[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


             SUSTAINING U.S. PACIFIC INSULAR RELATIONSHIPS

=======================================================================

                             JOINT HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS

                                and the

                   THE COMMITTEE ON NATURAL RESOURCES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           September 26, 2019

                               __________

                           Serial No. 116-68

                     (Committee on Foreign Affairs)

                               __________

                           Serial No. 116-24

                    (Committee on Natural Resources)

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

       Available:  http://www.foreignaffairs.house.gov/, http://
                            docs.house.gov, 
                       or http://www.govinfo.gov
                       
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
37-848PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------
                      

                      COMMITTEE ON FOREIGN AFFAIRS

                   ELIOT L. ENGEL, New York, Chairman
BRAD SHERMAN, California             MICHAEL T. McCAUL, Texas, Ranking 
GREGORY W. MEEKS, New York               Member
ALBIO SIRES, New Jersey		     CHRISTOPHER H. SMITH, New Jersey     
GERALD E. CONNOLLY, Virginia         STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida	     JOE WILSON, South Carolina
KAREN BASS, California		     SCOTT PERRY, Pennsylvania
WILLIAM KEATING, Massachusetts	     TED S. YOHO, Florida
DAVID CICILLINE, Rhode Island	     ADAM KINZINGER, Illinois
AMI BERA, California		     LEE ZELDIN, New York
JOAQUIN CASTRO, Texas		     JIM SENSENBRENNER, Wisconsin
DINA TITUS, Nevada		     ANN WAGNER, Missouri
ADRIANO ESPAILLAT, New York          BRIAN MAST, Florida
TED LIEU, California		     FRANCIS ROONEY, Florida
SUSAN WILD, Pennsylvania	     BRIAN FITZPATRICK, Pennsylvania
DEAN PHILLPS, Minnesota	             JOHN CURTIS, Utah
ILHAN OMAR, Minnesota		     KEN BUCK, Colorado
COLIN ALLRED, Texas		     RON WRIGHT, Texas
ANDY LEVIN, Michigan		     GUY RESCHENTHALER, Pennsylvania
ABIGAIL SPANBERGER, Virginia	     TIM BURCHETT, Tennessee
CHRISSY HOULAHAN, Pennsylvania       GREG PENCE, Indiana
TOM MALINOWSKI, New Jersey	     STEVE WATKINS, Kansas
DAVID TRONE, Maryland		     MIKE GUEST, Mississippi
JIM COSTA, California
JUAN VARGAS, California
VICENTE GONZALEZ, Texas                              
                             
                                     
                Jason Steinbaum, Democrat Staff Director
               Brendan Shields, Republican Staff Director


                     COMMITTEE ON NATURAL RESOURCES

                  RAUL M. GRIJALVA, Arizona, Chairman

JIM COSTA, California	          	ROB BISHOP, Utah,  Ranking Member
JARED HUFFMAN, California	  	AUMUA AMATA COLEMAN RADEWAGEN,				
RUBEN GALLEGO, Arizona		                          American Samoa
JOE NEGUSE, Colorado		  	JOHN R. CURTIS, Utah		  
DEB HAALAND, New Mexico			JENNIFFER GONZALEZ COLON, Puerto 		
JOE CUNNINGHAM, South Carolina		                            Rico
DIANA DEGETTE, Colorado			GARRET GRAVES, Louisiana		
DEBBIE DINGELL, Michigan		KEVIN HERN, Oklahoma
A. DONALD MCEACHIN, Virginia		MIKE JOHNSON, Louisiana
ED CASE, Hawaii				TOM MCCLINTOCK, California
MICHAEL SAN NICOLAS, Guam		BRUCE WESTERMAN, Arkansas
PAUL TONKO, New York			DON YOUNG, Alaska
GRACE NAPOLITANO, California		LIZ CHENEY, Wyoming
GREGORIO SABLAN, Northern Mariana 	PAUL COOK, California
    Islands				RUSS FULCHER, Idaho
ALAN LOWENTHAL, California		PAUL A. GOSAR, Arizona
TJ COX, California			LOUIE GOHMERT, Texas
MIKE LEVIN, California			JODY B. HICE, Georgia
JEFFERSON VAN DREW, New Jersey		DOUG LAMBORN, Colorado
NYDIA M. VELAZQUEZ, New York		DANIEL WEBSTER, Florida
WM. LACY CLAY, Missouri			ROBERT J. WITTMAN, Virginia
ANTHONY BROWN, Maryland
DARREN SOTO, Florida
STEVEN HORSFORD, Nevada
MATT CARTWRIGHT. Pennsylvania
                                

                    David Watkins, , Chief of Staff                            
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Schriver, Randall G., Assistant Secretary of Defense for Indo-
  Pacific Security Affairs, U.S. Department of Defense...........    10
Oudkirk, Sandra, Deputy Assistant Secretary for Australia, New 
  Zealand, and The Pacific Islands, Bureau of East Asian and 
  Pacific Affairs, U.S. Department of State......................    20
Pula, Nikolao, Director, Office of Insular Affairs, U.S. 
  Department of the Interior.....................................    27
Gootnick, David, Director of International Affairs and Trade, 
  U.S. Government Accountability Office..........................    36
Zackios, Hon. Gerald M., Ambassador to the United States from the 
  Republic of The Marshall Islands...............................   102
Susaia, Hon. Akillino H., Ambassador to the United States from 
  the Federated States of Micronesia.............................   111

       STATEMENT FOR THE RECORD SUBMITTED FROM A COMMITTEE MEMBER

Statement submitted for the record from Representative McCaul....   123

                                APPENDIX

Hearing Notice...................................................   130
Hearing Minutes..................................................   132
Hearing Attendance...............................................   133

                  ADDITIONAL MATERIALS FOR THE RECORD

Statement submitted for the record from Ambassador Kyota.........   135

            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

Responses to questions submitted for the record from 
  Representative Engel...........................................   138
Responses to questions submitted for the record from 
  Representative Titus...........................................   144
Responses to questions submitted for the record from 
  Representative Omar............................................   151
Responses to questions submitted for the record from 
  Representative Case............................................   152
Responses to questions submitted for the record from 
  Representative Sablan..........................................   154
Responses to questions submitted for the record from 
  Representative Nicolas.........................................   165

 
             SUSTAINING U.S. PACIFIC INSULAR RELATIONSHIPS

                      Thursday, September 26, 2019

                       House of Representatives,

                     Committee on Foreign Affairs,

                               joint with

                  The Committee on Natural Resources,

                                     Washington, DC

    The Committees met, pursuant to notice, at 10 a.m., in room 
2172, Rayburn House Office Building, Hon. Eliot Engel (Chairman 
of the Committee on Foreign Affairs), and Hon. Raul Grijalva 
(Chairman of the Committee on Natural Resources) presiding.
    Present from Committee on Foreign Affairs: Representatives 
Engel, Sherman, Sires, Connolly, Bera, Titus, Lieu, Phillips, 
Spanberger, Houlahan, Trone, Smith, Chabot, Perry, Yoho, 
Zeldin, Wagner, Mast, Buck, Wright, Reschenthaler, Burchett, 
and Pence.
    Present from Committee on Natural Resources: 
Representatives Grijalva, Case, Costa, Cunningham, Sablan, 
Nicolas, Gonzalez-Colon, Lamborn, Radewagen, Gohmert, and Hern.
    Mr. Sherman [presiding]. The Committee, or I guess in this 
case, the Committees will come to order.
    This hearing is a hearing of the Natural Resources and 
Foreign Affairs Committees. The Foreign Affairs Committee will 
take the lead with the first panel, and the Natural Resources 
Committee will take the lead with the second panel.
    Without objection, all members will have 5 days to submit 
statements, questions, and extraneous material for the record, 
subject to the length limitations and the rules of the 
respective Committees.
    Chair Eliot Engel could not be here today, and he figured I 
had done 23 years on the Foreign Affairs Committee and I could 
probably handle this. We will see if he is right or not.
    The purpose of this hearing is to provide members of both 
Committees with a deeper sense of strategic importance of 
America's relationships in the Pacific region, particularly 
those with the Freely Associated States. And the title of this 
hearing is the ``U.S. Pacific Insular Relationships''.
    America's legacy in the Pacific goes back well before World 
War II, but it is best known for World War II, where my own 
father fought in some of the very islands we are talking about 
here. A failure to focus adequate resources and intention on 
this region in recent years has opened the door to other 
regional actors. Most obviously, China has taken a growing 
interest in the Pacific Islands. Further west in the Pacific, 
they are building some of their own islands. But our focus here 
is on islands created by God rather than man.
    Just last week, China pressured not one, but two Pacific 
Island States to change their diplomatic recognition from 
Taipei to Beijing. With the Solomon Islands and Kiribati 
switching their allegiance to Beijing, it is worth noting that 
two of the four Pacific Island States that still recognize 
Taiwan are Freely Associated States; namely, the Marshall 
Islands and Palau.
    The topic we are here to discuss today, of course, is the 
Freely Associated States--the Marshall Islands, Palau, and the 
Federated States of Micronesia. We share a very unique 
relationship with these three sovereign countries. The Compacts 
we have with them serve as a foundation for our exceptionally 
close ties. FAS, or Federated citizens, have the right to live, 
work, and study in the United States without a visa. FAS 
citizens serve in the U.S. military at rates exceeding most of 
the States in the United States.
    The importance of Pacific Islands should never be 
understated. They control, both strategically and economically, 
an area considerably larger than the continental United States. 
As our technology makes the oceans more important, these 
islands will become more and more important.
    We enjoy close coordination with all three governments in a 
number of areas, including counternarcotics and illegal 
fishing. The Department of Education provides Pell Grants. The 
U.S. Postal Service provides domestic mail service, and the 
National Weather Service, Federal Aviation Administration, and 
FEMA also provide critical services.
    They are among our closest diplomatic allies at the United 
Nations and provide the United States with unfettered military 
access to their land, waterways, and airspace. In turn, the 
United States is responsible for the defense and security of 
the Freely Associated States. Suffice it to say that the 
Compacts create bonds between the United States and these three 
countries that are closer than we enjoy with any other 
sovereign nation.
    Despite these historic ties, we have heard from FAS leaders 
that all too often it seems the United States has drifted away. 
Too often, our policy seems to be on autopilot. A good example 
of this was congressional inaction on the last Compact we 
signed with Palau. Although the Compact was signed in 2010, 
Congress did not get around to funding it until 2017. This 
clearly upsets the relationship, did not actually save 
taxpayers any money, and the delay seems to reflect a lack of 
attention where attention is called for.
    The current Compacts are scheduled to elapse in 2023-2024. 
Furthermore, the Trust Funds we helped establish to provide for 
these countries' economic development have not performed as 
well as we would have expected. Accordingly, the Freely 
Associated States are not capable of making up for the 
shortfall when our financial support to these countries ends. 
To prevent a reoccurrence of what happened with Palau last 
time, we must get ahead of the issue, and that is one of the 
reasons we are holding this hearing, to get all of our 
colleagues in Congress to focus on the importance of the Freely 
Associated States.
    We are holding this hearing to solicit good ideas from this 
knowledgeable panel on how to strategically shape our 
engagement with the Freely Associated States and other partners 
in the region. The Freely Associated States should not have to 
choose between inattention from their long-term friends and the 
debt traps and other devices which would erode their 
sovereignty, which will no doubt be offered by China.
    We not only have the expertise of two panels of witnesses, 
we also have three Pacific Island Delegates to the U.S. 
Congress participating in these hearings, people who live and 
represent the region and will also, through their questioning 
and comments, give us a substantial understanding of the area.
    I want to point out that we have a created a Pacific 
Islands Caucus, co-chaired by Ed Case from Hawaii, myself, Ted 
Yoho, and Don Young. This will also help focus the attention of 
Congress on this important region.
    With that, I will recognize the acting Ranking Member from 
the Foreign Affairs Committee, Ms. Wagner, for her opening 
statement.
    Mrs. Wagner. I thank the Chairman very much.
    And I want to welcome our witnesses today and to thank them 
for their work in support of U.S.-Pacific insular relations.
    The ties between the United States and our partners in the 
Pacific are of immense strategic importance. And I am glad that 
the House Committee on Foreign Affairs and Natural Resources 
have the opportunity to highlight this as we draw closer to the 
renegotiation of our Compacts of free association with the 
Federated States of Micronesia, the Republic of the Marshall 
Islands, and Palau.
    Strong relations with Pacific Island nations are the 
backbone of U.S. security in the Indo-Pacific and have been 
since before the Second World War. And for decades, Micronesia, 
the Marshall Islands, and Palau have played a central role in 
developing U.S. capabilities and extending our ability to 
protect sovereignty, rule of law, and freedom of navigation in 
the Indo-Pacific.
    Increasingly, the Pacific Islands are on the front lines of 
Sino-U.S. rivalry. China has already begun to pressure Pacific 
Island countries in an attempt to push the borders of its 
sphere of influence out to the so-called second island chain, a 
line that passes right through the Northern Mariana Islands, 
Guam, and Palau.
    Last week, China coerced two Pacific Island countries--the 
Solomon Islands and Kiribati--to break with Taiwan and, 
instead, recognize Beijing before the communist government's 
70th anniversary on October 1st. China seeks to replicate its 
diplomatic victory in Palau and the Marshall Islands by 
weaponizing its economic clout. It has banned Chinese tourists 
from visiting Palau, and it currently forces Marshall Islands 
ships to pay higher fees to enter Chinese ports.
    The United States must stand by its partners and its allies 
as they face down a belligerent and strident Beijing. China 
does not share our vision for a free and open Indo-Pacific. It 
seeks to intimidate, entrap, and coerce the countries with 
which it works into increasing China's prestige and furthering 
its own agenda.
    We in Congress are proud to support the special 
relationship the United States shares with the Marshall 
Islands, Micronesia, and Palau. The United States must continue 
to stand together with the Freely Associated States in defense 
of our common interests.
    I want thank again the Chairman for organizing this 
hearing. It is wonderful to have representatives from our 
Pacific Islands here and to be teaming up with Natural 
Resources as we delve into this.
    I yield back the balance of my time, Mr. Chairman.
    Mr. Sherman. Thank you.
    It is my understanding that the gentleman from Arizona has 
asked that his opening statement time be used by my friend 
Kilili from the Northern Mariana Islands. The gentleman from 
the Northern Mariana Islands is recognized.
    Mr. Sablan. Thank you. Thank you very much. I thank my 
colleague for yielding to me.
    I called for this hearing believing the time has come to 
begin defining a new era for the United States relationship 
with some of our closest allies, the Freely Associated States 
of the Republic of the Palau, the Republic of the Marshall 
Islands, and the Federated States of Micronesia.
    And in so doing, I also hope to signal to the Pacific 
region writ large that the United States remains committed, 
more than ever committed to this part of the world. The United 
States political history with the Freely Associated States 
began at the end of World War II. The United Nations Security 
Council entrusted us to administer these former colonies on 
behalf of the international community. We were charged with 
fostering the development of their political institutions and 
promoting their economic, social, and educational advancement.
    Speaking as someone who grew up at this time in the 
Marianas, in Micronesia, in the Trust Territory of the Pacific 
Islands, which has also been entrusted to the U.S., little was 
done at first to fulfill these responsibilities. Only after the 
cold war was in full swing did concern grow that a lack of 
commitment to political and economic development might 
jeopardize long-term U.S. security interests in the Pacific. 
And because of that concern, the U.S. significantly increased 
assistance.
    In fact, the U.S. built such a strong bond that the 
Marshall Islands and the Federated States of Micronesia all 
chose to become Freely Associated, and the people of my home 
voted to make the Mariana Islands a natural part of the United 
States and chose to become United States citizens.
    Perhaps the United States forgot the lesson in the 1970's 
because today we are facing a similar dilemma. Instead of 
combating cold war concerns, however, today's challenges are 
coming from other Pacific powers who want a realignment of 
allegiance in their favor. And the U.S. neglect of our 
relationship with Palau and the Marshall Islands and the 
Federated States of Micronesia could well be encouraging these 
friends to turn elsewhere.
    In the more than 30 years since the Compacts of Free 
Association were entered with these three island nations, the 
United States has provided more than $4 billion in direct 
financial assistance. We have established three Trust Funds, 
the earnings of which we had hoped would eventually substitute 
for this aid.
    Today's hearing will begin weighing this U.S. assistance to 
these friends against the growing influence of other powers in 
the region. So, we must ask ourselves whether we are doing 
enough in return for the military and defense rights the Freely 
Associated States have given us, including the right of 
strategic denial to block or restrict military access by third 
countries.
    While the U.S. has helped the effort in their economic 
growth through their targeted financial support, we must be 
honest; growth has not been what we had hoped. We may need to 
provide more aid, particularly in light of the GAO's 2018 
report that the FSM and the Marshalls' Trust Funds face risks 
and may not provide the self-sustaining disbursement in future 
years that were envisioned.
    While we are at the infancy stage of fulfilling the 
interagency strong support for extending financial assistance, 
which we are told is vital to secure long-term U.S. strategic 
interests, we must avoid the repeat of the Compact renewal with 
the Republic of Palau. That renewal was agreed between our two 
nations in 2010. I introduced legislation to approve it, but 
Congress did not take final action until 2018, much too long to 
keep a friendly neighbor waiting.
    I want to thank our Administration witnesses and thank them 
for being here. Their presence underscores the importance of 
this issue to national security. I commend the Administration 
for its willingness to secure and strengthen our Nation's 
relationship with these allies who vote with us at the United 
Nations more than any other nations.
    And finally, I want to welcome my friends, Ambassador 
Zackios from the Republic of the Marshall Islands, and 
Ambassador Susaia from the Federated States of Micronesia. 
Welcome. I look forward to hearing about your governments' 
priorities for enhancing and moving the relationship with our 
two nations forward.
    And thank you, Mr. Chairman, and I yield my time back.
    Mr. Sherman. Thank you.
    It is my understanding that acting as Ranking Member for 
the Natural Resources Committee is the Resident Commissioner 
from Puerto Rico, who is now recognized for a 5-minute opening 
statement, after which I will recognize others in attendance 
who are interested in making a 1-minute opening statement. That 
does not mean you need to.
    [Laughter.]
    Miss Gonzalez-Colon. Thank you, Mr. Chairman, and I 
appreciate it.
    I think this is a great opportunity to have the Foreign 
Affairs Committee and the Natural Resources Committee jointly 
doing a hearing about a very important issue for the United 
States security, but also for the interests of the United 
States in the region.
    As a Member representing an island, I know how important it 
is to acknowledge all the situations in the past 50 years, as 
well as the status of the Compact. In that regard, we will be 
reviewing the United States relationship and interests with the 
Freely Associated States--the Republic of the Marshall Islands, 
the Federated States of Micronesia, and the Republic of Palau.
    I welcome the Ambassadors as well the members from the 
Government of the United States for this first panel.
    Our relationship with these three independent island 
nations dates back to World War II, as the Chairman just 
established, and it is currently governed by the Compact of 
Free Association that serves mutual interests. The Freely 
Associated States defer to the U.S. on decisions related to 
their external security and receive U.S. economic assistance 
and security guarantees. In return, our Nation has access to 
their lands and waters for strategic purposes and, more 
importantly, we have the ability to deny other countries the 
same access for providing that kind of security, as Ms. Wagner 
just said a few minutes ago about the increasing interest of 
China in the region.
    In 2023 and 2024, the financial assistance authorization 
provided by the Compact of Free Association as amended and the 
Compact Review Agreement are set to expire. The financial 
assistance provided under this agreements has been essential to 
the three island nations.
    I, therefore, look forward to having this productive 
discussion on how this expiration will impact the daily life of 
the Freely Associated States. And I also want to know about the 
implications it could have on the United States' strategic 
interest in the South Pacific region, particularly whether it 
could create a leadership void that other nations like China 
might seek to fill.
    I want also to hear from our witnesses on policy options 
these Committees can discuss and we can pursue to increase the 
Freely Associated States' economic self-reliance and ensure a 
brighter future for those countries.
    I want to thank both Chairmen for calling today's hearing. 
And after having for the first time a joint meeting with the 
President of the United States in May of this year from the 
three independent States, I think it is the first time that 
happened. And last, in August of this year, Secretary Pompeo 
got a separate meeting discussing the same issue with one of 
the islands. I think this is the right time to have these kinds 
of discussions in how can Congress help in this regard.
    I want to recognize Ms. Amata Radewagen from the American 
Samoan Island, who is part of the Natural Resources Committee 
in the House, that is part of this delegation that is well 
represented actually, the Pacific Islands.
    With that, I will yield back the balance of the time.
    Mr. Sherman. Thank you.
    I will see if anyone needs--yes, the gentleman from Guam is 
recognized.
    Mr. San Nicolas. Thank you, Mr. Chairman. I am deeply 
grateful for this joint hearing that we are going to be 
conducting here today for the purposes of really getting to the 
bottom of our relationship with the Compact of Free Association 
and those States that are so associated.
    It is important for us in the context of today's hearing to 
remember that the reputation of the United States as an 
administering power is no better represented than in our U.S. 
territories, our tribal nations, and our freely associated 
allies. And this relationship is wholly responsible for 
establishing our reputation on the world stage. No matter how 
much we go out diplomatically to try to talk about whether or 
not the United States is a good partner or a good ally, it is 
entirely reflected in whether or not our territories, our 
tribal nations, and our freely associated allies are succeeding 
or failing. And the success or failure of these administered 
areas rests largely with the Department of the Interior.
    And so, Mr. Chairman, I am very grateful for this hearing, 
so that we can discuss the success, particularly of our freely 
associated allies, and the administering responsibilities of 
the Department of the Interior, because the soft power 
implications of our ability to get this right have direct 
relations to our hard power responsibilities in maintaining 
peace and security throughout the globe.
    Mr. Chairman, I yield back.
    Mr. Sherman. Thank you.
    I understand the gentlelady from American Samoa would seek 
recognition. Recognized for 1 minute.
    Mrs. Radewagen. [Speaking foreign language.]
    Thank you, Mr. Chairman, Chairman Sherman, Chairman Sablan, 
and Ranking Members Wagner and Gonzalez-Colon, for holding this 
joint hearing on this very important issue.
    And thank you to the witnesses for taking time out of your 
busy schedules and coming here to testify.
    Special greetings to Ambassadors Zackios and Susaia, and 
Nikolao.
    The Freely Associated States are near and dear to my heart. 
Whenever I have the opportunity to visit any of these island 
countries, it feels like I am being welcomed home. In fact, I 
actually did have the privilege of living in the Marshall 
Islands for a number of years.
    The Freely Associated States are, arguably, our most 
important allies in the Pacific. Not only are they important 
security partners, the people of these island countries have a 
direct cultural and social impact on the United States and the 
territories. Their citizens live and work in our communities 
and serve in our military. They are our neighbors and family 
members. The American Government does not just have an 
obligation to these island nations; the amount of value we 
receive out of our agreements with the FAS means we owe it to 
the American people to maintain these relationships.
    Thank you, Mr. Chairman. I yield back.
    Mr. Sherman. Thank you.
    I see no other members seeking recognition. So, we will now 
move on to our first witness.
    Randall Schriver began his career in the Navy, served in 
important positions in the State Department, went on to 
positions in the private sector, and now serves as Assistant 
Secretary of Defense for Indo-Pacific Security Affairs.
    Mr. Schriver.

   STATEMENT OF RANDALL G. SCHRIVER, ASSISTANT SECRETARY OF 
 DEFENSE FOR INDO-PACIFIC SECURITY AFFAIRS, U.S. DEPARTMENT OF 
                            DEFENSE

    Mr. Schriver. Thank you. Good morning, Chairman and Ranking 
Members. I appreciate the opportunity to be here today to talk 
about these important relationships with the Freely Associated 
States.
    Our relationships with the Freely Associated States are 
critical to advancing our strategy to promote the free and open 
Indo-Pacific. We are advantaged by a deep and rich shared 
history, but also shared values and interests. We and the 
Freely Associated States believe strongly in respect for a 
safe, secure, prosperous, free, and open Indo-Pacific region 
that must preserve the sovereignty of all States, no matter 
their size. We stand together with these important allies and 
will sustain U.S. security guarantees to the Freely Associated 
States.
    The importance of these efforts is growing as we are 
increasingly confronted with a more assertive and confident 
China that is willing to accept friction in pursuit of its 
interests. There are, of course, other challenges that we work 
with our partners in the Freely Associated States in the Indo-
Pacific, such as persistent and evolving threats from non-State 
actors, emerging threats across new domains such as cyber and 
space, and a range of transnational threats, such as natural 
disasters; illegal, unreported, and unregulated fishing; 
piracy; drug trafficking, and the impact of climate change.
    Given our strong relations with the Freely Associated 
States, we have a particular concern by China's use of coercive 
tools to attempt to erode their sovereignty and induce them to 
behave in accordance with Chinese interests. As was mentioned, 
China has applied pressure to Taiwan's diplomatic partners, 
including Palau with the banning of Chinese tourists and the 
economic coercion that the Ranking Member mentioned that led to 
a switch in diplomatic recognition on the part of two Pacific 
Islands just last week.
    Our policy response at the Department of Defense is through 
implementation of the National Defense Strategy in which the 
Freely Associated States feature prominently in its 
implementation. We seek to build a more lethal and resilient 
joint force where we prioritize investments in key technologies 
and key areas of modernization, and the Freely Associated 
States are partners with us on this effort.
    As an example, the Marshall Islands host the Reagan 
Ballistic Missile Defense test site, which provides tremendous 
opportunities for us in our modernization efforts. The site 
enables cutting-edge U.S. Army and Air Force space and missile 
defense research and is leading to advanced technologies such 
as hypersonic test programs and the development of advanced 
surveillance systems.
    Also related to the implementation of our National Defense 
Strategy, we seek to strength alliances and attract new 
partners. These networks are critical to our ability to protect 
the U.S. and enable our forward presence, but it also gives us 
partners who are more capable to defend themselves and 
contribute to regional security. Consistent with growing 
partnership capability and in line with the 2018 Boe 
Declaration, we aim to build capacity and resilience, 
particularly to address challenges such as maritime security. 
The Freely Associated States are also critical to our 
Department's long-term strategy, as they grant us access and 
they support us in international fora.
    All three countries also contribute to our mutual defense 
by their service in the U.S. Armed Forces, as was mentioned by 
the Chairman and other members, at per capita rates higher than 
most U.S. States. And their citizens have paid the ultimate 
sacrifice with lives lost in combat in Iraq and Afghanistan.
    The Freely Associated States are also active contributors 
to the international pressure campaign on North Korea. We work 
with the Marshall Islands and Palau, for example, to prevent 
use of their ship registries to evade sanctions against North 
Korea.
    In Palau, the United States is working to provide radar 
equipment and technical support critical to improving maritime 
domain awareness, including air and surface awareness in the 
South and East China Seas. The radar will enhance our ability 
to compete with China in the region and will enable Palau to 
understand what is happening in its own sovereign territorial 
waters.
    To conclude, we are part of a whole-of-government 
engagement strategy in the Oceania region, and we are engaging 
in important ways. We have conducted an unprecedented number of 
DoD senior-level visits to the region in the last year and a 
half. We are also stepping up our work with like-minded allies 
and partners, such as Australia, New Zealand, France, and 
Japan, to protect the sovereignty and maritime rights of the 
Pacific Islands.
    Going forward, we also recognize that Compact guarantees 
and obligations are critical in the context of competing 
effectively with China, as Beijing is actively targeting this 
region in an effort to expand its own influence. In this 
regard, the Department of Defense strongly supports our 
interagency efforts to extend the economic provisions of the 
Compact to secure our long-term strategic interests in this 
vital region.
    Thank you again, and I look forward to your questions.
    [The prepared statement of Mr. Schriver follows:]

 
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    Mr. Sherman. Thank you.
    Ms. Sandra Oudkirk is a career diplomat. She is Deputy 
Assistant Secretary for Australia, New Zealand, and the Pacific 
Islands in the Bureau of East Asian and Pacific Affairs at the 
Department of State.
    You are recognized.

  STATEMENT OF SANDRA OUDKIRK, DEPUTY ASSISTANT SECRETARY FOR 
AUSTRALIA, NEW ZEALAND, AND THE PACIFIC ISLANDS, BUREAU OF EAST 
      ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE

    Ms. Oudkirk. Good morning. Chairman, Ranking Members, 
distinguished members of both Committees, thank you for the 
opportunity to appear before you today with my distinguished 
fellow panelists.
    As has been noted already, the Indo-Pacific is the most 
populous and economically dynamic region of the world. The U.S. 
interest in a free and open Indo-Pacific extends back to the 
earliest days of our Republic. Our relationships with the 
Republic of the Marshall Islands, the Federated States of 
Micronesia, and the Republic of Palau, collectively referred to 
as the Freely Associated States, have since World War II 
contributed to a secure, stable and prosperous Indo-Pacific 
region.
    Together, these three countries form a strategic bridge 
stretching from Hawaii to the Philippines, a span equivalent to 
the breadth of the continental United States. As has been 
noted, we have full responsibility and authority for security 
and defense matters in or relating to these three countries. We 
can deny other countries' militaries access to these countries, 
and the three governments consult closely with us on their 
foreign policies.
    Importantly, the Freely Associated States hold strong to 
their core democratic values. This is the foundation that 
underpins our relationship and our cooperation. As Secretary 
Pompeo has said during his August visit to Micronesia, these 
small islands are big strongholds of freedom. They are proven 
partners and friends. The Marshall Islands, the Federated 
States of Micronesia, and the Republic of Palau are 
historically among the United States' strongest supporters at 
the United Nations. The Freely Associated States stand with us 
to combat anti-Israel bias and stood with us on the Jerusalem 
vote. In addition, Palau and the Marshall Islands are two of 
the now 15 countries that maintain diplomatic ties with Taiwan.
    We work closely with the Freely Associated States on the 
full range of law enforcement issues. We train law enforcement 
personnel from all three countries. We conduct joint maritime 
law enforcement patrols, and we cooperate on law enforcement 
investigations.
    Eligible citizens of all three countries can and do travel 
without visas to live, work, and study in the United States. 
Citizens of the Freely Associated States serve in the U.S. 
Armed Forces at rates higher than most U.S. States, and 18 
servicemembers have lost their lives in combat since World War 
II.
    The United States must continue to deepen our engagement 
with the Freely Associated States, especially now at a time of 
increased competition from China, Russia, and other countries 
who seek to exert greater influence in the Pacific region.
    Our Compact relationships do not have an end date. However, 
the scheduled end of U.S. economic assistance is rapidly 
approaching, and now is not the time to leave these small, 
sovereign, partner nations open to the predations of larger 
countries.
    For example, China has significantly increased its 
engagement with the Pacific Islands over the past decade. China 
has provided $1.8 billion in economic assistance to the Pacific 
Islands since 2006, now putting it third in terms of donations, 
behind Australia at $7.7 billion and the United States at $1.9. 
China's engagement is still growing.
    Against this backdrop of growing competition, there is 
uncertainty across the Pacific about the United States' 
willingness and ability to sustain the robust bilateral 
presence that has contributed to peace, stability, and 
prosperity in the region. Our allies, partners, and other 
Pacific Island countries see our relationships with the Freely 
Associated States as a bellwether, as a signal of our 
commitment to the broader Indo-Pacific.
    On August 5th, during the first visit by a Secretary of 
State to the Federated States of Micronesia, Secretary Pompeo 
announced that the United States will begin consultations on 
certain provisions of our respective Compacts of Free 
Association with each country. We are coordinating closely 
across the interagency to evaluate our options. These 
agreements are complex. They require a thoughtful approach with 
extensive consultations to make sure that we get them right. An 
interagency group will travel to all three countries in October 
to better understand the needs and perspectives of each of the 
three countries.
    We are committed to working collaboratively with Congress 
to explore ways in which we might further strengthen our 
relationship with the Freely Associated States. Chairman 
Sherman, Chairman Sablan, Chairman Grijalva, Ranking Members 
Wagner and Gonzalez-Colon, distinguished members of the 
Committee, thank you again for the opportunity to appear before 
you today. We look forward to working closely with you and your 
colleagues in Congress to ensure that the United States can 
effectively secure U.S. interests in the Indo-Pacific. Thank 
you.
    [The prepared statement of Ms. Oudkirk follows:]

    
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    Mr. Sherman. We have with us the executive branch's liaison 
with the Freely Associated States. He is Nikolao Pula, the 
Director of the Office of Insular Affairs at the Department of 
the Interior, and he is recognized for 5 minutes.

STATEMENT OF NIKOLAO PULA, DIRECTOR, OFFICE OF INSULAR AFFAIRS, 
                U.S. DEPARTMENT OF THE INTERIOR

    Mr. Pula. Thank you, Mr. Chairman. Thank you, members of 
the Committees, and the distinguished members of both 
Committees. Thank you for the opportunity to testify before 
your Committees this morning. I am Nik Pula, Director of the 
Office of Insular Affairs at the Department of the Interior.
    Having traveled to each of these countries multiple times, 
I can assure you that the Federated States of Micronesia, the 
Republic of the Marshall Islands, and the Republic of Palau 
share a unique and special relationship with the United States.
    My colleagues at the Department of State and Defense 
discussed the diplomatic and military importance of our 
relationship with these Freely Associated States. I will focus 
on the financial assistance provided by Congress through 
Interior.
    The Department has partnered with the people of the former 
Trust Territory of the Pacific Islands since 1951, when the 
Navy transferred civil administration to Interior. Given our 
historic role, Congress determined then that Compact funding 
would flow through Interior. That continues today.
    No other independent nation with diplomatic and military 
relationships with the United States also has a relationship 
with the Department of the Interior. This can be attributed to 
the unique and special history that we have shared and continue 
to share going forward.
    This Compact framework has successfully ended their 
trusteeship status and restored stable, sovereign, and 
democratic self-governance to the Freely Associated States 
while providing the United States with continued access to this 
strategic region.
    The Compacts allowed their citizens entry into the United 
States visa-free as legal non-immigrants to live, work, and 
study here. Mainly families and individuals now live in the 
United States and also serve in the United States Armed Forces, 
adding to the growing American Pacific Islander diaspora, 
another source of strength to the United States relationship 
with the Freely Associated States.
    Through Interior alone, the U.S. has provided the FSM and 
RMI approximately $3 billion in financial assistance over the 
last 15 years from Fiscal Year to 2019. From 1994 to 2009, 
Palau benefited from U.S. financial assistance totaling 
approximately $560 million. And under the 2010 Palau Compact 
Review Agreement, passed by the Congress last year, an 
additional total of $229 million was made available to Palau.
    The financial assistance included in the Compacts for the 
FSM and the RMI has primarily supported the delivery of health 
and education services, infrastructure development such as 
hospitals, health centers, roads, utilities, and schools. The 
Compacts have also established Trust Funds for the FSM and the 
RMI to provide an additional source of funding when annual 
grants funding eventually ceases in 2023. The U.S. Compact 
relationship with Palau is different, but similar. Financial 
assistance to Palau supports government operations, 
infrastructure projects, and a Trust Fund.
    Neither the United States nor the Freely Associated States 
intended for any of the Compact agreements to underwrite the 
entire economies or the full operations of its country. Rather, 
the Compacts were intended to provide an economic springboard, 
making available the resources to allow the FSM, RMI, and Palau 
to improve essential government services and infrastructure 
while they reform the business climate, fiscal policies, and 
their capacity to govern.
    The Joint Economic Management Committees with the FSM and 
the RMI, both established under the Compact law, provide an 
opportunity for annual bilateral discussions on financial 
assistance issues and serve as an additional accountability 
mechanism. Compact grant assistance and payments to the Trust 
Funds for the FSM and RMI expire in 2023 and for Palau in 2024. 
As currently structured, post-2023-2024, the Trust Funds 
provide a transition away from direct U.S. grant assistance and 
toward economic self-sufficiency. At the end of Fiscal Year 8, 
the balance of the FSM Trust Fund was $636 million; RMI's was 
$402 million, and Palau's was $286 million.
    However, while the Trust Funds have grown and performed 
well, there are legitimate concerns about the expected 
distributions after 2023 and 2024. If funding under the Compact 
is not extended after 2023 and 2024 or the Trust Funds are not 
bolstered, the FSM, RMI, and Palau are all likely to experience 
significant economic shock with detrimental destructions to 
health, education, and government operations. The stability and 
balance of our relationship in this region that we have 
engendered thus far may suffer.
    Thank you, and I am happy to answer any questions.
    [The prepared statement of Mr. Pula follows:]

    
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    Mr. Sherman. Thank you for your testimony.
    David Gootnick is the Director of International Affairs and 
Trade at the U.S. Government Accountability Office. He also 
leads the Department's work on the Compacts of Free 
Association.
    Dr. Gootnick.

STATEMENT OF DAVID GOOTNICK, DIRECTOR OF INTERNATIONAL AFFAIRS 
        AND TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Dr. Gootnick. Thank you, Mr. Chairman. Chairmen, Ranking 
Members, and members of the Committees, thank you for the 
opportunity to participate in this hearing. I am going to focus 
in some detail on the economic assistance to the Republic of 
the Marshall Islands and the Federated States of Micronesia, 
introduced by my colleague, Mr. Pula.
    Under the amended compacts with Micronesia and the Marshall 
Islands, Sector Grants and Special Education Grants, known as 
the SEG, are scheduled to end and Trust Fund disbursements to 
begin in 2023. In my remarks today, I will focus on two key 
issues associated with this transition. First, the extent to 
which the two countries currently rely on U.S. support and, 
second, the status of their Trust Funds.
    First, on reliance on U.S. assistance, the Sector Grants 
and the SEG continue to support a substantial portion of 
government resources in both countries. In the FSM, these 
grants were roughly one-third of all government expenditures in 
2016 and nearly one-half of their expenditures if you add in 
other U.S. programs and services, which I will get to in a 
moment. In the FSM, the reliance on these grants varies 
considerably by State. Chuuk State, with the largest population 
and lowest per capita GDP, is the most reliant on these grants. 
There, these grants support about 85 percent of the health 
sector and 95 percent of the educational system. The Marshall 
Islands is somewhat less reliant on these grants. Overall, they 
support about one-quarter of government expenditures. Yet, they 
represented about a third of the health sector and two-thirds 
of the educational system.
    Both countries are also facing a transition in the 
availability of U.S. programs and services provided for by the 
compacts and their implementing legislation. After 2023, some 
of these programs and services are set to continue and some are 
not. So, for example, based on current U.S. law and the 
assessment of agency officials, FEMA funding for disaster 
relief and the services of the U.S. Postal Service will no 
longer be available. Likewise, the FDIC will no longer have the 
authority to insure deposits in the Bank of Micronesia. Other 
programs and services such as FAA civil aviation and USAID's 
disaster response may continue under other authorities. And 
yet, still other programs and services can continue without 
change. For example, eligibility for Pell Grants, Special 
Education Grants, and numerous public health programs will 
continue.
    There is an addendum to my written statement which provides 
an analysis of the status of most U.S. programs after 2023. I 
think it is a useful reference on this complex topic.
    Regarding the Trust Funds, at GAO we recently ran 10,000 
simulations of the Trust Funds under a range of scenarios. We 
found that under their current structure the Trust Funds are 
unlikely to consistently provide annual disbursements at the 
level of Sector Grants and may provide no disbursements at all 
in some years. These risks increase significantly over time. 
So, for example, in our analysis the FSM faces a 40 percent 
likelihood of zero disbursements in one or more years in the 
first decade after 2023. It is a greater than 90 percent risk 
if you run that analysis out 40 years. For the RMI, the risks 
are somewhat lower. It is 15 percent in the first decade; yet, 
more than 50 percent over 40 years. These results are entirely 
consistent with those of the Asian Development Bank and 
analysis funded by Interior.
    These risks have been known for some time and there have 
been proposals to mitigate these shortfalls. A number of these 
proposals rely on changing the constraints on disbursement 
built into the Trust Fund agreements. However, absent a 
reduction in planned disbursements or an increase in 
contributions, these changes, in and of themselves, will not 
resolve the shortfall in the Trust Fund balances. Additionally, 
some of these proposals represent changes in the Trust Fund 
agreements, and on the U.S. side this would require 
implementing legislation.
    Finally, migration under the compacts is set to continue 
after 2023. The most recent enumeration shows roughly 38,000 
compact citizens residing in Hawaii, Guam, and the Mariana 
Islands. Compact nation citizens have been recruited by U.S. 
firms, and migrant communities in the continental U.S. are 
growing, and in many cases quite successfully. GAO has and will 
continue to provide information on the demographics of compact 
migration and insight on the key issues faced by migrants and 
the affected jurisdiction.
    Chairmen, Ranking Members, members of the Committees, this 
completes my remarks. I am happy to answer your questions.
    [The prepared statement of Dr. Gootnick follows:]

    
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    Mr. Sherman. Thank you.
    We will now go to recognizing members. Rather than 
recognizing myself, I will recognize the Chair of the full 
Committee, Mr. Engel.
    Chairman Engel. Thank you, Mr. Chairman. I want to thank 
Mr. Sherman for his hard work in working for this very 
important issue and, also, in our 2172 Foreign Affairs room. 
So, thank you so much, Mr. Chairman.
    Thank you to the witnesses for testifying on the many 
elements of the important and unique friendship relationship 
between the United States and the Freely Associated States.
    I am very happy that we were able to organize this joint 
hearing with Chairman Grijalva, Vice Chairman Sablan, and the 
other members of the Natural Resources Committee, who have, 
along with the Foreign Affairs Committee, taken the lead on 
relations with the Freely Associated States over the years.
    I look forward to working with the Natural Resources 
Committee as we engage on these issues in the months and years 
ahead to ensure that we have a good outcome to upcoming 
negotiations on new Compacts of Association, so the U.S. and 
the Freely Associated States can strengthen our ties, safeguard 
our sovereign interests, and ensure our mutual defense well 
into the future.
    Despite the deep historic ties between our nations and the 
region's strategic importance, there is, frankly, not a lot of 
awareness about the Freely Associated States here in the United 
States. This hearing provides a good opportunity to put them 
back on the radar screen. Our relations with the Freely 
Associated States are a very important part of our overall 
Indo-Pacific strategy. The way we handle the compacts will 
demonstrate not only how we treat some of our closest friends, 
but America's commitment to the Pacific as a whole. So, I am 
very glad that we have an opportunity today to discuss how the 
United States and the FAS can deepen and broaden our bilateral 
engagement.
    And again, I want to thank Mr. Grijalva, Mr. Sablan, and 
Mr. Sherman.
    I have one question that I would like to ask Ms. Oudkirk. I 
have long believed that the United States should have 
diplomatic representation in every country of the world. 
Recently, during his visit to the Federated States of 
Micronesia, Secretary Pompeo said he was examining how our 
government can best interact with the Freely Associated States 
to put our relationship on a sound footing for the decades to 
come. May I ask you, what do you think about reassigning 
responsibilities for the Freely Associated States from the 
Department of the Interior to the Department of State or some 
other agency? And what would be the advantages and 
disadvantages of doing so?
    Ms. Oudkirk. Thank you very much, Chairman Engel.
    So, just to be very clear, we have accredited Ambassadors 
in place in each of the three Freely Associated States and 
embassies in each of those countries. So, the State Department 
does conduct our diplomatic relationship with those three 
countries as per normal, as we would with other countries in 
the world. The difference is, as Mr. Pula noted, the Department 
of the Interior implements the assistance under the Compacts. 
So, I think we believe we have a good arrangement, a good 
division of labor here. And additionally, Mr. Gootnick 
describes many of the domestic programs that are made available 
to the Freely Associated States from the post office to the 
Weather Service, and that is also additional and somewhat 
unique. But the diplomatic and foreign affairs relationship is 
conducted by the State Department.
    Chairman Engel. How many State Department officers are 
assigned to U.S. Embassies in Koror, Kolonia, and Majuro? And 
are these resources sufficient to achieve U.S. interests and 
goals?
    Ms. Oudkirk. If I may, sir, I will take that question back 
and give you a precise answer. I think that we believe that we 
are doing a good job. We are in the process of augmenting staff 
in many of our Pacific embassies, not just in the Freely 
Associated States. But I will get back to you with a precise 
number on the breakdown of the representatives country by 
country.
    Chairman Engel. All right. Thank you very much. And thanks 
to all our witnesses for testifying today. Thank you.
    Mr. Sherman. Thank you.
    The gentlelady from Missouri is recognized.
    Mrs. Wagner. I thank the Chairman very much.
    Ms. Oudkirk--is that correct?--as I asked Assistant 
Secretary Stilwell last week before the Asian-Pacific 
Subcommittee, have you considered traveling to Taipei, in 
accordance with the Taiwan Travel Act, to demonstrate America's 
support for Taiwan in the wake of the Solomon Islands' and 
Kiribati's to break with Taiwan?
    Ms. Oudkirk. I am traveling to Taiwan in 2 weeks. I am the 
U.S. senior official for APEC. So, in my APEC capacity, I will 
be traveling to Taiwan to consult with them on APEC-related 
issues.
    Mrs. Wagner. Much better answer than I received last week.
    Mr. Sherman. Hallelujah.
    Mrs. Wagner. Yes, and the Chairman concurs. That is 
wonderful, and I am so pleased that you are going to do that. 
We need to make a strong statement about this, and I believe 
that Assistant Secretary Schriver underscored that also in his 
testimony. We cannot have China bullying our friends and allies 
in the region, and it is very important that Taiwan understands 
how important strategically and trade-wise and in our values 
and support that we have for them. So, I am very, very pleased 
to hear that.
    Mr. Connolly. Would the gentlelady yield just for 1 second?
    Mrs. Wagner. Absolutely.
    Mr. Connolly. I just want to associate myself with her 
remarks. I am the Co-Chair of the Taiwan Caucus. And on both 
sides of the aisle, I think what you just expressed expresses 
our views as well.
    Thank you. I thank my friend.
    Mrs. Wagner. Absolutely. And I just love it when we have 
these wonderful bipartisan moments of agreement.
    [Laughter.]
    Ms. Oudkirk, what steps will the Trump Administration take 
to make sure that support for Taiwan among the Marshall Islands 
and Palau, the Freely Associated States that recognize Taipei's 
sovereignty, make sure that does not erode further?
    Ms. Oudkirk. So, thank you very much, Congressman Wagner.
    Taiwan is a democratic success story. It is a reliable 
partner. It is a force for good in the world. The United States 
will continue, and this Administration will continue, to 
support Taiwan, especially as it seeks to expand its already 
significant contributions to addressing global challenges and, 
in particular, its support to its diplomatic partners in the 
Pacific, including the Republic of the Marshall Islands and 
Palau.
    We believe that China's active campaign to alter the Cross-
Strait status quo, including by enticing countries to 
discontinue their diplomatic ties with Taiwan, is harmful. This 
effort undermines regional stability. It undermines a framework 
that has been established for decades and that has enabled 
peace, stability, and development across the Indo-Pacific.
    Mrs. Wagner. Thank you. I very much appreciate your 
testimony for the record, and I think it is a very good setup 
for your trip in 2 weeks to Taiwan. I look forward to an out-
read on that, and I think many on the Committee do. We hope 
that you will come back and visit with us about that.
    Assistant Secretary Schriver, can you explain how the 
Freely Associated States fit into our defense posture in the 
Pacific a little more broadly?
    Mr. Schriver. Thank you.
    They are very important partners across a range of 
activities, as I mentioned in the testimony, the research and 
development, the security cooperation on issues like North 
Korea. With respect to posture, in particular, they provide 
opportunities for logistic support. If you look at the 
distances from Hawaii to Guam and through other areas of the 
Indo-Pacific, there are nodes there that are helpful in 
logistic support, and certainly in the case of a conflict, they 
would be absolutely critical. They provide access for training, 
such as Pacific Partnership. There are possibilities of future 
facilities, but no decisions have been made at this point to 
build out further, other than in the areas I mentioned.
    Mrs. Wagner. If the U.S. Department of Defense no longer 
has the right of denial over foreign military activity in the 
Freely Associated States, how would that affect U.S. national 
security?
    Mr. Schriver. We would be greatly concerned, particularly 
if the absence of that right of denial then led to a more 
permissive environment for access to certain actors and, in 
particular, we would be concerned about Chinese access there. 
So, we are grateful for that, and we think it is a mutually 
beneficial relationship.
    Mrs. Wagner. You may not have time to answer this, but let 
me just say, Assistant Secretary Schriver, China is clearly 
seeking to build military, dual-use infrastructure throughout 
the Pacific Islands, such as piers that can accommodate Chinese 
navy ships. What are China's dual-use infrastructure plans for 
the region and what would these facilities mean for our 
defense?
    Mr. Schriver. I think the Chinese are very opportunistic 
and they are looking for permissive environments where they can 
use economic assistance and infrastructure support such as 
piers that will create later access opportunities for the PLA. 
So, it is something we watch very carefully and want to make 
sure that our influence and our relationships are as strong as 
possible to prevent that.
    Mrs. Wagner. Thank you. My time has expired. I yield back.
    Mr. Sherman. At this point, I will recognize the Chair of 
the full Natural Resources Committee, the gentleman from 
Arizona.
    Chairman Grijalva. Thank you, Mr. Chairman. And thank you 
for the hearing and for the work of our respective staffs on 
both Committees for putting this together; and to the 
witnesses, of course.
    Dr. Gootnick, the situation with the Trust Fund and the 
predictions in terms of its viability going forward, absent any 
real change, any readjustment, any renegotiation, the scenario 
you laid out, maybe you can repeat that part of it again?
    Dr. Gootnick. Sure. The Trust Funds were established with 
the intent of preserving the corpus, the body of the Trust 
Fund, and that was the focus at the time they were set up. 
There are three separate accounts--the corpus, the disbursement 
account, and a rainy day fund, if you will, and there are rules 
that govern funds being shifted between those funds and funds 
that are available for disbursement. That is the constraint 
that in the short run may lead to years where there are zero 
disbursements or a number of years where the disbursements do 
not equal the value of the Sector Grants that end in 2023. Now 
there is no specific provision that the Trust Funds would meet 
the value of the Sector Grants, but that is kind of a benchmark 
that a number of people have used.
    Chairman Grijalva. That is perhaps an expectation at some 
point, that it would meet the benchmark, but it is not part of 
the agreement?
    Dr. Gootnick. The agreement does not----
    Chairman Grijalva. Got you.
    Dr. Gootnick [continuing]. Explicitly and fully limit the 
distribution to the inflation-adjusted Sector Grants.
    Chairman Grijalva. Mr. Pula, if I may, we have heard 
primarily about national security in opening statements and in 
much of the testimony. And I do not disagree with that. There 
is an urgency there, and that urgency has to be dealt with.
    But, since 1951 when Interior assumed the responsibility, 
and the Resources Committee assumed the responsibility of that 
jurisdiction, security has been part of the issue. But I want 
to get from you--there is a humanitarian side to this issue as 
well. Understand the national defense/security thing. It is not 
an issue of argument or ``either/or,'' but it is a ``both'' 
question. And the humanitarian concerns that we have in terms 
of the degrees of services and attention that we bring to the 
people of the FAS, let's talk about that humanitarian side of 
this issue and the responsibility that this Congress and 
Interior have to make sure that that is part of the equation. 
And sometimes I hope we do not lose that part in the discussion 
about the need to backstop China and do all those other things 
that I do not disagree with at all, but there is a human side 
to this and those other people on that island and the migration 
attendant to that. If you would?
    Mr. Pula. Thank you, Mr. Chairman.
    You know, I have been doing this job for the Department of 
the Interior for over 20 years, and I can tell you and the 
members of the Committees that dealing with the Freely 
Associated States has been a special part of my personal work 
and in terms of the Department, in cooperation with the State 
Department, with the Ambassadors that are in the three 
countries. It has been an experiment of----
    Chairman Grijalva. More to the point, the investment that 
we are currently making----
    Mr. Pula. Yes.
    Chairman Grijalva [continuing]. To deal with all the 
issues, and to strengthen the relationship, my perception is 
that it is not enough. And so, I am asking.
    Mr. Pula. Well, let me say, Mr. Chairman, the law, the 
Compact, or the current agreement provids funding that we work 
with. Now if your question is, is that enough? My answer would 
be_it depends on who you ask. The way we at the Department of 
the Interior working with the three Freely Associated States, 
as you may well recall, during the cold war, when we came up in 
2003 in the beginning of this amended Compact which ends 2023, 
the agreement that we now have provides for some 
accountability. And the reason why I said that, the first 15 
years funding went to the countries, and Congress felt, well, 
so what do we have to show for it? So, in 2003, the United 
States provided funding to six sectors. In those six sectors, 
basically, the primary ones are health, education, 
infrastructure, and then, the other minor ones.
    Chairman Grijalva. So, the answer on the investment 
question I asked you is ``It depends.''?
    Mr. Pula. Yes.
    Chairman Grijalva. Yield back. I think my time is up. 
Appreciate.
    Mr. Sherman. Thank you.
    I now recognize the Resident Commissioner.
    Miss Gonzalez-Colon. Thank you, Mr. Chairman.
    My first question will be, Mr. Schriver, in your written 
testimony you note a concern with ``China's use of coercive 
tools to attempt to erode Pacific Island serenity and to induce 
them to behave in accordance with Chinese interests.'' What do 
you mean by that in terms of the tools? What tools?
    Mr. Schriver. We see economic coercion, the use of debt 
trap diplomacy. We see diplomatic and political pressure, the 
sense that China is large in the region, not going away, and 
you need to deal with us on our terms. So, they have a range of 
ways of applying pressure, and it is increasingly difficult, 
particularly for smaller States, to stand up to that, which is 
why I think our partnership with the Freely Associated States 
and others is so important.
    Miss Gonzalez-Colon. And you also say for those Pacific 
nations to behave in accordance with Chinese interests. What 
specifically does China want them to do?
    Mr. Schriver. Well, there is tremendous pressure.
    Miss Gonzalez-Colon. Taking a loan?
    Mr. Schriver. Ma'am, first of all, I would say there is 
tremendous pressure on the remaining diplomatic allies of 
Taiwan to switch diplomatic recognition. We saw two States, 
countries, last week male that sovereign choice to change, and 
there is pressure on Palau, pressure on the Marshall Islands.
    There is a range of other things that China may ultimately 
apply pressure--their positions on the South China Sea, their 
positions in international fora. We see them apply pressure to 
their partner countries in those instances, and certainly the 
Pacific Islands could be susceptible to that as well.
    Miss Gonzalez-Colon. Does the United States currently have 
any plans to build any additional U.S. military facilities on 
those Freely Associated States?
    Mr. Schriver. We are, I think, in a process now of 
reviewing plans and reviewing posture. I think we are grateful 
for the opportunity to have these relationships that give us 
options. As we look at the logistical needs, the access needs 
for contingency planning, we will certainly be in consultation 
with our partner countries on those issues.
    Miss Gonzalez-Colon. Thank you.
    Mr. Pula, one of the main issues is you have got a lot of 
experience in the Department of the Interior in the 
renegotiation of the Compacts and the renewal of one of them. 
In your experience, what will be the financial impact if funds 
are not continued beyond 2023?
    Mr. Pula. Thank you for the question. As we look at the 
Trust Fund, the current Compact agreement, the funding the 
direct assistance that we provide now for the last 15 years 
until the end of 2023 will end, and then, the Trust Funds will 
kick in. In short, if you look at the balance of the Trust 
Funds, they will not meet the level of the current aanual 
funding that goes to both RMI and the FSM. Of course, that all 
depends on how the market does regarding the Trust Funds. So, 
to answer the question, there are gaps. The RMI's Trust Fund is 
a little better. The FSM has a larger gap. And we hope, when we 
get there, as was mentioned by my colleague from the State 
Department, Secretary Pompeo had already announced 
renegotiation. So, in that sense, those are some of the things 
that the Administration is working together on to figure out 
how we can help in this process going forward beyond 2023.
    Miss Gonzalez-Colon. You are the Chair of the Trust, 
correct?
    Mr. Pula. Yes, I am.
    Miss Gonzalez-Colon. And being the Chair of the Trust, is 
any oversight currently in place to that trust? Any review of 
the processes there that you can share with us?
    Mr. Pula. OK, I am sorry, can you----
    Miss Gonzalez-Colon. You are the Chair of the Trust?
    Mr. Pula. Yes.
    Miss Gonzalez-Colon. My question is, if the Department of 
the Interior is doing an oversight of the Trust, as we speak?
    Mr. Pula. Right. The way the Trust Fund is set up, we have 
three members from the U.S. and two members from both the RMI--
--
    Miss Gonzalez-Colon. Do you have the money to run the Trust 
right now or not?
    Mr. Pula. Oh, do we have a manager?
    Miss Gonzalez-Colon. Yes.
    Mr. Pula. Yes, we hire financial folks that help us on a 
daily basis, yes.
    Miss Gonzalez-Colon. In that experience--and I know my time 
is running--but what detailed assessment of what stays and what 
may go away if the Compacts are not renegotiated?
    Mr. Pula. Well, I can say this: the Trust Funds will not be 
enough in terms of the funding. Like I said, that is something 
that we are sort of like discussing how to help. The portfolio 
itself or the Trust Funds of both FSM and RMI are sort of 
diversified based on the markets. But, at this point, we hope 
that it will work toward----
    Miss Gonzalez-Colon. And if you can provide it for the 
record later on, what recommendations specifically for the 
renewal or the agreements you may ask from these Committees?
    Having said that, I will yield back.
    Mr. Sherman. Thank you.
    Now I will recognize the gentleman.
    Mr. Sablan. Thank you. Thank you very much, Chairman 
Sherman.
    I am going to have some questions that I would ask the 
witnesses to respond in writing. I do not have enough time. But 
let me start.
    Secretary Schriver, you testified before the Senate Energy 
and Resources Committee 2 months ago that the Administration, 
quote, ``strongly supports extending Compact financial 
assistance''. End quote. But the source of funding was not 
answered at that hearing. Today, you testify again that the 
Administration strongly supports extending Compact financial 
assistance to secure long-term U.S. strategic interests in the 
region. So, in this intervening 2 months, has the 
Administration identified a source of funding?
    Mr. Schriver. We do not have a final answer on that, but 
the work has continued, work with OMB and our interagency 
colleagues, to identify our proposal that we would bring to the 
Congress to accomplish that.
    Mr. Sablan. Yes, thank you. That is good because we would 
not want to have a repeat of what happened with the Republic of 
Palau, where it took 7 years to get Congress to approve it.
    Secretary Oudkirk--I hope I got that right, Sandra--thank 
you very much for the visit recently; also, for the briefing 
for one of my meetings.
    But Compact extensions must be enacted into law, as we did 
with the Palau Compact in 2017 with Public Law 115-91. That 
implies getting congressional buy-in as the Compacts are 
negotiated. Do you agree?
    Ms. Oudkirk. Yes, sir.
    Mr. Sablan. So, Secretary Pompeo has announced that 
negotiations are beginning with the Federated States of 
Micronesia. I hope we can count on the Administration to 
cooperate and communicate fully with the Committees as these 
negotiations progress. May I have your commitment to do that?
    Ms. Oudkirk. Yes, sir. And just to clarify, we have begun 
consultations. We do not yet have a negotiating mandate.
    Mr. Sablan. Thank you. And I know you have a lot on your 
plate. So, any idea who will be conducting these negotiations? 
And I ask this question because the Palau Compact extension was 
handled by a State Department career officer; whereas, the 
previous FSM and Marshall's negotiations were handled by 
special representatives of the President. And this is important 
because the negotiator must be able to get commitments from 
other Federal agencies like the Postal Service, FEMA, FAA, 
FDIC. The negotiator has to have clout and must be able to 
speak for the President, right?
    Ms. Oudkirk. Yes, sir. So, right now, we are in the 
consultative process. We are working to determine who the 
negotiator will be. We have not made a determination on that 
yet, which is why I would draw a distinction between the 
consultative period that we are in now--we are listening; we 
are asking questions; we are trying to draw lessons learned. We 
are not actively negotiating the extension.
    Mr. Sablan. Thank you. But, within the lines, I was just 
making a suggestion. I hope you take that into consideration.
    And a basic element of the 2003 Compact was setting up 
self-sustaining Trust Funds to replace annual grants. GAO 
reports that the Trust Funds are unlikely to meet that goal. 
So, is it going to be one of your goals in negotiating Compact 
renewals to adequately capitalize these Trust Funds, so they 
can replace the annual grants?
    Ms. Oudkirk. So, Mr. Congressman, just as we are hoping to 
consult with you and take your advice on how to best configure 
our negotiating team and what our goals and objectives should 
be in undertaking this step, which does have a long and far-
reaching impact, we are also looking to gain lessons learned 
from our colleagues at GAO, from colleagues throughout the 
interagency, and our negotiating partners, the governments of 
the three Freely Associated States, the people living in those 
countries, to set objectives, and then, to negotiate toward a 
goal that provides the most benefits for the most reasonable 
cost.
    Mr. Sablan. Yes. So, I do not doubt, as both you and 
Secretary Schriver have said that you do understand, that there 
are powers at work in the Pacific and that they will step in 
and offer economic support if the United States gives up the 
field. So, Secretary Oudkirk, how about the--my time is up, Mr. 
Chairman.
    Mr. Sherman. Without objection, the gentleman will be 
granted another minute.
    Mr. Sablan. Thank you.
    A very important issue for me, Secretary Oudkirk, the 
Special Education Grant that replaced many Federal education 
programs, that grant was not made a permanent appropriation and 
has never been full-funded. What is your plan for making sure 
education gets reliable funding when this is negotiated, when 
the renegotiation happens? And this is important because, as I 
always say about the Marianas and everywhere, education is the 
key to future prosperity and well-being for the individuals at 
this site. So, we have to make sure that education is funded. 
Would you agree with me on that?
    Ms. Oudkirk. The State Department shares your concern and 
support for a well-educated population as the foundation for 
democracy, though I will defer on the specifics of the special 
education funding to my colleagues from either DOI or GAO, or 
we can take the question back.
    Mr. Sablan. Right. This should be, also, in negotiating. 
Right now, schools in the Freely Associated States or in the 
Federated States of Micronesia are closed at noon because there 
are no school meals. And you cannot educate, fully educate, 
students if you are only a half-day in session.
    Thank you, and I yield back, Mr. Chairman. I will have 
questions for the record.
    Mr. Sherman. Thank you.
    I will now recognize the gentlelady from American Samoa. 
Then, I will recognize myself for questions.
    Mrs. Radewagen. Thank you, Mr. Chairman.
    So, this question is for the panel. The administration of 
the FSM and RMI Trusts has been cumbersome and unnecessarily 
contentious with joint U.S. Insular Management Committees 
provided for in 2003. The 2010 Palau Compact extension is more 
efficient, but not less effective with Insular ownership and 
management within U.S. guidelines. Is there any reason not to 
replicate the Palau model in laws regarding the FSM and RMI? 
Secretary Schriver?
    Mr. Schriver. With your permission, I will defer to my 
colleagues who have more direct responsibilities for those 
matters.
    Mr. Pula. All right, I will take it. The Palau model is a 
sinking fund, their Trust Fund. So, it basically kind of ends. 
The RMI and FSM model that kicks in after 2023 is hopeful, and 
I want to emphasize and underline that, to be a perpetuity kind 
of fund. As a matter of fact, I had heard--of course, I could 
not confirm--that Palau is kind of interested in looking at the 
models of FSM and RMI in that extent.
    So, right now, the way that the Trust Funds for the FSM and 
RMI are set up, once the funding is picked up, still the 
committees, both the Trust Fund committees in both countries, 
still have to make some decision based on the current law. And 
some of the changes, I think, that the countries would like to 
do in order to help moving forward after 2023 is part of some 
of the discussions that we are going to be having with the 
countries as we move forward.
    Mrs. Radewagen. Secretary Schriver, the RMI is home to the 
Ronald Reagan Ballistic Missile Defense test site on Kwajalein 
Atoll. When Army General Martin Dempsey, former Chairman of the 
Joint Chiefs of Staff, visited the area, he called Kwajalein 
the world's premier range and test site for intercontinental 
ballistic missiles and space operations support and noted that, 
quote, ``There are a lot of things we do here because of where 
we're located that we cannot do anywhere else in the world.'' 
Could you please describe the importance of Kwajalein to the 
United States?
    Mr. Schriver. It is critically important, and I would 
certainly associate myself with General Dempsey's comment. It 
has the unique features of that access, but also its geographic 
location, which does make it ideal for the ballistic missile 
defense testing. If you want to simulate trajectories and where 
our interceptors would be fired from, it is absolutely ideal. 
There are other research and development projects that are 
conducted there, and I mentioned in my opening remarks the work 
on hypersonics. And there are a number of tests coming up. So, 
it remains a critical facility which we highly value.
    Mrs. Radewagen. Thank you, Mr. Chairman. I yield back.
    Mr. Sherman. Thank you.
    Mr. Assistant Secretary, as Ms. Oudkirk testified, we have 
the right to exclude military action from other States, but 
they can just call it space or call it something else and say 
it is not military. China had its space tracking station 
looking at our missile tests. Do we anticipate China trying to 
reestablish such a space tracking station and should we be 
concerned?
    Mr. Schriver. I have not seen any specific reporting about 
future intentions, although their ambitions in the space area 
are quite robust. So, I think it is----
    Mr. Sherman. But do you think--you know, we do missile 
testing in the area.
    Mr. Schriver. Yes.
    Mr. Sherman. Is the Department of Defense concerned having 
the Chinese monitor that from this territory, the Marshall 
Islands?
    Mr. Schriver. Certainly anyplace where they can advantage 
themselves for that kind of collection we would be concerned.
    Mr. Sherman. So, they can do a better job of monitoring 
than they could from just sending a ship there? Does having a 
land base enhance their ability?
    Mr. Schriver. Potentially. There are technical details that 
I----
    Mr. Sherman. Please take a look at that.
    Mr. Schriver. Yes.
    Mr. Sherman. We have talked a lot about the need to fund 
our efforts. The biggest pot of money is the defense budget. It 
is, on the one hand, the current system we have has a lot to 
speak for it, but if it is just a matter of getting the money--
and I am not talking about changing who does the work--could 
the Pentagon support the idea that the cost of the Freely 
Associated State Compacts, et cetera, come in the defense 
budget?
    Mr. Schriver. We are engaged in that discussion internally. 
I think there are some questions about the expertise for 
programs such as education and health that we do not have----
    Mr. Sherman. Trust me, you will give the money over to Mr. 
Pula.
    [Laughter.]
    Mr. Schriver. Yes. Of course, we have a number of programs 
that do benefit directly, the local population, I mentioned the 
radar facilities in Palau.
    Mr. Sherman. Right, but I am not talking about who spends 
the money. I am talking about getting the money for this 
important service. I mean, just by way of insight, I think the 
biggest funding for breast cancer research is in the military 
budget. If you want to do something good for the country or the 
world, you put it in the military budget. So, I hope that you 
would continue to pursue the idea that the money would be the 
military budget, but would immediately be transferred to State 
for what they are doing, to Interior for what they are doing, 
and, of course, for what you are doing. This is too important 
to our national defense to say, well, it was a good idea for 
our national defense, but we could not find any money in the 
Interior budget, so we did not do it.
    Ms. Oudkirk, cryptocurrency is something that the Marshall 
Islands is looking at. I had a chance to talk last May with 
President Heine and urge her not to go down that road. I serve 
on the Financial Services Committee. Our Chair has echoed the 
words of President Trump that this is a very bad road to go 
down. What is the State Department doing to discourage the 
Marshall Islands from adopting what is being called a sovereign 
cryptocurrency?
    Ms. Oudkirk. Sir, with your permission, I will take that 
question back.
    Mr. Sherman. OK.
    But if you look at the policy of the government, both on 
the Democratic side and the President, this is a huge risk to 
our national security. As important as what the Defense 
Department does, a lot of our power comes not from his ships, 
but from our ability to control the world financial payment 
system. Our sanctions, for example, rest on that. And you 
should not allow something under an entity that you are 
coordinating with to undermine that without making it a major 
concern.
    Ms. Oudkirk. Yes, sir, completely understood, and it is 
also a very technical issue and one where the Treasury 
Department----
    Mr. Sherman. It is not that technical. You just say, ``It 
is critical to the United States that the Marshall Islands not 
go down the road of a sovereign cryptocurrency. We do a lot for 
you. We are going to do more, especially when we put it in the 
Defense Department budget. Please do not do this.''
    [Laughter.]
    And finally, climate change, are we addressing climate 
change and what risk does this pose to the FAS?
    Ms. Oudkirk. Sir, I had the honor of accompanying Secretary 
Bernhardt to the Pacific Island Forum in Tuvalu last month. 
Climate change was an absolutely top priority for the Pacific 
Island States there. Secretary Bernhardt was very eloquent in 
describing all of the work, the U.S. approach to the climate 
issue, and all of the work that the United States does from 
NOAA, the Coast Guard, FEMA, and others, to deal with the 
issues of resilience and adaptability. This is an issue that is 
of absolute importance to our partners in the Pacific, and it 
is important that we engage with them and explain our approach 
and the many things and the many programs that we have across 
the region to work on adaption and resilience and handling 
extreme weather, making weather predictions, et cetera.
    Mr. Sherman. My time is expiring. I will simple say that, 
if we emitted less carbon and less methane, perhaps that would 
help as well.
    And I will ask you to respond for the record about Chinese 
efforts to influence the internal politics of the Freely 
Associated States.
    And with that, we will recognize Mr. Yoho, the gentleman 
from Florida.
    Mr. Yoho. Thank you, Mr. Chairman.
    I appreciate you all being here.
    Since post-World War II, the Indo-Pacific region has been 
considered open and free and passable by all. Not until 
recently have we seen this aggression from China, and it is 
disturbing to see how aggressively they are. And then, through 
their coercion and intimidation, we see what they are doing 
with other countries, offering a pot of money with hooks to it, 
you know, the predatory lending reminiscent of our robber 
barons of the 1800's.
    What people need to understand--and I think this 
Administration has shown a strong commitment to the Indo-
Pacific strategy, you know, with the Freedom of Navigation that 
we have done that was postponed and not performed in previous 
administrations. Is that signal getting out? Are people seeing 
a difference and they are feeling a little bit more confident? 
Mr. Schriver?
    Mr. Schriver. Certainly we hear a lot from allies and 
partners that they welcome our increased presence and our 
increased Freedom of Navigation Operations. We are also doing, 
outside the 12 nautical miles, a lot more joint sails and joint 
patrols with other countries. So, again, we get a demand signal 
and we get statements of appreciate from partners and allies. 
So, I think it is.
    Mr. Yoho. OK. And I have seen other countries step up, as 
you have seen. I have seen Canada say they are going to, and 
the UK, and all these. And those are all positive signals that, 
as a coalition, we are going to make sure that the Indo-Pacific 
region stays open to trade as it has done.
    And there is only one aggressor, and that aggressor, of 
course, as we have heard, is China. People said it is a threat. 
It is only a threat if you are afraid of it, No. 1 and, No. 2, 
if you are unprepared for it. With the tools this Committee 
passed through last year that the President and the Senate--
that the President signed into law with the bill that created 
the United States International Development and Finance 
Corporation, which is due to roll out in October, are we 
identifying projects and letting the people in those areas know 
that it is different than what the BRI Initiative of China has?
    And, Ms. Oudkirk, you look like you are ready to say 
something there.
    Ms. Oudkirk. Thank you very much, Congressman.
    I think I can speak for the entire Administration in saying 
we are delighted that Congress provided us tools through the 
BUILD Act to enhance our ability to support U.S. business, as 
we put forward a model that competes with that, with the 
closed, secretive model of China's Belt and Road Initiative.
    We are looking forward to something called the Indo-Pacific 
Business Forum, which will be held----
    Mr. Yoho. Right.
    Ms. Oudkirk [continuing]. In early November in Bangkok. 
That Forum will be an opportunity----
    Mr. Yoho. That is in November, is it not?
    Ms. Oudkirk. November 4th, yes.
    Mr. Yoho. And we have representation there?
    Ms. Oudkirk. Secretary Ross is leading----
    Mr. Yoho. Good.
    Ms. Oudkirk [continuing]. A large trade delegation. You are 
all welcome to come.
    Mr. Yoho. I might be there.
    Ms. Oudkirk. And we will have other parts of the 
Administration there as well. But that really is going to be 
the big, public opportunity for us to unveil the implementation 
of the economic side of the Indo-Pacific Strategy. So, the 
various alphabet soup--Asia EDGE on Energy, DCCP on 
telecommunications, ITAN on infrastructure, there is a list of 
projects. Hopefully, there will be signings; there will be 
deals made. It should be a really good follow-on event to the 
event that the Cabinet Secretaries had last summer here in 
Washington at the U.S. Chamber where they unveiled the Indo-
Pacific----
    Mr. Yoho. OK. Let me go ahead and interject here. Because 
you guys are the boots on the ground; you are the ones that are 
the face of America. You can only do what we do as far as 
creating tools and use those tools, but I hope the message gets 
out clear.
    We talk a lot about the military strategic importance of 
that area, which it is. It is vital, but more so for an open 
and free trade area. And then, the emphasis needs to really be 
put on the people of those areas, because that is really the 
resources that are so important. Yes, it is important 
militarily and strategically, but it is important for the 
people of those areas. And that is where we should put our 
emphasis.
    And I am reading your notes, Ms. Oudkirk. You were talking 
about the amount of tourism that China was going in there, and 
it boosted their economy up a bunch. But China got upset 
because they were not recognized. And so, they told everybody 
do not go there. This is the coercion they are going to use 
over and over and over again that we do not do. And I hope that 
message gets out and that you use the tools available.
    And real quick--am I over? I am over? No, still going. I 
was looking at the wrong red button.
    One of the other things I wanted to ask you about--and I 
think this is for you, Mr. Pula--you were talking about the 
different Trusts, FSM and the RMI. The other ones, are those 
sovereign wealth funds? If not, can they be converted to those? 
And if so, what would you need? Is that something we need to 
do?
    Mr. Pula. Those are not sovereign wealth funds.
    Mr. Yoho. Can we create a vehicle like that?
    Mr. Pula. That is something we can look into.
    Mr. Yoho. I would sure like to look at that.
    And then, Ms. Oudkirk, you were talking about there are 
three Ambassadors to that area, that those areas have full 
diplomatic recognition. Others are by the Interior Department, 
correct? Is there a way that we could strengthen that and have 
them to have full diplomatic recognition? And you can submit 
your answer to the record because I am out of time.
    Mr. Sherman. I will just comment that the United States 
also, like China, does use our economic power, economic power 
that I hope is not undermined by Marshall Islands sovereign 
cryptocurrency.
    The gentleman who has been here from the very beginning, 
further from me geographically in this room and from the area, 
but he has been here from the beginning, the gentleman from 
California.
    Mr. Bera. Thank you, Mr. Chairman.
    Yes, I agree with a lot of what my colleague from Florida 
just talked about. And I think the issue of maritime 
sovereignty, maritime strength, the issue of Taiwan having 
visited multiple times is absolutely bipartisan and reflects 
the values of the United States in terms of freedom of 
democracy, freedom of choice, free markets.
    Obviously, I think many of us on this Committee have been 
very concerned with China's overreach and lack of respect for 
that maritime sovereignty and rule of law, and certainly was 
critical of the Obama Administration in their lateness in 
acting on the South China Sea, but I also applauded their 
decision to start the Freedom of Navigation Operations as well.
    Assistant Secretary Schriver, under your leadership, the 
U.S. has increased the pace of those operations, but at this 
juncture what I think many of us feared was China establishing 
that foothold in the South China Sea and gaining some 
confidence in that. As they start to think about the second 
island chain, and so forth, how do you think this changes the 
calculus from the Chinese perspective, given where they were 
with the first one?
    Mr. Schriver. I suspect they are evaluating our response, 
our actions, and those of other partners, based on what they 
did with the buildout of the outposts in the South China Sea, 
the deployment of military systems, and now seeing how 
countries are reacting to that, first and foremost the United 
States. We have increased Freedom of Navigation. We have more 
joint patrols, joint sails with other countries. We are 
increasing our capacity-building. Another program we have to 
assist countries in the maritime is the Southeast Asia Maritime 
Security Initiative, where we help with their ability to sense 
and see and contribute to maritime security.
    So, I hope what they see is a response that is really 
counterproductive to what China's ultimate aims are. They would 
be far better off pursuing their interests through peaceful 
means and allowing that area to remain free and open, and not 
try to change the qualitative nature of it. Because we are open 
to having a free and open Indo-Pacific that benefits all, 
including China. But if one country tries to change 
international law, then we will get a strong response.
    Mr. Bera. Well, thank you for that update. Certainly there 
is a lot of support. I cannot speak for every member of this 
Committee or this body, but I think most of us, if I listen to 
the comments, fully support that increased presence and sending 
that signal to China that they can have a prosperous future as 
well, but you have got to have the rule of law and the rule of 
the open seas.
    Either Assistant Secretary Schriver or Ms. Oudkirk can 
answer this next question. We have a close relationship with 
other nations who play a major role in supporting the Freely 
Associated States. Australia and New Zealand are part of our 
Five Eyes, you know, our closest relations, but Japan also has 
a relationship. I would just be curious if you could give us an 
update on how Australia, New Zealand, and Japan are also 
supporting the Freely Associated States.
    Ms. Oudkirk. So, I will take the non-military aspects of 
that. We work very closely with development partners. I would 
say Australia, New Zealand, Japan, India increasingly has shown 
an interest, and Taiwan for its diplomatic partners. We work to 
ensure that our assistance programs, whether they are on the 
soft side, you know, training programs, or on the more delivery 
of assistance are coordinated, that they do not duplicate, that 
they do not create gaps.
    This is an effort that we have broadly across the Pacific 
in support of the various strategies, our Indo-Pacific 
Strategy, the Australian Pacific Step-Up. And so, that is 
something that is ongoing and it is the subject of constant 
diplomatic engagement.
    Mr. Bera. Great.
    Mr. Schriver. If I could just add briefly, Secretary Esper 
took his first trip as confirmed Secretary to the Indo-Pacific, 
and he included Australia and New Zealand, the first Secretary 
of Defense visit to New Zealand since 2011. It was not only to 
invest in that relationship that is important, but it was to 
talk about the Oceania region.
    As my colleague mentioned, Australia has a Step-Up program. 
New Zealand has the Reset. So, we are talking about how we can 
be partners together in protecting the sovereignty and 
increasing capacity in this area.
    On the DoD side, we have specific projects throughout the 
Pacific Island region. There is work going on in the PNG that 
we are doing with the Australians about a particular base. 
There is work in Fiji, where the Australians have worked on the 
peacekeeping training facility and we are doing the training. 
So, it is expansive throughout the region, and it is really a 
way to leverage the like-minded nature of those close 
alliances.
    Mr. Bera. Great. Well, thank you for that. And again, for 
the Chinese that would be watching this, this is an important 
region.
    Mr. Sherman. I now recognize the gentleman from Tennessee.
    Mr. Burchett. Thank you, Mr. Chairman, members.
    This area actually holds a little bit of history in my 
family. My father was in the United States Marine Corps and 
fought on the island of Peleliu. So, some of these islands 
are--he and my mom are both in heaven, but they were wonderful 
people. And daddy went back for the 50th anniversary of the 
invasion of Peleliu, and they treated him like royalty and it 
was one of his fondest memories.
    And I remember my mama was there for about 30 minutes and 
she slipped on some coral and busted her head open, and my dad 
made a joke about how that he was there for, I think, 20-
something days in combat and never got a scratch and mama was 
there 30 minutes and she got a Purple Heart. And the Navy 
surgeon, actually, after my mom and daddy both died, I was 
going through some stuff, and the Navy surgeon actually wrote 
my parents a very nice letter just how memorable it was.
    And daddy, one of the greatest, I guess, disappointments of 
his life was, after the war, they went to China, actually, and 
were escorting the Japanese soldiers off the island because the 
Chinese were killing them. But daddy had a real love for the 
Chinese folks and he hated the fact that we, in his words, ``We 
turned them over to the communists.'' And he said they could 
have been one of our greatest allies and we blew that.
    But, anyway, my question really has to do with, if China 
tried to coerce any of the Freely Associated States, the FAS, 
to switch their diplomatic relations from Taiwan to mainland 
China, could our defense veto or the right of strategic denial 
prevent this? And if any of you all could answer that, that 
would be fine. Thank you all so much.
    Ms. Oudkirk. OK. Thank you very much, Congressman. I will 
address the issue of sort of Taiwan's diplomatic partners.
    So, we were very disappointed in the decisions of the 
governments of the Solomon Islands and of Kiribati last week to 
switch recognition. We do believe that, as I said earlier, the 
status quo situation across the Straits is a situation that has 
enabled peace and prosperity in the region for decades.
    We believe that countries who choose to recognize China in 
the hopes that it will provide economic benefits or 
concessionary loans ultimately will be disappointed, as have 
many other countries who have taken out those loans for other 
reasons, once they realize the terms of the loan. I think when 
we look at China's Belt and Road Initiative, we see that it is 
a program by China for China.
    And kind of to answer a little bit of the question that I 
got earlier, the wonderful thing about U.S. deals and U.S. 
investment around the world is that investment is led by U.S. 
companies. It is made on commercial terms. We deeply appreciate 
the support that Congress has given us through the BUILD Act 
and other economic tools that will help us support our private 
sector. But, at the end of the day, it is the private sector 
that needs to lead, and that is what makes us different from 
China.
    Mr. Burchett. Any others just want to comment on that?
    Mr. Schriver. I certainly agree that we were disappointed 
by the decision that those countries made. I think we 
underscore the unique aspects of our defense relationship with 
the Freely Associated States, so that there might be even 
additional costs if they were to make a similar choice. But 
they are certainly under pressure. And so, one of the reasons 
we at the Defense Department talk about the economic aspects of 
our Compact, seemingly an economic issue, not a defense issue, 
is that it is really the comprehensive relationship that keeps 
them, I think, more aligned with us on a range of things, to 
include the security challenges associated with China.
    Mr. Burchett. Thank you all very much. I hope that we can--
a lot of lives were lost to secure that security. Although it 
is mainly on the History Channel now, it lives in me. My daddy, 
as I stated, he never got a scratch hardly. His were all 
internal. As a little boy, I can remember, even until the day 
he died, when I would wake him up, I would never go over the 
top of him. I would grab him by his toe because I really did 
not know where he was when he woke up. And he was an incredible 
human being.
    And so, thank you all so much for what you do. Thank you.
    Mr. Sherman. I would point out to the Committee that I am 
working on legislation to try to identify China debt trap debt 
instruments and encourage countries simply not repay without 
hurting their international credit rating.
    With that, I will recognize the gentlelady from 
Pennsylvania who has been here the longest in this room, if not 
the longest in Congress----
    Ms. Houlahan. No, not so long.
    Mr. Sherman [continuing]. For 5 minutes.
    Ms. Houlahan. Thank you. I appreciate it.
    And it is nice to see you again, Assistant Secretary 
Schriver.
    My first question is for you and Mr. Pula as well. We 
talked a little bit about climate change. And I was wondering 
if you might, or anybody, comment on the implications possibly 
on the migration of people and whether or not that has any 
implications to national security and, also, to trade as well. 
I am particularly interested in, if people are leaving, what 
sort of void does that leave behind in terms of national 
security and, also, trade?
    Mr. Schriver. Thank you.
    We at the Department of Defense have cited climate change 
and the impact as having a national security impact, and that 
is true in the region of the Pacific Islands and the Freely 
Associated States. Most of our efforts are on shoring up the 
resiliency of our facilities there, like the facility we spoke 
about at Kwajalein.
    The issues associated with migration in the Freely 
Associated States are unique because of their ability to travel 
to the United States. But, potentially, migration could leave 
both access opportunities for adversaries and it could lead to 
other humanitarian situations where the Department of Defense 
has a supporting role. So, it is something, again, that we have 
reported on and been very public about our concerns, and we do 
have a role in responding to that.
    Ms. Houlahan. Mr. Pula.
    Mr. Pula. Thank you for the question.
    On the climate change, I had the privilege to accompany 
Secretary Zinke last year to the Pacific Island Forum in Nauru. 
As we all know, the small island nations in the Pacific are 
very big in the climate change issue. I recall correctly 
Secretary Zinke's point to the reporters, when the question of 
climate change was asked, he said, the United States has been 
doing its part in terms of lowering CO2 levels, working on the 
climate change. ``You might want to ask those questions to 
China and other countries.'' So, I think with this 
Administration, they have been working hard on resiliency and 
all that, as we engage, also, with the folks in the Freely 
Associated States, as well as our other friends in the Pacific 
Island countries.
    With the migration part, again, just yesterday on my way 
back from Honolulu, I sat next to a 3-year-old and mother on 
the plane from Chuuk who were traveling to Nevada. I was 
talking to the mother and I was surprised. They said they were 
on their way to Denver to visit some families.
    I guess the point I am trying to make is, with folks from 
the Freely Associated States traveling to the United States, 
some of whom live here--some of them go back in the migration. 
But connecting with the climate change issue, I think with the 
Marshall Islands, the President of the Marshall Islands has 
spoken at the U.N. and other areas because of the low-lying 
atolls. These are issues that the Administration is aware of 
and we have been dealing with as much as we can, and as we 
speak to our friends and colleagues from FAS.
    Ms. Houlahan. And some of the legislation that I helped put 
forward actually has to do with asking our State Department to 
be more involved in helping other nations to meet their Paris 
Climate Accord agreements as well. And so, it is critical, this 
issue of climate change, and I do believe it has implications 
to national security in that particular area of the world.
    I only have a minute left, but I was wondering, I know Mr. 
Burchett talked a little a bit about the issues of Belt and 
Road. You all talked about that as well. Can you specifically 
speak to Vanuatu and Samoa in terms of the concern, if any, 
that you have in terms of China coming in for developing a 
port, and whether or not we are doing the right things and 
enough things to invest in that area? I only have about a 
minute left.
    Mr. Schriver. Starting with the port, there has been public 
reporting of the Chinese involvement in building out a port in 
Vanuatu. Interestingly, there was public backlash in Vanuatu 
about the suspicions that the port and the pier, in particular, 
would be used not just for commercial purposes, but potentially 
host military vessels. So, that backlash led to clarifications 
from the government there that they are for commercial 
purposes, but that can change in the future. So, we are 
concerned about that.
    I think we are engaging Vanuatu in ways to demonstrate that 
we can be a preferred security partner. I traveled there with 
an interagency team, including Coast Guard colleagues who 
talked about their law enforcement needs and the interests in 
protecting their sovereign territorial waters from illicit 
activity. And so, we are trying to use the tools available to 
us to show that we can be the preferred partner.
    Ms. Houlahan. Thank you. I have run out of time. I yield 
back.
    Mr. Sherman. Recognize the gentleman from Hawaii.
    Mr. Case. Thank you, Mr. Chair.
    And I would like to start out by following up on your 
comments about our new Pacific Islands Caucus, which is a 
first-ever congressional caucus focused on the Pacific Islands, 
roughly 24 jurisdictions across the entirety of the Pacific 
Islands that are all integral to the future of not only the 
Pacific, but the Indo-Pacific and our country. And so, we 
welcome the community here and all those listening.
    Mr. Sherman. If the gentleman will yield, I want to praise 
you for coming up with the idea and getting us organized in 
creating that caucus. I yield back.
    Mr. Case. Well, thank you very much. The members on the 
dias, most of us are members and all of us are very interested 
in this. So, we welcome your suggestions on how to fully engage 
on these subjects with the Congress.
    This is to the three members of the Administration here. We 
have got three separate departments here. I support the 
Compacts. I support our relationship on a number of levels, 
whether you want to talk about trust responsibilities that go 
back generations to shared support of friends with shared 
values, to our military aspects of mutual defense. However, the 
impact of the Compacts thus far on specific jurisdictions in 
our country are not acceptable anymore. And I speak primarily 
of the locations where the Compact migrants come to. These are 
Guam. These are CNMI to some extent, certainly Hawaii, and not 
just restricted to those. For example, Arkansas has a large 
Compact population. And there is virtually no compensation to 
us for the price of welcoming those migrants to our 
jurisdictions.
    We welcome them. We have an incredibly strong and growing 
community of Compact country migrants in Hawaii, maybe 20,000, 
somewhere in that range when you count those that have become 
American citizens.
    However, the cost to Hawaii is probably somewhere around 
$300 million-plus today. That is a State expense, a State 
expense. The GAO is studying this right now, correct? You are 
engaged in a study commissioned by the Senate which I strongly 
support to actually update the calculations, which at Fiscal 
Year were roughly $148 million for Hawaii in the areas of 
health and education, but also other areas.
    Now we just cannot accept that anymore, because I suspect 
that cost is going to accelerate because we are going to have 
an increasing number of migrants from the Compact countries if 
the Compacts continue, as I hope they do. And the cost per 
person is probably going to accelerate, too.
    So, the attitude and the response--and I was here in 
Congress the last time the Compact came to Congress for 
approval, and I regret that we did not make more of an issue of 
it at the time. At the time, we sought to double the Compact 
impact aid paid from, I think it was $15 million to $30 
million, which was nothing.
    Now we review our obligation as accepting the Compact 
migrants. However, the attitude of the Administration was we 
will negotiate the Compacts, and the actual impact on the rest 
of the country and specific jurisdictions like Hawaii is not 
our business; we are just going to negotiate the Compacts. And 
I am saying it is your business. I am asking you to acknowledge 
that this is your business. And I hope that you will strongly, 
as you get into these negotiations, for all of the 
jurisdictions that bear a disproportionate result from the 
migrants, that you will make that your business, and not just 
say, ``Well, Congress, we negotiated these here. Here are the 
Compacts for approval, and by the way, it is up to you to 
determine how to fund the Compact impact.'' So, it is not going 
to be OK with me, I can tell you that, and I think that is 
probably true of other Members that represent these 
jurisdictions.
    So, I do not need a response from you, but I am just 
telling you this is your business. I hope you will deal with 
it.
    Let's see, I want to talk briefly about the interchange 
having to do with the State Department, Ms. Oudkirk. I had a 
very interesting interchange with a journalist from the Pacific 
Islands. There was a program put on by the East-West Center, 
which is one of our preeminent institutions located in Honolulu 
that outreaches to the Indo-Pacific, invaluable to our 
relationships. And these journalists came in to talk with me 
freely off the record. We had a great discussion. They were all 
from their countries. And I asked them, what is the one thing 
that we can actually do to strengthen our relationships? And 
they basically said it is about relationships, personal 
relationships. And their perception, almost to a person--and 
these are people from across the Indo-Pacific--all felt that, 
basically, China was out-personalizing us in this department.
    Now it strikes me that, yes, of course, we have a 
diplomatic presence, but I would be curious to see what that 
diplomatic presence has looked like in terms of a trend over 
the last 10 or 20 years. I hope it has been going up, but 
probably not.
    And what also strikes me is that a lot of our soft power 
outreach is now borne by the Department of Defense. They do a 
great job in many of these areas, but they should not be doing 
that. It really should be State that is doing this.
    So, I would simply leave you with that comment, that there 
is a significant perception at least that, in terms of the 
development of relationships, we are not doing a good job.
    Thank you.
    Mr. Sherman. Thank you.
    I will now recognize the gentleman from Guam.
    Mr. San Nicolas. Thank you, Mr. Chairman.
    I am going to echo some of the sentiments from my colleague 
from Hawaii, but maybe be a little bit more pointed in so 
doing.
    Mr. Pula, in your response to my Chairman on the Natural 
Resources Committee, when you said that ``it depends'' in terms 
of who you ask with respect to whether or not the U.S. 
investment into the FAS States was sufficient for them to be 
able to reach a level of self-sufficiency. I do not think it 
depends on who you ask. I think it is blatantly obvious that it 
has been an abject failure.
    Not only has the corpus of the Trust not grown to a level 
to meet the need of the funding, not only have the grants and 
technical assistance been sufficient for the areas to be able 
to reach a level of self-sufficiency not to rely on those 
fundings, but both of those funding levels have not even 
factored in the inordinate amount of subsidy that is provided 
by the host regions, to include the territories, the State of 
Hawaii, and the others that were mentioned by my colleague.
    If we had not hosted this level of migration, the corpus 
and the Trust Fund and its growth would be even more under 
water, and the grants that they are receiving would be even 
less sufficient. So, I do not think there is any debate as to 
whether or not the Compact relationship was sufficient or not 
for these areas to be able to reach a level of independence. I 
think it is very, very obvious that it has not.
    On Guam, the population of the FAS residents is more than 
two out of the four States that comprise the FSM. It is over 50 
percent of the entire population of the Republic of Palau, and 
it is over 50 percent of the entire population of the island of 
Majuro that is the largest atoll in the Republic of the 
Marshall Islands. And so, the subsidy that has been provided, 
at least just from Guam, for the Compacts and their lack of 
ability to be able to make up for whatever these areas are 
needing is enormous.
    Not only does the population of the FAS make up almost 10 
percent of the population on Guam, but the Compact impact 
fundings that Guam receives is less than 2 percent of what its 
overall budget is for its annual Fiscal Year operations. We get 
less than 2 percent of the funding in Compact impact for our 
budget, and our population on the FAS is nearly 10 percent. So, 
the subsidy is enormous. And we need to factor all those things 
when we are looking at this on an equal basis.
    Part of the way for us to be able to move away from the 
need for subsidy, in terms of whether it is being done in host 
areas or if it is going to be absorbed by more Trust Funds, is 
to ensure the areas are able to develop to a level that they 
are not going to be having their population moved to areas to 
get subsidized. And it is also to be able to ensure level of 
developments, that we are not relying on Trust Fund moneys to 
subsidize the lack of development. But development is grossly 
lacking in these areas, and I would like to argue due in large 
part to our inability to necessarily expend the resources that 
are provided in a way that is going to facilitate that new 
element.
    And so, I wanted to ask specifically about the Joint 
Economic Management Committee and the Joint Economic Management 
and Financial Accountability Committee. These two Committees 
are responsible for administering the grants that are provided 
to the FSM and the RMI. With respect to all the grants that 
have been provided, is there a balance that is basically 
unexpended in JEMCO and JEMFAC? Mr. Pula?
    Mr. Pula. Thank you, Congressman, for the question.
    Yes, there are balances. It is the funding that we 
provide----
    Mr. San Nicolas. What is the total value of the balances 
right now?
    Mr. Pula. Well, let me say this: we will get that 
information to you. I cannot get it off the top of my head.
    Mr. San Nicolas. Just an estimate, the balances in JEMCO 
that have been unexpended in terms of grants?
    Mr. Pula. Well, for the FSM, because of the infrastructure, 
the slowness of how it went for the FSM, I would say it is over 
$100 million.
    Mr. San Nicolas. Over $100 million in unexpended grants 
that are supposed to help these areas to develop. How about in 
JEMFAC?
    Mr. Pula. In JEMFAC, I would say a few million dollars, not 
as much, and those are like the unused funding in the Sector 
Grants not spent totally, because it is on an annual basis.
    Mr. San Nicolas. If we want to reduce the amount of 
dependence of these areas, we need to make sure the funding 
that we are providing to be able to make them more self-
sufficient is actually being deployed to encourage that self-
sufficiency.
    Secretary Schriver, I just wanted to ask real quick, does 
the INDOPACOM strategy factor in a status-quo relationship with 
the FAS?
    Mr. Schriver. If I understand the question, it does assume 
we will continue with that status of Freely Associated States 
and Compacts. If that status were to change, Indo-Pacific 
Command would adapt.
    Mr. San Nicolas. And just to close, Mr. Chairman, the need 
for us to make sure we get the grant deployment right, and the 
need for us to make sure we get these funding levels right, is 
because, if we do not, and the ground changes out there, and we 
have a change in whether or not China is involved, or what have 
you, it is going to cost us exorbitantly more in the 
adjustments that INDOPACOM is going to have to make in order to 
compensate for that.
    Thank you, Mr. Chairman.
    Mr. Sherman. And last, but certainly not least, the lady 
from Virginia.
    Ms. Spanberger. Thank you, Mr. Chairman.
    And thank you to our witnesses who are here today.
    This week at the U.N. General Assembly, President Hilda 
Heine of the Republic of the Marshall Islands emphasized that 
her country could be one of the first to see large-scale 
migration as a result of rising sea levels. I understand the 
Freely Associated States all view climate change and sea level 
change as an existential threat. And my question is, what 
impact, in your view, is this likely to have on the security 
and the stability of the region? And what are your Departments 
doing to plan for these challenges of the anticipated large-
scale migration? And what do we see as the threat or the 
challenge facing the United States as a result of this regional 
change and challenge? And I will open it up to all of our 
witnesses.
    Mr. Schriver. Thank you. I will just address the security 
aspect. We have identified in the Department of Defense public 
reporting that climate change and its impact is a national 
security threat and that we have a role in addressing that. 
Primarily, we look at the resiliency of our facilities, 
protection of our facilities, and we would certainly put the 
Reagan Ballistic Missile Test facility at the top of that list.
    I think, beyond that, if we get into different scenarios of 
how migration could occur--and we have already spoken about the 
unique status that allows these citizens to come to the United 
States--but there could be potential other humanitarian 
situations where the Department of Defense would be involved in 
a supporting role, logistics, response, et cetera. But it is 
something that we have identified as a concern.
    Ms. Spanberger. Thank you very much.
    Ms. Oudkirk.
    Ms. Oudkirk. So, the United States recognizes that 
addressing environmental degradation and climate change is a 
priority for the Pacific Island State, including the Freely 
Associated States. And this is because of the threat of sea 
level rise and the region's extreme vulnerability to natural 
disasters.
    So, the State Department works with interagency partners to 
support a variety of programs that provide resilience and 
adaptation in the Pacific Islands. This ranges from improving 
drinking water quality and wastewater management to support 
weather forecasting infrastructure, to improve early warning 
and disaster resilience and response. And then, of course, in 
the case of a natural disaster, to provide the immediate 
recovery and response assistance through the Office of Foreign 
Disaster Assistance.
    Ms. Spanberger. OK.
    Ms. Oudkirk. So, this year the U.S. Government pledged 
$36.5 million in new foreign assistance to the Pacific Islands. 
Much of that was concentrated in programs that broadly address 
environmental, climate, or fisheries-related issues. And we are 
committed to continuing to work--we talked earlier about other 
development partners--working with development partners and 
bilaterally to address these challenges.
    Ms. Spanberger. So, I appreciate the focus on some of the 
preventative things that we are doing to ensure that we are 
mitigating challenges, but if we are working toward a place 
where this threat is recognized as the threat of sea level 
change will lead to large-scale migration, specific to the 
challenge potentially of large-scale migration, do you have any 
comments on what we, as a country, have been doing to either 
help with that threat, and then, how it might impact us?
    Ms. Oudkirk. I defer to DOI on migration because of the 
unique FAS relationship.
    Ms. Spanberger. Yes. Thank you.
    Mr. Pula. I do not want to take that question.
    [Laughter.]
    Congresswoman, thank you. But I do want to come back just a 
little bit to my friends, the Congressman from Hawaii and also 
from Guam, regarding the Compact impact. I know that is----
    Ms. Spanberger. As it relates to migration?
    Mr. Pula. Yes, migration.
    Ms. Spanberger. OK.
    Mr. Pula. Because a few years back Governor Abercrombie, I 
went over there to Honolulu, gave him a $10 million check. He 
looked at me. He threw it on the ground and said, ``Nik, this 
is not enough for what the State of Hawaii gave out.'' So, I am 
well aware of the brunt for years now since the Compact began.
    The migration part_because it is allowable in the Compact 
for the folks in FAS to travel freely without visa, they do 
come and go back. They do not always come and just stay as 
population grows. There are some areas, of course, where the 
population is kind of decreasing because they are leaving, and 
I think a lot of them are coming not necessarily because of 
climate change, but because of seeking for a better future--
schools and jobs, and what not.
    But in our Department, we try to do our best with technical 
assistance whenever our friends from the Freely Associated 
States ask for things. For example, we fund quite a bit of 
outside islands of the Marshall Islands, these reverse-osmosis 
machines to help with the flooding, sea level, and all that. 
But, primarily, of course, the issue, as we all know, is much 
bigger than we all can handle.
    Ms. Spanberger. Thank you for your answers. I am out of 
time. I yield back.
    Mr. Sherman. Thank you.
    I want to thank this panel for joining us. We will now 
empanel the next panel consisting of the Ambassadors from the 
Marshall Islands and the Federated States of Micronesia.
    While people are standing up and sitting down, I will put 
in a plug for a hearing of the Asia and Pacific Subcommittee in 
the fourth week of October. We are going to focus on human 
rights in South Asia, and those concerned with the Indo-Pacific 
region I think will find that interesting. There has been a lot 
of interest in human rights in South Asia.
    I know Mr. Cox, and people may think I am skipping the 
gentleman from California. I have been informed that he did not 
want to ask questions of the first panel. If I am wrong, I will 
bring them back. OK.
    So, we will concentrate on human rights in South Asia after 
we return from this recess.
    I will now turn over the chair to Kilili Sablan, the 
gentleman from the Northern Mariana Islands, who, on behalf of 
the Natural Resources Committee, will chair the portion of this 
hearing with the second panel. Thank you.
    Mr. Sablan [presiding]. Thank you.
    And good afternoon, everyone.
    That was a good hearing. I actually had over a dozen 
questions that I could not ask, but I will ask for the record.
    At this time, I would like to recognize and welcome His 
Excellency Gerald M. Zackios, Ambassador to the United States 
from the Republic of the Marshall Islands, and, of course, His 
Excellency Akillino Susaia, Ambassador to the United States 
from the Federated States of Micronesia.
    And so, I would start with Ambassador Zackios, please. You 
have 5 minutes, and the light turns green when it starts. When 
it goes orange, you have a minute remaining, and when it goes 
red, of course, your 5 minutes is up.
    Please. Thank you.

 STATEMENT OF HON. GERALD M. ZACKIOS, AMBASSADOR TO THE UNITED 
        STATES FROM THE REPUBLIC OF THE MARSHALL ISLANDS

    Ambassador Zackios. Chairman Sablan, distinguished leaders, 
and members of the Committees, thank you for this meeting. It 
is very timely. President Heine would have been here if she 
could, but matters of State required her attention. She conveys 
a warm ``yawk-way'' and appreciation to the Committee.
    Since you have our full statement, I am going to highlight 
its key points. The first is that, during the years of U.S. 
administration on our islands, we came to feel, as President 
Reagan promised in advocating for Compacts of Free Association, 
``You will always be family to us.'' We are proud to enable 
U.S. control over a strategic expanse of the Pacific larger 
than Texas, including shipping lanes coveted by other nations; 
to be the location of what the Joint Chiefs have described as 
the world's premier range and test site for ICBMs and space 
operations; to be a U.N. member second only to Israel in voting 
with the United States, and to have a higher rate of enlistment 
in the U.S. military than most U.S. States.
    The Trump Administration and many in Congress from both 
parties want to continue our free association long beyond 2023. 
The RMI's current government does, too. The biggest potential 
threat comes from the financial influence of China, as has been 
shown in other Pacific Islands. For example, our government was 
challenged by a Chinese proposal to build a port and 1,000 
homes on Rongelap in return for its autonomy from our 
government.
    A pivotal issue is that the Trust Fund, established by the 
2003 Compact amendment to replace annual U.S. grant assistance 
after Fiscal Year 3, will not have enough money, despite good 
returns. It is critical that the Trust Fund be kept capitalized 
so that it can accomplish its purpose. As matters stand now, 
our Nation will experience severe economic shocks and 
shortfalls in funding for critical priority Compact sectors of 
health and education. If not done by Fiscal Year 4, this 
certainly can be done over a 20-year Compact extension.
    A first step can be taken by the U.S. making the 
contributions it pledged in both its 1986 and 2003 Compact 
laws. Twenty million was to be provided if it could 
substantiate economic losses due to the U.S. nullifying tax and 
trade provisions of the Compact after it was signed. The first 
reaction of some in the RMI to the announcement of Compact 
extension negotiations was to recall this unfulfilled 
commitment.
    The 2003 amendments replaced many U.S. education programs 
with a supplemental education grant. The $6.1 million a year 
indexed for inflation has never been provided. It is now 5.5 
million in dollars worth less. The grant should be a permanent 
appropriation, as is other Compact provisions.
    Current Federal programs and services agreement also need 
to be continued, such as the Postal Service, FEMA, Weather 
Services, Federal Aviation Authority programs, and special 
education programs and Pell Grants. The RMI cannot replace 
them.
    There are other issues for negotiations that are of 
immediate priority concern. The preeminent one is the source of 
funding. It was not worked out for Palau Compact extension 
until 7 years after the 2010 agreement. The budget baseline 
needs to be addressed. Additionally, many agencies operate in 
the RMI, some unique and requiring special funding.
    The negotiations need to be conducted on the U.S. side in a 
way that will bring all involved seriously to the table and 
appreciative of the importance of their programs. The Compacts 
were negotiated by Ambassadors representing the U.S. President. 
Special representatives at the State Department renegotiated 
the 2003 Compact extension. The Palau extension model of 
regular State Department officers negotiating was insufficient.
    Finally, I must note a concern the Compact does not address 
and cannot effectively address, but must concern us all. The 
rising ocean is an existential threat that can reduce the size 
of our Nation and totally wipe it off the map.
    Thank you for this opportunity to discuss our concerns, and 
I am happy to answer any questions.
    [The prepared statement of Ambassador Zackios follows:]

    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Sablan. Thank you very much, Ambassador Zackios.
    And now, my friend, Ambassador Susaia, please, you have 5 
minutes, sir.

STATEMENT OF HON. AKILLINO H. SUSAIA, AMBASSADOR TO THE UNITED 
         STATES FROM THE FEDERATED STATES OF MICRONESIA

    Ambassador Susaia. Thank you, Chairman, Ranking Members, 
distinguished members of the Committees. Thank you for 
convening this joint hearing and for the opportunity to testify 
before you today.
    I have submitted for the Committees copies of my full 
written statement. So, I wish to summarize the key points of 
the statement for the purpose of this hearing.
    The United States is and has been the closest friend and 
ally of the Federated States of Micronesia, as the FSM 
continues to grow and flourish as a young nation. The U.S. and 
the FSM have done much in recent months to acknowledge and 
celebrate the special relationship between our two countries.
    In May, our newly elected President, David W. Panuelo, came 
to Washington to meet with President Donald Trump and several 
Cabinet Secretaries. That visit reinforced the fact we have no 
greater friend in the world than the United States, and the 
United States respects and values the relationship it has with 
the FSM.
    We were, then, delighted to host two Cabinet Secretary 
officials, Secretary of Veterans Affairs Robert Wilkie and 
Secretary of State Mike Pompeo. This was the first time our 
Nation has been accorded such opportunities in our young 
history.
    The U.S. and the FSM have a longstanding strategic 
partnership that reflects the common values of our two 
countries, including our commitment to promoting sovereignty, 
the rule of law, democracy, and regional security. In 1986, the 
FSM and the United States entered the Compact of Free 
Association. The 1986 Compact was renewed and amended with the 
entry into force of the 2003 amended Compact of Free 
Association, which remains in effect today.
    Under these Compacts, the FSM has continuously granted the 
U.S. security and defense rights in the Territory of the FSM. 
FSM citizens have the right to live, work, and study in the 
United States without a visa. Under the 2003 amended Compact, 
the United States committed to provide certain key financial 
assistance through Fiscal Year 2023 and to provide U.S. Federal 
programs and services in the FSM.
    The Federated States of Micronesia is fully committed to 
its relationship with the United States which contributes to 
the strength and prosperity of both our nations. We look 
forward to being a part of the United States enhanced effort to 
promote a free and open Indo-Pacific and to advance our defense 
partnership even further.
    While the defense and immigration provisions in the amended 
Compact will continue after 2023, ensuring the continued 
strength of our partnership, certain financial assistance 
provisions of the amended Compact will expire after Fiscal Year 
2023. These provisions include Federal programs and services, 
Supplemental Education Grants and Sector Grants. U.S. 
contributions to the U.S.-FSM Compact Trust Fund are also set 
to expire. This financial assistance is a central pillar of our 
strong relationship and has further strengthened the bonds 
between our two countries.
    We were pleased to hear Secretary Pompeo's announcement 
last month in Pohnpei that the U.S. is prepared to work with 
the FSM on an extension of this support beyond Fiscal Year 
2023. We look forward to starting these negotiations with the 
U.S. very soon. The potential end of this financial assistance 
has created uncertainty for our government and our people. 
These discussions and the decisions that will result will allow 
us to remove that uncertainty and move forward most effectively 
with our strategic partnership with the United States.
    In preparation for these discussions, the FSM has 
established a Joint Committee on Compact Review and Planning 
that will be responsible for negotiating with the United 
States. Recently, the Committee announced the appointment of 
the chief negotiator. In response, the FSM is still awaiting 
further information from the U.S. on a proposed schedule for 
beginning discussions.
    To conclude, Chairman and members of the Committees, the 
FSM government appreciates the House Natural Resources' and 
Foreign Affairs' longstanding commitment to the enduring 
partnership between the U.S. and the FSM. Although the year 
2023 may seem distant now, there is much work to be done that 
will require coordinated efforts among the various parts of the 
FSM government and both the Executive and legislative branches 
of the U.S. Government. Given the number of issues to be 
addressed and the great importance of these issues to both of 
our countries, we believe that this work should begin as soon 
as possible. We look forward to keeping the Committees informed 
of significant developments as this process moves forward.
    We hope that these negotiations can serve as an opportunity 
for the U.S. and the FSM to reaffirm our unique friendship and 
strong partnership and our mutual commitment to promoting 
security and stability in the Indo-Pacific region.
    Thank you, Chairmen, for holding this hearing on this 
important topic.
    [The prepared statement of Ambassador Susaia follows:]

    
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    Mr. Sablan. Thank you. Thank you very much, Ambassador.
    And at this time, I would yield to the gentleman from Guam, 
Mr. San Nicolas, for 5 minutes.
    Mr. San Nicolas. Thank you, Mr. Chairman.
    Ambassador Zackios and Ambassador Susaia, very nice to see 
you, my friends. ``Yawk-way.''
    [Speaking foreign language] for making the time to be with 
us here today and for all of your advocacy for the region that 
I know is a very difficult task that you undertake with all of 
your hearts.
    Mr. Chairman, I think that the implementation negotiation 
that we are talking about here today needs to move beyond a 
continuation discussion and it needs to include opportunities 
for our FAS allies to really strengthen to an American 
standard. When we shortchange the FAS, that is an ultimate 
reflection of the United States' commitment to its allies, and 
really you are the only freely associated allies we have. It is 
an actual step above almost all of the other diplomatic 
relationships that we have throughout the globe. And so, if our 
freely associated allies are not a reflection of American 
excellence, then how can we go out as America and truly make 
the case that embodying American excellence is something that 
is going to be worthwhile? I think we need to really understand 
that and we need to make a commitment to that.
    With that, Mr. Chairman, I have to put on the record 
certain things that I believe we need to consider to include in 
this implementation agreement in order for our allies to be 
able to have access to some of the most robust programs that 
this country has to offer.
    First of all, Mr. Chairman, we need to make sure that we 
include the ability for our FAS allies to have access to 
capital the same way that U.S. territories are able to access 
that capital. Right now, a U.S. territory is able to go out 
into the bond market and is able to float a triple tax-exempt 
debt that they can use for development. Right now, our FAS 
allies are stuck in the international bond market, which has 
exorbitant interest rates compared to what you would be able to 
get for a triple tax-exempt bond in our domestic markets.
    Being able to extend access to our domestic markets to our 
FAS allies would grant them the ability to finance dramatic 
infrastructure projects that could be life-altering for the 
people and for the economy of the FAS. They can build schools. 
They can build hospitals. They can build roads. They can expand 
their airports. They can grow and develop, so they are not 
dependent on grants and not even dependent on interest from a 
Trust Fund.
    Second, Mr. Chairman, we need to look into making sure that 
our FAS citizens are able to access something that all of the 
other administered areas under the Department of the Interior 
are able to access, and that is Medicaid. If you live in a 
territory and you are administered by the Department of the 
Interior, your citizens are able to access Medicaid. If you are 
a Native American, your tribal government, you are still able 
to access Medicaid. FAS citizens are the only citizens that are 
under an administering relationship of the Department of the 
Interior that are not able to access Medicaid.
    Accessing Medicaid will not just be the extension of a 
benefit to the Freely Associated States; it would actually help 
the host areas in terms of being able to take on the cost of 
the hosting. On Guam, we are not able to extend Medicaid to 
freely associated citizens. In Hawaii, they are not able to 
extend Medicaid to freely associated citizens. So, the cost of 
subsidizing the health care for these citizens is borne at a 
rate that we are not able to access as if they were full 
citizens of the United States.
    So, when we have JEMCO and JEMFAC underinvesting in health 
care in the Freely Associated States, and we have their 
citizens moving to host areas in order to get that health care, 
they are coming in and they are being subsidized at the full 
cost of somebody who actually is not able to have this 
Medicaid. So, being able to extend that program will not only 
help the host areas, but if we can also extend that program 
into the FAS, perhaps even considering reprogramming grant 
funding that is sitting in JEMCO and sitting in JEMFAC, and 
having it be used for matching funds for Medicaid, that could 
actually not only help to fund the health care needs of the 
areas, but it would provide a base level of funding to be able 
to bring in new service providers and new investment, so we 
have less need for migration out for the purposes of health 
care.
    Mr. Chairman, I wanted to put my friends on the record, 
particularly with JEMCO and JEMFAC, because I believe that that 
is a reflection of underutilization of existing resources. And 
I think that we really need to talk about why we are not using 
the resources that are already provided in order for us to be 
able to meet the needs of our allies in the Freely Associated 
States.
    So, I will go ahead and start with you, Ambassador Susaia, 
if I may. Can you elaborate on the amount of funds that is 
sitting in JEMCO and what the FSM believes is not only the 
reason for that money sitting there, but the impact for not 
being able to access those grants?
    Ambassador Susaia. Thank you, Chairman. Thank you, 
Congressman San Nicolas.
    I heard the answer from Director Pula when you asked the 
same question to him. I know that we have challenges, too, in 
our country, FSM, in terms of utilizing the infrastructure 
funds, mainly the infrastructure funds, because of several 
issues. Like, in some of our States, the government does not 
have eminent domain to lands on which some of these projects 
are supposed to be built, like schools, dispensaries, and 
others. So, that is contributing to the delay.
    But, on the other hand, the conditions and the restrictions 
that are placed by the Compact or the fiscal procedures 
agreement, the supplementary agreement to the Compact, is also 
contributing to the delay and the backlog of the use of these 
funds. For instance, the bonding requirements for projects, 
construction projects, is very prohibitive for companies, local 
companies, in the FSM to bid for these projects. So, we end up 
advertising for companies to come here from Guam or Honolulu or 
California, and the amount of these projects is not that huge 
in terms of these companies' profit. So, the delay is always 
finding companies to bid for these projects.
    So, to me, I think those are the bottlenecks that we are 
facing in terms of implementing these infrastructure funds.
    Mr. Sablan. Ambassador, thank you.
    If my colleagues would agree, we may have a second round of 
questions, but Guam's Congressman's time is up.
    I would like to ask unanimous consent--there is four of us 
here; Dr. Gootnick is still in the room--does anybody have any 
objection to Dr. Gootnick joining the panel?
    Do you have any objection, Dr. Gootnick, to coming in and 
joining the panel?
    Miss Gonzalez-Colon. He may regret it.
    [Laughter.]
    He may regret it, but----
    Mr. Sablan. You are more than welcome, but you do not have 
to. But you know how important you are here, Dr. Gootnick.
    And so, thank you. Thank you.
    Dr. Gootnick is seated as a participant in the panel, too.
    And at this time, I recognize my friend and distinguished 
Resident Commissioner from Puerto Rico, Miss Gonzalez-Colon, 
for 5 minutes.
    Miss Gonzalez-Colon. Thank you, Mr. Chairman.
    I would like to introduce for the record the statement of 
Ranking Member Michael McCaul from Foreign Affairs and----
    Mr. Sablan. Without objection.
    Miss Gonzalez-Colon. Thank you.
    [The prepared statement of Mr. McCaul follows:]

    
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    Miss Gonzalez-Colon. And first of all, I want to say thank 
you and welcome to the Ambassadors. I know it is a long way 
coming here to DC and to manage all these issues.
    I was reviewing the General Accounting Office report on the 
Fund, on the Trust Funds, and how those funds are distributed. 
One of the questions we did to the Department of the Interior 
was in terms of if there is any oversight. There are many 
recommendations regarding the policies that are going to be 
implemented, the fiscal changes that may be happening in those 
forms.
    My question to you and to this panel will be in terms of, 
what changes specifically do you understand should be addressed 
to have more opportunity to use those funds? Because everybody 
is talking about making changes. What kind of changes 
specifically are you seeking, if any? Ambassador Zackios?
    Ambassador Zackios. Thank you, Congresswoman, for the 
question.
    I think the first thing that we feel is important to 
consider post-2023 is the FPA. We feel that the distribution 
policy that currently is in the FPA that addresses use of 
resources from the Trust Fund needs to be revisited.
    We see, and I understand from the earlier questions about 
management, FPA as it applies to grants and programs under the 
current agreement does not necessarily under the Compact apply 
to the Trust Funds. So, I think we need to address that issue.
    I would end my answer here by saying that in talking about 
the issue of our Trust Fund, I think fiscal responsibility does 
not necessarily translate to micromanagement. I think these are 
independent countries, and I think we could work together to 
make sure that resources that are provided are put to good use 
without the burdens of micromanagement that will stifle a lot 
of the efforts that we are trying to achieve from these 
resources to help these countries.
    Thank you.
    Miss Gonzalez-Colon. Ambassador.
    Ambassador Susaia. Yes. I think the fact remains that the 
forecast of projected revenue was an issue that remained. It is 
insufficient. So, it is not so much to change the wording of 
the Compact for how to utilize the Trust Fund proceeds. It is 
really the fact that the return on the investment to date is 
not sufficient to fund, to replace the Sector Grants.
    So, it is our hope that, if we can extend the term of the 
Compact and continue to receive the same level of funding, or 
whatever the abilities were to buildup the corpus, so that 
eventually we will have more budgetary, several lines to take 
care of the Sector Grants.
    Miss Gonzalez-Colon. Can you describe, both of you describe 
the practices you have been doing in your nations in order to 
have or increase budgetary and economic self-reliance during 
the last years, and how those two islands may be impacted if 
there is no negotiation of a new agreement? I mean, what 
services are going to be impacted directly immediately if you 
do not have a new Compact?
    Ambassador Zackios. In addition to most of this, 
Congressman, that would be mostly affected, health and 
education are key sectors that will be really affected by 
these. So, the continuation of the extended provisions is very 
important, as I have cited, and the funding of the Trust Fund, 
so that it can address this.
    To your point of what we have done, the Marshall Islands 
has invested its own resources into the Trust Fund, $30-plus 
million. When it started, when the Compact was initiated, we 
put $30 million, and then, that plus additional.
    We have also gone out, as required by the Compact, to find 
subsequent contributors. So, the Marshall Islands had engaged 
Taiwan to become a subsequent contributor in the Trust Fund. We 
hope that, as is required also under the Compact, the U.S. can 
also help us find subsequent contributors instead of also 
putting more resources into the Trust Fund in the upcoming 
negotiation by extending the full term of the Compact extension 
period to address the shortfalls in the Trust Fund.
    Miss Gonzalez-Colon. Thank you. I know my time has expired. 
But, Ambassador, you can submit it for the record later on.
    Mr. Sablan. Yes, thank you, Congresswoman Gonzalez-Colon.
    I have just been told that the Committee is going to need 
the room after this. So, we will not be able to have additional 
time for a second round.
    Let me take my 5 minutes and ask--I will, Ambassadors, 
submit questions for the record. I would like for you to 
respond to those in writing.
    But let me go this way. Ambassador Susaia and Ambassador 
Zackios, today we heard the importance of sustaining the 
relationship between the United States and the Freely 
Associated States. So, as we look ahead to 2023, how can our 
Committees or the U.S. Congress be more helpful? Or are there 
any further recommendations you would like us to keep in mind? 
A minute and a half. Ambassador Susaia?
    Ambassador Susaia. Thank you, Chairman. If I may, I would 
like to take the first crack at the question, and my colleague 
here can help.
    We are mindful of the role that the Congress plays in the 
review and approval of any agreement that will be negotiated 
between our negotiators and the U.S. Especially your Committees 
on Natural Resources and Foreign Affairs, the role that you 
play in terms of the jurisdiction of these types of agreements.
    And so, I wish, on behalf of the FSM, to ask that the 
review and approval process, knowing how the legislative 
process in the Congress plays, that it be done on a timely and 
expeditious basis. As you alluded to in your earlier statements 
to the other panel, the experience that Palau has, we really do 
not want to go that route, down that same road.
    Thank you, Chairman.
    Mr. Sablan. Any other thoughts and ideas you have, you 
could submit them in writing.
    Ambassador Susaia. Yes.
    Mr. Sablan. Ambassador Zackios, please.
    Ambassador Zackios. I would like to associate myself with 
those comments by Ambassador Susaia, but also say that, in the 
case of the Marshal Islands, one thing that we would like the 
Committees to bear in mind, the joint Committees--and we want 
to thank the House for passing the $20 million that will go 
into the Trust Fund. I think that is a very important start, as 
we discuss this issue. So, the commitment to pay the $20 
million, I think it is a very important one to start the 
relationship.
    And we were asked other questions about the need to 
continue this relationship. It is a very important 
relationship. We say that it started after World War II. I 
would, in fact, say that it started in the 1800's when the 
Boston missionaries actually visited the islands.
    But the relationship and the extension of this relationship 
is very important, as we have heard also the pressure that is 
being put on these small island countries. China is very 
aggressively in the islands and is trying to influence, of 
course, these countries to change their relationship. The 
Marshall Islands is firm with its commitment to the U.S. In 
fact, President Heine said that we are open to providing 
additional space for strengthening up the partnership for 
defense purposes.
    Mr. Sablan. Thank you.
    Ambassador Zackios. So, the extension of this relationship, 
the speed at which we will conclude this relationship, the 
level of the people that will participate, and the amount of 
resources that is required is fully important for the 
Committees.
    Mr. Sablan. Thank you, Ambassador.
    Ambassador Zackios, one of the 16 people who petitioned the 
United Nations Committee on the Rights of the Child this week 
for action on climate change was from the Marshall Islands. I 
do not know how we can talk about reviewing the Compact of Free 
Association with your nation without acknowledging that lots of 
the Marshalls is in danger of disappearing in the years ahead. 
And so, I have to think that this reality must be in the minds 
of many in the Marshalls and in your mind and may influence 
what you want to achieve in the Compact renewal and 
negotiations. I let you know that I acknowledge that and that I 
will continue to encourage my colleagues to keep that in mind 
also.
    Dr. Gootnick, I brought you back for two reasons. And I 
have got 45 seconds. One, Dr. Gootnick, is that there is always 
this disagreement on how to allocate, how to determine, how to 
put value on the cost of Compact impact aid. I mean, of course, 
the territories and the State of Hawaii, for example, always 
have their own numbers. And everyone who comes in and is signed 
up as someone who identifies as Chuukese, as FAS, even if that 
person is fully employed and contributing to that State or 
territory, even if that person happens to be Chuukese, but is 
born in the State or territory, there has been no definition of 
how to identify, use a common denominator to estimate the cost 
of Compact impact, but it is huge. There is no question about 
it.
    But I want to ask you, Dr. Gootnick, and if you cannot 
answer right now, then please submit for the record. GAO's 2018 
report noted that the Federated State of Micronesia and the 
Republic of Marshall Islands Compact Trust Funds face risks and 
will not provide disbursements in some future years. So, has 
GAO concluded how much additional contributions are needed to 
reduce the risk of no disbursements?
    Dr. Gootnick. So, I think the issue is more with respect to 
the structure of the Trust Fund. The Trust Fund, when it was 
set up, was very much set up in an effort to maintain the 
corpus of the Trust Fund. So, the net effect of that, of the 
Trust Fund rules, is that it constrains disbursement. And I do 
not know that I have a specific figure for you, and I do not 
know that one could develop----
    Mr. Sablan. You can provide it for us.
    Dr. Gootnick. I will think about your question.
    Mr. Sablan. Thank you.
    Dr. Gootnick. I am not sure that under the current rules 
one could come up with a specific answer to it.
    Mr. Sablan. Thank you, but give us your best answer. I know 
you will. You always do.
    Dr. Gootnick. I would like to mention, since you brought me 
back, one quick point on Compact migration. The first thing is 
there is no question that the right to migrate is a lynchpin of 
the Compacts. So, it is there. There is also no question that 
Compact citizens migrate primarily for economic reasons, for 
work, to educate their children, and to take care of health 
care needs. At the same time, there is also no question that 
there are financial costs.
    I have teams that have been out to the affected 
jurisdictins in the past and a team that is just recently 
returned, speaking to State officials, speaking to Compact 
migrants, and speaking to Micronesian officials. It is the case 
that the single most significant thing and prevalent thing that 
is cited is access to Medicaid; that prior to 1996, there was 
access to Medicaid. Subsequent to 1996 welfare reform, there 
have been a number of machinations in Hawaii, for example, but 
there is not access. And I think with respect to the Federal 
Government's role, while not taking a position one way or the 
other, that is the biggest issue that is out there.
    Mr. Sablan. Thank you, Dr. Gootnick.
    I do not want to be accused that I am abusing this seat. 
But, at this time, I would like to recognize the distinguished 
gentlelady from American Samoa, Ms. Radewagen, for 5 minutes.
    Mrs. Radewagen. Thank you, Mr. Chairman. I will try to keep 
it short. I have several questions I wanted to ask, but in the 
interest of time I will submit them, and then, ask for the 
answers to be submitted later.
    But there are many unaddressed issues relating to the U.S. 
testing of 67 nuclear bombs on formerly populated islands in 
the RMI. And this question is for Ambassador Zackios. Most 
recently, as you noted in your testimony, there is great 
concern about the leakage of radioactive waste from the U.S. 
nuclear tests buried at the Runit Dome on Enewetak. The House-
passed National Defense Authorization Act for Fiscal Year 
requires a study of Runit, and I want to say that I am greatly 
concerned about the current situation on Enewetak. Are there 
other lingering issues from the U.S. nuclear legacy that should 
be kept in mind in a Compact extension?
    Ambassador Zackios. Thank you, Congresswoman.
    In addition to what I stated in my testimony about the 
Runit Dome and the conveyance of gratitude for the efforts that 
are currently undertaken, yes, there are issues that are 
unresolved from the nuclear testing program under the Section 
177 agreement. Of course, as we understand, that agreement is 
an espousal agreement, but it also provides for a Changed 
Circumstance Petition. The Marshall Islands submitted a Changed 
Circumstance Petition through Congress in the year 2000, and 
that petition to address this lingering issues of shortfalls, 
to address cancers, land remediation, and other things relative 
to the testing program has not been fully addressed.
    So, I think it is also important to look at the changed 
circumstance and other issues that are currently before the 
Congress, including what is already before the Congress with 
regards to Runit Dome.
    Mrs. Radewagen. Thank you, Ambassador.
    So, I guess I will put a second question in there. After 
all, I am entitled to 5 minutes.
    A recent report by the RAND Corporation noted that China is 
likely to seek ways to challenge American dominance with its 
Pacific Island allies by floating economic incentives to the 
FAS in exchange for loosened ties to Washington. RAND further 
concluded that, quote, ``Going forward, the United States 
should demonstrate their commitment to the region by 
maintaining appropriate levels of funding to the FAS and 
strengthening engagement with the FAS more broadly. Failure to 
do so would be a self-inflicted wound that could come at the 
expense of the foreign policy and defense interests of the 
United States.''
    So, Ambassador Zackios, please tell us how China is 
developing influence in the RMI and what more can the United 
States do to demonstrate its commitment to the region?
    Ambassador Zackios. Thank you, Congresswoman.
    With respect to that question, it is a very important 
question. First, I would say that China is developing its 
influence in the islands. If we can look at it actively, that 
is currently taking place between the U.S. and China in the 
Marshall Islands: $2.2 billion of trade was done between China 
compared to $311 million of trade with the Marshall Islands. 
Additionally, telecommunication, Huawei is very involved in the 
islands through their telecommunications system. And there is 
so much personal ``pursue action'' by China. It is courting our 
leaders to China, taking them to Beijing.
    So, the importance, as you have rightly stated, about 
putting resources there is very important, sufficient resources 
to address this relationship. We talked about discouraging 
this, and we talked about what other opportunities we have to 
look at in preparing yourself. We have the ship registry, and 
it was said in testimony earlier that China is penalizing our 
vessels that fly the RMI flag, as you are fully aware. We are 
the second largest flag in the world. And they are paying 
heavier taxes because of our relationship with the United 
States. So, those are issues that China is doing in the 
islands.
    As I said in my statement, they were trying to build a 
project and proposal on Rongelap Atoll, which is very proximate 
to Kwajalein, 1,000 houses, and that created a place almost 
similar to Hong Kong that would at autonomous from the Republic 
of the Marshall Islands. In fact, their last attempt was to 
move a motion of no confidence by pressuring our leaders to 
move a motion of no confidence in our current government 
because of this pressure to make the change.
    Mrs. Radewagen. Thank you, Your Excellencies.
    Thank you, Mr. Chairman.
    Mr. Sablan. Thank you. Thank you very much.
    Without objection, all members may have 5 days to submit 
questions, statements, and extraneous materials for the record, 
subject to the length limitations in the rules.
    Having no further business, this hearing--oh, yes, of 
course, thank you. Thank you very much.
    I am sorry, I have a Virgin Islander here who is reminding 
me.
    [Laughter.]
    Thank you very much.
    I will come back and talk to you, Dr. Gootnick. Thank you 
always, sir. We will continue to need your guidance, and 
particularly on this one issue that is never going to go away, 
how to find--which Interior should do--some kind of methodology 
to determine the cost, the value of Compact impact to several 
jurisdictions that are actually paying for the cost of 
migration now.
    But thank you, everyone.
    And this hearing is adjourned.
    [Whereupon, at 12:45 p.m., the Committees were adjourned.]

                                APPENDIX

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