[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
PRESERVING U.S. INTERESTS IN THE INDO-
PACIFIC: EXAMINING HOW U.S. ENGAGE-
MENT COUNTERS CHINESE INFLUENCE IN
THE REGION
=======================================================================
OVERSIGHT HEARING
BEFORE THE
SUBCOMMITTEE ON INDIAN AND INSULAR AFFAIRS
OF THE
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
Tuesday, May 16, 2023
__________
Serial No. 118-29
__________
Printed for the use of the Committee on Natural Resources
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
or
Committee address: http://naturalresources.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
52-350 PDF WASHINGTON : 2023
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COMMITTEE ON NATURAL RESOURCES
BRUCE WESTERMAN, AR, Chairman
DOUG LAMBORN, CO, Vice Chairman
RAUL M. GRIJALVA, AZ, Ranking Member
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Gregorio Kilili Camacho Sablan,
Tom McClintock, CA CNMI
Paul Gosar, AZ Jared Huffman, CA
Garret Graves, LA Ruben Gallego, AZ
Aumua Amata C. Radewagen, AS Joe Neguse, CO
Doug LaMalfa, CA Mike Levin, CA
Daniel Webster, FL Katie Porter, CA
Jenniffer Gonzalez-Colon, PR Teresa Leger Fernandez, NM
Russ Fulcher, ID Melanie A. Stansbury, NM
Pete Stauber, MN Mary Sattler Peltola, AK
John R. Curtis, UT Alexandria Ocasio-Cortez, NY
Tom Tiffany, WI Kevin Mullin, CA
Jerry Carl, AL Val T. Hoyle, OR
Matt Rosendale, MT Sydney Kamlager-Dove, CA
Lauren Boebert, CO Seth Magaziner, RI
Cliff Bentz, OR Nydia M. Velazquez, NY
Jen Kiggans, VA Ed Case, HI
Jim Moylan, GU Debbie Dingell, MI
Wesley P. Hunt, TX Susie Lee, NV
Mike Collins, GA
Anna Paulina Luna, FL
John Duarte, CA
Harriet M. Hageman, WY
Vivian Moeglein, Staff Director
Tom Connally, Chief Counsel
Lora Snyder, Democratic Staff Director
http://naturalresources.house.gov
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SUBCOMMITTEE ON INDIAN AND INSULAR AFFAIRS
HARRIET M. HAGEMAN, WY, Chair
JENNIFFER GONZALEZ-COLON, PR, Vice Chair
TERESA LEGER FERNANDEZ, NM, Ranking Member
Aumua Amata C. Radewagen, AS Gregorio Kilili Camacho Sablan,
Doug LaMalfa, CA CNMI
Jenniffer Gonzalez-Colon, PR Ruben Gallego, AZ
Jerry Carl, AL Nydia M. Velazquez, NY
Jim Moylan, GU Ed Case, HI
Bruce Westerman, AR, ex officio Raul M. Grijalva, AZ, ex officio
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CONTENTS
----------
Page
Hearing held on Tuesday, May 16, 2023............................ 1
Statement of Members:
Hageman, Hon. Harriet M., a Representative in Congress from
the State of Wyoming....................................... 1
Leger Fernandez, Hon. Teresa, a Representative in Congress
from the State of New Mexico............................... 2
Westerman, Hon. Bruce, a Representative in Congress from the
State of Arkansas.......................................... 59
Statement of Witnesses:
Watson, Peter, President and CEO, The Dwight Group, LLC,
Washington, DC............................................. 4
Prepared statement of.................................... 6
Questions submitted for the record....................... 12
Gray, Alexander, Managing Partner, American Global
Strategies, LLC, Oklahoma City, Oklahoma................... 14
Prepared statement of.................................... 16
Questions submitted for the record....................... 18
Grossman, Derek, Senior Defense Analyst, The RAND
Corporation, Santa Monica, California...................... 20
Prepared statement of.................................... 22
Questions submitted for the record....................... 30
Friberg, Emil, Former Assistant Director, GAO International
Affairs and Trade, Arlington, Virginia..................... 32
Prepared statement of.................................... 33
Questions submitted for the record....................... 37
Paskal, Cleo, Non-Resident Senior Fellow, Foundation for
Defense of Democracies, Washington, DC..................... 43
Prepared statement of.................................... 45
Questions submitted for the record....................... 54
Additional Materials Submitted for the Record:
Submissions for the Record by Representative Radewagen
Letter from David W. Panuelo, President, Federated States
of Micronesia to FSM Leadership dated March 9, 2023.... 76
OVERSIGHT HEARING ON PRESERVING U.S. INTERESTS IN THE INDO-PACIFIC:
EXAMINING HOW U.S. ENGAGEMENT COUNTERS CHINESE INFLUENCE IN THE REGION
----------
Tuesday, May 16, 2023
U.S. House of Representatives
Subcommittee on Indian and Insular Affairs
Committee on Natural Resources
Washington, DC
----------
The Subcommittee met, pursuant to notice, at 2:25 p.m., in
Room 1334, Longworth House Office Building, Hon. Harriet M.
Hageman [Chairwoman of the Subcommittee] presiding.
Present: Representatives Hageman, Radewagen, LaMalfa,
Gonzalez-Colon, Carl, Moylan, Westerman; Leger Fernandez,
Sablan, and Case.
Ms. Hageman. The Subcommittee on Indian and Insular Affairs
will come to order.
Without objection, the Chair is authorized to declare a
recess of the Subcommittee at any time.
The Subcommittee is meeting today to hear testimony on
preserving the United States' interests in the Indo-Pacific:
Examining how U.S. engagement counters Chinese influence in the
region.
Under Committee Rule 4(f), any oral opening statements at
hearings are limited to the Chairman and the Ranking Minority
Member. I therefore ask unanimous consent that all other
Members' opening statements be made part of the hearing record
if they are submitted in accordance with Committee Rule 3(o).
Without objection, so ordered.
I will now recognize myself for an opening statement.
STATEMENT OF THE HON. HARRIET M. HAGEMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WYOMING
Ms. Hageman. I am Harriet Hageman, and I am the Chairman of
the Subcommittee on Indian and Insular Affairs.
The United States is a Pacific power through its
territories of Guam, Northern Mariana Islands, and American
Samoa. These territories are home to over 200,000 American
citizens and, as such, the United States has an interest in a
free and open Indo-Pacific that is free from a malign
influence.
Furthermore, the United States holds special relationships
with three Pacific Island nations known as the Freely
Associated States, or FAS. These three countries are the
Republic of Palau, the Republic of the Marshall Islands, and
the Federated States of Micronesia. Through compact agreements
with these countries, the U.S. gains extraordinary security
rights in return for U.S. economic assistance.
The U.S. Department of the Interior, through the Office of
Insular Affairs, manages Federal relations with the U.S.
territories and FAS under the Compacts of Free Association,
including administration and monitoring of grants, economic
assistance, and Federal programs as prescribed by Federal
statutes, and applicable agreements enacted into law. These
interests and relationships are why we are here today.
The People's Republic of China, or the PRC, is actively
seeking to increase its influence in the region and undermine
U.S. interests. The PRC has adopted a strategy of disruption
and destabilization aimed at what I am told by one of our
witnesses has described as political and social entropy in
small, vulnerable nations. I hope we can hear more about this
today and shine a light on what China is doing within the Indo-
Pacific Region.
Whatever the answer to the question about what China's
intentions may be, what the world now knows is that Beijing is
taking actions to assert or seize effective political control
throughout the Indo-Pacific Region. It also has escaped no
one's attention that the PRC seemingly has adopted a century-
old game plan to dominate the Pacific Islands and use them as a
platform to expand the Chinese Communist Party's malign
influence.
In furtherance of that strategy, China is aggressively
threatening political stability in the Pacific Island nations
through political warfare and economic coercion. These actions
serve to challenge U.S. influence, interests, and values in the
region.
America has not forgotten the lessons of World War II and
the Cold War. The United States will not stand idly by in the
face of PRC political provocation, attacking the sovereignty of
our Pacific allies and interference in U.S. Pacific Island
territories. America is renewed in our determination to restore
a stable international order in the region that respects the
integrity of democratic self-government for all island peoples.
To that end, we will appreciate any insights on how U.S.
engagement will contribute to stability in the region and
counter China's malign influence on our friends and our allies.
I want to thank the witnesses that are here, and I look
forward to their testimony.
The Chair now recognizes the Ranking Minority Member for
any statement.
STATEMENT OF THE HON. TERESA LEGER FERNANDEZ, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW MEXICO
Ms. Leger Fernandez. Thank you, Madam Chair, and thank you
to our witnesses, and my apologies for being a little late. We
had to have a moment of silence on the Floor of the House today
because of the loss of three beautiful souls to gun violence,
and the heroic work of our law enforcement officers, two who
also ended up in the hospital. So, my apologies.
But there is something about when we think about, from
places as small and far away as Farmington, New Mexico, to the
islands, the Freely Associated States, that we are all
connected with each other, and we are all seeking to hold each
other together and to look to see how we work together to make
sure that we are stronger, and to make sure that we can bring
peace to our communities and peace to the region in which you
spend your time.
Today's hearing on preserving U.S. interests in the Indo-
Pacific will include a good discussion on the Compacts of Free
Association of the United States and the Freely Associated
States, of the Federated States of Micronesia, and the
Republics of Marshall Island and Palau.
And, yes, we have maintained a special relationship with
the Freely Associated States for more than seven decades.
Through Compacts of Free Association entered into the 1980s,
these nations, your nations, allowed the United States to have
military access to the most strategic part of the Northern
Pacific between Hawaii and the Philippines.
Residents of the Freely Associated States are not citizens
of the United States, but are granted residence and other
privileges through their compacts, including the ability to
reside and work in the United States and its territories
indefinitely as lawful non-immigrants.
The initial compacts went into effect in the 1980s and
renewed in 2003 for 20 years. They had three main goals: (1)
end the U.N. trusteeship for securing full self-government for
the islands; (2) continue a close defense relationship; and (3)
assist the FSM and the RMI in their efforts to advance economic
self-sufficiency. Economic sovereignty is key.
With the People's Republic of China's increased presence in
the Pacific in recent years, it is a top bipartisan, I believe
very bipartisan, strategic priority to renew the financial
provisions of the FAS compacts when they expire at the end of
Fiscal Year 2023. In fact, I was in a Rules Committee hearing
just last week on the PRC's coercive economic tactics. During
the hearing, we heard about the need for collective resilience
to more effectively curb bad actors like the PRC.
In other words, collective resilience, we need to work
together with our allies and our partners. That is how we
strengthen our position. But if we let the economic assistance
to the Freely Associated States end, we run the risk that the
PRC will fill the vacuum in the region. So, this is a matter of
defense, security, and economic opportunity, both for the
United States and the FAS.
Thankfully, the Biden administration's Special Presidential
Envoy for Compact Negotiations has successfully negotiated and
secured signed memorandums of understanding with all three
compact nations to extend financial assistance for an
additional 20 years. We expect the parties to sign the final
agreements and transmit them to Congress in the coming weeks.
Thank you once again, Madam Chair, for holding today's
hearing. I look forward to hearing our witnesses explain the
need of Congress to swiftly pass the COFA agreements once they
are transmitted, and to highlight any issues that we need to
learn more about. I am very much enjoying the educational
experience of sitting and listening to such experts on these
matters.
Thank you very much, and I yield back.
Ms. Hageman. Thank you.
Now I will introduce our witnesses: Mr. Peter Watson,
President and CEO, The Dwight Group, LLC, Washington, DC; Mr.
Alexander Gray, Managing Partner, American Global Strategies,
LLC, Oklahoma City, Oklahoma; Mr. Derek Grossman, Senior
Defense Analyst, The RAND Corporation, Santa Monica,
California; Mr. Emil Friberg, Former Assistant Director and
Senior Economist, International Affairs and Trade, Government
Accounting Office, Washington, DC; and Ms. Cleo Paskal, Non-
Resident Senior Fellow, Foundation for Defense of Democracies,
from Washington, DC.
Let me remind the witnesses that under Committee Rules,
they must limit their oral statements to 5 minutes, but their
entire statement will appear in the hearing record.
To begin your testimony, please press the talk button on
the microphone.
We use timing lights. When you begin, the light will turn
green. When you have 1 minute left, the light will turn yellow.
And at the end of 5 minutes, the light will turn red, and I
will ask you to please complete your statement.
I will also allow all witnesses on the panel to testify
before Member questioning.
The Chair now recognizes Mr. Watson for 5 minutes.
STATEMENT OF PETER WATSON, PRESIDENT AND CEO, THE DWIGHT GROUP,
LLC, WASHINGTON, DC
Mr. Watson. Thank you very much, Chairman Hageman, Ranking
Member Leger Fernandez, and distinguished members of the
Subcommittee. Thank you indeed for the privilege and honor of
inviting me to visit with you today.
My written statement, of course, addresses the interrelated
economic, social, and political development challenges that the
Pacific Islands have faced in the past and will continue to
face as we enter what one hopes will be a new era of deepening
engagement by the United States, Japan, Australia, New Zealand,
and indeed, other developed democracies of the world in the
Pacific Islands Region, as represented by the Pacific Islands
Forum nations, or PIF, as you wish, as an acronym.
The PIF community, of course, includes the Freely
Associated States of FSM, Federated States of Micronesia,
Marshall Islands, and Palau. And my most recent experience with
the Palau Economic Advisory Group informs the narrative of my
written statement.
My prepared statement also includes an analysis of the
critical need for the U.S. national vigilance in protection of
the freedom and security of all three U.S. Pacific Island
domestic territories: Guam, CNMI, and American Samoa, which I
want to spend some time focusing on, the latter indeed needing
fisheries security enforcement to be urgently prioritized.
Of course, as I learned initially during my tour of duty at
the National Security Council, where, like Alex, I was
responsible for the Pacific Islands, I realized the fullest
possible development potential by the Pacific Island community
also serves the individual and collective strategic imperatives
of the United States and our allies.
Accordingly, to understand how the COFA for the FSM, RMI,
and Palau became successfully included in this complex
partnership, it is axiomatic that every president since Truman
and every U.S. Congress since 1946 has acted consistent with
one overarching and immutable principle. It has been the
strategic denial of the islands now comprised by the FSM, RMI,
and Palau to the military forces of any nation, unless by
agreement of the United States, and that is unsurpassed by any
other strategic imperative in U.S. relations with those
islands.
From 1947 to 1986, as we all know, the U.S. administration
of these islands was pursuant to the decision of the president
and Congress to reject annexation and to place the islands in
the U.S. trusteeship system. The trusteeship agreement
expressly provided for the United States to combine
international standards of self-determination and application
of the same domestic laws Congress applied in the U.S.
territories, including nearby Guam.
It was during the four decades of the trusteeship that the
United States encouraged the peoples' also traditional and
elected leaders to embrace the standard of living that
includes, for example, social, political, and economic reliance
on dependable and safe modern commercial civil aviation
possible through the same FAA en route aviation safety system
provided in the U.S. states and territories, which continues
under COFA.
The same was true of the U.S. Postal Services, the U.S.
Department of Education scholarship and early childhood
education programs, U.S. weather services, a combination of
FEMA and USAID disaster relief programs, FDIC, and over a dozen
other Federal programs and services otherwise only provided in
U.S. states and territories.
Again, the United States actively encouraged this
dependence during the trusteeship, when the islands played a
crucial and irreplaceable role in America's arms race with the
USSR and the success of nuclear deterrence strategy that
prevented nuclear war for decades. And the return on U.S.
investment in these islands during the Cold War and trusteeship
was matched under COFA by the benefits to America during the
war on terror of the missile defense system that could not have
been otherwise developed without COFA.
In close, Madam Chair, as we now face PRC competition and
threats that come with it, the COFA nations and our territories
are even more vital than ever to America's strategic
repositioning. In addition to the strategic denial and basing
and operating rights from Kwajalein to Angkor, the citizens of
the Freely Associated States serve under COFA in the armed
forces in the United States at a higher rate than most states
in the same uniform and battles as our fellow Americans, as do
the U.S. territories, especially American Samoa.
Thank you, Madam Chair. These points are not the end of the
discussion that we will have about the COFA for the months
ahead. But it is part of the beginning of that discussion, and
I thank you for giving me and my colleagues the opportunity of
sharing these thoughts with you today.
[The prepared statement of Mr. Watson follows:]
Prepared Statement of Dr. Peter S. Watson
Introduction
``The Witness appreciates the invitation to appear before this
distinguished Subcommittee. The subject matter of the Subcommittee's
hearing is both a timely and an important one.''
That I place the above in italicized quotation marks is an
affectation, as I am actually quoting myself, not high manners--but I
do so to reference the same was from my testimony some thirty-seven
years ago--September 10, 1986--on the subject of ``Developments in the
South Pacific Region,'' before Chairman Solarz's Asian and Pacific
Subcommittee of the House Committee on Foreign Affairs.
And as we look back on all the testimony presented that day--
available at https://books.google.com /
books?id=yxuBCg7XnUgC&pg=PP3&source=gbs_selected_pages&
cad=2#v=onepage&q&f=false--it's not unfair to observe that, in the
intervening years, while the U.S. has had important regional successes
notably the conclusion of the Compacts of Free Association it also
had vital engagement opportunities lost or squandered, notwithstanding
China therein identified as a burgeoning threat in the Solarz hearing--
high hubris on open display in the interim.
As described below, some engagement gaps in U.S. attention have
more recently been addressed--but Pacific Island leaders are no doubt
wondering whether their nations are simply of more priority now due to
the pervasive Chinese presence which my fellow panelists compellingly
describe.
Meanwhile, reading the news releases, many would be forgiven for
believing the U.S. Pacific Island Leaders' Summit recently convened by
President Biden in September last year (the Summit) was a historic
first. Indeed, that credit goes to President H.W. Bush, who on October
27, 1990, convened the initial U.S. Pacific Islands Summit in Honolulu,
when meeting with the Heads of State of the Solomon Islands, Tonga,
Tuvalu, the Cook Islands, Papua New Guinea, Western Samoa, Fiji, Nauru,
Micronesia, the Marshall Islands, and Kiribati: https://www.presidency.
ucsb.edu/documents/remarks-the-conclusion-the-pacific-island-nations-
united-states-summit-honolulu-hawaii
However, the principal deliverable of that first summit, the `Joint
Commercial Commission' never came into sufficiently funded fruition to
meet the original expectations, thus left many Island leaders feeling,
rightly or otherwise, the U.S. was unwilling or unable to fulfill its
commitments.
The gaps in U.S. engagement in the Pacific Islands in recent years
belies its history there. The United States had some of the earliest
western commercial and diplomatic contacts across the span of the
Islands. In the first decades of the nineteenth century, American
sealers, whalers and explorers traversed the Pacific. Many of the South
Pacific Islands became ports of call. Indeed, the United States was
involved in South Pacific trade well before it acquired itself a
Pacific Coast in 1846.
The U.S. had, for example, full consular representation with New
Zealand in 1838--a full year before Great Britain had such
representation in 1839. And yet, in recent times, the U.S. had allowed
such subtle, yet profound, engagement modalities as the Peace Corps to
atrophy and dissipate in the Pacific Islands, just as China was quietly
yet pervasively inserting itself there in the profoundly disturbing
ways we see.
The Pacific U.S. Territories of American Samoa, Commonwealth of the
Northern Mariana Islands (CNMI) and Guam, together with the Freely
Associated States of Federated States of Micronesia, Republic of the
Marshall Islands, and Republic of Palau all have embedded important
levels of federal government economic engagement; however, as detailed
by other panel members, this has not prevented the near-catastrophic
Chinese intrusions seen in Rongelap (RMI), in the FSM, and with Palau
not free from related challenges.
Why Dollar Diplomacy is Not Enough:
As further described below, out-competing China requires an
intelligent increase in the level of US direct economic assistance to
the Pacific region, and to individual Pacific Island nations. More
proof is not needed regarding the relentless implementation and
expansion of the ``Belt and Road Initiative'' wherever it gains a
foothold of access to provide grant or loan-funded infrastructure
projects.
Projects funded by China tend to be highly visible. Countless
diplomats from the U.S. and like-minded nations have commented on the
high visibility of China-backed projects. Those same diplomats bemoan
the struggle to achieve a higher level of visibility of the economic
assistance provided by their nations ``in the trenches,'' so to speak,
of health, education, environment and other sectoral projects and
programs.
Pacific Islanders can't help but be impressed by the scale and
visibility of China-backed projects. Notably, the quality of those
projects is often sub-par, and in some cases the projects fail with the
same visibility that China enjoyed at the ribbon-cutting stage. We
could look at Pohnpei, the host island of the Capitol of the Federated
States of Micronesia (FSM), for a highly visible failure. The state's
government administration building was built on a prominent Kolonia-
town location with aid and labor from China. The large building allowed
for the co-location of the Governor's office with much of the state's
administration.
Unfortunately for the people of Pohnpei, the building's poor
design, poor quality, and foreign electrical and plumbing systems led
to regret on the part of the state and embarrassment--one must
presume--on the part of the donor. At this moment China is re-building
the Pohnpei Administration building and they have redressed quality
problem at other venues on the island of Pohnpei.
So, counting on China to fail to learn lessons and improve the
quality of its funded projects in the future would be unwise on the
part of the U.S.
The U.S. seeks to enhance the level of effective economic
assistance it provides to Pacific Island nations, and we would do well
to try to elevate the visibility and promote the high-quality of our
targeted economic assistance projects and programs. We must expand
collaboration and seek deeper opportunities to partner synergistically
with like-minded donor partners in the Pacific.
But we clearly must also be prepared for the response to be greater
and greater spending by China in the Pacific. So, it unlikely we can
fully counter the influence of China through enhanced spending alone.
What's needed is a three-part strategy that goes beyond enhanced
spending alone.
Expanding Engagement to Improve Stability and Security in the Pacific:
The U.S. needs to do more to maintain our desired outcome of a
``Free and Open Indo-Pacific.'' In addition to increasing the effective
level and visibility of our economic assistance, second, we need to
significantly enhance our economic-related engagement throughout the
Pacific; and third, we need to enhance people-to-people engagement
throughout the Pacific.
As detailed below, enhanced economic assistance will achieve better
and less volatile regional economic growth outcomes, and allow Pacific
Island nations to sharpen their fiscal and economic policies to improve
resilience in the face of periodic shocks to which each nation must
adjust and broaden its economic base. Palau, for example, must avoid
returning to the excessive reliance it had for several years on
tourists from China.
This paper will identify important new economic engagement
initiatives that Washington is introducing into the Pacific Island
region. Due to its early catalytic role, particular emphasis is given
to the activities of the U.S. Trade Development Agency: https://
ustda.gov/ (TDA), with important mention to its partnering with the
Japanese Bank for International Cooperation: https://www.jbic.go.jp/en/
index.html (JBIC). Likewise important is JBIC's teaming with the U.S.
Development Finance Corporation: https://www.dfc.gov/ (DFC) with its
critically-expanded finance facilities, and their joint teaming with
Australia's Department of Foreign Affairs and Trade (DFAT).
Enhanced economic engagement should, at a minimum, involve greater
commercial interaction throughout the Pacific. We need to find direct
and indirect ways to achieve increased trade and direct investment from
the U.S. and from investors from like-minded nations including, of
course, Japan and Australia. The US has long declared its desire to
promote the objective of increased trade and investment; however, we
need to undertake a serious review of the quality, quantity, and
consistency of our efforts to achieve such an objective. A restart of
some initiatives together with initiation of more and better programs
would be a good start.
Important economic engagement focus will be placed here on the
activities of the Palau Economic Advisory Group (EAG). In particular,
the EAG brings a comprehensive approach to assisting Palau to: (i)
achieve better results with the economic assistance it receives, (ii)
benefit from additional programs and partnerships to increase trade and
investment from the US and like-minded nations, and (iii) to restore,
enhance, and introduce programs that promote enhanced people-to-people
engagements in Palau and in the U.S. However, allow me an immediate
caveat here: I appear here today strictly in my private capacity, not
as a U.S. delegate of the Palau EAG, nor as a member of the EAG itself.
Accordingly, all EAG-related comments here are strictly and exclusively
my own, and not in any way to be attributed to the EAG, or either of
its bi-national founders.
Of great concern to broader U.S. economic and national security
interests is the degradation of the U.S. Tuna Fleet, with a review of
the same, with specific reference to the need to enhance and secure the
economy of American Samoa. And, as we consider the further regional
engagement of American Samoa, the CNMI and Guam, the reference to
French Polynesia's Forum Associate Membership in the Pacific Island
Forum (PIF) suggests consideration of a similar membership for our
Pacific jurisdictions.
Modalities of Expanded U.S. Economic Engagement in the Pacific Islands:
i. The Role of TDA.
One of the many positive outcomes of the Summit was the release of
very useful new U.S. economic engagement programs. In this regard, a
central outcome of the Summit was the White House's designation of TDA
as the lead implementing agency of its newly created Pacific Island
Strategic Infrastructure Initiative (PISII) and co-lead of the
Transportation Partnership with the Pacific Islands (TPPI). These
economic engagement initiatives aim to catalyze sustainable, climate-
smart infrastructure investment throughout the Pacific Islands using
TDA's project preparation and partnership-building toolkit in sectors
including clean energy, transportation, digital and healthcare
infrastructure.
To help fulfill these commitments, in late February 2022 and early
March 2023, TDA engaged in scoping missions to the Pacific Islands,
with stops in Federated States of Micronesia, Fiji, Palau, the Republic
of Marshall Islands, Samoa, and Tonga. These scoping missions served as
opportune visits to establish new engagement partnerships and directly
solicit infrastructure proposals from key Pacific Island markets.
As known, these island countries face unique challenges, including
pronounced climate change impacts, severe weather events, limited
digital and transport connectivity, supply chain disruptions, and food
security issues, among others. Discussing these challenges firsthand
enabled TDA to assess current infrastructure needs and discuss
potential ways to partner with local public and private sector entities
to advance sustainable infrastructure solutions.
TDA participated in the U.S.-Pacific Islands Trade and Investment
Dialogue Senior Officials Meeting, led by the Office of the U.S. Trade
Representative, and met with ministries and private sector partners
across the Pacific Islands to discuss potential areas of cooperation.
They are now evaluating potential project leads for the modernization
and buildout of ports and airports, cold storage facilities, digital
infrastructure, telemedicine and healthcare solutions, electrical grids
and clean energy.
During the scoping missions, TDA announced the expansion of its
signature regional aviation initiative, which is now called the U.S.-
Southeast Asia and Pacific Islands Aviation Cooperation Program. The
initiative will now undertake dedicated programming across the Pacific
Islands. Looking forward, USTDA will also host a Pacific Island Country
delegation to the United States for a Ports Modernization Reverse Trade
Mission, scheduled for fall 2023.
TDA bookended its scoping missions with visits to New Zealand and
Australia, with whom the Agency has partnered to jointly support
quality infrastructure and human capacity building to advance the
resilience and prosperity of the Pacific Islands. TDA is also
supporting an open Call for Proposals for the Pacific Islands: Through
the Pacific Islands Strategic Infrastructure Initiative, TDA issued
this call for proposals to utilize the full breadth of its toolkit to
match the infrastructure priorities of Pacific Island countries with
the technical innovation of U.S. companies.
In a short amount of time, TDA has catalyzed new partnerships, to
importantly include JBIC, concurrent with deepening its existing
relationships in the Pacific Islands. Their efforts will soon lead to
an expanded portfolio of project preparation and partnership-building
activities that will promote sustainable infrastructure and greater
economic resilience across the region, while introducing high-quality
U.S. solutions. In short, TDA is on the front lines of Washington's
engagement efforts to strengthen the U.S.-Pacific Partnership.
ii. The Role of Regional Engagement between TDA--DFC--JBIC--DFAT
As China's intrusion in the region was more fully internalized in
Washington, it was recognized that the U.S. needed to expand the
mandate and funding of TDA's sister agency, the Overseas Private
Investment Corporation (OPIC). As a consequence, OPIC was morphed into
DFC, its role in assisting regional alliance engagement to contest the
China threat is well-described here by DFC's CEO Scott Nathan: https://
www.dfc.gov/media/speeches-testimony/testimony-dfc-ceo-scott-nathan-
house-committee-foreign-affairs-0.
TDA, for its part, not only provided catalytic support for DFC's
regional project developers, but also expanded its reach there in May
2022 by concluding a teaming arrangement with JBIC, which, in turn, was
able to pivot off JBIC's equity and debt facilities, a significant
capital multiplier outcome: https://ustda.gov/ustda-jbic-formalize-
global-partnership-on-infrastructure/
The TDA tie-in with JBIC was preceded by JBIC's November 8, 2017
teaming with OPIC, which was subsequently converted into an agreement
with the new DFC on December 14, 2021: https://www.jbic.go.jp/en/
information/press/press-2020/0114-014177.html
An even further expansion of regional finance capability took place
on October 16, 2022 when DFC, JBIC, DFAT and Export Finance Australia
(EFA) enhanced their collective collaboration: https://www.dfc.gov/
media/press-releases/joint-statement-united-states-japan-and-australia-
renewal-trilateral
The benefit of this collective finance engagement took place in
November 2022 at the Partnership for Global Infrastructure and
Investment (PGII) event at the G20 Summit, where it was announced that
DFC, JBIC and EFA would provide USD $50 million each provided to
support Telstra's acquisition of Digicel Pacific. Digicel Pacific is
the leading telecommunications operator in the Pacific, with over 2.5
million subscribers in Papua New Guinea, Fiji, Vanuatu, Samoa, Tonga,
and Nauru, with Telstra's acquisition of the same precluding a
threatened Chinese acquisition of the same: https: / /
www.whitehouse.gov / briefing-room / statements-releases / 2022 / 11 /
15 / united-states-australia-japan-joint-statement-on-cooperation-on-
telecommunications-financing/
iii. The Role of a Significant American Tuna Fleet:
Maintaining an active and viable U.S. tuna purse seine fleet
operating in the strategically important central Pacific Ocean is vital
for a number of reasons. First the fleet is based in American Samoa and
supports the local economy by delivering tuna to the StarKist facility
there, the largest private sector employer in the territory and by
utilizing a range of goods and services provided by local businesses.
The economy of American Samoa is overwhelmingly dependent on the
tuna industry and the related service industries that support both the
StarKist facility and vessels based there. The future of the U.S. purse
seine fleet and the future of American Samoa are inextricably and
undeniably linked.
The activities of the fleet provide a critical counterbalance to
China's growing influence across the region. As known, China has
focused strategically on developing direct commercial ties with several
Pacific Island States through investments in the fisheries sector, both
through the activities of its vessels as well as shoreside investments.
China understands that building commercial and industry ties is a the
single most important vector for political and economic engagement.
As a result, maintaining a viable American Samoa-based purse seine
fleet operating in the Pacific Ocean contributes not only to the United
States and American Samoan economy, but to regional food security,
national security, and other vital national interests. The fleet also
operates as numerous additional sets of ``eyes and ears'' across vast
reaches of the Western and Central Pacific Ocean.
And yet, the American Samoa-based fleet faces a number of
challenges that risk further significant reductions in the number of
vessels operating in the region. Frankly speaking, the fleet operates
on an increasingly uneven playing field with respect to its
international competitors, in particular China. China and other flag
states are able to exempt their vessels from a range of international
regulatory requirements by reflagging or entering into charter
arrangements with Pacific Island States who themselves are exempt from
these requirements.
Moreover, although the underlying Convention requires that
``Participating Territories'' such as American Samoa be afforded the
same treatment as the Pacific Island States, the America Samoa-based
fleet is not afforded these same exemptions creating a vastly
disproportionate burden on the American Samoa economy.
Finally, the fleet faces a number of regulatory challenges on the
domestic front as well. Current initiatives being considered by the
Administration would further limit access by the fleet to fish on the
high seas, and potentially close remaining U.S. waters, that are not
already closed to fishing, under an expanded Pacific Remote Islands
National Marine Sanctuary.
It is often said, because it is undeniably true, that fisheries are
as central to the politics of the Pacific as oil is to the Middle East.
Unless the United States is prepared to withdraw completely from
engagement with the Pacific Island States on these strategically
important fisheries issues, these trends affecting the American Samoa-
based fleet must be addressed and reversed, and soon. (In parallel,
another burden to American Samoa's economy needs to be early addressed,
that is raising the hourly wage there to the federal level.)
Finally, another approach to adding fisheries value to American
Samoa is to benefit from such as the Marshall Islands relationship with
Taiwan and U.S. One innovative approach here is to have Taiwanese
Bumblebee send fish it catches in Marshallese waters to American Samoa
for processing, then export them from there--this simultaneously
bringing RMI closer to controlling their fisheries.
Enhanced people-to-people Engagement:
While certain US policy initiatives are already underway to enhance
regional people-to-people engagement, an additional/intentional focus
will be required to achieve lasting results. Plans for the return of
the Peace Corps to many Pacific Island countries are well advanced, but
final arrangements are still awaited for in Palau, the FSM and the
Marshall Islands--the same being warmly welcomed and a strong signal of
U.S. commitment.
Similarly, continuation and even enhancement of the resident Civic
Action Team in Palau, and a return to FSM and RMI, would bring very
positive, mutually beneficial results.
The US Department of Veterans Affairs should be encouraged to
expand ways to improve access to VA health benefits for the substantial
and growing number of veterans in the FAS.
Another set of programs to consider were highlighted during the
COVID-19 response in which US resources from HHS, CDC and other
agencies, were deeply appreciated and highly effective. Making some
such interactions more frequent or even permanent on the ground could
yield equally admirable and long-lasting benefits.
Programs to improve education in the FAS and to make US higher
education affordable for FAS citizens would continue to enhance our
linkages. Finally, the U.S. must improve its focus upon the rights and
benefits FAS citizens enjoy while legally and productively residing in
the U.S. and in U.S. territories. Fixing the mistakenly excluded
Medicaid benefit was a good step.
Addressing the Real ID problems faced for a period of years was
another step. But too often Compact citizens living in the US face
challenges green-card holders so not face. A pathway to citizenship
afforded to immigrants from non-Compact nations is not afforded to
Compact immigrants. The U.S. can and should address and redress
inequities when possible, to further bolster US-FAS people-to-people
engagement outcomes.
In present close in this section relating to the importance of
personal relationships, it useful to note the coincidence that, at this
moment, the two most important women leaders in the Pacific are,
respectively, the Prime Minister of Samoa, Fiame Naomi Mata'afa, and
the Congresswoman from American Samoa, Aumua Amata Coleman Radewagen,
who naturally graces this body.
Expanded Engagement in the Pacific Island Forum:
Regarding expanded U.S. engagement in the region, it is noted that
the Governor of Guam was the only U.S. territory Chief Executive to
participate in the proceedings of the 2002 U.S. Pacific Islands Summit
in Washington D.C., and after its conclusion the Governor announced
that her local government administration would unilaterally seek
Associate Membership in the Pacific Islands Forum (PIF).
The U.S. historically has advised Guam and the PIF Secretariat that
Observer status in that international organization is the only
appropriate participation for Guam, American Samoa and the Northern
Mariana Islands. That is, given the requirements of the American system
of constitutional federalism, under which the President is the sole
national voice in foreign affairs, with the result that neither states
nor territories can go beyond participation as civil society observers
in international proceedings in which foreign policy matters are
deliberated.
One wonders if this is not a constitutional cage of our own making.
It is noted that the U.S. and France are among 19 nations that are
not PIF members but allowed to participate as countries ``engaged'' in
the region in the capacity of Forum Dialogue Partners. Yet, two French
territories that had Observer status became Associate Members as a
springboard to Full Member status. That includes New Caledonia, which
like Guam is not fully self-governing, and French Polynesia, classified
as an ``overseas country.''
Meanwhile, Wallis and Fotuna is still a French possession in
Observer status, demonstrating that one size does not fit all for
France and PIF, just as it need not for U.S. and its other territories,
especially if there are good domestic and/or international law reasons
for differentiation.
Similarly, Cook Islands and Niue are territorial dependencies of
New Zealand, given the ``Free Associated State'' designation and PIF
full membership, while Tokelau, New Zealand's small territory
(population 1,383), is an Associate Member of PIF.
While Australia and New Zealand have managed to expand beyond their
colonial past and the French territories have been accepted by PIF
despite France's nuclear testing legacy, the U.S. Pacific seems to be
having an identity crisis about being a Pacific nation, and thereby
precluding its small Pacific territories from regional roles that seem
natural.
If U.S. territories are not fully integrated into the U.S.
constitutional system as are states, why should they not exercise some
degree of international personality and integration in the regional
community? Or, what if the U.S. applied for PIF membership and made
Guam, American Samoa and Northern Mariana permanent members of the U.S.
delegation? The people of the Pacific who remember that 100,000
Americans died freeing them from brutal tyranny know the U.S. is a
Pacific nation, but has the U.S. fully considered the benefits of
either itself, or its Pacific Island Territories, in a far closer
engagement with the PIF?
Palau: A Case-study in Enhanced U.S. Engagement:
The Compacts of Free Association with the FSM, the RMI, and Palau
present unique opportunities and unique challenges resulting from our
history during the Post-World War II period.
In particular, reference to Palau can show the Biden administration
recognizing its importance by launching the Palau Economic Advisory
Group on September 15th 2022: https://www.doi.gov/oia/press/Compact-
Mandated-Palau-Economic-Advisory-Group-Launched
In proceeding with the EAG launch, the administration reversed
twelve years of earlier inaction, with the EAG being (notionally)
established on September 3, 2010, under the Agreement reached during
the 15th Anniversary Review of the Compact of Free Association between
the U.S. and Palau. In so launching the EAG, the administration has
demonstrated its ability to move past periods of relative neglect.
For its part, Palau appreciates the focus and attention on military
relations as evidence by the consistent, twice-yearly meetings that
provide a conducive environment and an opportunity to ensure mutually
beneficial interactions. Palau appreciates the high-level visits it has
received, including, among others, from the Secretary of Veteran's
Affairs. The Secretary acknowledged the sacrifices--and the ongoing
sacrifice--of Palauan citizens in the US military serving at a rate in
proportion to population unmatched by any state of the United States
likewise true of the FSM and Marshall Islands.
So, what are my (again, strictly personal) observations as a member
of the EAG? I see a nation that is a proud partner of the U.S. I see a
nation that has broad and deep linkages with the U.S. as evidenced by
the many Palauans alive today are resident in the U.S. mainland or a
U.S. territory. I see a country that has been economically damaged by
China's intentional ban on visitors from China to Palau, from a peak of
over 90,000 visitors or 54 percent of the total in FY2015 to virtually
none in a few years.
I see a country which has been further damaged by the impact of
COVID-19 on its tourism industry, causing economic activity to decline
by nearly 30 percent from its peak. I see a country forced to borrow,
albeit on concessional terms, to manage its way through the COVID-19
pandemic while keeping its tourism industry on life support to survive
until now. I see a country with inadequate and declining quality of its
infrastructure--however the same is beginning to attract the attention
of TDA/DFC/JBIC/DFAT-EFA.
Accordingly, for the relevant reasons, I see a country poised to
recover and prepared to deliver improved livelihoods to its current
population, and to do its best to attract Palauans to return home with
the education, skills and experience they have developed abroad
mostly in the U.S.
I welcome those with an interest in the comprehensive activities of
the EAG since its launch to take a moment to review its First Annual
Report, to appear when released on its web-site: https://pitiviti.org/
eag-meetings-reports
Conclusion:
The United States has recently emerged from a period where it took
its place and engagement in the Pacific Islands largely for granted.
Many negative interests have taken full advantage of this period of
hubris, clearly not least China. Armed with the knowledge of the
profound negative effect of this laissez-faire, the U.S. has recently
demonstrated it has a comprehensive range of economic engagement tools
to bring to bear, not least that of TDA and DFC.
And while this Hearing is not focused on the Compacts under
`present hoped-for closure', the same when concluded will clearly be
the signal to all parties how seriously the U.S. has reengaged. The
administration's launching of the Palau Economic Advisory Group is a
further strong positive signal the U.S. is fully committed in its
regional role and status.
______
Questions Submitted for the Record to Peter Watson, President & CEO,
The Dwight Group
Questions Submitted by Representative Westerman
Question 1. Historically, what was the importance of the islands
that now comprise the FAS and how does that importance show itself in
the present competition for influence and control in the Indo-Pacific?
Answer. It has been observed the CCP regime that rules the PRC
appears in some respects to be seeking to accomplish in the Pacific
Islands during the third decade of the 21st Century what Imperial Japan
attempted to accomplish in the third decade of the 20th Century. That
is, to use control of Oceania as a strategic and economic bridge to
gain control and dominate the Indo-Pacific region.
Imperial Japan used the League of Nations Mandate to establish a
civilian governing system based in Koror, Palau, to expand its power
projection to Saipan and across Micronesia to Chuuk and Majuro. PRC is
using political and economic codependence to set the stage for by
economic and strategic coercion as needed to achieve a dominant
position throughout a region spanning 1/3 of the earth's surface.
Surrounding Taiwan is one obvious purpose, and that is an
imperative in any assessment of regional economic and political
security threat. But of equal if not greater long-term interest to PRC
is access of sea lines of communication that run directly through the
FAS waters, islands and airspace.
Just as Imperial Japan's creeping expansion across the region of
small islands and big oceans included creeping militarization contrary
to its LON mandate, the allies had to island hop to reverse Japanese
aggression and drive imperial forces back to the homeland.
To avoid conflict that can lead to war, the U.S. and its allies in
our shared region must confront the political warfare and effectively
counter the political disruption, and corruption tactics the PRC is
waging to end democracy, free enterprise and rule-of-law in small
Pacific nations that control large ocean areas in strategic locations.
Question 2. How important are the FAS for the future of U.S.
economic presence in the Indo-Pacific, as well as countering CCP
aggression?
Answer. Vitally. Together with the U.S. territories that extend the
U.S. homeland into the Western Pacific, the FAS are centers of American
economic and strategic national interest. U.S. economic assistance is
an investment in peoples and nations that host critical military
presence more important than ever to keep the peace.
Questions Submitted by Representative Radewagen
Question 1. Dr. Watson, you mention you wished to elaborate further
on the American Samoa's fishing and the American Samoa Economic
Development Credit. Could you please do that?
Answer. That Congress has allowed the American Samoa Economic
Development Credit (ASDEC)/Section 30A to lapse is very regrettable:
Indeed it is extremely short-sighted. American Samoa is critical to the
U.S. mainland as its irreplaceable security platform in the southern
Pacific Islands--it's that simple.
American Samoa depends on its tuna canning industry, the
territories largest private employer and economic driver. With roughly
2,300 workers, the tuna cannery in Pago Pago is the largest private
sector employer in American Samoa, being responsible for nearly 20% of
its workforce, and has relied heavily on the Section 30A tax credit.
Local economic diversification cannot occur without a reauthorization
of the tax credit. This will provide time to recover from the economic
downturn and plan.
The House Ways and Means Committee has previously voted out a five-
year extension, and Senator Murkowski offered an amendment for a five-
year extension, but same was not taken up.
American Samoa is hopeful the Finance Committee will support a
multi-year reauthorization which will help diversify its economy and
give businesses the confidence to invest in American Samoa without
having to worry about annual expiration.
The Finance committee solved this problem for Puerto Rico and the
U.S. Virgin Islands in an earlier tax reform bill providing them with a
five-year extension for the rum tax cover over, a provision which
scores substantially higher than the ASEDC. This is the time to rectify
to extremely prejudicial situation in American Samoa--the anchor of
U.S. national security in the lower Pacific Islands.
Question 2. Do you see any path that would allow more participation
by any of the Pacific territories in the Pacific Islands Forum; and not
run afoul of the U.S. Constitution or the traditional authority of the
President/ Executive branch in conducting foreign affairs?
Answer. I was pleased to provide detail on this in my written
testimony, but for emphasis, the U.S. federal government not only can
and should facilitate a deeper engagement of the Pacific territories--
especially by American Samoa, as the U.S.'s only territory in the
southern Pacific--but it should also strongly consider becoming a
member itself. The U.S. had diplomatic representation in New Zealand in
1938, years before itself acquired a Pacific coast: In short it well
past due the United States moved to correct these PIF membership
mistakes of the past.
Questions Submitted by Representative Case
Question 1. During my time for questions in our hearing, I misspoke
when describing the Government Accountability Office's reported fiscal
impact from Compact residents on local communities. I noted that
localities collectively reported $1.8 billion in costs between 2004 and
2018 when in reality that figure in the GAO report is $3.2 billion. If
Congress were to expand the same eligibility for federal benefits to
Compact migrants as are currently extended to lawful permanent
residents, what uncovered costs from delivering still-uncovered
services would host communities have to cover without federal aid?
Answer. Local education costs may not be covered, for just one
example. Also, it has been suggested by some that there were methodical
deficiencies in past enumerations by OIA and Bureau of Census for
purposes of allocating annal grants under Section 104(e) of the 2003
COFA Amendments Act of 2003 (P.L. 108-188).
Specifically, the practice of OIA and the Bureau for the last 20
years has been to include U.S. citizens with origins in FAS as
``qualified non-immigrants'' under Section 104(e), referred to a here
as ``Compact Migrants.'' Since U.S. citizens do not enter of reside in
U.S. under Section 141 of the COFA, the enumeration and costing of the
program may be askew. Indeed, the record before the Subcommittee has
reported that half of ``Compact Migrants'' are U.S. citizens, a
distinction that could alter assessment on past and present costs for
COFA impact payments.
GAO also reported inconsistency and administrative discretion
exercised in directing enumeration that had no basis in statute. That
needs to be addressed and prevented.
Question 2. Citizens of the Freely Associated States are eligible
to join the U.S. military and frequently serve in our armed forces.
What proportion of the population from the Freely Associated States
joins the U.S. military compared to other U.S. communities? What are
the challenges veterans in the Freely Associated States experience in
accessing Department of Veterans Affairs health care and other benefits
when they return home to their countries? What can be done to improve
this?
Answer. Thank you. I of course respect the resources of OIA, VA and
Defense can best provide an accurate response to those questions;
however, on the first I am aware that the FAS--and American Samoa--have
its nationals serve in the U.S. armed forces at larger percentages than
the far majority of U.S. states, if indeed more than all.
Question 3. Funding for the Compacts of Free Association is
currently borne by the Department of the Interior and the Biden
administration suggests moving that funding the Department of State but
to keep administration of the Compacts within the Department of the
Interior. Given the critical role the Compacts of Free Association to
our national security and to the Department of Defense, should the
Department of Defense also bear some of these costs?
Answer. Some believe Defense Department has been misinformed and
misled into believing U.S. security and defense rights under COFA are
``locked in'' and/or binding on FAS ``in perpetuity.'' That is a deeply
flawed narrative that in some degree may have caused Defense to believe
its commitment in FAS is limited to INDOPACOM operational programs and
community relations activities involving in connection therewith, but
that relations with Congress, State, Interior and NSC on COFA
negotiations and approval are of limited efficacy and managed at a
bureaucratic level.
Defense should have a senior leadership and policy role and should
be represented by full time assigned personnel in the COFA management
and implementation process. The Defense budget should include
contributions to the COFA economic and political package, as well as
payment of operational and defense site costs as currently is the case.
Whether the funding and federal domestic program coordination in
the international setting is funded through State or Interior, Defense
should play a prominent role in managing relations with the FAS under
COFA.
Question 4. Last year the administration released the first ever
Strategy for Pacific Island Partnership along with a more detailed
Roadmap to a 21st Century U.S. Pacific Islands Partnership. How was
this and recent efforts to reengage the region seen by the Pacific
Islands? What role can Congress play to help implement the Pacific
Islands Partnership Strategy?
Answer. U.S. engagement in region will always be welcome and
appreciated. Right now the best measure is to approve a new federal law
extending the COFA on terms Congress determines to best serve U.S. and
FAS interests.
Question 5. The Pacific Islands Forum, a critical inter-
governmental organization in the Pacific Islands region, laid out a
regional vision for development of the Pacific Islands in its 2050
Strategy for the Blue Pacific Continent. How can the United States
support this strategy?
Answer. As responded to in Congresswoman's follow-up question on
the Pacific Island Forum, the U.S. federal government not only can and
should facilitate a deeper membership engagement there of its Pacific
territories--especially by American Samoa, as the U.S.'s only territory
in the southern Pacific--but it should also strongly consider becoming
a member itself. The U.S. had diplomatic representation in New Zealand
in 1938, years before itself acquired a Pacific coast: In short, the
way the U.S. can maximally support the development of the Pacific
Islands in its 2050 Strategy for the Blue Pacific Continent is for it
to become a full PIF member, and likewise have its Pacific territories
have a deeper organic role in the same.
______
Ms. Hageman. Thank you.
The Chair now recognizes Mr. Gray for 5 minutes.
STATEMENT OF ALEXANDER GRAY, MANAGING PARTNER, AMERICAN GLOBAL
STRATEGIES, LLC, OKLAHOMA CITY, OKLAHOMA
Mr. Gray. Thank you, Chairman Hageman, and Ranking Member
Leger Fernandez, and members of the Committee for this
opportunity to testify today on a matter of tremendous
importance for the sovereignty and integrity of U.S. Pacific
territories and insular areas, and that is countering the
malign influence of the People's Republic of China.
As the first-ever Director for Oceania and Indo-Pacific
Security at the NSC from 2018 to 2019, I witnessed firsthand
the PRC's growing influence across the Pacific, including in
U.S. territories and insular areas.
While PRC ambitions have received considerable media
coverage and high-level official attention in places like the
Solomon Islands and Papua New Guinea, there has been an
alarming dearth of focus on Beijing's efforts to penetrate,
influence, and subvert U.S. territories for which our
government is directly responsible.
While the United States has an extraordinary strategic
interest in the integrity of the Freely Associated States, I am
going to focus my attention in this testimony primarily on U.S.
territories.
In addition to the obligation the U.S. Government has to
the integrity of these areas, they are strategically
significant as the United States embarks on prolonged
competition with the PRC. The territories of Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands are
in vital sea lanes, they host critical military infrastructure
and assets, and they are integral parts of the Indo-Pacific
economy.
Additionally, the United States administers nine Pacific
possessions, including Wake Island, Midway Atoll, and others
that are likely to play important roles in that evolving U.S.-
PRC competition.
The strategic reality in the region has made U.S.
territories and possessions in the Pacific a prime target for
PRC malign influence. As others have noted, this influence can
come in many forms: propaganda, traditional espionage,
influence operations targeted at elites, but also general
public opinion, and more. U.S. Pacific territories have
witnessed the full spectrum of PRC operations, but given their
anomalous status within the U.S. Government and quirks of how
the executive branch is organized, they fail to receive the
attention and the resources to appropriately address the
predations of the PRC.
In my written testimony, I have laid out the various
specific ways the PRC is exerting malign influence against U.S.
territories in the Pacific. But I think just to encapsulate
that, Washington needs to begin prioritizing the defense of
U.S. Pacific territories and possessions the same way we would
address those same actions against a U.S. state.
To increase the responsiveness of senior levels of the U.S.
Government to the threats facing our Pacific territories and
possessions, it is time for the National Security Council to
establish an interagency policy process chaired at the
assistant secretary level by an appropriate NSC official to
respond to threats to U.S. territories, and to integrate this
response into our larger National Security Strategy. This
process would need representation from across the U.S.
Government.
Just as a few specific examples of steps the government
could and should take, we need to establish a director-level
position at the National Security Council focused on the U.S.
territories and possessions who can provide staff support to
that policy process that I just mentioned.
The Coast Guard is the entity most capable of defending and
safeguarding U.S. sovereignty in the U.S. territories and
possessions. They need additional resources to undertake that
mission, including, I would add, continuing forward with the
process of evaluating a permanent Coast Guard station in
American Samoa.
Additional bureaucratic fixes can be made to strengthen the
hand of the U.S. Government in countering PRC malign activity
in the region. That could include opening additional FBI field
offices outside of Honolulu in our U.S. territories and
possessions. It also means taking the PRC's economic assault on
our Pacific territories more seriously, and integrating efforts
by Departments of Commerce, Treasury, and Labor into a larger
policy process to address challenges like what has happened to
the cannery in American Samoa, which is a direct result of the
PRC's economic coercion.
Finally, U.S. territories and possessions in the Pacific
are vital sovereign parts of the United States, and they are
going to be instrumental in the conduct of our long-term
competition with the PRC.
In addition to the strategic rationale, we owe it to the
Americans who call these islands home to structure the U.S.
Government appropriately, apply the appropriate attention and
focus to safeguarding them from malign interference and
influence.
The bureaucratic fixes I have outlined are just a beginning
baseline for that process as we continue to reconfigure
ourselves for the era of great power competition. Thank you
again.
[The prepared statement of Mr. Gray follows:]
Prepared Statement of Alexander B. Gray
Chairwoman Hageman and Ranking Member Fernandez, thank you for the
opportunity to appear before the Subcommittee today to address an issue
of the utmost importance to the sovereignty of the United States and
the integrity of our Pacific territories and insular areas: countering
the malign influence of the People's Republic of China (PRC).
As the first-ever Director for Oceania and Indo-Pacific Security at
the National Security Council (NSC) from 2018 to 2019, I witnessed
firsthand the PRC's growing influence across the Pacific Islands,
including in U.S. territories and insular areas. While PRC ambitions
have received considerable media coverage and high-level official
attention in places like Solomon Islands and Papua New Guinea, there
has been an alarming dearth of focus on Beijing's efforts to penetrate,
influence, and subvert territories for which the United States
Government is directly responsible.
While the United States has an extraordinary strategic interest in
ensuring the integrity of the Freely Associated States (FAS) of the
Republic of the Marshall Islands, the Republic of Palau, and the
Federated States of Micronesia, I will not cover this matter
extensively in my testimony today. It is imperative that the U.S.
swiftly conclude extensions to the Compacts of Free Association with
the FAS, and it is well-documented that the PRC is actively seeking to
subvert the sovereignty of the FAS, weaken U.S. strategic interests in
the FAS, and project malign influence for the purpose of strengthening
Beijing's strategic-military objectives relative to the United States
in the Micronesian Region. Renewing the Compacts forthwith is a matter
of the utmost military, political, and economic urgency for the United
States.
Instead, I will primarily focus my remarks on the increasingly
pernicious challenge posed by the PRC in U.S. territories and insular
areas. In addition to the obligation the U.S. Government has to
preserve the integrity of these areas, they are strategically
significant as the U.S. embarks on a prolonged competition with the
PRC. The territories of Guam, American Samoa, and the Commonwealth of
the Northern Mariana Islands (CNMI) are located in vital Pacific sea
lanes, host critical military infrastructure and assets, and are
integral parts of the Indo-Pacific economy. Additionally, the U.S.
administers nine Pacific possessions: Baker Island, Howland Island,
Jarvis Island, Johnston Atoll, Kingman Reef, Midway Atoll, Palmyra
Atoll, and Wake Island. These possessions also contain important
strategic infrastructure, occupy critical Pacific geography, and will
likely play important roles in the evolving U.S.-PRC competition.
Approximately 265,000 Americans live in the three Pacific
territories as citizens or nationals. The Pacific territories and
possessions have over 1 million miles of Exclusive Economic Zone
(EEZs); the Pacific possessions alone have over 750,000 miles. Since
the beginning of America's acquisition of considerable Pacific
territory in the 19th century, the strategic imperative outlined in the
1820s by President John Quincy Adams has remained immutable: the
``furnishing of commerce and fishery extending to the islands of the
Pacific . . . still require that the protecting power of the Union
should be displayed under its flag.'' American strategic interests in
the Indo-Pacific, and particularly East Asia, require an extended
presence across the great swathe of the Pacific to project power,
protect commerce, and ensure the interests of the United States in the
region and beyond. The growing Sino-American rivalry has only
heightened this imperative.
Guam, only about 1,500 miles from Japan, is home to roughly 7,000
U.S. military personnel, including a U.S. Navy attack submarine
squadron and ship repair facility, a major U.S. Air Force base,
multiple U.S. Coast Guard cutters, and, over the next decade, 5,000
relocated Marines from Okinawa. Tinian, in the CNMI, will serve as an
alternate airfield for U.S. military aircraft.
American Samoa, about 2,000 miles north of New Zealand in the
Polynesian island group of the South Pacific, is the focus of a
feasibility study on whether to base Coast Guard Fast Response Cutters
there to uphold regional security and assist local partners in
countering China's malign activity. It has tremendous latent capacity
for the projection of U.S. power in the South Pacific at a time of
increased PRC interest in that subregion.
The United States' Pacific possessions (grouped collectively as the
Minor Outlying Islands) are strategically vital. Located in the North
Pacific along the same critical sea lanes between the U.S. West Coast
and East Asia that had originally prompted their acquisition in the
nineteenth century, these small islands provide sovereign American
territory in the vast expanse of the Pacific.
For example, situated between Hawaii and Guam, Wake Island is
undergoing an $87 million upgrade by the U.S. Air Force to better
support flight operations. Both Midway Atoll and Johnston Atoll
previously housed U.S. military installations and could be reactivated
to provide additional U.S. power projection across the North Pacific,
particularly as the PRC seeks to put U.S. facilities like Guam under
missile threat. The flexibility offered by these possessions is an
exceptional strategic opportunity for the U.S. in the Pacific.
These strategic realities have made the U.S. territories and
possessions in the Pacific a prime target for PRC malign influence. As
others have noted, this influence can come in many forms: propaganda,
traditional espionage, influence operations targeted at both elites and
general public opinion, and more. The U.S. Pacific territories have
witnessed the full spectrum of PRC operations but, given their
anomalous status within the U.S. Government and quirks in U.S.
Executive Branch organization, have failed to receive the attention and
resources needed to appropriately address Beijing's predations.
Some of these PRC efforts have been unique to the Pacific
territories. The CNMI, for instance, has been inundated by the ``birth
tourism'' phenomenon emanating from the PRC and encouraged by a parole
visa program initiated under the Obama administration. Birth tourism
has overwhelmed the CNMI's medical capacity, and, in recent years,
foreign births have exceeded native ones there. At the same time, four
of China's largest construction firms and a major casino operator were
found by U.S. authorities to be persistently paying local workers below
the minimum wage. Local CNMI officials have repeatedly raised concerns
about pernicious PRC practices that destabilize the local economy and
place undue pressure on CNMI's social cohesion.
Across U.S. territories and possessions in the Pacific, China's
malign activity is damaging local economies and the regional ecology.
Persistent and pervasive illegal, unreported, and unregulated (IUU)
fishing by PRC vessels has been common in American Samoa, Guam, the
CNMI, and as far east as Hawaii. Overfishing and depleted stocks have
roiled territorial economies, with a tuna cannery on American Samoa,
one of the island's largest employers, even temporarily suspending
operations due to lack of fish.
The PRC also regularly intrudes into EEZs across the region,
including with hydrographic survey ships and even with auxiliary
general intelligence vessels (AGIs), which have entered EEZs as far as
Hawaii or northern Australia. Such unfettered activity by PRC vessels
can provide critical information to counter U.S. Navy submarine
activity, compromise undersea cables, and establish underwater
surveillance systems. Without a regular air or sea presence across this
vast region, the U.S.'s ability to ensure the integrity of its
territories' EEZs is in question.
Washington must begin the process of prioritizing the defense of
U.S. Pacific territories and possessions from PRC predation while also
reorganizing itself to address these challenges in a systematic manner.
First, the U.S. Government must treat the above mentioned PRC
misbehavior with the same seriousness with which it would similar
attacks on a U.S. state. The Americans who reside in our Pacific
territories and possessions deserve nothing less.
To increase the responsiveness of the senior-levels of the U.S.
Government to the threats facing the Pacific territories and
possessions, it is time to establish a National Security Council-led
interagency policy process (chaired at the assistant secretary-level by
an appropriate NSC official) to respond to threats to U.S. territories
and possessions and integrate this response into the larger National
Security Strategy, especially with regards to PRC competition. Such a
process would have appropriate representation from relevant agencies,
including but not limited to the Departments of the Interior, State,
Defense, and Homeland Security.
Additionally, the NSC should create a cross-functional Director-
level position focused on the U.S. territories and possessions who can
provide staff support to the aforementioned policy process. This
official would provide needed accountability for elevating awareness of
the needs of the territories and possessions within the policy process,
and ensure that other U.S. Government policy processes are reflecting
the realities facing the territories and possessions.
The U.S. Coast Guard is the entity most capable of enforcing U.S.
sovereignty and safeguarding vital interests across the Pacific
territories and possessions. Whether it is enforcing EEZs in the Minor
Outlying Islands, preventing IUU fishing across the Pacific, or
countering narcotics and human trafficking, the Coast Guard is an
essential tool in blunting Beijing's assault on U.S. territories. A
substantially increased Coast Guard presence in American Samoa, Guam,
and CNMI will be needed in the years ahead. While it continues to be
under-resourced relative to the scale of its missions, creative
thinking in Washington should be applied to allocate existing resources
in pursuit of what should be a strategic imperative: the defense of the
Pacific territories and possessions.
Additional bureaucratic fixes can be made to strengthen the hand of
the U.S. Government in countering PRC malign activity in our
territories and possessions. For instance, the Federal Bureau of
Investigation (FBI) manages its Pacific operations from Honolulu. Given
the scale of PRC operations in the Western Pacific, an additional field
office on Guam and satellite offices, appropriately manned, in CNMI and
American Samoa would support both defensive efforts but also assist in
wider-regional intelligence and counterintelligence operations with
Pacific Islands partners.
The PRC's economic assault in territories like CNMI and American
Samoa deserves special attention. While there has been increased
awareness of Beijing's strategies of economic aggression broadly, their
effectiveness and the unique vulnerabilities of U.S. Pacific
territories to those strategies has received insufficient attention. As
part of the previously proposed NSC-led policy process, the Departments
of Commerce, Treasury, Labor and appropriate regulatory bodies must pay
particular attention to proposed projects and investments from foreign
entities in U.S. Pacific territories. These projects not only pose
threats to social cohesion and economic well-being but also pose
potential strategic challenges. Simply because our territories are far
from Washington does not mean the U.S. Government can fail to apply a
vigorous lens to potential threats.
U.S. territories and possessions in the Pacific are vital parts of
the United States and will be instrumental in our conduct of long-term
competition with the PRC. In addition to the strategic rationale, we
owe it to the Americans who call these islands home to structure the
U.S. Government appropriately, and apply the appropriate attention and
focus, to safeguarding them from malign interference and influence. The
bureaucratic fixes outlined above offer a beginning baseline for that
process as the U.S. continues to reconfigure for the era of Great Power
competition.
Again, I thank the Chair and Ranking Member for the opportunity to
appear before you today and I look forward to your questions.
______
Questions Submitted for the Record to Alexander Gray, Managing Partner,
American Global Strategies
Questions Submitted by Representative Westerman
Question 1. What current military presence does the US have in the
Indo-Pacific, and what potential is there to grow our military
presence? Is this something you deem as crucial to combating CCP
influence and aggression in the region?
Answer. The U.S. military presence in the Indo-Pacific is currently
focused on forward deployed forces in Japan, South Korea, and Guam,
with Hawaii serving as the locus of the Indo-Pacific military effort
through its headquartering of both U.S. Indo-Pacific Command and U.S.
Pacific Fleet. Guam is currently undergoing a long-anticipated
transition of forces from Okinawa, Japan, primarily Marine Corps
assets, which will both strengthen Guam's role in U.S. forward-deployed
defense while hopefully alleviating some of the pressures Okinawa has
faced by hosting large numbers of U.S. forces. American Samoa currently
lacks any notable U.S. military presence, but should be strongly
considered for a permanent U.S. Coast Guard facility and the basing of
USCG cutters to project power across the South Pacific. Additional Navy
and Coast Guard assets positioned in CNMI and resources devoted to
strengthening alternative airfield infrastructure in the Minor Outlying
Islands (e.g. Wake, Midway, etc.) would provide additional options for
the U.S. in the ongoing competition with the CCP. Finally, as the
Compacts of Free Association are hopefully renewed, there are
opportunities to strengthen rotational U.S. military deployments in
Palau and FSM, in addition to the permanent presence at Kwajalein in
RMI. Palau, in particular, can serve as an important alternative site
for critical infrastructure given its proximity to both Guam and
Okinawa.
Question 2. How do you assess the political risk that one or more
of the FAS will decide to change partner of choice and realign with PRC
or some other power hostile to the U.S. over the next 20 years, or any
time in the future? What must U.S. do to reduce this risk?
Answer. While there is certainly political risk that PRC/CCP
influence operations will succeed in creating pockets of support within
the FAS (FSM, Palau, RMI) over the next two decades, I am less
concerned by a complete realignment toward the PRC in any of the three
polities. Pacific Island states seek to hedge against both Great Power
competitors to the extent possible, and a complete realignment given
the historical and economic connections with the U.S. would present
significant practical difficulties. However, to combat CCP influence
and the emergence of pockets of support in the FAS that seek to promote
PRC/CCP interests, it is critical for the U.S. to place its long-term
relationship with the FAS on a more permanent footing through renewed
COFAs while also taking concrete steps to push back against PRC/CCP
influence operations that undermine island sovereignty.
Questions Submitted by Representative Case
Question 1. During my time for questions in our hearing, I misspoke
when describing the Government Accountability Office's reported fiscal
impact from Compact residents on local communities. I noted that
localities collectively reported $1.8 billion in costs between 2004 and
2018 when in reality that figure in the GAO report is $3.2 billion. If
Congress were to expand the same eligibility for federal benefits to
Compact migrants as are currently extended to lawful permanent
residents, what uncovered costs from delivering still-uncovered
services would host communities have to cover without federal aid?
Answer. While not an expert in ``Compact Impact'' issues, I
recognize the immense importance of ensuring that host communities are
not exposed to undue costs associated with Compact migration. Such
costs undermine political support for the Compacts, with serious
adverse national security impacts. I have long encouraged the national
security community to take seriously the threat posed by ``Compact
Impact'', if unaddressed, to undermine the political will needed to
sustain healthy, long-term relationships with the FAS.
Question 2. Citizens of the Freely Associated States are eligible
to join the U.S. military and frequently serve in our armed forces.
What proportion of the population from the Freely Associated States
joins the U.S. military compared to other U.S. communities? What are
the challenges veterans in the Freely Associated States experience in
accessing Department of Veterans Affairs health care and other benefits
when they return home to their countries? What can be done to improve
this?
Answer. It is my understanding that, collectively and as a
percentage of population, citizens of the FAS serve in the U.S.
military at a higher rate than any U.S. state. That is a tremendous
credit to the citizens of Palau, FSM, and RMI, and something that U.S.
leaders should never cease to emphasize in interactions with their FAS
counterparts. Unfortunately, as has been demonstrated repeatedly since
the Iraq and Afghanistan conflicts, the Department of Veterans Affairs
lacks infrastructure in the FAS to address the types of injuries
sustained in recent conflicts. Many FAS veterans lack the resources to
travel to the closest available VA facilities. I encourage Congress to
examine additional funding for FAS veterans to travel to VA facilities
where their needs can be met, as well as establishment of satellite
facilities in the FAS to treat some conditions (mental health being an
area of significant attention). The obligations owed to our FAS
veterans is significant, and the relationships forged through military
service are a major strategic advantage to the U.S. in the region.
Question 3. Funding for the Compacts of Free Association is
currently borne by the Department of the Interior and the Biden
administration suggests moving that funding the Department of State but
to keep administration of the Compacts within the Department of the
Interior. Given the critical role the Compacts of Free Association to
our national security and to the Department of Defense, should the
Department of Defense also bear some of these costs?
Answer. The Department of Defense is the largest strategic
beneficiary of the COFAs through their access to the FAS and right of
denial to other strategic competitors. DoD, given its budget and the
benefits gained from the FAS, should be the largest budgetary
contributor to the COFAs. Interior should continue to manage COFA
assistance and State has a key role in managing the relationships with
sovereign states, but DoD must take a large proportion of the financial
obligation given the strategic benefits.
Question 4. Last year the administration released the first ever
Strategy for Pacific Island Partnership along with a more detailed
Roadmap to a 21st Century U.S. Pacific Islands Partnership. How was
this and recent efforts to reengage the region seen by the Pacific
Islands? What role can Congress play to help implement the Pacific
Islands Partnership Strategy?
Answer. Congress can help the recent Pacific Islands strategy by
ensuring steady funding for key initiatives, like reopening U.S.
embassies in the Pacific and bringing the Peace Corps back to the
region. Pacific states are justifiably skeptical of U.S. commitment to
the region, given American distraction over the last thirty years, and
Congress should provide the resources to help alleviate that
skepticism. Swift approval of the COFAs would also strengthen
perceptions of American staying power.
Question 5. The Pacific Islands Forum, a critical inter-
governmental organization in the Pacific Islands region, laid out a
regional vision for development of the Pacific Islands in its 2050
Strategy for the Blue Pacific Continent. How can the United States
support this strategy?
Answer. The U.S. can utilize a whole-of-government approach to
assist the Pacific Islands meet the challenges they face, whether IUU
fishing or environmental threats. Bringing the entire USG, from the EPA
to the Fish and Wildlife Service to the DEA to the USDA, to engage to
address challenges Pacific Island states actually face (soil erosion,
rising sea levels, etc.) will help implement the strategy put forth.
Congress can provide critical oversight to ensure the USG is working
holistically to execute and implement this strategy.
______
Ms. Hageman. Thank you.
The Chair now recognizes Mr. Grossman for 5 minutes.
STATEMENT OF DEREK GROSSMAN, SENIOR DEFENSE ANALYST, THE RAND
CORPORATION, SANTA MONICA, CALIFORNIA
Mr. Grossman. Good afternoon, Chair Hageman, Ranking Member
Leger Fernandez, and distinguished members of the Subcommittee.
Thank you for inviting me to speak today.
Beijing is pursuing three interrelated objectives in the
Pacific, which include eliminating Taiwan's diplomatic space;
accessing natural resources and generating economic activity;
and breaking through the U.S. military's domination of the
second island chain.
China's strategy toward the Pacific Island countries is
also playing out in the FAS, a region of keen geostrategic
interest to the United States. As my RAND colleagues and I
discussed in a 2019 report to Congress, the FAS are critical
enablers of U.S. military operations that support the United
States' Indo-Pacific strategy.
Marshall Islands is one of the four nations in Oceania that
diplomatically recognizes Taiwan over China. Because it has
limited influence over the Marshall Islands, Beijing may be
attempting to find ways to covertly secure its economic
interests there. For example, two Chinese nationals who have
also become naturalized Marshallese citizens conspired to
establish the Rongelap Atoll Special Administrative Region
within Marshall Islands, potentially giving Beijing access to
natural resources and fishing in the future. Rongelap is also
near the U.S. Ronald Reagan missile defense test site on
Kwajalein Atoll, potentially raising spying concerns.
The Federated States of Micronesia is the only state within
the FAS that diplomatically recognizes China over Taiwan. As a
result, Chinese contacts with state governments and state
officials are numerous. In 2014, the two nations created the
Commission on Economic Trade Cooperation. China's economic
relationship with FSM includes substantial trade and aid
components. Additionally, the FSM is a participant in China's
global infrastructure and investment program known as Belt and
Road Initiative.
Like Marshall Islands, Palau also recognizes Taiwan over
China, which has made it a target of Chinese pressure. Most
notably, Chinese tourism to Palau ramped up for years until
suddenly, in November 2017, Beijing barred tourists from
traveling to this pristine vacation spot. It appears that
Beijing's move was in retaliation for Palau's refusal to switch
diplomatic recognition.
And because the South China Sea is now practically devoid
of fishery resources, Chinese fishermen are going farther
afield in search of these resources, including within Palau's
Exclusive Economic Zone. This is causing new security concerns.
For example, in December 2020, with the assistance of the U.S.
Coast Guard, Palauan authorities discovered 28 Chinese
fishermen poaching sea creatures within its EEZ, and Palau
deported them.
Although they do not face diplomatic pressure from China
because they are U.S. territories, American Samoa, Commonwealth
of the Northern Mariana Islands, as well as Guam, nonetheless
are dealing with a variety of Chinese economic and security
threats.
For American Samoa, Chinese illegal, unreported, and
unregulated fishing activities have depleted tuna stocks within
its EEZ and disrupted the local economy, even to the point of
forcing a tuna cannery there, which is one of the island's
largest employers, to temporarily suspend operations due to a
lack of tuna availability. The Biden administration has been
considering a Trump-era plan to station a U.S. Coast Guard
cutter in American Samoa, in part to deter and intercept
Chinese IUU fishing activities.
CNMI primarily faces a potential economic threat from China
as well, due to the fact that CNMI's economy is highly
dependent on tourism coming from China. As we have seen with
Palau and countries outside of Oceania, it is quite easy for
Beijing to exact retaliation against those it harbors
disagreements with by ending Chinese tourism to these
destinations.
And for Guam, the primary Chinese threat is military in
nature. Because Guam is home to U.S. Navy, Air Force, and, as
of January, a Marine Corps base, the island has become an
attractive target for China to disrupt or disable in the run-up
to or during military operations against Taiwan or in the East
or South China Sea. Indeed, Chinese social media has referred
to its military's DF-26 intermediate range ballistic missile as
the ``Guam killer missile.'' Meanwhile, in April of this year,
China also sent a carrier group featuring its Shandong aircraft
carrier into waters approximately 400 miles off the coast of
Guam.
I have many recommendations detailed in my written
statement, but in the interest of time, here are three.
First, consider Pacific-focused policy.
Second, offer economic assistance to U.S. territories
particularly susceptible to Chinese economic coercion.
And third, provide additional maritime domain awareness and
patrol capabilities to FAS and U.S. territories.
Thanks again for the opportunity to testify today, and I
look forward to your questions.
[The prepared statement of Mr. Grossman follows:]
Prepared Statement of Derek Grossman,\1\ The RAND Corporation \2\
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\1\ The opinions and conclusions expressed in this testimony are
the author's alone and should not be interpreted as representing those
of the RAND Corporation or any of the sponsors of its research.
\2\ The RAND Corporation is a research organization that develops
solutions to public policy challenges to help make communities
throughout the world safer and more secure, healthier and more
prosperous. RAND is nonprofit, nonpartisan, and committed to the public
interest. RAND's mission is enabled through its core values of quality
and objectivity and its commitment to integrity and ethical behavior.
RAND subjects its research publications to a robust and exacting
quality-assurance process; avoids financial and other conflicts of
interest through staff training, project screening, and a policy of
mandatory disclosure; and pursues transparency through the open
publication of research findings and recommendations, disclosure of the
source of funding of published research, and policies to ensure
intellectual independence. This testimony is not a research
publication, but witnesses affiliated with RAND routinely draw on
relevant research conducted in the organization.
Chinese Strategy in the Freely Associated States
and American Territories in the Pacific:
Implications for the United States
For decades, Beijing considered the Pacific Islands part of China's
``periphery'' [zhoubian], or neighboring region.\3\ Despite their
geostrategic value to Japan during World War II, Beijing had virtually
ignored this part of the world in favor of focusing on ``major
powers,'' such as the United States and Russia, as well as countries
that share borders with China and other parts of the developing world,
such as Africa. In recent years, however, Chinese attention has
increasingly included Oceania, probably in no small part due to China's
growing economic and military power and corresponding global interests.
Indeed, Chinese President Xi Jinping in 2015 referred to the South
Pacific as the ``southern leg'' of the ``Maritime Silk Road,'' which
eventually became part of the global investment and infrastructure
program, known as the Belt and Road Initiative (BRI), and his signature
economic program.\4\
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\3\ Timothy R. Heath, Derek Grossman, Asha Clark, China's Quest for
Global Primacy: An Analysis of Chinese International and Defense
Strategies to Outcompete the United States, RAND Corporation, RR-A447-
1, 2021, p. 40, https://www.rand.org/pubs/research_reports/RRA447-
1.html.
\4\ National Development and Reform Commission, ``Vision and
Actions on Jointly Building Silk Road Economic Belt and 21st Century
Maritime Silk Road,'' Ministry of Foreign Affairs and Ministry of
Commerce, People's Republic of China, 2015.
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The purpose of this testimony is threefold. First, I outline the
broad contours of Chinese strategy toward the Pacific Islands region.
Next, I provide an analysis of Chinese strategy specifically in areas
of relevance to the Committee, including the Freely Associated States
(FAS)--composed of Marshall Islands, Federated States of Micronesia
(FSM), and Palau--as well as U.S. territories in the Pacific, including
American Samoa, the Commonwealth of the Northern Mariana Islands
(CNMI), and Guam. Finally, I submit several policy recommendations for
Congress and the U.S. Government to consider going forward.
China's Strategy in the Pacific Islands
Although mainstream interest in China's strategy toward the Pacific
has been growing in recent years, Western and Chinese scholarship on
the subject remains thin compared with other regions, making it more
difficult to discern the true nature of Beijing's objectives there.\5\
Nevertheless, the available scholarly literature generally coalesces
around China pursuing three interrelated objectives in the Pacific (not
necessarily in rank order): (1) eliminating Taiwan's diplomatic space,
(2) accessing natural resources and generating economic activity, and
(3) breaking through the U.S. military's domination of the second
island chain.\6\ Differences among experts, whether Western or Chinese,
usually stem from emphasizing one driver over another, but the debate
is simply a matter of degree: Most, if not all, researchers recognize
that China's Pacific strategy is the product of these three factors
working together. Our research at the RAND Corporation draws this same
conclusion.
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\5\ This section draws from my previous congressional testimony on
China's strategy in the Pacific delivered to the U.S.-China Economic
and Security Review Commission on August, 3, 2022. See Derek Grossman,
China's Gambit in the Pacific: Implications for the United States and
Its Allies and Partners, RAND Corporation, CT-A2198-1, 2022, https://
www.rand.org/pubs/testimonies/CTA2198-1.html.
\6\ Ethan Meick, Michelle Ker, and Han May Chan, China's Engagement
in the Pacific Islands: Implications for the United States, U.S.-China
Economic and Security Review Commission, June 14, 2018, p. 1. One
recent study of interest surveys and interviews 39 Chinese scholars on
Beijing's top goals in the Pacific. It found that pursuing Chinese
economic interests were paramount, although reducing Taiwan's
diplomatic space was also important. For more, see Denghua Zhang,
``China's Motives, Influence, and Prospects in Pacific Island
Countries: Views of Chinese Scholars,'' International Relations of the
Asia-Pacific, September 17, 2021. Another study places more emphasis on
the economic aspects of China's strategy in the Pacific (Jenny Hayward-
Jones, ``Big Enough for All of Us: Geo-Strategic Competition in the
Pacific Islands,'' Lowy Institute, May 16, 2013). A separate study
argues that Beijing's economic agenda in the Pacific is helping China
carve out a new ``sphere of influence'' meant to challenge the United
States' and Australia's current spheres (Yu Lei and Sophia Sui,
``China-Pacific Island Countries Strategic Partnership: China's
Strategy to Reshape the Regional Order,'' East Asia, Vol. 39, March
2022). Other experts have emphasized the geostrategic implications of
China's approach to the Pacific. See, for example, Jonathan Pryke,
``The Risks of China's Ambitions in the South Pacific,'' Brookings
Institution, July 20, 2020; and Terence Wesley-Smith and Graeme Smith,
The China Alternative: Changing Regional Order in the Pacific Islands,
Australian National University Press, 2021.
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Regarding China's goal to eliminate Taiwan's diplomatic space,
Oceania is home to four of Taipei's remaining 13 official diplomatic
partners worldwide: Marshall Islands, Nauru, Palau, and Tuvalu.
Notably, two Pacific Island countries--Solomon Islands and Kiribati--
switched their diplomatic recognition in 2019 from Taiwan to China,
underscoring how quickly Taipei can lose diplomatic ground to Beijing
in this contested region.
China also wants to access natural resources in the Pacific. Most
significantly, as fisheries dwindle in the nearby South China Sea due
to a combination of coral reef destruction for artificial island
construction, overfishing, pollution, and climate change, Beijing has
sought to make up losses farther afield.\7\ According to one recent
study, Beijing's distant-water fishing fleet, defined as ships fishing
outside internationally recognized exclusive economic zones (EEZs),
numbered 2,701 ships in 2020, easily making it the world's largest.\8\
The problem is that in order to satisfy the tastes of China's
burgeoning middle class, Beijing--without respect for international
commercial and environmental standards--incentivizes fleets to haul in
as much seafood as possible (tuna and sea cucumbers, in particular),
resulting in massive numbers of illegal, unreported, and unregulated
(IUU) fishing incidents.\9\ According to the study, from 2015 to 2019,
Beijing's fleets committed the most incidents of IUU fishing on the
high seas, and the second- and third-most frequent locations for
Chinese IUU fishing were in the Western/Central Pacific and South
Pacific, respectively.\10\ These regions are home to the Pacific Island
countries. Besides finding additional fishery stocks to tap, China is a
huge proponent of deep-sea mining access to hunt for important metals,
such as nickel, cobalt, copper, and manganese.\11\ Beijing also mines
land resources. While Pacific Island nations generally do not have much
land mass, Beijing, for years, has been exploiting gold and nickel
mines, liquefied natural gas, and timber in Papua New Guinea.\12\
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\7\ U. Rashid Samaila, William W.L. Cheung, Louise S.L. Teh, et
al., Sink or Swin: The Future of Fisheries in the East and South China
Seas, ADM Capital Foundation, 2021.
\8\ Environmental Justice Foundation, The Ever-Widening Net:
Mapping the Scale, Nature and Corporate Structures of Illegal,
Unreported and Unregulated Fishing by the Chinese Distant-Water Fleet,
March 2022, p. 11.
\9\ Blake Herzinger, ``China Is Fishing for Trouble at Sea,''
Foreign Policy, November 20, 2020.
\10\ Environmental Justice Foundation, 2022, p. 25.
\11\ Denghua Zhang, ``China Looking Under the Sea for Opportunities
in the Pacific,'' East Asia Forum, June 30, 2018.
\12\ Meick, Ker, and Chan, 2018, p. 7.
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Finally, on the military objective of breaking through the second
island chain, Beijing seeks to weaken U.S. partnerships in the Pacific
that afford the United States military advantages, which could be
leveraged against China during a Taiwan, South or East China Sea, or
even Korea scenario.\13\ Admittedly, the last time RAND researchers did
an in-depth analysis of Chinese primary source literature on this
subject in 2018, the record was scant, probably because Beijing had not
been paying much attention to the Pacific Islands region; it will be
interesting to see whether this changes over time. Nonetheless, there
are several examples from the past decade worth noting here. One
Chinese scholar, Qi Huaigao of Fudan University, outlined in 2014 how a
school of contemporary Chinese foreign policy thinking viewed the
development of ties in the Pacific as necessary to achieve ``maritime
breakthroughs'' past encircling external powers.\14\ Another Chinese
expert, Zhang Ying of Beijing Foreign Studies University, wrote in 2016
that the ``South Pacific region . . . hinders China's expansion into
the deep sea.'' \15\ And Xu Xiujun, a scholar at the Chinese Academy of
Social Sciences, concurred with Zhang's assessment. Xu added in 2014
that U.S. military presence in the region will very likely play a key
role in U.S. efforts to contain China.\16\
---------------------------------------------------------------------------
\13\ For an assessment of Chinese conceptions of the Second Island
Chain, see Andrew S. Erickson and Joel Wuthnow, ``Barriers,
Springboards and Benchmarks: China Conceptualizes the Pacific `Island
Chains,' '' China Quarterly, No. 225, March 2016.
\14\ Qi Huaigao [Chinese], ``Thoughts on the Top Design of
Periphery Diplomacy'' [``Chinese''], Journal of International Relations
[Chinese], Forum of World Economics and Politics [Chinese], No. 4,
2014, p. 15.
\15\ Zhang Ying [Chinese], ``China's Strategic Choice in the South
Pacific: Perspectives, Motivations and Paths'' [``Chinese''],
Contemporary World and Socialism, No. 6, 2016, p. 132.
\16\ Xu Xiujun [Chinese], ``The Diplomatic Strategy of China to
Develop the Relations with the South Pacific Region'' [``Chinese''],
Pacific Journal [Chinese], Vol. 22, No. 11, November 2014, p. 21.
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Beyond the literature, Beijing has engaged in behavior throughout
the region that could eventually support the objective to puncture the
second island chain. Most notably, in April 2022, China signed a
security agreement with Solomon Islands to allow regular visits of
Chinese navy ships and training of local law enforcement. Traditional
regional powers--such as the United States, Australia, Japan, and New
Zealand--are concerned that China might eventually leverage these
activities to establish a permanent base in the region. Meanwhile,
Beijing is assisting Kiribati to upgrade its airstrip on Canton Island,
which is located just 1,500 miles off the coast of Hawaii. Tarawa
claims the renovation will support tourism, but Washington believes it
could be a future Chinese air base.\17\ In 2018, China reportedly was
helping Vanuatu build a potentially dual-use wharf on Santo Island. At
first, the Vanuatans dismissed concerns, but eventually they decided to
end the project.\18\ Broadly, China is adding highly skilled defense
attaches throughout the Pacific Island countries--of which only three
(Fiji, Papua New Guinea, and Tonga) have militaries--and is offering to
train security officials, perhaps further enabling an operating
presence in the region in the years to come.\19\
---------------------------------------------------------------------------
\17\ Jonathan Barrett, ``Kiribati Says China-Backed Pacific
Airstrip Project for Civilian Use,'' Reuters, May 13, 2021.
\18\ Ben Bohane, ``South Pacific Nations Shrug Off Worries on
China's Influence,'' New York Times, June 13, 2018.
\19\ Denghua Zhang, ``China's Military Engagement with Pacific
Island Countries,'' Asia and the Pacific Policy Society, August 17,
2020.
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China seeks to achieve its three top objectives in the Pacific by
leading with the least controversial and most attractive agenda to
Pacific Island states. Then, over time, and as Pacific Island nations'
trust in Beijing grows, China can leverage noncontroversial cooperation
for more-sensitive benefits, such as accessing these nations' EEZs for
fishing, switching their diplomatic allegiance from Taiwan to China,
and establishing a military foothold in the region. As evidenced by the
leaked China-Pacific Island Countries Common Vision Plan that then-
Chinese Foreign Minister Wang Yi brought to the region in late May 2022
for concurrence among the Pacific Island nations, Beijing seeks to
boost economic, pandemic-related, people-to-people, and climate change
cooperation, among other initiatives.\20\
---------------------------------------------------------------------------
\20\ ``China-Pacific Island Countries Common Development Vision,''
leaked draft, Australia Broadcasting Corporation News, undated, https:/
/www.documentcloud.org/documents/22037011-china-pacific-island-
countries-common-development-vision. Also, see Wang Yi's official
statement on this vision statement at ``Wang Yi: The Comprehensive
Strategic Partnership Between China and Pacific Island Countries Will
Surely Achieve Steady and Sustained Growth,'' Ministry of Foreign
Affairs of the People's Republic of China, May 30, 2022.
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Simultaneously, Beijing very likely employs information operations
to control the narrative, such as by denigrating American, Australian,
Japanese, Taiwanese, and perhaps New Zealander contributions to the
Pacific and suggesting greater ``win-win'' or mutually beneficial
Chinese involvement in the region with ``no strings attached.'' Beijing
has even shown a willingness to block unfavorable media coverage from
within Pacific Island states, as it did during then-Foreign Minister
Wang's visit to the region.\21\ China also probably bribes government
officials and entities at all levels and contributes to political
activities that reinforce its narrative.\22\ A new area of potential
concern, as outlined in Micronesian President David Panuelo's
unprecedented and blistering warning letter of May 20, 2022, prior to
the Pacific Islands Forum (PIF), the premier multilateral venue in the
region, which held its annual summit in July 2022, pertained to China's
goal of dominating regional communications infrastructure. He noted
that ``the Common Development Vision seeks Chinese control and
ownership of our communications infrastructure . . . for the purpose of
. . . mass surveillance of those residing in, entering, and leaving our
islands, ostensibly to occur in part through cybersecurity
partnership.'' \23\ If his interpretation is accurate, Beijing seeks
extensive control over Pacific Islanders' daily activities.
---------------------------------------------------------------------------
\21\ Edwina Seselja and Joshua Boscaini, ``China's Visit to Pacific
Highlights Growing Threat to Journalism in the Region,'' Australia
Broadcasting Corporation News, June 1, 2022.
\22\ Edward Cavanough, ''China and Taiwan Offered Us Huge Bribes,
Say Solomon Islands MPs,'' The Guardian, December 7, 2019.
\23\ ``FSM [Federated States of Micronesia] President Warns Pacific
Leaders over China Documents,'' Radio New Zealand, May 27, 2022.
Panuelo's original letter can be found at https://s3.documentcloud.org/
documents/22039750/letter-from-h-e-david-w-panuelo-to-pacific-island-
leaders-may-20-2022-signed.pdf.
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China's Strategy in the Freely Associated States
China's strategy toward the Pacific Island countries that I just
described is also playing out in the FAS--a region of keen geostrategic
interest to the United States.\24\ As my RAND colleagues and I
discussed in a 2019 report to Congress, the FAS are critical enablers
of U.S. military operations that support the United States' Indo-
Pacific strategy.\25\ Washington is seeking to sustain these long-
standing security partnerships by renewing the Compacts of Free
Association (COFAs) it has with them. The COFAs are unique
international agreements that allow the United States to maintain sole
and unfettered military access to the lands, waterways, and airspace of
the FAS. China would like to convince the FAS to do away with the COFAs
entirely, but more realistically, it is focused on blunting any
military advantages that the U.S. military might accrue from the COFAs.
What follows is an accounting of some Chinese activities vis-a-vis the
FAS to achieve this objective.
---------------------------------------------------------------------------
\24\ Some language in this section is adapted and updated from
Derek Grossman, Michael S. Chase, Gerard Finin, et al., America's
Pacific Island Allies: The Freely Associated States and Chinese
Influence, RAND Corporation, RR-2973-OSD, 2019, https://www.rand.org/
pubs/research_reports/RR2973.html.
\25\ Grossman et al., 2019; White House, Indo-Pacific Strategy of
the United States, February 2022.
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Marshall Islands
Marshall Islands is one of the four nations in Oceania that
diplomatically recognizes Taiwan over China. What we uncovered as part
of our 2019 research on China's strategy toward the FAS is that
Beijing, for years, has been offering economic incentives--such as
lowering import taxes for Marshallese-flagged shipping into Chinese
harbors--in exchange for official ties with China.\26\ This was a
significant incentive because, at the time of our research, the
Marshall Islands was the third-largest ship registry. Two other
countries at the top of these rankings, Panama and Liberia, both
switched from Taiwan to China and received the same benefit. Thus far,
Majuro has rebuffed Chinese offers, but a change in diplomatic
recognition from Taipei to Beijing, if it were to ever happen, would
very likely entail additional areas of China-Marshall Islands
cooperation.
---------------------------------------------------------------------------
\26\ Grossman et al., 2019, p. 40.
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Because it has limited influence over the Marshall Islands, Beijing
may be attempting to find ways to covertly secure its economic
interests there. For example, at the Asia World Expo held in Hong Kong
in April 2018, a Chinese businessman and the mayor of Rongelap Atoll
proposed the creation of a special administrative region to attract
investment to the atoll. The mayor of Rongelap supported turning it
into a ``special administrative region'' and financial center on par
with Hong Kong, Singapore, and Dubai.\27\ The proposal quickly became a
source of controversy in Marshallese politics, stemming from concerns
that such a proposal could make the area a haven for money laundering
and other illegal activities; the government declined to back it after
it was declared unconstitutional by the Marshallese Attorney General.
In November 2018, President Hilda Heine narrowly survived a no-
confidence vote that was ostensibly brought because of opposition to
plans to introduce a state-backed cryptocurrency, but President Heine
stated that the real reason for the vote was her government's
opposition to the Chinese-backed Rongelap plan: ``Really the vote of no
confidence is about the so-called Rongelap Atoll Special Administrative
Region, or [RASAR] scheme, which is an effort by certain foreign
interests to take control of one of our atolls and turn it into a
country within our own country.'' \28\
---------------------------------------------------------------------------
\27\ Mackenzie Smith, ``Remote Marshall Islands Atoll Plans to
Become the `Next Hong Kong,' '' Radio New Zealand, September 21, 2018.
\28\ Dateline Pacific, ``Marshalls President, Facing Ouster, Blames
Chinese Influence,'' Radio New Zealand, November 9, 2018, https://
www.rnz.co.nz/international/programmes/datelinepacific/audio/
2018670409/marshalls-president-facing-ouster-blames-chinese-influence;
Alan Boyd, ``Chinese Money Unsettles Marshallese Politics,'' Asia
Times, November 14, 2018.
---------------------------------------------------------------------------
More recently, two Chinese nationals, Cary Yan and Gina Zhou, who
have also become naturalized Marshallese citizens, were arrested by
U.S. authorities in Thailand in 2020 on corruption and money-laundering
charges involving a New York-registered organization. Yan and Zhou were
the drivers behind the RASAR scheme in the Marshall Islands.
Nevertheless, in 2020, the Marshallese parliament passed legislation to
establish RASAR, and some of these lawmakers allegedly received bribes
of between $7,000 and $22,000. If RASAR moves forward, China would
potentially gain access to natural resources and fishing with little
oversight from Majuro, which is 420 miles away.\29\
---------------------------------------------------------------------------
\29\ Pete McKenzie, ``Bribes, Booze and Bombs: The Brazen Plan to
Create a Pacific Tax Haven,'' Washington Post, February 15, 2023.
---------------------------------------------------------------------------
RASAR's close proximity to U.S. military facilities on Kwajalein
Atoll raises other worrisome issues. For over five decades, Kwajalein
Atoll has remained a strategic location for the U.S. Department of
Defense. The U.S. Army Kwajalein Atoll hosts several critical defense-
related activities on the atoll. The largest tenant is the Ronald
Reagan Ballistic Missile Defense Test Site, which provides the United
States with a unique ability to test intercontinental ballistic
missiles, ballistic missile defense, and hypersonics, as well as an
ample spectrum of equipment required for space surveillance, space
object identification, and monitoring new foreign launches. Kwajalein
also hosts the U.S. Space Force's Space Fence radar system, designed to
detect and track space debris threatening satellite operations. A
Chinese presence at Rongelap could have security implications for
Kwajalein, especially in terms of enhancing Beijing's ability to
collect intelligence on sensitive U.S. sites there.
Finally, China has further attempted to exploit the United States'
nuclear testing legacy in the Marshall Islands, particularly within the
sensitive context of COFA renegotiations. For example, the Chinese
Ministry of Foreign Affairs recently argued that Washington should take
greater responsibility for the environmental and human harm it
committed against the Marshall Islands by testing 67 nuclear weapons
there during the Cold War.\30\
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\30\ Matthew Lee and Nick Perry, ``Some Fear China Could Win from
U.S. Spat with Marshall Islands,'' Associated Press, November 26, 2021.
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Federated States of Micronesia
FSM is the only state within the FAS that diplomatically recognizes
China over Taiwan. As a result, Chinese contacts with state governments
and state officials are numerous. In March of this year, Chinese
Special Envoy to the Pacific Qian Bo visited and met with President
Panuelo. In August 2017, Chinese Vice Minister of Foreign Affairs Zheng
Zeguang visited Pohnpei with a high-level delegation and met with FSM
political leaders. The previous president, Peter Christian, was also
accorded a state visit to Beijing in March 2017--an honor that had a
lasting positive effect on FSM's perception of China until Panuelo's
tenure began in 2019. Panuelo has said ``we are bribed to be complicit,
and bribed to be silent.'' \31\ He also described having to change his
cell phone number because the Chinese Ambassador to FSM kept pressuring
him to accept Chinese-made vaccines during the pandemic so that China
appeared to have a competitive edge over the United States.\32\ At the
time of this writing, the FSM Parliament is determining its next
president, who might once again be more accommodative of Chinese
wishes. We will have to continue to monitor the situation. Regardless,
a key topic of dialogues between the two countries has been the U.S.
Compact Trust Fund that the FSM government will rely on if U.S.
economic assistance expires this year. Beijing has suggested that China
might be willing to supplement the Compact Trust Fund to help the FSM
achieve greater self-reliance.\33\
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\31\ ``Micronesia Takes on China,'' The Economist, March 16, 2023.
\32\ ``Micronesia Takes on China,'' 2023.
\33\ ``FSM Receives Visit from Highest Ranked Chinese Official in
FSM's History,'' Kaselehlie Press, September 18, 2017.
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Beyond diplomacy, Beijing continues to pursue its economic
interests in the country. In 2014, the two nations created the
commission on economic trade cooperation. China's economic relationship
with FSM includes substantial trade and aid components. Additionally,
the FSM is a participant in China's BRI. Chinese embassy discretionary
grants occasionally provide much-needed heavy equipment on an ad hoc
basis. Larger infrastructure projects have ranged from building
official residences for government officials at the national and state
levels to providing ships for inter-island transport. China has also
expressed interest in building resort hotels and casinos on Yap and
Pohnpei.\34\
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\34\ Grossman et al., 2019, p. 34.
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On the security side, Chuuk State, the FSM's largest state, has
long expressed interest in becoming a sovereign nation. This could
emerge as an important consideration in the context of China's
relationship with the FSM. Throughout the FSM's history, there has been
domestic internal contention between the state and the national
government over the equitable distribution of non-COFA funding
(fisheries and tax revenue). The United States has consistently
maintained that its relationship is with the national government in
Palikir, and any movement by a state to secede would, if a state were
no longer part of the federation, presumably mean an end to the COFA in
all its dimensions. While this understanding has implicitly buttressed
national unity, the cessation of economic support after fiscal year
2023 or beyond may undermine national cohesion. Such a development
could have important strategic implications by opening a pathway for
Beijing to forge ties to an independent Chuuk.\35\ The Chuuk lagoon,
one of the Pacific's largest and deepest, was once a critically
important location for the Japanese Navy and remains a potentially
important strategic naval asset.
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\35\ For more, see Derek Grossman, ``Delayed Chuuk Secession Vote a
Win for U.S. Policy in Oceania,'' RAND Blog, March 6, 2020, https://
www.rand.org/blog/2020/03/delayed-chuuk-secession-vote-a-win-for-us-
policy-in.html.
---------------------------------------------------------------------------
Palau
Like Marshall Islands, Palau also recognizes Taiwan over China,
which has made it a target of Chinese pressure. Although it is
difficult to determine the exact causation, Chinese tourism to Palau
ramped up for years until, suddenly in November 2017, Beijing barred
tourists from traveling to this pristine vacation spot. It appears that
Beijing's move was in retaliation for Palau's refusal to switch
diplomatic recognition.\36\ China has retaliated against other
countries using this same tactic, including South Korea in 2017 because
of its deployment of the U.S. Terminal High-Altitude Area Defense
(THAAD) system. Palau's president, Surangel Whipps, Jr., said in a
recent interview, ``There's a lot of pressure on Palau . . . what we've
told them is that we don't have any enemies--so we shouldn't have to
choose. If you want to have relations with Palau, you're welcome. But
you cannot tell us that we cannot have relations with Taiwan.'' \37\
---------------------------------------------------------------------------
\36\ Grossman et al., 2019, pp. 41-42.
\37\ Fumi Matsumoto, ``Palau Maintains Taiwan Ties Despite Chinese
Pressure,'' Nikkei Asia, July 13, 2022.
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Palau's decision to reject fellow Pacific Island nation Nauru's
decision to initiate a process at the United Nations that might result
in the issuance of international deep-sea mining licenses is perhaps
another sore point in China-Palau relations.\38\ As noted, Beijing is a
strong advocate of deep-sea mining, and China will probably look to
partner with PIF members in favor of it--such as Cook Islands, the
location of this year's PIF summit--against Palau.
---------------------------------------------------------------------------
\38\ ``Palau Urges the Rest of the World to Resist Deep-Sea
Mining,'' Island Times, April 14, 2023.
---------------------------------------------------------------------------
And because the South China Sea is now practically devoid of
fisheries, Chinese fishermen are going farther afield in search of
these resources, including within Palau's EEZ. This is causing new
security concerns. For example, in December 2020, with the assistance
of the U.S. Coast Guard, Palauan authorities discovered 28 Chinese
fishermen poaching sea creatures within its EEZ and deported them.\39\
From a broader geostrategic perspective, Beijing has expressed
frustration at Palau's invitation to host U.S. forces in the country.
Through its Party mouthpiece publication, Global Times, Beijing angrily
responded ``the U.S. has continued to use all means to contain and
encircle China in an all-round and multidimensional manner, including
using the first and second island chains,'' of which Palau and the FAS
are a part.\40\
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\39\ ``Chinese Fishing Boat Stripped and Escorted Out of Palau,''
Island Times, January 5, 2021.
\40\ Li Jie, ``Palau Cannot Afford Being Geopolitical Strategic
Pawn in US' Encirclement on China,'' Global Times, August 16, 2021.
---------------------------------------------------------------------------
China's Strategy in U.S. Territories in the Pacific
Although they do not face diplomatic pressure from China because
they are U.S. territories, American Samoa, CNMI, and Guam nonetheless
are dealing with a variety of Chinese economic and security threats. I
detail some of these threats below.
American Samoa
Beijing's threat to American Samoa is primarily economic. Because
the South China Sea is practically devoid of fisheries, Chinese fishing
trawlers have increasingly turned to far-flung locales to make up the
difference, including off the coasts of American Samoa, CNMI, and Guam.
For American Samoa, in particular, Chinese IUU fishing activities have
depleted tuna stocks within its EEZ and disrupted the local economy,
even to the point of forcing a tuna cannery there, which is one of the
island's largest employers, to temporarily suspend operations due to
lack of tuna availability.\41\ The Biden administration has been
considering a Trump-era plan to station a U.S. Coast Guard cutter in
American Samoa, in part to deter and intercept Chinese IUU fishing
activities but also to bolster the U.S. Navy presence operating in the
East and South China Seas, which is designed to counter China's gray
zone operations against regional opponents.\42\
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\41\ Dan Southerland, ``Chinese Overfishing in the South Pacific
Devastates Some Islands' Livelihoods,'' Radio Free Asia, April 6, 2021.
Also see Alexander B. Gray and Douglas W. Domenech, ``U.S. Territories:
The Frontlines of Global Competition with China,'' RealClear Defense,
March 11, 2021.
\42\ Alexander B. Gray, ``Guarding the Pacific: How Washington Can
Counter China in the Solomons and Beyond,'' War on the Rocks, September
30, 2022.
---------------------------------------------------------------------------
Commonwealth of the Northern Mariana Islands
As is the case with American Samoa, CNMI primarily faces a
potential economic threat from China. This is mainly due to the fact
that CNMI's economy is highly dependent on tourism coming from China.
According to a 2021 analysis, ``Chinese influence is deeply rooted in
the CNMI's economy at every level, from local mom-and-pop stores to
luxurious resorts. Chinese tourists have already supplanted visitors
from traditional markets like Japan.'' \43\ As we have seen with Palau
and countries outside of Oceania, it is quite easy for Beijing to exact
retaliation against those it harbors disagreements with by ending
Chinese tourism to these destinations. Separately, although not a
direct threat to CNMI itself necessarily, in recent years, Chinese
scientists in conjunction with the international community have been
making significant progress in deep-sea research, including in the
Mariana Trench, which is the deepest place on earth. Some suspect that
Beijing is exploring the deep seas not only to expand scientific
knowledge but also to further its future military aims. The thinking is
that Beijing wants to ensure that its submarines are able to break
through the first island chain without detection, and thus, perfecting
technology to navigate at extreme depths would be helpful in this
regard.\44\
\43\ Yuan Zhi (Owen) Ou, ``The Northern Mariana Islands: U.S.
Territory, China-Dependent,'' The Diplomat, September 25, 2021.
\44\ Meaghan Tobin, ``U.S.-China Battle for Dominance Extends
Across Pacific, Above and Below Sea,'' South China Morning Post,
January 19, 2019.
---------------------------------------------------------------------------
Guam
Unlike American Samoa and CNMI, the primary Chinese threat to Guam
is military in nature. Because Guam is home to U.S. Navy, Air Force,
and, as of January 2023, Marine Corps bases (Camp Blaz), the island has
become an attractive target for China to disrupt or disable in the run-
up to or during military operations against Taiwan or in the East or
South China Sea. Indeed, Chinese social media has referred to its
military's DF-26 intermediate-range ballistic missile as the ``Guam
Killer.'' \45\ Thus, Pentagon planners naturally assume that Guam will
be targeted, and in response, they have quietly deployed a THAAD
battery there to intercept incoming missile threats.\46\ In April of
this year, China also sent a carrier group featuring its Shandong
aircraft carrier into waters approximately 400 miles off the coast of
Guam.\47\ Beijing undoubtedly sought to demonstrate the capability to
operate near Guam's shoreline to deter the United States, but it also
probably sought to train under ``realistic conditions'' in preparation
for potential armed conflict in the future.
\45\ Keith Johnson, ``China's `Guam Killers' Threaten U.S. Anchor
Base in Pacific,'' Foreign Policy, May 11, 2016.
\46\ Wyatt Olson, ``Guam's THAAD Missile Defense Battery Will
Relocate to New Marine Corps Base,'' Stars and Stripes, May 10, 2022.
\47\ Joseph Trevithick, ``Chinese Carrier Recently Sailed Near
Guam, Enters the South China Sea,'' War Zone, April 25, 2023.
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Recommendations for Congress and the U.S. Government
Drawing on the preceding analysis, I recommend that Congress and
the broader U.S. government might consider the following measures:
Ensure funding for the renewed COFAs. The COFAs are
essential for Washington to maintain because these unique
international agreements with the FAS in the North Pacific
enable the U.S. military to have near-exclusive access to
the FAS territories and EEZs. COFAs provide Washington with
a power projection superhighway into the Indo-Pacific to
address potential future contingencies, including a Taiwan,
East China Sea, South China Sea, or Korea scenario.
Congress should consider ensuring funding that is at least
equal to current levels, but an increased amount would
demonstrate a strong commitment to this geostrategically
vital subregion of Oceania.
Focus on non-China-related challenges as well. The Biden
administration's historic U.S.-Pacific Islands Summit at
the White House this past September was a good start
because the Joint Declaration and Pacific Island Strategy
deprioritized countering China in favor of challenges much
higher on Pacific Islanders' agenda. However, more needs to
be done to build trust with Pacific Island states, who
still believe Washington is primarily interested in
geostrategic competition rather than helping them on issues
of importance in the region, such as climate change,
poverty alleviation, health security, and transnational
crime. Softer forms of cooperation are likely to be
welcomed throughout the region.
Consider opening diplomatic missions in every Pacific
Island state. Vice President Harris' announcement to PIF
that the United States would open diplomatic missions in
Kiribati and Tonga, which just opened, and Secretary of
State Antony Blinken's announcement in February that
Washington would reopen its embassy in Solomon Islands
after nearly 30 years are welcome developments. However,
more needs to be done. The current State Department posture
has some Ambassadors covering multiple Pacific Island
countries or defense attaches doing likewise. Embassies act
as Washington's eyes and ears on the ground, and requesting
information from Australian and New Zealander
representatives has proven insufficient toward
accomplishing all of Washington's objectives. And doing so
overburdens Washington's friends. Instead, the United
States could look to build its own diplomatic capabilities
to ensure that China does not acquire an informational
advantage.
Consider Pacific-focused policy. Bills focused on the
Pacific Island region, such as the Boosting Long-term U.S.
Engagement (BLUE) in the Pacific Act, which was introduced
in the past two Congresses, show a renewed emphasis on the
region and, particularly, on assisting Pacific Island
states with challenges most important to them. The BLUE
Pacific Act, for example, covered climate change, pandemic
recovery, and natural disaster preparedness, among many
other areas, highlighting topics that Pacific Island
nations cite as their most significant security
threats.\48\
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\48\ U.S. House of Representatives, ``Boosting Long-term U.S.
Engagement (BLUE) in the Pacific Act,'' H.R. 2967, May 4, 2021, https:/
/www.congress.gov/bill/117th-congress/house-bill/2967.
Offer economic assistance to U.S. territories particularly
susceptible to Chinese economic coercion. American Samoa
and CNMI would greatly benefit from such a program because
they are highly dependent on China for their livelihoods.
Such an effort might involve subsidizing the tuna fishing
or tourism industries in American Samoa and CNMI,
---------------------------------------------------------------------------
respectively.
Provide additional maritime domain awareness and patrol
capabilities to FAS and U.S. territories. As shown in my
analysis, Chinese IUU fishing activities are a growing
problem across the entire region, and this challenge is
compounded by the fact that the FAS and U.S. territories
have large EEZs with typically limited capacity (excluding
Guam) to respond to Chinese incursions within them.
______
Questions Submitted for the Record to Derek Grossman, Senior Defense
Analyst, The RAND Corporation
Questions Submitted by Representative Westerman
Question 1. In your written statement, you refer to ``soft
cooperation'' in the form of diplomatic presence and intergovernmental
engagement in the region. What other forms of soft cooperation might
would you cite or recommend?
Answer. Soft cooperation can take many forms, so long as it is not
military (i.e., hard cooperation). Before we discuss the various types
of soft cooperation, it is important to briefly consider what Pacific
Island countries seek from the United States. First and foremost is
action on climate change as many in the region believe it is an
existential challenge in the coming decades. To be sure, the Biden
administration's signing of the Inflation Reduction Act (IRA) into law
in 2022, which in part tackles climate change, was a significant step.
However, funding and implementing the provisions within the IRA--and
doing even more, especially on unilateral carbon emission caps--will be
key to building trust in the Pacific Islands region. Another form of
soft cooperation is assisting Pacific Island states to counter illegal,
unreported, and unregulated (IUU) fishing activities and narcotics
trafficking. One of the recent security agreements between the United
States and Papua New Guinea addresses precisely these challenges. A
third kind of soft cooperation falls into the broad category of
providing humanitarian assistance and disaster relief (HA/DR) funding,
equipment, personnel, and expertise. Although HA/DR includes a set of
military operations, Pacific Island nations typically do not have
military counterparts--only three have militaries (Fiji, Papua New
Guinea, and Tonga). Hence, intergovernmental dialogues that assist
Pacific Island countries in improving their disaster preparedness and
cleanup operations would be welcomed, especially those that do not
require military expertise. Finally, the United States could elevate
the assistance it provides to strengthen government institutions and
their ability to counter China's increasingly coercive activities
throughout Oceania. Pacific Island countries are overwhelmingly small
and impoverished and, thus, particularly susceptible to malign
influence.
Question 2. What is strategic denial, and why is it important for
the U.S.? What does it mean for the U.S. and the ongoing with
competition with China if we did not have strategic denial rights?
Answer. I define strategic denial as the ability to prevent an
adversary from achieving decisive or significant victories on the
battlefield. A more commonly used term for strategic denial is
``deterrence by denial.'' In the specific context of potential war
against China over Taiwan, the Biden administration--and Trump
administration before it--has made clear that deterrence by strategic
denial is Washington's core objective. In other words, the United
States will seek to provide the military equipment and expertise
required to enhance U.S. allies and partners' ability to defend
themselves from attack and thwart Chinese advances--or at least give
them the ability to hold out until U.S. military intervention.
During my oral remarks and in my written testimony, I discussed the
need for Washington to ensure renewal of the Compacts of Free
Association (COFAs) with the Freely Associated States in order to
maintain uninhibited U.S. military access to the region stretching from
Palau to Marshall Islands, which is the size of the continental United
States. With such access, the U.S. military can leverage its position
in the second island chain, along with nearby U.S. territories
Commonwealth of the Northern Mariana Islands (CNMI) and Guam, to
forward-deploy troops and equipment that can assist U.S. allies and
partners primarily in the first island chain in the strategic denial
mission.
Questions Submitted by Representative Radewagen
Question 1. You mentioned, in your written testimony, the wisdom of
subsidizing the tuna fishing and tourism industries of American Samoa
and the CNMI to offset and counter China's economic influence in the
region. Can you elaborate further on these recommendations and how to
further counter IUU fishing activities in the region?
Answer. As I mentioned in both my oral remarks and written
testimony, Chinese deep-sea fishing fleets are increasingly fishing in
the exclusive economic zones (EEZs) of sovereign states throughout
Oceania, including off the coasts of American Samoa and CNMI. Beijing's
overfishing of these waters is creating tuna shortages, which at one
point disrupted the operations of a major tuna cannery on American
Samoa. I recommended that Washington subsidize the tuna cannery and
consider speeding up deployment of U.S. Coast Guard patrol ships there
to deter Chinese IUU fishing trawlers from entering the United States'
EEZ. Another possible response is for the Biden administration to
postpone or terminate its planned expansion of marine life sanctuaries
within the EEZ. American Samoa's governor, Lemanu P.S. Mauga, voiced
his strong opposition to the move in a recent letter to President
Biden. Mauga argued that the planned expansion--which would actually be
the fourth such expansion since the last under the George W. Bush
administration in 2009 (and twice under the Obama administration in
2014 and 2016)--``could cripple the economy of a U.S. territory.'' \1\
Taken to the extreme, the Biden administration could roll back Bush-
and Obama-era expansions to reopen the approximately 50 percent of the
EEZ that is currently closed to tuna fishing. Doing so would
significantly raise supply in the short term, but over the longer term
and particularly without the proper restrictions, this response might
not solve the problem--and could even make it worse.
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\1\ Fili Sagapolutele, ``Gov Says Biden's Plan to Expand PRIMNM
Would `Cripple' Our Economy,'' Samoa News, April 10, 2023.
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Regarding CNMI, to clarify, I did not say that Washington should
subsidize the tourism industry. Rather, I simply observed that Chinese
economic influence over the territory is strong due to the large volume
of Chinese tourists who visit each year. To counter any undue level of
Chinese economic influence in CNMI, Washington might consider
collaborating with the territory to incentivize the growth of other
private sector companies, especially those outside the tourism
industry. Alternatively, Washington could limit the number of Chinese
tourists entering CNMI annually or make the requirements for entry more
onerous.
Questions Submitted by Representative Case
Question 1. During my time for questions in our hearing, I misspoke
when describing the Government Accountability Office's reported fiscal
impact from Compact residents on local communities. I noted that
localities collectively reported $1.8 billion in costs between 2004 and
2018 when in reality that figure in the GAO report is $3.2 billion. If
Congress were to expand the same eligibility for federal benefits to
Compact migrants as are currently extended to lawful permanent
residents, what uncovered costs from delivering still-uncovered
services would host communities have to cover without federal aid?
Answer. This subject is outside my area of expertise, and so I will
pass.
Question 2. Citizens of the Freely Associated States are eligible
to join the U.S. military and frequently serve in our armed forces.
What proportion of the population from the Freely Associated States
joins the U.S. military compared to other U.S. communities? What are
the challenges veterans in the Freely Associated States experience in
accessing Department of Veterans Affairs health care and other benefits
when they return home to their countries? What can be done to improve
this?
Answer. This subject is outside my area of expertise, and so I will
pass.
Question 3. Funding for the Compacts of Free Association is
currently borne by the Department of the Interior and the Biden
administration suggests moving that funding the Department of State but
to keep administration of the Compacts within the Department of the
Interior. Given the critical role the Compacts of Free Association to
our national security and to the Department of Defense, should the
Department of Defense also bear some of these costs?
Answer. I have not completed an analysis about which U.S. federal
agencies are best suited to fund the Compacts of Free Association
(COFAs). Regardless, I'd reiterate the importance of funding COFAs for
maintaining U.S. strategic interests in the Pacific Islands.
Question 4. Last year the administration released the first ever
Strategy for Pacific Island Partnership along with a more detailed
Roadmap to a 21st Century U.S. Pacific Islands Partnership. How was
this and recent efforts to reengage the region seen by the Pacific
Islands? What role can Congress play to help implement the Pacific
Islands Partnership Strategy?
Answer. Frankly, I think the picture here is mixed. On the one
hand, Pacific Island countries were very pleased that the United States
was taking the time and energy to recognize their importance and their
particular wants and needs. On the other hand, Pacific Island leaders
generally reject picking a side or otherwise participating in
intensifying U.S.-China strategic competition. Following the historic
U.S.-Pacific Islands Summit at the White House in September 2022, it
was clear from off-the-record statements from Pacific Islanders that
they fully understood that the event was more about Washington's
interests in winning its competition with Beijing than in addressing
their agenda items. Unfortunately, for the United States, it is an
inescapable strategic context. However, additional focus on Pacific
Island countries' top agenda items--to include first and foremost
climate change but also (not necessarily in this order) HA/DR,
transnational crime, institutional resilience, and internal stability--
would foster additional trust. As I noted in my written testimony,
Congress could spur the Biden administration and future administrations
to further action by passing legislation that promotes cooperation on
these challenges rather than focusing on competition against China.
Question 5. The Pacific Islands Forum, a critical inter-
governmental organization in the Pacific Islands region, laid out a
regional vision for development of the Pacific Islands in its 2050
Strategy for the Blue Pacific Continent. How can the United States
support this strategy?
Answer. As mentioned above, additional U.S. government focus on the
challenges most pertinent to Pacific Island countries rather than on
strategic competition with China would most effectively support the
2050 Strategy for the Blue Pacific Continent.
______
Ms. Hageman. Thank you.
The Chair now recognizes Mr. Friberg for 5 minutes.
STATEMENT OF EMIL FRIBERG, FORMER ASSISTANT DIRECTOR, GAO
INTERNATIONAL AFFAIRS AND TRADE, ARLINGTON, VIRGINIA
Mr. Friberg. Good afternoon, Chair, Ranking Member, and
members of the Subcommittee. My name is Emil Friberg. I am
affiliated with Georgetown University. In 2021, I retired from
the GAO, where I supported Compact of Free Association reviews,
many of them for this Committee. The views I share today are my
own.
I want to highlight two things: the structure of the
compacts and strategies to deepen COFA and U.S. ties.
Turning to structure, the compacts are based on three
pillars.
The first compact pillar: defense rights and obligations.
The benefits to the United States include strategic denial,
defense veto, U.S. defense sites, including at Kwajalein Atoll
in the Marshall Islands and new sites in Palau. COFA nations
benefit from U.S. defense guarantees. COFA citizens join the
U.S. military, a contribution to COFA defense and a benefit to
the United States.
The second compact pillar is economic assistance. U.S.
grants support about one-third of Micronesia and the Marshall
Islands' government budgets, and about 14 percent of Palau's
budget. Many Federal agencies operate in the COFA nations when
Congress has extended programs, essentially treating them as if
they were a U.S. state or territory. Examples include U.S.
postal and weather services, FAA airport programs, public
health, Pell Grants to students, and USDA home loans to
households and families.
The third compact pillar is immigration. Migration benefits
COFA families, giving them access to U.S. opportunities.
Migration also benefits U.S. employers, some of whom recruit
workers directly from COFA nations.
These three compact pillars are linked together. U.S.
defense rights are secured with economic assistance to COFA
governments and benefits to COFA families. In conjunction with
the U.S. state of Hawaii and the U.S. territories of Guam and
the Commonwealth of the Northern Mariana Islands, the COFA
nations secure the North Pacific for the United States.
Now I will outline four strategies to deepen COFA and U.S.
ties.
The first strategy is: Maintain and extend U.S. programs to
COFA nations. Congress should maintain current grants to COFA
nations and provide eligibility for any new Federal programs as
if they were a U.S. state or territory. For example, the CARES
Act extended pandemic unemployment assistance eligibility to
workers in COFA nations and COFA workers in the United States.
A second strategy: Improve COFA migrant status to equal
that of green card holders. Today, the status is unequal and
sometimes confusing. Providing COFA migrants with the
equivalent of permanent resident or green card status would
treat COFA migrants as equal to other lawful, permanent
residents with respect to Federal program eligibility, and
provide a pathway for naturalization.
The third strategy is invest in hands-on Federal engagement
in the COFA nations. I have three examples: re-establish the
Department of Defense Civic Action Team Program in the FSM and
the RMI to upgrade infrastructure and to heighten our security
presence; restore Peace Corps programs in all three compact
nations; establish access to VA benefits and health care for
COFA nation military veterans.
And lastly, the fourth strategy is maintain congressional
engagement. Congress can assure that U.S. programs deliver
results with accountability, and that U.S. efforts are properly
resourced. Congress can assess U.S. policy and operational
coordination across the three compact pillars: defense,
economic assistance, and migration.
Finally, I would advocate that Congress reinstate the
periodic GAO review mandate to support congressional monitoring
of any renewed compact assistance.
In closing, the most significant action to deepen bilateral
ties is congressional approval of compact renewal.
I wish to thank the Subcommittee for this opportunity to
speak, and I look forward to any questions you may have. Thank
you.
[The prepared statement of Mr. Friberg follows:]
Prepared Statement of Emil Friberg, PhD Arlington, VA
I. Introduction
Good afternoon, Chair, Ranking Member, and distinguished members of
the subcommittee. My name is Emil Friberg, I am affiliated with the
Center for Australia, New Zealand, and Pacific Studies at Georgetown
University and an economic consultant. Previously, I served as an
Assistant Director and Senior Economist at the U.S. Government
Accountability Office (GAO) where I oversaw reviews of the Compacts of
Free Association, leading to 40 publications from 2000-2021. Many of
those reviews were requested by this committee. The views expressed
here are my own, and not of any current or past employer.\1\
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\1\ This testimony statement draws from my paper published by the
East West Center's Asia-Pacific Bulletin: No Time to Lose: Renew the
Compacts of Free Association, June 29, 2022. I also draw from U.S. GAO:
Compacts of Free Association: Implications of Planned Ending of Some
U.S. Economic Assistance (GAO-22-104436, Feb. 14, 2022) and Compacts of
Free Association: Populations in U.S. Areas Have Grown, with Varying
Reported Effects (GAO-20-491, June 15, 2020).
---------------------------------------------------------------------------
Today I will address how the Compacts of Free Association help
preserve U.S. interests in the Indo-Pacific and I will highlight the
urgency for renewing the Compacts. I commend this committee for holding
this hearing to focus on the strategic imperative of the region and
these Compacts.
II. COFA history and structure
As you know, Compact of Free Association (COFA) economic support,
along with certain federal services and programs that are provided to
the Federated States of Micronesia (FSM) and the Republic of the
Marshall Islands (RMI) expire at the end of September 2023 and expire
for the Republic of Palau (Palau) at the end of September 2024.
Renewing these agreements requires the completion of bilateral
negotiations and approval by the U.S. Congress. Negotiations started in
2020 but made little progress. The U.S. appointment of a Special
Presidential Envoy for Compact Negotiations in March 2022 was framed by
concerns that China's Pacific influence would grow in the wake of
stalled COFA negotiations. Fortunately, progress has been made and top
line agreement was reached on future aid packages with each nation and
is included in the President's FY2024 budget request.
History: World War II to the Compacts
The three Compacts of Free Association are the result of a
prolonged half-century process following WWII.
After costly battles across the Pacific to defeat Japan, the United
States held the islands of the North Pacific. In 1947 the United States
became the administering authority of the Trust Territory of the
Pacific Islands (TTPI), established by the United Nations Security
Council.
Under the TTPI, the United States had authority to establish bases
and to station armed forces. During the trusteeship, the U.S. military
used land in the region, including for 67 nuclear tests in the Marshall
Islands conducted from 1946 to 1958.
In accordance with its responsibilities under the UN trusteeship
and following UN-observed plebiscites, the United States entered into
the Compacts that created three nations and ended U.S. administration
of the last WWII UN trusteeship.
These Compacts entered into force in 1986 for the FSM and the RMI,
and in 1994 for Palau.
Compact structure
Key Compact features include:
Defense. The Compacts grant the United States ``strategic
denial''--the option to deny foreign militaries access to
the COFA nations and a ``defense veto'' to block polices
incompatible with U.S. authority and responsibility for
security and defense of the COFA nations. In addition, the
Compacts provide for U.S. defense sites, including sites in
Palau and at Kwajalein Atoll in the RMI. Importantly, the
RMI Compact provided compensation for damages from 67 U.S.
nuclear tests. The agreement was the full settlement of all
legal claims--past, present, and future--against the United
States and terminated all compensation litigation.\2\
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\2\ The RMI Compact (Section 177) provided $150 million as the full
legal settlement of all claims. The COFA implementing legislation has
authorizations for additional ex gratia compensation which have been
used by Congress to further address the nuclear testing program legacy.
---------------------------------------------------------------------------
COFA citizens contribute directly to the defense of the United
States as members of U.S. Armed Forces. They are able to
join the military directly from the COFA nations or enlist
after migrating to the United States.
Immigration. The Compacts allow COFA citizens to work and
reside indefinitely in the United States. However, entry
under the terms of the Compact does not establish a path to
naturalization.
Economic Assistance. The Compacts committed the United
States to provide annual economic assistance and specific
programs, such as the U.S. Postal Service (USPS) and
National Weather Service, for set periods, ending in 2023
for FSM and RMI, and 2024 for Palau. Compact trust funds
have been established to provide a source of annual
funding: since 1999 for Palau and after 2023 for FSM and
RMI. The U.S. Department of the Interior (DOI) administers
COFA grant assistance.
III. COFA funding and experience
Assistance
For the COFA nations, Department of the Interior Compact funding
will have totaled approximately $10.5 billion for the period FY1987
through FY2023 for FSM and RMI, and FY1995 through FY2024 for Palau
(all dollars are FY 2023 dollars).\3\
---------------------------------------------------------------------------
\3\ Note these summary dollars do not include the significant
assistance provided by other U.S. Departments including Education,
Health and Human Services, and Transportation through non-Compact
related authorizations. For example, programs such as Pell Grants and
USDA housing loans, are provided to COFA governments and citizens as
they are to U.S. states.
Economic assistance to the FSM will have been $5.5
billion, to the RMI--$2.3 billion, and to Palau--$1.2
---------------------------------------------------------------------------
billion.
On a rough per capita/per year basis, this economic
assistance is about: $1,400 for the FSM, $1,100 for the
RMI, and $2,200 for Palau.
In addition to economic assistance, Interior Compact
funding also paid $738 million for military land leases and
$707 million for nuclear testing responses in the RMI.
The U.S. Department of Education has provided the FSM and the RMI
with a Supplemental Education Grant (SEG) that ends in September, 2023.
Expiring grants (Compact and SEG) represent almost 30 percent of
FSM national and state government expenditures and 20 percent for the
RMI (both for FY2019). These expiring grants are mostly for education
where they make up 86-93 percent of FSM state education expenditures
and 50 percent of RMI education expenditures.
Trust funds
The Palau Compact Trust Fund will likely meet its objective as a
sinking fund to make continued payouts through 2044. The FSM and RMI
Compact Trust Funds were designed to be perpetual funds to cover
expiring Compact (but not SEG) grants. Under current rules, funds will
not be disbursed in some years due to structural restrictions on
distributions. These interruptions will cause severe fiscal shocks in
the FSM and RMI.
Country accountability
In 2003 in order to curtail poor accountability and performance,
FSM and RMI Compact financial assistance changed from cash transfers to
sector grants for priority sectors. Grant management and joint FSM-U.S.
and RMI-U.S. committees provided oversight that improved education,
health, and infrastructure sector performance. Financial accountability
has improved over time, but weaknesses persist. The required Palau
Advisory Group on Economic Reform was not constituted until August
2022.
Federal organization and accountability
Interior staffing shortfalls have limited the federal government's
ability to ensure that Compact funds were used effectively. When it was
asked by the GAO, the U.S. Congress repealed the statutory mandate for
comprehensive GAO reviews of the FSM and RMI Compacts every five
years.\4\ This reduced Congressional oversight of the Compacts.
---------------------------------------------------------------------------
\4\ Public Law 111-68, Sec. 1501(c).
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Migration
In addition to escaping the impact of climate change and nuclear
testing, COFA citizens have moved to the United States, seeking
economic opportunity, education, and health care. U.S. census data
(2013-2018) identified 94,000 Compact migrants residing in the United
States.
Compact legislation enacted in 2003 provided $30 million of annual
grant assistance that is divided between Hawaii, Guam, and the
Commonwealth of the Northern Mariana Islands to help offset the fiscal
impact of providing government services to COFA migrants. This funding
ends after September 2023.
IV. Key actions for the administration
Deepen bilateral relations with grants
Annual U.S. Compact assistance is a strategic bilateral connection
at a time of mounting security concerns. Delivering that assistance
through an annual grant process helps maintain relations and requires
the U.S. and COFA nations to work together. In contrast, cash transfers
and trust fund disbursements are hands-off--a more distant
relationship.
Embrace new and old issues
COFA nations identify climate change as their primary security
issue and want direct U.S. assistance for adaptation and resilience. In
response to this request, the U.S. Department of Defense (DOD) should
restore its Civic Actions Team (CAT) program, with a focus on upgrading
and hardening infrastructure (airports, ports, roads, seawalls, and
utilities) for both climate impact and to support ``agile''
deployments.
The United States should also address illegal fishing that
threatens COFA government revenue; such an action will also strengthen
maritime security.
Pursuing its aim as a critical moral and political issue rather
than a legal one, the RMI wants U.S. action on outstanding nuclear
issues, including increased compensation and nuclear waste cleanup. For
example, U.S. action could address Runit Dome environmental issues.
Improve Compact implementation
Actions are needed to improve grant performance and accountability
and to address the well-understood problem of FSM and RMI trust fund
rules and disbursements.
Existing FSM grant distribution among FSM states must be
reassessed for improved education and health sector
performance.
COFA nation and U.S. Compact administration require proper
staffing levels and capacity.
Accountability requires transparency, including the public
posting of bilateral agreements, budgets, reports, meeting
minutes, and other documents.
The issues of FSM and RMI trust fund rules must be
formally addressed, as any changes require Congressional
approval.
V. Key actions for Congress
Fund Compact renewal
Timely approval of Compact renewal is essential for COFA government
operations, and its absence will hurt government operations and
contribute to a current surge in migration. Further, this funding
directly links back to the concern of this hearing--countering Chinese
influence in the Pacific.
Extend U.S. programs
Congress can take direct actions to deepen bilateral relations,
including (1) restoring eligibility for programs that were ``cashed
out'' in the FSM/RMI Supplemental Education Grant (SEG) that ends in
2023 and (2) granting COFA nations routine eligibility for other
federal programs. For example, the recent CARES Act extended pandemic
unemployment assistance to COFA workers. Restoration of Peace Corps
programs in all three Compact nations would provide mutual benefits.
Establish U.S. Administrative Capacity
Mandate adequate administration staffing for U.S. Compact
implementation at Interior's Office of Insular Affairs and Office of
Inspector General and the Department of State.
Reinstate required periodic GAO reviews and conduct routine and
consistent committee oversight.
Currently, no federal body effectively coordinates COFA policy.
Congress should reestablish an Interagency COFA Group, co-chaired by
Defense, Interior, and State, and the Office of COFA Affairs under the
authority of the National Security Council. Once established, the
structure could coordinate government-wide responses to COFA issues,
such as security threats, climate impact, and Compact migration.
Address COFA citizen migration
No federal department is charged with monitoring and addressing the
impact of migration to the United States of COFA citizen migration or
monitoring and protecting this right on behalf COFA migrants. Congress
has restored Compact migrant Medicaid eligibility, but other program
eligibilities should be restored and a clear path to U.S. citizenship
established. Further, the existing program that partially addresses
Compact migration fiscal impact in Guam, Hawaii, and the Northern
Mariana Islands ends this fiscal year. The current Compact impact
approach does not address the mainland U.S. states where most COFA
migrants now reside.
Further the Departments of Homeland Security and Transportation
should be charged with reporting on the entry and exit of COFA citizens
through U.S. ports of entry in order to determine the scale of COFA
outmigration to the United States.
VI. Conclusion
In closing, I wish to thank the subcommittee for this opportunity
to speak with you today. The Compacts of Free Association are integral
to U.S. security interests and needs in the North Pacific. The
approaching expiration of annual economic assistance requires timely
completion of agreements and their enactment and funding by Congress.
On its own, Congress can also take proactive steps to strengthen U.S.
relations in the North Pacific. I look forward to any questions you may
have.
______
Questions Submitted for the Record to Emil Friberg, Former Assistant
Director and Senior Economist, Government Accountability Office
Questions Submitted by Representative Westerman
Question 1. The news regarding the near depletion of the Bikini
Resettlement Trust Fund and spike in expenditures by Bikini Claims
Trust Fund has raised serious concerns about how these funds were
managed and how any future funds would be managed. How can the U.S.
ensure that these COFA trust funds under Section 177 and all COFA trust
funds are managed responsibly and used for their intended purpose?
Answer----
Congressional actions.
For the U.S. to ensure that COFA trust funds are managed
responsibly and used for their intended purposes, Congress can use
implementing legislation to direct U.S. agency actions to:
target the use of funds for priority sectors such as
education and health;
require transparency in the operation, expenditure, and
accountability of U.S. funds;
condition the transfer of funds or distribution of funds
from a sub-account of the Compact Trust Fund on prior year
compliance with use and accountability requirements; for
example, requiring performance reporting, transparent
budgets, and timely and clean financial audits; and
strengthen its own engagement through oversight hearings
and the reinstatement of required U.S. Government
Accountability Office reviews and audits.
Cause for concern--the Bikini Resettlement Trust Fund.
Congress provided $19.2 million in 1982 (PL 97-257) to establish a
trust fund for the resettlement of the Bikini people in the RMI, with
an additional $1 million payment immediately available to be used per
the terms of the trust fund agreement. The 1982 public law stated that
payments to the people of Bikini would be according to terms and
conditions set forth in a trust fund agreement subject only to the
disapproval of the Secretary of the Interior.\1\ Congress provided an
additional $90 million over FY1989-FY1992 (PL 100-447) to the
Resettlement Trust Fund for the People of Bikini.
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\1\ 96 STAT. 840 PL 97-257, Sept. 10, 1982
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From 1982 to 2017, Interior exercised its right to veto
expenditures from the resettlement fund. In 2017, when petioned by the
Kili-Bikini-Ejit Local Government to end this practice, Interior
released its veto authority on Nov. 21, 2017. Interior determined that
the monies were no longer ``Federal funds'' and the Department deferred
to the Mayor and Council Leaders to assume control over the
Resettlement Trust Fund. Immediately distributions soared, and the
FY2018 trust fund distribution was three and one-half times the average
distribution of the previous 4 years. Today, the trust fund is
depleted.
Transparency and accountability must be guaranteed.
The dismal record of timely audits around the Bikini trust funds
demonstrates the need to condition future U.S. grants and trust fund
contributions/distributions on performance and accountability.
Trust Fund Audits. FY2016 is the last year of released
audits for the Bikini Resettlement Trust Fund and the
Bikini Claims Trust Fund. Since then, the two trust funds
provide no transparency into any trust fund activities. The
FY2016 and prior year audits were completed between one and
nine months after the end of a fiscal year.
KBE Local Government Audits. The FY2018 audit of the Kili-
Bikini-Ejit Local Government (RMI), which was not published
until Feb. 4, 2023, is the most recent. It shows the
dramatic increase in trust fund disbursements that year,
after Interior transferred authority for the disbursements
to the mayor.
Much like the Bikini trust funds, the local government provides
no transparency about its recent actions. This lack of
transparency is a continuation of its past performance. For
example, of its last 10 posted audits, the most quickly
completed was published more than 5 years after the fiscal
year ended, while the longest audit report took more than 9
years after the fiscal year ended to be released.
Questions Submitted by Representative Sablan
Question 1. The President's FY24 budget supports the adoption of
the Compact Impact Fairness Act (CIFA) in lieu of compact impact
payments (currently $36 million annually in mandatory and discretionary
funding) distributed to the affected jurisdictions. In your opinion,
would extending to COFA migrants federal benefits normally only
available to permanent residents residing in the states and territories
be enough to justly compensate host jurisdictions like Hawaii, Guam,
and the Marianas?
Answer----
CIFA will support COFA families but only partially addresses host
government Compact impact.
Host jurisdictions like Hawaii, Guam, and the Commonwealth of the
Northern Mariana Islands (CNMI) have collected and reported on the
fiscal impact of COFA migrants for over three decades. The three areas
have consistently reported the cost of educating the children of COFA
migrants, as well as health system costs. Other cost reporting among
the three has varied, with Hawaii reporting high cost for social
services and Guam reporting high costs for public safety.
The Compact Impact Fairness Act of 2023 (CIFA) would establish COFA
migrant eligibility for several specific federal programs: Supplemental
Security Income (SSI) program; Supplemental Nutrition Assistance
Program (SNAP); Temporary Assistance for Needy Families (TANF); and
certain social service block grants. To the extent that Hawaii, Guam,
the CNMI, and other U.S. states are currently providing state-funded
program benefits to COFA migrants who are ineligible for federal aid,
CIFA would provide federal relief of ongoing state expenditures. Where
such state-funded programs are not currently being provided, CIFA would
directly benefit COFA migrant households.
However, CIFA does not address the large Compact impact expense
areas of education and public safety, nor will it cover the state/
territory share of Medicaid expenses.
Question 2. How do you think we can best assure that congressional
priorities provided in the second Compact will continue? If Compact
impact payments were to resume, would we need to establish, in law, the
formula that will be used in the future to estimate impacts on
jurisdictions and the allocation of payments?
Answer----
Reestablish congressional COFA priorities in new Implementing
legislation.
The congressional priority to focus U.S. support on education and
health was incorporated in the FSM/RMI amended Compacts. This
incorporation recognized the nexus between improving the education and
health of COFA citizens at home and reducing the impact cost of COFA
citizens who migrate. The congressional priority for financial
accountability was incorporated through the use of grants rather than
transfers to COFA nations and the establishment of joint oversight
committees.
To ensure that COFA funds are managed responsibly and used for
their intended purposes, implementing legislation can direct U.S.
agency actions and condition the distribution of funds for only
specified uses and only after meeting accountability requirements. For
example, legislation can:
specify agency actions, providing clear objectives and
instructions to the Secretaries of the Interior and State;
require transparency in the operation, expenditure, and
accountability of U.S. funds, whether provided directly or
as distributions from U.S.-funded Compact Trust Funds;
condition the transfer (or distribution) of funds on prior
year compliance with use and accountability requirements;
for example, requiring performance reporting, transparent
budgets, and timely and clean financial audits; and
strengthen its own engagement through oversight hearings
and by reinstating required U.S. Government Accountability
Office reviews and audits.
Distribution of Compact impact grants to date.
During the amended Compact period, Congress provided $30 million in
annual Department of the Interior grant funds to be distributed between
American Samoa, Guam, Hawaii, and the CNMI in proportion to a periodic
count of the COFA migrant population in the four jurisdictions.
Interior contracted with the U.S. Census Bureau to conduct periodic
population counts. In the most recent effort, Census counted FAS
citizens who entered the United States after 1986 (from Micronesia and
the Marshall Islands) or 1994 (from Palau) and also included their
U.S.-born children (biological, adopted, and step-) and grandchildren
younger than 18 years in the count of COFA migrants.
Distribution of Compact impact grants going forward.
Renewing Compact Impact grants going forward requires legislative
action. While the current structure could be extended as currently
written, this is an opportunity to modify the approach, including:
Modify how the COFA population is defined for a per-capita
distribution of grant funds. For example, should the U.S.-
born children, and even grandchildren, of COFA migrants be
counted?
Modify the geographic scope of Compact Impact grant funds
beyond the Pacific areas to states with significant COFA
populations.
Modify the allowed use of Compact Impact grants to focus
on specific sectors or programming areas, such as education
and public safety.
Enforce or modify a requirement that Interior reports to
Congress annually on Compact impact. Interior last reported
on Sept. 8, 2017.
If COFA-affected jurisdictions are required to report on
Compact impact, require Interior to issue reporting and
methodology guidance.\2\
---------------------------------------------------------------------------
\2\ See unimplemented U.S. GAO recommendations in Compacts of Free
Association: Improvements Needed to Assess and Address Growing
Migration (GAO-12-64, November 14, 2011), https://www.gao.gov/products/
GAO-12-64.
Question 3. The accounting and identification of COFA migrants
needs to be tightened it seems and more narrowly defined. For instance,
I understand that U.S. citizen children and grandchildren of COFA
migrants who are working, paying taxes, and contributing to a state's
or territory's economy could still be counted by Census and Interior as
COFA migrants. Do you think this is appropriate and that such
individuals should still be counted as negatively impacting a state or
territory's finances and therefore requiring reimbursement? How would
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you recommend COFA migrants be defined and counted?
Answer. Recent Interior/Census enumeration efforts counted U.S.-
born children/grandchildren of COFA migrants under age 18. Once they
turn 18, they are no longer counted as COFA migrants in the population
count for division of Compact impact grants. One rational for counting
these US-citizen children is recognizing the cost of migrant households
on the education system.
However, the counting of U.S. born children under age 18 in these
households has been complicated for Census, and has resulted in data
programming errors, that in turn resulted in enumeration errors, that
in turn led to errors in Compact impact payments.\3\
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\3\ See: Compacts of Free Association: Populations in U.S. Areas
Have Grown, with Varying Reported Effects (GAO-20-491, June 15, 2020),
htps://www.gao.gov/products/GAO-20-491, Appendix VI: Compact Migrant
Enumeration Methods, Definitions, and Error.
Going forward, I recommend a simpler definition and method to count
COFA migrants in the event that future Compact impact grants are
---------------------------------------------------------------------------
distributed to states and territories based on COFA population:
Count people present in the United States who were born in
the FAS and are not US citizens. (Since they are not U.S.
citizens, they will travel on a COFA passport and enter the
U.S. under the terms of the Compacts.)
For the 50 U.S. states, Census can present data from the
American Community Survey (ACS) on this population. Since
the ACS is a continuous survey effort, the estimated COFA
population can be updated over time.
For the Pacific U.S. territories (where the ACS is not
implemented), the decennial census can be used by Census to
establish a baseline COFA population. That number can be
annually updated between each census using Department of
Homeland Security, Customs and Border Protection passport
scan data for arrivals and departures. (Inward annual
migration to a U.S. territory would be the difference
between COFA arrivals and COFA departures that year.) This
cooperation between Census, DHS, and Interior may require a
congressional mandate.
Question 4. Can you discuss the viability of the trust funds and
the payment of those funds through continued sector grants for
healthcare and education?
Answer----
FSM and RMI Compact Trust Funds.
By design, FSM and RMI Compact Trust Fund distributions cannot
exceed the level of expiring Compact sector grants. They are not
designed to cover the expiring Supplemental Education Grant (SEG) or
the cost of any of the expiring Federal services (Postal Service,
Weather Service, FEMA funds).
Consequently, there is a looming hit to the FSM and RMI education
sectors with the loss of the Supplemental Education Grant, with its
final federal appropriation in FY2023. For example, Chuuk State in the
FSM will lose 22 percent of its education budget (FY2019 data) due to
the SEG's expiration.\4\
---------------------------------------------------------------------------
\4\ Chuuk State is selected for the example as it is the most
dependent on U.S. funds among the FSM states and more dependent than
RMI and Palau on U.S. funds.
---------------------------------------------------------------------------
Future education and health budgets are also at risk. Both trust
funds can initially cover expiring grants, but under current trust fund
rules there will be zero disbursements in future years when there is a
downturn in stock market returns. The resultant fiscal crisis would be
severe: in Chuuk State, the Compact grants covered by trust fund
support represent 71 percent of education and 86 percent of health
expenditures (FY2019 data).
Current Compact negotiations and signed agreements may alter the
future prospects of the trust funds, either through additional
deposits, by making necessary changes in trust fund distribution rules,
or even by re-purposing the use of trust fund distributions.
Palau Compact Trust Fund.
The Palau Compact Trust Fund was designed as a sinking fund to make
payments until 2045. It is very likely to achieve this goal and could
continue to make payments in subsequent years.
Questions Submitted by Representative Case
Question 1. During my time for questions in our hearing, I misspoke
when describing the Government Accountability Office's reported fiscal
impact from Compact residents on local communities. I noted that
localities collectively reported $1.8 billion in costs between 2004 and
2018 when in reality that figure in the GAO report is $3.2 billion. If
Congress were to expand the same eligibility for federal benefits to
Compact migrants as are currently extended to lawful permanent
residents, what uncovered costs from delivering still-uncovered
services would host communities have to cover without federal aid?
Answer----
Updated Compact Impact Costs for FY2004 to FY2018
At the time U.S. GAO reported on the Compact Impact for Guam,
Hawaii, and CNMI, the available data summed to $3.2 billion for FY2004-
FY2018. However, at the time of the GAO report, Guam had tabulated
Compact Impact cost for FY2018. With that data now available from Guam,
the TOTAL Compact Impact reported is $3.3. billion ($1.85 billion for
Hawaii, $1.37 billion for Guam, and $116 million for CNMI). For FY2018
alone, Hawaii reported $198 million in Compact Impact, Guam reported
$150 million, and the CNMI reported $10 million.
CIFA will support COFA families but only partially address host
government Compact impact.
Host jurisdictions like Hawaii, Guam, and the Commonwealth of the
Northern Mariana Islands (CNMI) have collected and reported on the
fiscal impact of COFA migrants for over three decades. The three areas
have consistently reported the cost of educating the children of COFA
migrants, as well as health system costs. Other cost reporting among
the three has varied, with Hawaii reporting high costs for social
services and Guam reporting high costs for public safety.
The Compact Impact Fairness Act of 2023 (CIFA) would establish COFA
migrant eligibility for several specific federal programs: Supplemental
Security Income (SSI) program; Supplemental Nutrition Assistance
Program (SNAP); Temporary Assistance for Needy Families (TANF); and
certain social service block grants. To the extent that Hawaii, Guam,
the CNMI, and other U.S. states are currently providing state-funded
program benefits to COFA migrants who are ineligible for federal aid,
CIFA would provide federal relief of ongoing state expenditures. Where
such state-funded programs are not currently being provided, CIFA would
directly benefit COFA migrant households.
However, CIFA does not address the large Compact impact expense
areas of education and public safety, nor will it cover the state/
territory share of Medicaid expenses. The cost of education is the
primary area of reported Compact impact for Hawaii and Guam,
representing $118 million or 64 percent of Hawaii Compact impact in
FY2017, and $73 million or 49 percent of Guam Compact impact in FY2017.
The 2020 public law that restored Medicaid eligibility for COFA
migrants is beneficial to the U.S. states who had used state funds for
COFA medical coverage. However, with Medicaid extended, the states
remain responsible for the state share of Medicaid expenses. Currently
the state share is 44 percent for the State of Hawaii.\5\ For the U.S.
territories the benefit of Medicaid COFA eligibility is not certain as
the federal program operates with a financial cap on federal
expenditures in the territories.
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\5\ This accounts for the Federal Medical Assistance Percentage
(FMAP) FY2023 rate of 56 percent in Hawaii. The federal share of CHIP
is 69 percent in Hawaii.
Question 2. Citizens of the Freely Associated States are eligible
to join the U.S. military and frequently serve in our armed forces.
What proportion of the population from the Freely Associated States
joins the U.S. military compared to other U.S. communities? What are
the challenges veterans in the Freely Associated States experience in
accessing Department of Veterans Affairs health care and other benefits
when they return home to their countries? What can be done to improve
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this?
Answer. Data on COFA citizens in the U.S. military is seldom
presented in DOD reports or other demographic reporting, possibly due
to the small numbers. I am not aware of any current data analysis of
this topic. There are two sources that could be used by researchers to
answer this question:
U.S. Census data: For the 50 U.S. states, the American
Community Survey (ACS) can be used to answer the question
about the proportion of COFA citizens in the U.S. military
as compared to other U.S. communities. For example, there
are questions in the survey that identify place of birth
(COFA nations) and current as well as past service in the
U.S. Armed Forces, Reserves, or National Guard. To make a
comparison between COFA and other U.S. communities, the
populations should be of the same age range (for example
age 18-30), high school graduates or higher, and fluent in
English. The later two criteria are generally requirements
to join the U.S. military. For the U.S. territories, the
decennial census data is the only source for this
information. Note, this data source can also be used to
identify the number of prior military service members for
providing veteran services. Due to the small numbers of
COFA citizens in the ACS data and the requirement for
confidentiality, Census may have to undertake this
analysis.
DOD: Defense Department manpower data also contains
information that could be used to understand the
contributions of COFA citizens to the U.S. military. For
example, the Population Representation in the Military
Services report (last published for FY2019) by the DOD
Office of Military Personnel Policy compares the
demographics of the armed forces and the applicants and
accessions each year to civilian demographic benchmarks.
The report uses data from the Defense Manpower Data Center
(DOD) and the Current Population Survey (Bureau of Labor
Statistics). Variables analyzed include age, gender, race/
ethnicity, geography, and neighborhood income.
COFA nation veterans are not able to receive Veterans
Administration (VA) benefits in their home nations. If they reside in
their home nation, they need to buy an airplane ticket and fly to Guam
or Hawaii to access health care. Previously introduced congressional
legislation called for the VA to operate a pilot program to facilitate
COFA veterans' access to health care in the Pacific. The importance of
access to VA benefits is one reason that some COFA migrants stay in the
United States. To improve on the status quo, having the VA implement a
pilot program to address the access gap would be beneficial to COFA
veterans and would, of course, honor the service of those veterans.
Question 3. Funding for the Compacts of Free Association is
currently borne by the Department of the Interior and the Biden
administration suggests moving that funding the Department of State but
to keep administration of the Compacts within the Department of the
Interior. Given the critical role the Compacts of Free Association to
our national security and to the Department of Defense, should the
Department of Defense also bear some of these costs?
Answer. This is an appropriate issue to raise. The Compacts are
based on three pillars: defense rights, economic assistance, and
immigration. U.S. defense rights are secured with economic assistance
to COFA nations and families. The history to date has little DOD
contribution to the three Compact pillars; rather, Interior directly
pays for DOD operational interests in the COFA nations for the benefit
of the Department of the Defense:
From FY1987 to FY2023, Interior has provided the Marshall
Islands with $352 million (current dollars) or $707 million
(FY2023 dollars) for nuclear testing compensation and
programs.
Further, Interior has provided the Marshall Islands with
$526 million (current dollars) or $738 million (FY2023
dollars) for military land lease payments.
Given the heightened strategic interest of the region, this is the
right time for DOD to bring its substantial financial resources into
the Compact relationship framework. Beyond finances, DOD can also make
in-kind contributions: (1) re-establish its Civic Action Team program
in the FSM and RMI, (2) continue its deployment of humanitarian
missions, and (3) address illegal fishing that threatens COFA
government revenue and maritime security.
Question 4. Last year the administration released the first ever
Strategy for Pacific Island Partnership along with a more detailed
Roadmap to a 21st Century U.S. Pacific Islands Partnership. How was
this and recent efforts to reengage the region seen by the Pacific
Islands? What role can Congress play to help implement the Pacific
Islands Partnership Strategy?
Answer. Congress can use its appropriations and oversight role to
monitor U.S. engagement and implementation of the Strategy/Roadmap. The
Roadmap provides an extensive list of project areas and numerous
financial commitments. Congress can review U.S. agency operations to
make sure they are coordinated and properly resourced. One area for
review is that the United States coordinates with other country and
international agency donors to the Pacific islands to avoid duplication
and to allow an efficient division of labor. Regarding resources, are
U.S. projects focused and scaled to be well resourced? Or are U.S.
projects diffused and underfunded? U.S. efforts should be focused in
order to succeed.
The recent establishment of U.S. Embassies across the Pacific and
the promised deployment of Peace Corps is an essential demonstration of
a new U.S. reengagement with the Pacific islands.
I believe other panel members will have more to contribute on these
questions.
Question 5. The Pacific Islands Forum, a critical inter-
governmental organization in the Pacific Islands region, laid out a
regional vision for development of the Pacific Islands in its 2050
Strategy for the Blue Pacific Continent. How can the United States
support this strategy?
Answer. I believe other panel members will have more to contribute
on this question.
______
Ms. Hageman. I thank the witness for their testimony, and
the Chair now recognizes Ms. Paskal for 5 minutes.
STATEMENT OF CLEO PASKAL, NON-RESIDENT SENIOR FELLOW,
FOUNDATION FOR DEFENSE OF DEMOCRACIES, WASHINGTON, DC
Ms. Paskal. Chair Hageman, Ranking Member Leger Fernandez,
distinguished members of the Subcommittee, thank you for the
daunting honor of being invited to testify today.
I am going to explain why the FAS are important to China,
what Beijing is doing to try to turn them into vassal states,
and how the United States can help the FAS defend themselves.
Why are the FAS important to China? Well, because they are
really important to the United States. The U.S. relationship
with the FAS, as we have heard, is multi-dimensional and
complex. China has some interests in many of the dimensions,
but there is one above all that makes them a very high priority
for Beijing, and that is geography.
We often hear about the strategic importance of the first
island chain. That is the chain of islands that runs roughly
north-south off the coast of Asia: Japan, Taiwan, Philippines,
Malaysia. It hems in China's vast and growing military. Much of
America's defense strategy in the Pacific is reinforcing that
so-called castle wall.
The implicit assumption is the PLA will come pouring off
the coast of China and hit the chain. That is the strategy.
But, as the saying goes, amateurs talk strategy and
professionals talk logistics. And the logistical reality is
that this really gets a lot harder, if not impossible, without
the east-west chain of islands.
America's Pacific Islands and the FAS create a corridor of
freedom, that includes freedom of deployment, from Hawaii to
the waters of treaty allies Philippines and Japan, and through
them onto Taiwan. Continued access is the unspoken assumption
that underpins the castle wall approach.
Through their COFAs with the United States, the FAS have
voluntarily granted the United States, as we have heard,
uniquely extensive defense and security access to their
sovereign territories. The United States takes these
extraordinary agreements for granted. It shouldn't. As I have
heard Dr. Watson say, the word ``free'' isn't freely
associated.
China can read a map as well, and has been working hard and
smart to change the strategic geography. It has been expanding
its reach by building and militarizing islands between its
coast and the first island chain in the South China Sea. That
pushes it closer to that first island chain and aids in its
deployment. It is also one of the reasons why Beijing is so
keen on taking Taiwan. It blows a hole in the chain.
But taking Taiwan isn't China's end point. Once it takes
Taiwan, China needs to secure it. That means the security
perimeter is centered on Taiwan, and then goes out from there,
which the other Pacific Islands' leaders and the FAS know it.
In 2022, Micronesian President David Panuelo wrote that China's
intention was ``shifting us very close into Beijing's orbit,
intrinsically tying the whole of our economies and societies to
them.''
The people of the region also know it. When, as was
mentioned, China media talks about a Guam killer missile, the
people of Guam, Americans, know that means killing them.
Imagine if Chinese media was talking about Wyoming killer
missiles, for example.
China would prefer to take Taiwan through political warfare
than by force. Also, China would prefer to take the FAS the
same way.
So, how is China trying to use political warfare to
undermine the United States and the FAS? It is attacking the
institutions of state and democracy itself in a form of
entropic warfare, as the Chair mentioned. That creates social
and political fragmentation and weakens resistance. Here are
some examples from each of the FAS.
Dr. Grossman mentioned Rongelap and the Chinese Marshallese
couple that tried to essentially create, according to the U.S.
Government indictment, the intention of establishing a semi-
autonomous region akin to Hong Kong within the country. That
has now gone to trial. That attempt came within one vote of
succeeding in the Marshall Islands Parliament. The couple
involved pled guilty, and a few weeks ago the United States
deported one of the criminals back to the Marshall Islands,
where she is free to establish her linkages with local elites,
some of whom will be running in the upcoming election. The
second sentencing was today, and he is also likely to be
deported back to the Marshall Islands.
There are similar concerns about Chinese money and criminal
activity affecting the upcoming elections in Palau, another
country that recognizes Taiwan. Palau has deported hundreds of
Chinese criminals, and has since identified many more that it
doesn't have the capacity to expel. U.S.-sanctioned major triad
figure Broken Tooth was also operating from Palau.
In Micronesia, the former President wrote about China, ``We
are bribed to be complicit and bribed to be silent. The
practical impact of this is that some senior members and
elected officials take actions that are contrary to FSM's
national interests, but are consistent with the PRC's national
interests.''
Each of the FAS is one election away from being lost to the
free world. From a narrow strategic lens, that means that, in
the same way the loss of Taiwan blows a hole in the north-south
chain, this blows a hole in the east-west chain.
With the United States looking at the edge of the Pacific
and focusing on the Chinese coast, China is looking at
replicating an American World War II island-hopping campaign by
using political warfare to embed and conquer.
The goal? In 2008, Admiral Keating told SASC that a senior
Chinese officer suggested to him, ``Why don't we reach an
agreement, you and I? You take Hawaii east, we will take Hawaii
west, we will share information, and we will save you all the
trouble of deploying your forces west of Hawaii.'' China's
actions make it look like that wasn't said in jest.
This has the potential to change the security dynamic of
the Pacific in the most fundamental way we have seen since the
end of World War II. The honest leaders of the region know it,
and are trying to tell us for the sake of their people and for
the sake of America. We owe it to them and to those who died
the last time around to listen. In my written testimony, I make
several recommendations about how to do that.
Thank you.
[The prepared statement of Ms. Paskal follows:]
Prepared Statement of Cleo Paskal, Non-Resident Senior Fellow,
Foundation for Defense of Democracies
Introduction
Chairman Hageman, Ranking Member Leger Fernandez, and distinguished
members of this subcommittee, thank you for the privilege and honor of
being invited to testify today on this important topic.
The Republic of the Marshall Islands (RMI), the Federated States of
Micronesia (FSM), and the Republic of Palau are, by far, the United
States' most supportive strategic allies.
Through their Compacts of Free Association (COFAs) with the United
States, the three Freely Associated States (FAS) have voluntarily
granted the United States uniquely extensive defense and security
access in their sovereign territories. In the words of the Compacts:
``The Government of the United States has full authority and
responsibility for security and defense matters in or relating to the
Marshall Islands and the Federated States of Micronesia [and Palau].''
\1\
---------------------------------------------------------------------------
\1\ Compact of Free Association Act of 1985. Pub. L. 99-239 (99th
Congress), 99 Stat. 1770, codified as amended at 48 USC Sec. 1681.
(https://www.congress.gov/99/statute/STATUTE-99/STATUTE-99-Pg1770.pdf);
Trust Territory of the Pacific Islands. Pub. L. 99-658 (99th Congress),
100 Stat. 3672, codified as amended at 48 USC Sec. 1681. (https://
www.congress.gov/99/statute/STATUTE-100/STATUTE-100-Pg3672.pdf)
---------------------------------------------------------------------------
This includes control over key aspects of strategic decision-
making, such as the prerogative for the United States to set up and
operate U.S. military bases in the countries \2\ and to have a veto
over other countries' military access to the region.\3\
---------------------------------------------------------------------------
\2\ Thomas Lum, ``The Compacts of Free Association,'' Congressional
Research Service, August 15, 2022. (https://crsreports.congress.gov/
product/pdf/IF/IF12194/1)
\3\ In broad terms, apart from defense and security provisions, the
COFAs also give citizens of the FAS the right to work in the U.S., to
serve in the U.S. military, and they provide financial support and
services (such as the postal service) to the government and people of
the FAS. The financial and service provisions are renegotiated every
twenty years, and are currently up for renewal, expiring in FSM/RMI in
2023 and Palau in 2024.
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The COFAs have strong bipartisan support, including important
leadership from members of this subcommittee.\4\ In other examples, in
a 2019 hearing, Representative Brad Sherman (D-CA) said, ``[T]he
Compacts create bonds between the United States and these three
countries that are closer than we enjoy with any other sovereign
nation.'' \5\ That same year, Republican Mike Pompeo became the first
Secretary of State to visit FSM in a bid to renew COFA negotiations.\6\
---------------------------------------------------------------------------
\4\ Jack Detsch and Zinya Salfiti, ``Congress Presses White House
to Take Control of Pacific Island Talks,'' Foreign Policy, September 8,
2021. (https://foreignpolicy.com/2021/09/08/congress-presses-white-
house-to-take-control-of-pacific-island-talks)
\5\ U.S. House of Representatives, Committee on Foreign Affairs and
Committee on Natural Resources, ``Joint Hearing on Sustaining U.S.
Pacific Insular Relationships,'' September 26, 2019. (https://
www.govinfo.gov/content/pkg/CHRG-116hhrg37848/pdf/CHRG-
116hhrg37848.pdf)
\6\ Colin Packham and Jonathan Barrett, ``U.S. seeks to renew
Pacific islands security pact to foil China,'' Reuters, August 5, 2019.
(https://www.reuters.com/article/us-micronesia-usa-pompeo-
idUSKCN1UV0UV)
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Given the locations of the FAS, the Compacts have come to form the
often-unacknowledged foundation of the United States' defense
architecture in the Pacific. With their thousand-plus scattered islands
and atolls, the Exclusive Economic Zones (EEZs) of the three countries
combine to cover a contiguous maritime area larger than the continental
United States, right through the heart of the Central Pacific.
Historical Context
The region's strategic importance to the United States has long
been evident and became undeniable in the 20th Century.
After World War I, the League of Nations handed many of Germany's
Pacific possessions, including much of what is now the FAS and the
Commonwealth of Northern Marianas, to Imperial Japan under what is
known as the South Seas Mandate. For the decades leading up to World
War II, Japan administered this vast area as a colony with the main
administrative seat in what is now Koror, Palau. The Palauan language
still has many Japanese loan words, and thanks to intermarriage,
Japanese surnames are common across the region.
In the 1930s, Japan put great effort into establishing ports and
airfields with, at least, dual-use capabilities. It also put in
extensive defensive fortifications and communications systems and
streamlined resource extraction.
By the time Japan attacked Pearl Harbor on December 7, 1941, with
the intention of pushing the United States out of the Pacific, it was
already prepared and dug in across what is now the FAS and the
Commonwealth of Northern Marianas. It invaded Guam on December 8,
defeating the U.S. garrison by December 10.
Liberating the region from Imperial Japan resulted in some of the
most horrific fighting of the war. Countless locals suffered and died,
islands were devastated, and the heart-rending U.S. military losses of
thousands in battles like Peleliu (Palau), Angaur (Palau), Truk (now
Chuuk, FSM), Kwajalein (RMI), and Guam shaped generations of Americans.
After the war, again acknowledging the region's uniquely important
location on the front line between Asia and the Americas, the area now
covered by the FAS was included in the only United Nations `Strategic'
Trust Territory \7\ and was put under U.S. administration. While under
U.S. administration, the U.S. conducted 67 nuclear tests in the
Marshall Islands. If the explosive power were spread out evenly, it
would equal approximately one Hiroshima explosion a day for twenty
years.\8\
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\7\ ``UN Trusteeship Council Documentation,'' Dag Hammarskjold
Library, April 24, 2023. (https://research.un.org/en/docs/tc/
pacificislands)
\8\ Hart Rapaport and Ivana Nikolic Hughes, ``The U.S. Must Take
Responsibility for Nuclear Fallout in the Marshall Islands,''
Scientific American, April 4, 2022. (https://
www.scientificamerican.com/article/the-u-s-must-take-responsibility-
for-nuclear-fallout-in-the-marshall-islands)
---------------------------------------------------------------------------
In spite of this, as they went independent, the people of the
region chose to enter into Compacts with the United States. In 1986,
the United States reached separate COFA agreements with the Marshall
Islands and with the Micronesian island groups of Yap, Chuuk, Kosrae,
and Pohnpei to form, respectively, The Republic of Marshall Islands and
the Federated States of Micronesia.\9\ Palau agreed to a Compact in
1994.\10\
---------------------------------------------------------------------------
\9\ ``Compacts of Free Association,'' Office of Insular Affairs,
U.S. Department of the Interior, (https://www.doi.gov/oia/compacts-of-
free-association)
\10\ William Chapman, ``In Palau, Even God is Said to Oppose
Micronesian Unity,'' The Washington Post, July 17, 1978. (https://
www.washingtonpost.com/archive/politics/1978/07/17/in-palau-even-god-
is-said-to-oppose-micronesian-unity/f85347c8-d7cc-4680-bfe4-
7371975bd349)
---------------------------------------------------------------------------
The Commonwealth of the Northern Mariana Islands (CNMI) considered
but rejected independence and formally joined with the United States as
a commonwealth in 1986. It had been proposed that the Northern Mariana
Islands join with Guam, and while there was a considerable degree of
public support in the Marianas, this did not happen because Guam
ultimately rejected the idea.
The memory of the sacrifices of World War II and concern over
Soviet activities in the Pacific motivated many American political
leaders to work to ensure the continuation of deep and strong relations
with American Pacific islands and to establish the Compacts.
Ambassador Amatlain Elizabeth Kabua, the permanent representative
of the Marshall Islands to the United Nations, noted that at the time
that her country's COFA was originally concluded with the United
States: ``Many in the U.S. Congress and government had fought in the
Pacific during World War Two--they knew who we were, where we were, and
why we were important.'' \11\
---------------------------------------------------------------------------
\11\ Carnegie Endowment, ``Islands in Geopolitics,'' YouTube,
September 19, 2021. (https://www.youtube.com/watch?v=ZbegDXWLHXA)
---------------------------------------------------------------------------
There was an acknowledgement that America's Pacific islands paid
deeply for being country's real Pacific `coast.' For example, when then
President Ronald Reagan, who was instrumental in passing the Compacts,
landed in Guam in 1984, he said: ``[Guam] may be nearly 9,000 miles
from our Nation's Capital, but it's a real pleasure to know that we're
among fellow Americans. . . . In times of crisis, few Americans have
been more steadfast in the defense of our shared values and few have
made more sacrifices to preserve them.'' \12\ It is worth remembering
that Chinese media calls China's DF-26 missile the ``Guam killer.''
\13\
---------------------------------------------------------------------------
\12\ President Ronald Reagan, ``Remarks on Arrival at Guam
International Airport in Agana,'' April 25, 1984. (https://
www.reaganlibrary.gov/archives/speech/remarks-arrival-guam-
international-airport-agana)
\13\ Bill Gertz, ``Army Deploying Iron Dome Missile Defense to
Guam,'' The Washington Times, October 7, 2021. (https://
www.washingtontimes.com/news/2021/oct/7/army-deploying-iron-dome-
missile-defense-guam)
---------------------------------------------------------------------------
Forgetting the Map
However, especially after the end of the Cold War, some in the U.S.
defense and strategic community seem to have gradually forgotten why
the FAS are important. There is, as former Reserve Head of Intelligence
for Marine Forces in the Pacific, Col. Grant Newsham puts it: ``a focus
on the castle wall--on building up and working with Japan, Philippines,
Australia, and others--assuming the People's Liberation Army [PLA] will
conveniently come pouring off the coast of China and into our
crosshairs. Meanwhile, China is setting up well behind our western-most
defenses, in the Pacific islands.''
China Learns From the Defeat of Others
The American Pacific islands and the FAS create a `corridor of
freedom' (including freedom of deployment) from America's Pacific
islands of Hawaii to the waters of treaty allies Philippines and Japan.
And, through them, on to Taiwan. Continued access is the unspoken
assumption that underpins the `castle wall' approach.
So, what are China's goals in the region? In 2008, Admiral Timothy
Keating told the Senate Armed Services Committee that a senior Chinese
officer suggested to him: ``why don't we reach an agreement, you and I?
You take Hawaii east. We'll take Hawaii west. We'll share information,
and we'll save you all the trouble of deploying your naval forces west
of Hawaii.' '' \14\
---------------------------------------------------------------------------
\14\ Cleo Paskal, ``China Moves to Dominate Pacific with U.S. Mired
in Ukraine,'' The Sunday Guardian (India), March 13, 2022. (https://
www.sundayguardianlive.com/news/china-moves-dominate-pacific-u-s-mired-
ukraine)
---------------------------------------------------------------------------
Getting effective control of the Pacific islands is an essential
part of that goal. And there is evidence that China has been making a
concerned attempt to jump the castle wall and, as the Japanese did in
the 1930s, hunker down across the Pacific islands. But, having learned
from the Japanese experience, they are using political warfare and so
keeping under the threshold of what would call for a military response.
China's efforts are well-funded and broadly successful. They
generally follow a predictable sequence. First, the People's Republic
of China (PRC) puts in a commercial presence with Chinese nationals
(who, according to China's 2017 National Intelligence Law, are legally
obligated to support the government's intelligence operations).\15\
Where possible, there is a targeting of key industries, such as
fishing, lumber, and mining. There are also highly publicized
infrastructure projects and ``gifts.'' This economic engagement usually
includes two other elements: a focus on projects that give China a
strategic edge, for example, ports, airports and telecoms; and
corruption (including working with Chinese organized crime).\16\
---------------------------------------------------------------------------
\15\ National Intelligence Law of the People's Republic, (Adopted
at the 28th meeting of the Standing Committee of the 12th National
People's Congress on June 27, 2017), (China). (https://cs.brown.edu/
courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf)
\16\ Bernadette Carreon, Aubrey Belford, and Martin Young,
``Pacific Gambit: Inside the Chinese Communist Party and Triad Push
into Palau,'' Organized Crime and Corruption Reporting Project,
December 12, 2022. (https://www.occrp.org/en/investigations/pacific-
gambit-inside-the-chinese-communist-party-and-triad-push-into-palau)
---------------------------------------------------------------------------
This braided approach of commerce, strategy, and criminality often
leads to the weakening of the rule of law and state institutions. This
`entropic warfare' can contribute to political and social
fragmentation, even chaos, and facilitates the rise of a domestic
constituency ready to serve as PRC proxies in exchange for backing. It
also lays the groundwork for (potentially violent) transnational
repression.
The most recent reported example of a major milestone on this
trajectory is the China-Solomon Islands security deal,\17\ which allows
for the deployment of PLA troops in Solomon Islands to maintain social
order as well as to protect Chinese citizens and major projects.
---------------------------------------------------------------------------
\17\ Kate Lyons and Dorothy Wickham, ``The Deal that Shocked the
World: Inside the China-Solomons Security Pact,'' The Guardian (UK),
April 20, 2022. (https://www.theguardian.com/world/2022/apr/20/the-
deal-that-shocked-the-world-inside-the-china-solomons-security-pact)
---------------------------------------------------------------------------
Less reported, but just as concerning, is the fact that the pro-PRC
Prime Minister of Solomons used a Chinese slush fund to pay off 39 of
the 50 Members of the Parliament--enough to amend the constitution and
postpone the elections that were due to be held this year.\18\
---------------------------------------------------------------------------
\18\ Cleo Paskal, ``How China buys foreign politicians: A case
study,'' The Sunday Guardian (India), September 5, 2021. (https://
sundayguardianlive.com/news/china-buys-foreign-politicians-case-study)
---------------------------------------------------------------------------
The Solomons parliament building is on the island of Guadalcanal
and was built with U.S. money to honor the Americans who died at the
Battle of Guadalcanal. There was a commemoration of the 80th
anniversary of that battle last summer. The event was attended by
Ambassador Caroline Kennedy, whose father, John F. Kennedy, was saved
by two Solomon Islanders after his boat was rammed by the Japanese in
World War II. The pro-PRC Prime Minister did not show up for the
commemoration.\19\
---------------------------------------------------------------------------
\19\ Kirsty Needham, ``Solomons PM's absence from memorial service
was a `missed opportunity,' U.S. official says,'' Reuters, August 8,
2022. (https://www.reuters.com/world/asia-pacific/solomons-leader-did-
not-attend-us-war-memorial-service-snub-media-report-2022-08-08)
---------------------------------------------------------------------------
China's Greater East Asia Co-Prosperity Sphere
China's ambitions go well beyond the Solomons. In May and June
2022, at a time when many of the countries involved still had covid
entry restrictions in place, China's Foreign Minister Wang Yi and
entourage was waved in to eight Pacific Island Countries (PICs). During
that trip, two other China-drafted agreements were circulated giving a
sense of Beijing's comprehensive and extensive ambitions for the
region.\20\
---------------------------------------------------------------------------
\20\ Cleo Paskal, ``China Launches Empire Building Exercise in
Pacific Theatre,'' The Sunday Guardian (India), May 29, 2022. (https://
www.sundayguardianlive.com/news/china-launches-empire-building-
exercise-pacific-theatre)
---------------------------------------------------------------------------
Wang proposed a ``China-Pacific Island Countries Common Development
Vision'' supported by a ``China-Pacific Island Countries Five-Year
Action Plan on Common Development (2022-2026).''
Elements of the ``Vision'' \21\ include: law enforcement
cooperation, incorporating ``immediate and high-level police
training;'' ``cooperation on network governance and cyber security,''
including a ``shared future in cyberspace;'' the ``possibility of
establishing [a] China-Pacific Island Countries Free Trade Area;''
enhancing ``cooperation in customs, inspections and quarantine;''
creating ``a more friendly policy environment for cooperation between
enterprises;'' setting up Confucius Institutes; training young
diplomats; establishing a ``China-Pacific Island Countries Disaster
Management Cooperation Mechanism,'' including a prepositioned ``China-
Pacific Island Countries Reserve of Emergency Supplies,'' and more.
---------------------------------------------------------------------------
\21\ @CleoPaskal, Twitter, May 26, 2022. (https://twitter.com/
CleoPaskal/status/15298676659924 74626)
---------------------------------------------------------------------------
The ``Action Plan'' \22\ includes: ``a Chinese Government Special
Envoy for Pacific Island Countries Affairs'' (who has since been
appointed); a ``China-Pacific Island Countries Ministerial Dialogue on
Law Enforcement Capacity and Police Cooperation'' (also completed);
``assistance in laboratory construction used for fingerprints testing,
forensic autopsy, drugs, electronic and digital forensics;''
``encourag[ing] and support[ing] airlines to operate air routes and
flights between China and Pacific Island Countries;'' ``send[ing] 200
medical personnel'' in the next five years; sponsoring ``2500
government scholarships'' from 2022 to 2025, and much more.
---------------------------------------------------------------------------
\22\ @CleoPaskal, Twitter, May 26, 2022. (https://twitter.com/
CleoPaskal/status/15298491870719 26273)
---------------------------------------------------------------------------
Combined, the Vision and Action plans are a blueprint for influence
(if not control) of key levers of national power. It is often reported
that Wang's `failure' to get countries to sign on to the two documents
was a setback for China, but it is doubtful Beijing even thought that
was in the cards. Otherwise, Wang would have held his group meeting
with the PIC foreign ministers at the end of his trip, after he had a
chance to speak to more of them individually, rather than in the
middle.
Also, four of the countries in the region recognize Taiwan. Those
signing up to Beijing's deal would have been striking a sudden blow-by-
proxy against their neighbors. It is not the way things are usually
done in the Pacific.
China would know that. It has a half-dozen think tanks dedicated to
studying the region, has trained hundreds (if not thousands by now) of
Pacific island bureaucrats, and has generational, focused intelligence
on key leaders and their families. Within the countries, China has
large footprints, often including the largest embassy (with staff that
speak the local language), financial relationships with key business
leaders, favorite members of the media, control of large sections of
the retail sector, including in the relatively remote areas, and more.
There are also less obvious levers. The Belt and Road Initiative
seems to be expanding, including in part via World Bank and Asian
Development Bank contracts (essentially using the money of others,
including the United States, to pay for Chinese companies to build
infrastructure). There is also the widespread use of Chinese organized
crime as an `auxiliary', as has been seen in Hong Kong.
What Wang was likely doing by floating the deal was drawing out
those who oppose China to enable them to be isolated and targeted and
seeing who was willing to be compliant so they could be built up and
rewarded.
Additionally, while the multilateral Vision and Plan went unsigned,
Wang did sign a series of bilateral deals, some of which echoed
elements of the Vision, in most of the countries he visited.\23\ Some
were formalizations or expansions of existing areas of cooperation, but
some were new, such as agreements on fingerprint laboratories. There
seemed to be a focus on gaining access in agriculture (land), fisheries
(seas), aviation (air), and disaster response (amphibious,
prepositioning).
---------------------------------------------------------------------------
\23\ ``China's whirlwind Pacific tour a slight success with several
bilateral agreements signed,'' RNZ (New Zealand), June 4, 2022.
(https://www.rnz.co.nz/international/pacific-news/468464/china-s-
whirlwind-pacific-tour-a-slight-success-with-several-bilateral-
agreements-signed)
---------------------------------------------------------------------------
Apart from undermining democracy in the region and creating proto-
proxy states, PRC influence operations are having a concrete effect on
the United States' ability to operate in the region. Washington is
quietly being blocked out of some Pacific island ports, likely by pro-
PRC elements. In the latest case, Vanuatu failed to issue timely
clearance for U.S. Coast Guard cutter JUNIPER (a 225' buoy tender) to
enter Port Vila on January 26, 2023, to commence planned shiprider
illegal, unreported, and unregulated (IUU) fishing operations. The
ship, running out of fuel and unable to continue waiting, diverted to
Fiji instead.\24\
---------------------------------------------------------------------------
\24\ Cleo Paskal, ``The U.S. is blocked from ports in PRC-
Influenced Solomons, Vanuatu,'' The Sunday Guardian (India), February
4, 2023. (https://www.fdd.org/analysis/2023/02/05/us-blocked-from-
ports-solomons-vanuatu)
---------------------------------------------------------------------------
This was not the first time a Coast Guard cutter was blocked from
entry in a Pacific port. In August 2022, the USCGC Oliver Henry, which
was also on an IUU fisheries patrol, could not obtain entry to refuel
in Solomon Islands. Solomons then declared a moratorium on naval vessel
visits from the United States and most other countries.\25\
---------------------------------------------------------------------------
\25\ Benjamin Felton, ``Solomon Islands Blocks All Naval Port
Visits After U.S. Coast Guard Cutter Denied Entry,'' USNI News, August
30, 2022. (https://news.usni.org/2022/08/30/solomon-islands-blocks-all-
naval-port-visits-after-u-s-coast-guard-cutter-denied-entry)
---------------------------------------------------------------------------
In both cases, national governments blamed overwhelmed domestic
bureaucracies. However, that rang hollow given: the high-profile nature
of the incidents; the subsequent lack of effort to correct the issue
(indeed doubling down in the case of Solomons); and the fact that these
patrols are for something all the countries in the region say they want
(help with illegal fishing).
The FAS
While Oceania as a whole is of interest to China, for the same
reason the American Pacific islands and the FAS are important to the
United States--they give Washington a strategic bridge to the coast of
Asia as well as a buffer against Chinese advances--they are especially
important to China. If the United States maintains its position there,
the rest of Beijing's plan does not work. Additionally, two of the
three FAS recognize Taiwan, making them even greater threats to China.
And so there are also persistent, high-priority PRC political
warfare efforts \26\ to get the FAS to abandon, or at least downgrade,
their defense and security relationships with the United States and to
get Palau and Marshalls to abandon Taiwan. Here are some examples in
each of the FAS.
---------------------------------------------------------------------------
\26\ ``China's Influence on the Freely Associated States of the
Northern Pacific,'' United States Institute of Peace, September 20,
2022. (https://www.usip.org/publications/2022/09/chinas-influence-
freely-associated-states-northern-pacific)
---------------------------------------------------------------------------
Federated States of Micronesia (FSM)
Then FSM President David Panuelo was one of the leaders concerned
about PRC activities in the region that Wang's Pacific gambit exposed
for targeting. After seeing Wang's proposals, Panuelo wrote \27\ to
other Pacific Island leaders it was ``The single-most game-changing
proposed agreement in the Pacific in any of our lifetimes.'' He added,
``I am aware that the bulk of Chinese research vessel activity in the
FSM has followed our Nation's fiber optic cable infrastructure, just as
I am aware that the proposed language in this agreement opens our
countries up to having our phone calls and emails intercepted and
overheard.''
---------------------------------------------------------------------------
\27\ @CleoPaskal, Twitter, May 26, 2022. (https://twitter.com/
cleopaskal/status/15300191485284 92551)
---------------------------------------------------------------------------
The intention, he wrote, was: ``to shift those of us with
diplomatic relations with China very close into Beijing's orbit,
intrinsically tying the whole of our economies and societies to them.
The practical impact, however, of Chinese control over our security
space, aside from impacts on our sovereignty, is that it increases the
chances of China getting into conflict with Australia, Japan, the
United States and New Zealand, on the day when Beijing decides to
invade Taiwan. . . . To be clear, that's China's long-term goal: to
take Taiwan. Peacefully, if possible; through war if necessary.''
The clarity of Panuelo's statement marked him as someone Beijing
would not like to see in power. Perhaps coincidentally, he lost his re-
election bid. On March 9, 2023, while still President of FSM, David
Panuelo wrote another letter \28\ in which he describes cases of what
he calls PRC ``Political Warfare and Grey Zone activity [that] occur[s]
within our borders.''
---------------------------------------------------------------------------
\28\ Cleo Paskal, LinkedIn, March 10, 2023. (https://
www.linkedin.com/posts/cleopaskal_panuelo-letter-on-switch-to-taiwan-
prc-activity-7039672476045340672-8RmJ)
---------------------------------------------------------------------------
He wrote, ``One of the reasons that China's Political Warfare is
successful in so many arenas is that we are bribed to be complicit, and
bribed to be silent. That's a heavy word, but it is an accurate
description regardless. What else do you call it when an elected
official is given an envelope filled with money after a meal at the PRC
Embassy or after an inauguration? What else do you call it when a
senior official is discreetly given a smartphone after visiting
Beijing? . . . What else do you call it when an elected official
receives a check for a public project that our National Treasury has no
record of and no means of accounting for?''
The effect, he wrote, is ``Senior officials and elected officials
across the whole of our National and State Governments receive offers
of gifts as a means to curry favor. The practical impact of this is
that some senior officials and elected officials take actions that are
contrary to the FSM's national interest, but are consistent with the
PRC's national interests.''
He then described the outcomes of this corrosion of the body
politic. ``So, what does it really look like when so [many] of our
Government's senior officials and elected officials choose to advance
their own personal interest in lieu of the national interest? After
all, it is not a coincidence that the common thread behind the Chuuk
State secession movement, the Pohnpei Political Status Commission and,
to a lesser extent, Yap independence movement, include money from the
PRC and whispers of PRC support. (That doesn't mean that persons
yearning for secession are beholden to China, of course--but, rather,
that Chinese support has a habit of following those who would support
such secession).''
The results, he wrote, are: ``At worst in the short-term, it means
we sell our country and our sovereignty for temporary personal benefit.
At worst in the long-term, it means we are, ourselves, active
participants in allowing a possible war to occur in our region, and
very likely our own islands and our neighbors on Guam and Hawaii, where
we ourselves will be indirectly responsible for the Micronesian lives
lost.''
This led him, in the letter, to describe discussions that he had,
at his request, with the Foreign Minister of Taiwan, Joseph Wu, about
either recognizing Taiwan or initializing an agreement for a Taipei
Economic & Cultural Representative Office (TECRO) in Micronesia. A core
reason for that, he explained, is ``greatly added layers of security
and protection that comes with our country distancing itself from the
PRC, which has demonstrated a keen capacity to undermine our
sovereignty, reject our values, and use our elected and senior
officials for their purposes.''
Given how important the region is to China strategically, he knows
how dangerous this is to him personally, and he added: ``I am acutely
aware that informing you all of this presents risks to my personal
safety; the safety of my family; and the safety of the staff I rely on
to support me in this work. I inform you regardless of these risks,
because the sovereignty of our nation, the prosperity of our nation,
and the peace and stability of our nation, are more important. Indeed,
they are the solemn duty of literally each and every single one of us
who took the oath of office to protect our Constitution and our
country.''
That offer to switch to Taiwan was not followed up. Based on
personal discussions in Taiwan and Washington, it seems possible that
Taiwan felt it could not move without U.S. approval, and the State
Department was not supportive. On May 11, 2023, David Panuelo left
office. The opportunity was lost and the undermining of FSM democracy--
and potentially relations with Washington--continues. What is going on
in FSM is far from unusual in the region; what is unusual is having a
president say it out loud.
Republic of Marshall Islands (RMI)
The Marshall Islands recognizes Taiwan and is home to the U.S.
military's Ronald Reagan Ballistic Missile Defense Test Site.
Undermining either of those relationships would greatly benefit China's
strategic goals. One operation that could have done that featured two
China-linked Marshallese nationals involved, according to the U.S.
Government, in ``a multi-year scheme that included establishing a
nongovernmental organization and allegedly bribing officials in the
Republic of the Marshall Islands with the intention of establishing a
semi-autonomous region, akin to Hong Kong, in the U.S.-defended
Marshall Islands.'' \29\
---------------------------------------------------------------------------
\29\ U.S. Immigration and Customs Enforcement, Press Release, ``ERO
New York City removes noncitizen aggravated felon to the Marshall
Islands,'' April 27, 2023. (https://www.ice.gov/news/releases/ero-new-
york-city-removes-noncitizen-aggravated-felon-marshall-islands)
---------------------------------------------------------------------------
That attempt came within one vote of succeeding in the Marshall
Islands parliament. The couple involved were charged in New York and
pleaded guilty, meaning the names of the Marshallese who were bribed
didn't become public, potentially leaving some of them to run in the
upcoming November 2023 elections without that information being made
available to the electorate. More concerning, the United States
deported one of the criminals involved in the bribery back to the
Marshall Islands, where she is now walking free, able to re-establish
her linkages with local elites.\30\
---------------------------------------------------------------------------
\30\ Ibid.
---------------------------------------------------------------------------
Republic of Palau
The president of Palau (another country that recognizes Taiwan),
Surangel Whipps Jr., is a staunch defender of democracy. He has
consistently supported Taiwan, even when it has had a detrimental
effect on Palau's economy (at least in the short-term). For example,
China built up Chinese tourism to Palau then suddenly pulled all its
tourists out in an attempt to crash the Palauan economy and force it to
derecognize Taiwan.\31\
---------------------------------------------------------------------------
\31\ Farah Master, ``Empty hotels, idle boats: What happens when a
Pacific island upsets China,'' Reuters, August 19, 2018. (https://
www.reuters.com/article/us-pacific-china-palau-insight-idUSKBN1L4036)
---------------------------------------------------------------------------
Palau stood firm. Recently, Whipps, who has also offered the United
States a base, said, ``A Chinese Ambassador asked us to have diplomatic
relations with China and we said, `we have no problem having diplomatic
relations with China.' What we have a problem with is [China] telling
us that we cannot have diplomatic relations with Taiwan [. . .] We see
that tensions are rising, we believe in `presence is deterrence'. It
just reminds us that we all need to be prepared because do not want to
ever go through World War 2 again. It is important that we align
ourselves with people that believe in boundaries, rule of law,
democracy and freedom because we need to protect those values.'' \32\
---------------------------------------------------------------------------
\32\ Rachael Nath, ``Pacific must `stand together' on Taiwan
issue--Palau's Surangel Whipps Jr,'' RNZ (New Zealand), April 20, 2023.
(https://www.rnz.co.nz/international/pacific-news/488336/pacific-must-
stand-together-on-taiwan-issue-palau-s-surangel-whipps-jr)
---------------------------------------------------------------------------
Palau also has an election coming up in less than a year and a
large Chinese organized crime presence,\33\ and Whipps' current chances
at re-election are not considered promising.
---------------------------------------------------------------------------
\33\ Bernadette Carreon, Aubrey Belford and Martin Young, ``Pacific
Gambit: Inside the Chinese Communist Party and Triad Push into Palau,''
Organized Crime and Corruption Reporting Project, December 12, 2022.
(https://www.occrp.org/en/investigations/pacific-gambit-inside-the-
chinese-communist-party-and-triad-push-into-palau)
---------------------------------------------------------------------------
Conclusion
The three FAS are considered high value targets by Beijing. All are
only an election away from being absorbed into China's version of the
Greater East Asia Co-Prosperity Sphere. There are leaders willing to
take principled and courageous stands for democracy, Taiwan, and the
U.S. relationship--and they are the ones warning what is coming. But
they may not be around for long. As seen with Solomons, all China has
to do is capture a couple dozen of the elite in the FAS to blow a hole
in the foundation of the U.S. Pacific defense architecture.
What to do? All the usual ``should have been done already''
recommendations: return the Peace Corps to the region, apologize to the
Marshall Islands for the nuclear testing, sort out the treatment of
U.S. military veterans from the FAS, get better connectivity and
transport into the region to make it easier to connect with the United
States, stop arguing over the relatively tiny amounts of U.S.
government spending involved in the COFAs (compared to the incalculable
cost of trying to `win them back', if it were even possible), etc. This
list is easily available, as the issues have been languishing, in some
cases, for decades.
But underpinning all that is the need to:
Acknowledge that the relationship between the United States and the
FAS is unique, forged by mutual sacrifice and is essential for U.S.
security (a State or Defense Department posting to the FAS should be
considered as important a career milestone as one in Paris--as this
really is the front line). Lumping the FAS together under the general
``Pacific islands'' category is inaccurate and insulting given the
nature of the relationship. Other Pacific island countries will
understand privileging the FAS, and, in fact, it might make a closer
relationship with the United States seem more attractive to them. So,
for example, on May 22, 2023, President Joe Biden will be visiting
Papua New Guinea (PNG) on his way from Japan to Australia in what is
being called the first visit by a sitting President to a Pacific island
country. Palau is on that route as well. Why PNG and not Palau or
another FAS?
Understand that democracy is under attack across the region and
needs defending. Solomons has seemingly gotten away with `delaying'
elections. That is being presented by Beijing as a sales point for a
close relationship with China to other proto-dictators. Allowing that
to stand in Solomons puts democracy elsewhere at risk. Free and fair
elections need to happen in Solomons as soon as possible. Additionally,
in the FAS, extremely careful attention must be paid to election
integrity--especially as both Marshall and Palau have elections coming
up. China got its candidate elected in Maldives by funnelling money to
the ex-pat Maldivian community in Sri Lanka in order to garner him the
extra votes needed to win. Marshalls and Palau have no way to monitor
campaign spending in their substantial ex-pat communities, many of whom
are in the United States. Help from Washington could make a substantial
difference.
Back those fighting for the things we consider shared values and--
it seems odd to even have to say this--that are in the U.S. interest.
It is inexplicable that Panuelo's offer to recognize Taiwan was passed
up. Had that happened, it would have undermined China's whole
`inevitability' narrative about peeling off countries from Taiwan one
by one. We are fighting on a political warfare battlefield (for now).
We are (at best) on defense. When someone is willing to make a
courageous move based on principles, not backing them just hands China
another example to shop around about why not to take Washington
seriously.
Do not outsource American interests. Since the end of the Cold War,
there has been a seeming inclination to defer to Australia and New
Zealand on many `Pacific islands' issues. Apart from not honoring the
unique bilateral relationships the United States has with the FAS, this
clearly has not worked or else the region would not be in the position
it is in now. In many areas and sectors, Australia and the United
States work together well and have the same priorities. However, they
are different countries and divergence should not be a surprise. For
example, U.S. security concerns in Solomons could well take second
place in Canberra's decision-making to Australian desires to have a
better trade relationship with China. Additionally, while keeping
bilateral priorities in mind, working with a wider range of allies that
are welcome in the PICs can be beneficial. Japan, in particular, is
doing excellent, if quiet, work across the region. Taiwan and India
also have much to offer.
Military engagement in the FAS need not be larger, but it should be
appropriate. That likely means fielding permanent, compact, small teams
led by young officers who pay attention to those around them and adapt
easily. Permanent presence is essential to avoid the ephemeral `cargo
cult' effect that is engendered by U.S. forces periodically showing up
and then leaving, or generals and admirals dropping by for a short
visit and leaving thinking everything is fine. Contractors should be
limited and be supervised carefully to ensure they are not damaging
trust.
Move from Maritime Domain Awareness (MDA) to Maritime Domain
Enforcement. For many countries in the region, fisheries have the
potential to create stabilizing economic benefits for the people;
however, illegal fishing is rampant, as is drug smuggling, human
trafficking, and more. There are myriad `MDA' workshops, but precious
little enforcement. Locals will repeatedly say, `we know about all
sorts of illegal activities happening in our waters--but we do not have
the capacity to do anything about it.' Following the law to seize and
destroy a few of the illegal fishing boats would do more good than a
year's worth of MDA workshops.
Support the building and growth of domestic, independent capacity
to identify and counter challenges ranging from organized crime to
environmental disasters. This has begun in Palau, where the office of a
national security coordinator (NSC) has proven of exceptional worth.
The United States should support the FAS if they choose to replicate
and expand the NSC concept in the other FAS.
Aggressively go after dirty money. Currently, there is no downside
to accepting Chinese money--no loss of assets, no loss of position, no
loss of visas. In fact, the U.S. government just gave a free ride back
to the Marshalls to a person already convicted of bribing officials.
Unless the money is cut off, and costs incurred, it will be very hard
to get anything else to work. Under the Compacts, the United States is
actually obligated to do this. It has an ``obligation to defend the
Marshall Islands and the Federated States of Micronesia [and Palau] and
their peoples from attack or threats.'' \34\ One would think the
deliberate destruction of democracy counts as a threat.
---------------------------------------------------------------------------
\34\ Compact of Free Association Act of 1985. Pub. L. 99-239 (99th
Congress), 99 Stat. 1770, codified as amended at 48 USC Sec. 1681.
(https://www.congress.gov/99/statute/STATUTE-99/STATUTE-99-Pg1770.pdf)
---------------------------------------------------------------------------
Across Oceania, but especially in the FAS, the United States is at
imminent risk of having the relationships it has long taken for granted
severely weakened, with the PRC using political warfare to `island hop'
east and south in order to set up what are effectively forward
operating locations able to, yes, push the United States `back to
Hawaii'. This has the potential to change the security dynamics of the
Pacific in the most fundamental way we have seen since the end of World
War II. The honest leaders of the region know it, and are trying to
tell us, for the sake of their people, and for the sake of America. We
owe it to them, and to those who died the last time this happened, to
listen.
[GRAPHIC] [TIFF OMITTED] T2350.001
.epsMap by Pavak Patel and Cleo Paskal
______
Questions Submitted for the Record to Cleo Paskal, Non-Resident Senior
Fellow, Foundation for Defense of Democracies
Questions Submitted by Representative Westerman
Question 1. How specifically has the CCP been working to infiltrate
the FAS politically. How can U.S. respond to counter CCP political
infiltration into the FAS?
Answer. The Chinese Communist Party (CCP) has a toolkit of
political warfare weapons that it uses to infiltrate and then, if it
can, control, the FAS (and elsewhere) politically. Many approaches are
tried at once. Those that open up cracks are doubled down upon, though
efforts continue in other areas as well.
Very broadly, major operations are usually ``braided,'' with three
mutually reinforcing strands.
First, the initial approach may be designed to look commercial--for
example, as with the attempted setting up of the Rongelap Atoll Special
Administrative Region (RASAR) in the Marshall Islands under the guise
of economic development.
Second, the PRC combines this with a strategic goal. So, in the
case of RASAR, the attempted setting up of a country-within-a-country
was designed to undermine the sovereignty of the Marshall Islands,
drive a wedge between the Marshall Islands and the United States/
Taiwan, and act as a launch site for other PRC operations.
Third, corruption and criminal activity are threaded throughout--in
the case of RASAR, that manifests as bribery of senior officials.
One can see a similar braided approach with the various PRC-linked
port and fisheries projects that are branded as economic development
(commercial), but that undermine a nation's maritime and border
security (strategic), in part through buying off key officials
(corruption). The officials may think they are just `making a bit of
money on the side', without fully realizing the strategic
vulnerabilities that are being injected into their systems.
The same is true for corruption that results in PRC-linked
companies winning contracts for installing critical infrastructure, for
example Huawei towers in Solomon Islands. For more examples, please see
the 9 March 2023 letter from then Federated States of Micronesia
President David Panuelo.
All of this is wrapped up in layers of protective information
warfare, using paid-for traditional media, social media, social events,
trips to China and more, backed by a very good intelligence network
that gives China insight into who to target, and how.
How to counter it? Do what we should be doing anyway and go after
the strand that reinforces the commercial and strategic and that gives
the CCP its unfair advantage: the corruption.
Currently, there is almost never any downside to taking Chinese
money: No loss of money, assets, status, visa access to the United
States, etc. Indeed, in the case of RASAR, none of the Marshallese who
were bribed were exposed by the United States, let alone charged. And
one of the convicted Chinese criminals involved was even deported by
the United States back to the Marshalls, where she is now free to
continue her operation. This is a moral, legal, and strategic failure.
There are many brave FAS citizens trying to keep their countries
secure, as evidenced by President Panuelo's letter, the work of the
Palau national security coordinator, and others. But the longer they
are unsupported, the more worn down they become and the fewer their
numbers will be. It is also often difficult for local investigators and
prosecutors to bring to trial the higher profile cases due to how
close-knit the local societies are.
Very public investigations into CCP corruption and criminal
activities in the FAS (and Guam and CNMI) should be undertaken by the
relevant U.S. agencies and departments. That can include supporting the
appointment of special prosecutors with specific remits to investigate
corruption.
In the case of FAS citizens, if found guilty of taking money that
links back to foreign malign actors, there should be a revocation of
the right to enter the United States.
These measures can be bolstered by congressional hearings into the
issue and congressional visits to the region to hear first-hand about
the challenges.
Additionally, there should be support for domestically controlled
national security coordination offices in each of the FAS. Palau was
the first to establish such a post and it has proven invaluable for
domestic security coordination and streamlining security and defense
collaboration with international partners, in particular the United
States.
Question 2. What is one of the biggest threats to the people of the
Pacific Islands?
Answer. As described above, there is a focused, well-funded, and
well-resourced CCP-led attempt to undermine sovereignty of Pacific
Island countries in order to extend PRC influence across the region.
The result is an exportation of the same centralized, brutal,
extortionate, and environmentally and socially destructive system one
finds in the PRC.
Which is the point: At its very core, this is a battle of systems:
authoritarianism versus democracy.
This is why the institutions that support democracy (free press,
independent judiciary, even elections themselves) are among the first
targets of PRC influence operations. This strategy was explicitly
described in the book Unrestricted Warfare, written by two People's
Liberation Army (PLA) Air Force Colonels in 1999.
As seen in Solomon Islands, each country is only one election away
from a PRC proxy taking power and, in the case of Solomons, literally
doing away with democracy (in this case by `delaying' elections).
Unless there is democracy and reasonably honest and consensual
government, nothing else will work. All the USAID projects, signing of
agreements, Pacific Island Forum visits, etc., can't accomplish
anything if the people in power are authoritarians in hock to Beijing.
For example, if the United States signs a deal with Papua New
Guinea (PNG) to put in a naval base but then the government of PNG is
elite captured by China, all that's happened is the United States has
built a base for China--unless Washington wants to forcibly hold on to
the base when asked to leave, which in itself would be an information
warfare win for Beijing.
Question 3. What solutions should be prioritized?
Answer. Democracy needs to be promoted and protected. At a minimum,
this requires a combination of diplomacy and the cutting off of the
flow of the illegal money that is distorting democracy.
A high priority on the diplomacy front is working to ensure the
pro-PRC government in Solomons isn't allowed to get away with delaying
elections--it should be publicly called out and the Pacific Games
(which were used as the excuse to delay elections) should be boycotted
until elections are held. Any country that attends the games should be
tagged as caring more about sports than democracy. A stand should be
taken, not just to protect democracy in Solomons, but so that others
are dissuaded from trying something similar. The United States is being
tested.
On the money front, here are two ideas of many: First, track the
illegal money and prosecute the corrupt officials (and enlist the
assistance of Australia and New Zealand to do the same); second, ensure
careful oversight of campaign funding going to sway FAS voters in the
United States.
These are some measures that would not only help liberate the
Pacific Islands from PRC political warfare, they would also show those
fighting for their own sovereignty across the Pacific Islands that the
United States of America has their back.
Questions Submitted by Representative Radewagen
Question 1. You highlight in your testimony that the PRC utilized a
slush fund to pay off 39 of 50 Members of the Solomon Islands
Parliament in connection with the security agreement reached there and
that President David Panuelo of the FSM also recently described in an
open letter the effects of PRC corruption locally as well--can you
elaborate for the committee on the patterns of PRC corruption to
undermine local governments in the Pacific?
Answer. Just to elaborate, the 39 or the 50 seem to have been
bought off to make Prime Minister Sogavare `Motion of No Confidence'
proof (and so ensure a PRC proxy was in place and could deliver the
security agreement) as well as to ensure that Sogavare had enough votes
to amend the constitution in order to delay elections. They delivered
on both counts.
It is also worth noting that the process allowed the PRC to
identify compliant politicians it can cultivate (Sogavare is convenient
to Beijing but eminently replaceable) as well as reticent ones it will
target for removal from politics.
I describe some of the ways local governments are undermined in the
replies to Chairman Westerman's questions above, but it's worth adding
that Chinese organized crime is an integral part of the PRC's
operations. They bribe, enforce, smuggle, blackmail, and more.
While largely free to make their own money and develop their own
networks, Chinese criminals do so with the understanding that they must
be useful to Beijing when required (as made explicit in the PRC's 2017
National Intelligence Law). As a result, they become very difficult to
extract from a country as Beijing will often refuse to allow them to be
deported back to China, and Pacific Island countries don't have the
resources to charge or jail them or fight Beijing on deportation.
As a result, in some places, there are scores, if not hundreds, of
Chinese `undesirables'--people identified by the affected Pacific
Island country as a problem for the state--walking free, undermining
governance at a very fundamental level.
Question 2. In your written testimony, you envision moving away
from ``Maritime Domain Awareness'' to ``Maritime Domain Enforcement''.
Can you elaborate further on that? And what additional resources, the
United States may need to allocate to ensure that enforcement can be
done effectively.
Answer. This is a foundational question that warrants a hearing of
its own with experts from across a wide range of fields, including
military, financial, fisheries, and more. As Dr. Watson said at the
hearing, fisheries should be considered a national security issue for
the United States.
One reason is that while illegal, unreported and unregulated (IUU)
fishing is profitable and possibly necessary for food importer China,
it also serves as an excuse to `flood the zone' with China's dual use
fishing fleet, some of which contains a serious criminal element (that
also turns a nice profit).
China will not give this up easily. It will put pressure on local
governments and try to undermine patrols and enforcement efforts. It is
likely not a coincidence that U.S. Coast Guard ships on IUU patrol have
had trouble landing in ports in Solomon Islands and Vanuatu, affecting
their ability to do their work.
Apart from enforcement at sea (the specifics of which are best left
to those more expert than me), one will need a plan to `protect' the
execution of any enforcement policy, including dealing with local
corruption and giving backing to local governments trying to stand
their ground against pressure from Beijing.
This is where direct U.S. government involvement and support is
essential. Few countries will take on China by themselves. U.S.
intelligence has a role to play as do U.S. diplomats and also a
comprehensive political warfare effort (with an economic component)
that improves the local environment so IUU fishing can't operate.
So, what's needed? More than anything, a change of mind-set from
the administration on down through the State Department and Department
of Defense (in particular).
Local nations know they have a problem with IUU and don't need to
be reminded of it. They need help doing something about it. They lack
the resources--particularly ships and personnel. In the case of Palau,
for example, their biggest ship is barely a match for a single Chinese
fishing boat--much less a double-hulled, armed, maritime militia boat.
And it would stand no chance against a Chinese `government' ship.
A `total' approach to the IUU problem--that covers surveillance
through enforcement--needs to be employed and considered a priority by
the U.S. government. It currently is not a top priority--even though it
is THE major priority to many Pacific Island countries.
To get a sense of the overmatch, while the U.S. Coast Guard is
making efforts, to cover the vast Pacific Ocean west of Hawaii, the
Coast Guard has approximately three Medium Endurance Cutters--with
maybe another one being deployed in the next year. A total of four
ships. It has three shorter ranged Fast Response Cutters--with perhaps
four more received and deployed in the fairly near future.
That's at best seven Coast Guard ships to cover the Western
Pacific, a zone larger than the continental United States. It's a huge
expanse and seven ships is just seven ships--some of which will be in
port for a period of time. Imagine patrolling the U.S. with seven
police cars that go around 30 miles per hour.
Without the ability to intercept, search, and detain, it's sort of
like watching a shoplifter but not intervening. Indeed, it seems as
though the United States and other Western and larger regional nations
glide over the problem as if someone else will handle enforcement.
One should consider U.S. military support to FAS illegal fishing
operations as a proper activity relating directly to these nations'
`national defense' for which the United States has responsibility under
the Compacts of Free Association (needless to say, this is also the
case for U.S. territories). USINDOPACOM needs to see it as such,
especially given the dual-use nature of the PRC fishing fleet. Indeed,
this would be a tangible `push back' against Chinese encroachment and
influence--or just plain theft of our allies' natural resources and a
danger to their economic security.
The IUU fishing problem--and enforcing laws against it--should also
be considered from a broader perspective. For example, penalties can be
applied `asymmetrically.' Given that most of the IUU fishing is
Chinese, we should apply financial and economic pressure on other
Chinese entities that are related to fishing, however broadly. For
example, we should delist from U.S. exchanges companies that finance
and construct the fleets, ports, and docks involved in illegal
fisheries, applying tariffs to Chinese fisheries products, restricting
U.S. technology and financial flows into the PRC if any connection can
be made to the fleet. Given the military-civil fusion nature of the
PRC, this may be quite helpful.
At the same time, apart from playing defense, one should also go on
`offense' economically and prioritize the redevelopment of an American
fishing fleet and processing capability so there is broader incentive
to make sure everyone is playing by the rules and local economies are
more likely to benefit.
Questions Submitted by Representative Case
Question 1. During my time for questions in our hearing, I misspoke
when describing the Government Accountability Office's reported fiscal
impact from Compact residents on local communities. I noted that
localities collectively reported $1.8 billion in costs between 2004 and
2018 when in reality that figure in the GAO report is $3.2 billion. If
Congress were to expand the same eligibility for federal benefits to
Compact migrants as are currently extended to lawful permanent
residents, what uncovered costs from delivering still-uncovered
services would host communities have to cover without federal aid?
Answer. Not my area.
Question 2. Citizens of the Freely Associated States are eligible
to join the U.S. military and frequently serve in our armed forces.
What proportion of the population from the Freely Associated States
joins the U.S. military compared to other U.S. communities? What are
the challenges veterans in the Freely Associated States experience in
accessing Department of Veterans Affairs health care and other benefits
when they return home to their countries? What can be done to improve
this?
Answer. I understand there is work on this topic related to the
COFA negotiations, and I can just go by what is publicly available. As
such, my comments are general and may be overtaken by new initiatives
(and I hope they will be).
As with VA services in general, even in the United States, the key
issues are 1) awareness of available services; 2) accessibility to
services; and 3) receiving proper services.
These are long-standing problems for many veterans living in the
United States. However, things are much worse for veterans from the FAS
by virtue of the restrictions on VA activities and operations in
foreign countries. This is exacerbated by the distance and expense
required to travel to U.S. territory to access health care benefits or
to receive care.
As a result, many FAS veterans are unable to access VA services and
health care and are effectively abandoned by the VA (and the government
they served) once they return to their home country.
When considering how, and whether, to improve this situation, one
must remember that while the FAS are indeed `foreign' countries, they
are also the only three nations on earth that have formally entrusted
their national defense to the United States. Not only have FAS citizens
volunteered to risk their lives on behalf of the United States, the
entire countries have volunteered to be a critical part of U.S.
defenses.
An adjustment to U.S. law that allows the VA to operate in the FAS
as if it were U.S. territory is necessary, given the FAS's unique
circumstances.
Until this can be accomplished, the VA needs to make the FAS and
serving its veterans a priority. It currently is not. In fact, veterans
seem to be losing some services. One veteran in Marshall Islands, who
served for over two decades with the U.S. Army and was a recruiter,
said that up until about a decade ago, veterans could get their VA
medicine posted to them. (The FAS have local U.S. postal codes.) Then
that stopped. That should be restarted, as a priority.
Appropriate `work arounds' can be accomplished to ensure FAS
veterans are served as close to possible as if they were U.S. veterans
in the United States. This includes easy use of local medical services
without out-of-pocket expenses or labyrinthine reimbursement
procedures.
As a part of that, each U.S. Embassy in the FAS should have a VA
ombudsman--either VA staff or contracted--to serve local veterans who
are otherwise intimidated by the prospects of navigating the Veterans
Administration.
While permanent services are being set up, we should consider
regular deployments of U.S. military medical teams to the FAS for set
periods of time, say, quarterly, to provide basic medical services, to
include mental health care.
Question 3. Funding for the Compacts of Free Association is
currently borne by the Department of the Interior and the Biden
administration suggests moving that funding the Department of State but
to keep administration of the Compacts within the Department of the
Interior. Given the critical role the Compacts of Free Association to
our national security and to the Department of Defense, should the
Department of Defense also bear some of these costs?
Answer. I give my answer knowing that changing such a fundamental
aspect of the COFAs might be extremely difficult at this stage.
However, it is worth pointing out that of any U.S. Government
department, the Department of Defense has:
By far the greatest number of people in the FAS;
The most regular interactions with people in the region;
The most comprehensive and up-to-date knowledge about the
countries; and
The greatest interest in ensuring good relations.
So, for example, on one small island in Palau, there are scores of
Marines living for months among the locals, learning, making friends,
playing baseball, improving infrastructure, etc. That one island alone
has far more Americans living much more closely with Palauans than the
State Department has at the U.S. Embassy.
Additionally, with the large number of FAS citizens who served in
the U.S. military, there is a common cultural bridge with which to work
(and, given the treatment of veterans, it should be improved anyway).
The Department of Defense, including the Reserves (possibly through
a National Guard State partnership program), has all the skills and the
motivation needed to work with the FAS to improve education, health,
infrastructure, accounting, investigations, etc. over the long run.
Seems a lost opportunity not to include them in the process.
Question 4. Last year the administration released the first ever
Strategy for Pacific Island Partnership along with a more detailed
Roadmap to a 21st Century U.S. Pacific Islands Partnership. How was
this and recent efforts to reengage the region seen by the Pacific
Islands? What role can Congress play to help implement the Pacific
Islands Partnership Strategy?
Answer. Pacific Islanders tend to be understandably pragmatic to
the point of jaded about `policies' and `strategies.' Unless they can
see tangible results (lower energy costs, better telecoms, better
schools, more jobs, rain water capture systems, help with illegal
fisheries, lower cost flights to the United States and within the
region, etc.), it doesn't really resonate. So, for example, while the
opening of the embassies in Solomon Islands and Tonga seems like a good
advance (as per the strategy), the fact that neither offer consular
services turns them into a disappointment for most locals.
Congress would be well placed, including through hearings, to try
to ensure that activities under the strategy produce real results on
the ground.
Question 5. The Pacific Islands Forum, a critical inter-
governmental organization in the Pacific Islands region, laid out a
regional vision for development of the Pacific Islands in its 2050
Strategy for the Blue Pacific Continent. How can the United States
support this strategy?
Answer. It's worth noting the heavy emphasis on the Pacific Islands
Forum (PIF) doesn't resonate with most Pacific Islands citizens. They
PIF seemingly plays little to no role in their daily lives, and the
bureaucrats sent there often have weak connections to their communities
(they aren't elected to the PIF, so they tend to be beholden to
bureaucracies, for what are considered plum postings, and not to their
fellow citizens). Additionally, the United States isn't even a member
of the PIF.
It might be worth Congress learning more about, and looking more
toward, the well-respected Pacific Community (https://www.spc.int/),
the region's scientific and technical organization of which the United
States is a member, to find grounded, local, practical solutions to
many of the challenges facing Pacific Islanders.
______
Ms. Hageman. I thank the witness for their testimony, and
the Chair will now recognize Chairman Westerman for his opening
statement.
STATEMENT OF THE HON. BRUCE WESTERMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARKANSAS
Mr. Westerman. Thank you, Chairman Hageman, and also thank
you to the witnesses for being here today as we convene to take
testimony from expert witnesses on the preservation of U.S.
critical interests in the Pacific Islands and, more broadly,
the Indo-Pacific Region.
Today's hearing will focus on regional outcomes that impact
the well-being of our fellow Americans living in our nation's
domestic island territories located in the increasingly
contested geopolitical region of the Pacific. The record we
create today will support the mission and work of this
Committee to ensure that U.S. citizens and our locally self-
governing U.S. territories of American Samoa, Guam, and the
Northern Mariana Islands benefit and prosper under the American
model of democracy, market-driven economics, responsible
environmental stewardship, and of course, strong national
defense.
The United States also has sovereignty and responsibility
for outposts in the Pacific that includes Jarvis, Howland,
Baker, Wake, Midway, Johnston, and Palmyra Islands. We need to
remember that those U.S. lands in the Pacific, including the-
then U.S. territories of Hawaii and the Philippines, were
directly attacked and in some cases occupied by an aspiring
imperialist dictatorship attempting to conquer the Pacific. One
hundred thousand Americans died freeing the Pacific Islands
from brutality and tyranny in World War II. Their sacrifices
highlight why it is a strategic imperative to ensure a free and
open Indo-Pacific.
At the international level, the United States maintains an
unprecedented political and economic partnership, as well as a
strategically imperative security and defense alliance with
three sovereign Pacific Island democracies through the Compacts
of Free Association. These three countries are the Republic of
the Marshall Islands, the Federated States of Micronesia, and
the Republic of Palau, and are also known as Freely Associated
States, or FAS.
Under their individual compact agreements, the Freely
Associated States accepted and, through their constitutional
processes, ratified mutually-agreed terms for entering into
free association with the United States. The U.S. relationship
with the FAS is the closest political, economic, and strategic
relationship the United States has with any other nation or
group of nations.
At this moment, the compact agreements with the Marshall
Islands, Micronesia, and Palau are being negotiated for renewal
by the Biden administration. In future hearings, this Committee
anticipates addressing compact renewal, including any
agreements reached with the Freely Associated States and sent
to Congress by the President. This is a top priority, given the
importance of the U.S.-FAS relationships.
It is through regional, strategic, and mutual security
agreements like the Compacts of Free Association that the
United States can exercise peace through strength with our
allies to counter increasing global threats. The greatest
threat to global peace, prosperity, and freedom is a communist
regime in the People's Republic of China.
To be clear, this Committee recognizes the distinction
between the Chinese Government and the Chinese people. Thus,
when this Committee refers to China and the threat it poses, it
is referring to the Chinese Government and its Communist Party.
In the present day, China does not hesitate to engage
opportunistically in its trademark disruption and usurpation
tactics, targeting any nation over which it gains influence or
control. This Committee is deeply troubled that China has, for
at least a decade, targeted the FAS. China has even targeted
our American territories. Beijing has employed tactics aimed at
disruption of political order and social cohesion.
The threat that China poses to the United States and to the
world cannot be overstated. We must fully understand the extent
of China's activities in the FAS and U.S. territories, and how
engagement in the Pacific deters Chinese influence. Thus, I
hope our witnesses today can give us frank assessments of U.S.
interests in the Pacific and how China is working to undermine
those threats and use the Pacific Islands as a platform for an
enlarged threat of unrestrained aggression in the region and
beyond.
And as Chairman of the Committee, I am committed to working
across the aisle. Ranking Member Grijalva and I have both
talked about the importance of working together to make sure
that we do what is best for the territories that we talked
about, and also for those Freely Associated States, and what is
best for America and, quite frankly, for the world going
forward.
So, this is very important. I appreciate the engagement
today, and I look forward to questions.
I yield back.
Ms. Hageman. Thank you, Mr. Chairman. The Chair will now
recognize the Members for 5 minutes for questions, beginning
with me.
Mr. Derek Grossman, I am going to direct my first questions
to you. In your statement, your first recommendation for
Congress and the U.S. Government is to ensure funding for the
renewed Compacts of Free Association. The compacts are unique
in the United States and provide the FAS with substantial
economic assistance and access to Federal programs and
services. Do you think China is prepared to make the same or a
comparable level of long-term economic commitments to the FAS
in order to replace the United States as a partner of choice,
or do you believe the PRC intends to achieve its goals solely
through less costly, short-term opportunistic engagement that
includes tactics of disruption and political warfare?
Mr. Grossman. Thank you for that question. Of course, it is
difficult to know how China would react to having a
geostrategic void, so to speak, if we could not come to a COFA
renewal agreement.
But what we have seen in the past, is that Chinese
officials have consistently tried to offer better deals to
countries that feel caught up in intensifying U.S.-China
competition, and this can take the form of improved trading
opportunities, as well as through Belt and Road Initiative that
I mentioned in my opening remarks.
But at the same time, we shouldn't think that if we were
unable to renew the COFAs, that China would necessarily come in
and give equal or more in yearly economic assistance to the
Freely Associated States. I am not sure that that is something
that we can determine at this time. But I am pretty confident
that they would try to offer at least something that would make
us feel like we didn't do the right thing.
Ms. Hageman. In your testimony about China's strategy
toward the Pacific Islands, you mentioned that one of China's
top three priorities for the region is breaking through U.S.
military domination of the second island chain. Can you explain
the territories and FAS's strategic location within this island
chain, and what capabilities or opportunities this location
provides the United States?
Mr. Grossman. Yes. So, I think, when China looks out at the
region, they see concentric circles hemming them in: first
island chain, second island chain; some say the third island
chain is Hawaii and the Aleutian Islands of Alaska, right?
But when we look at it, we say this is great, because we
have points of power projection, so we can project military
power from these regions into the theater, into the Indo-
Pacific to deal with Taiwan Strait, South China Sea, East China
Sea, or even a Korea scenario. And China is trying its best to
try to loosen the screws on U.S. alliances and partnerships
throughout the entire region, but also to include in the second
island chain.
And the reason why the geography is so important is
because, and my RAND colleagues and I said this back in the
2019 report that I referenced to Congress, is it essentially
provides having uninhibited access to a region that is the size
of CONUS, literally, from Palau to Marshall Islands is the size
of CONUS, to have that is like a power projection superhighway
from Hawaii into the Pacific, right?
So, China wants to complicate our ability to flow forces
into the region for future contingency.
Ms. Hageman. Thank you.
Mr. Gray, you were the first Director for Oceania and Indo-
Pacific Security at the NSC. While President Biden has retained
a region-specific team within the NSC, you have some
recommendations about how to increase responsiveness of the
senior levels of government and integrate responses into the
National Security Strategy. To your knowledge, has the model
that was stood up under the Trump administration been
maintained under the current Administration?
Mr. Gray. Thank you for the question, Chair.
My understanding is that the position that I occupied at
the NSC is no longer entirely devoted to the Pacific Islands,
that it has reverted to covering Southeast Asia, as well as the
Pacific Islands.
Now, that is to say I do think that there has been some
excellent focus on the Pacific by this current NSC staff, but I
do think there is value in having a director who is entirely
focused on the Pacific Islands. And as I said in my written
testimony, I think there should be a director who is also
entirely focused on our territories and possessions. Personnel
is policy. And if you don't have someone who is day to day
focused in these areas, you will have neglect.
Ms. Hageman. Wonderful. Thank you for that.
I yield back, and the Chair now recognizes the Ranking
Minority Member, Ms. Leger Fernandez, for 5 minutes of
questioning.
Ms. Leger Fernandez. Thank you so much, Madam Chair, and
thank you for the testimony to all of our witnesses today.
It strikes me as I both read your testimony and listened to
you today, that we all agree kind of on this common theme of
the need to support this region, the Freely Associated States,
each of these islands, but that it is also an issue of mutual
benefit. And we have to live up to our part of the bargain in a
certain sense, in that we need to be able to understand what is
actually happening within the islands, and what is important,
and the role that China is playing, whether it is from Belts
and Roads to interfering with elections.
And those issues around interfering with the elections are
stuff that we see here, as well, right? But it is unusual and
different, and we need to have a perspective that is tied to
the uniqueness of the islands. So, I want to touch base on a
few of the points that were raised.
Both Ms. Paskal and Dr. Friberg, you raised issues with
regards to the issue of the climate crisis, and the issues that
there isn't FEMA authority, and what do we do with emergencies.
And if we do not pay attention to that crucial piece, that is a
threat. That is a threat to everybody, but the islands are most
susceptible.
Could each of you talk a bit about what we should be doing
different, and what that would mean in terms of how the people
on the ground feel about it in each of these places?
Mr. Friberg. Thank you for that question. I have a few
comments about this in the written statement, but let me just
sort of discuss the climate issue a little bit, because I think
for the three COFA nations, they do view this as one of their
major security issues, is their survivability and the ability
of their fisheries to succeed and to be able to have fresh
water and access to land for farming, et cetera.
One of the ways, for example, I proposed that if DoD
restores the Civic Action Team, their functionality can be
partly to support infrastructure, which is sort of pro-climate
remediation and adaptation, as well as supporting DoD's efforts
to have agile deployment, for example. So, this may be work at
ports, sea walls, other kinds of infrastructure, but this is an
area I think that is of really great interest to the COFA
nations.
I think the other thing is that the FEMA funding for USAID
activities in Micronesia and the Marshall Islands will end at
the end of this Fiscal Year. So, they would revert to being
able to be recipients of USAID traditional assistance around
the world, but not sort of the substantial assistance that
comes from a FEMA engagement. So, that again, is one of the
things which is really on the table at this point with the
expiration of economic assistance under the compacts.
I will turn to my colleague.
Ms. Paskal. It is still one of the things that is top of
mind for many of the people, I know the compact states a little
bit better than the territories.
And it goes to this bigger issue of, they mostly don't want
to just wait for us to come and save them, right? So, giving
them the tools to be able to protect themselves and to be a
part of the decision-making process. There are proposals, for
example, for think tanks to be developed, so that you don't
have these climate experts who fly in and then tell them you
need this, or you need that. And in many cases, land issues are
extremely complex in the islands, and the locals know it much
better than anybody else. So, working with local knowledge in
the areas is essential.
But similarly, in terms of civil defense, there is a lot of
retired U.S. military personnel. As was referenced, they serve
in the U.S. military at rates that are higher than almost any
U.S. state, as far as I know, and then they go back home. So,
they have the ability to coordinate and to respond well in
times of crisis, but they don't have the infrastructure to loop
them together so that they can, they are out in the villages,
so those sort of just linking mechanisms that give them the
tools to solve their own problems in a way that works for them
currently is missing.
I think there is a piece of legislation that is going to be
proposed that may help with that, and I think that that, with
HADR, but with many other areas would be extremely important.
Ms. Leger Fernandez. Thank you very much. My time is
expired. But we might send out some additional questions
because I think that the issues that you are raising, and the
fact that we have an opportunity to get it right and not lose
this opportunity, as many of your written testimonies pointed
out that we have done in the past. Thank you very much. I yield
back.
Ms. Hageman. The Chair now recognizes Representative
Radewagen.
Mrs. Radewagen. Talofa lava, Madam Chair Hageman and
Ranking Member Leger Fernandez. Thank you for this hearing,
which comes just as we are waiting to see if the Administration
finally signs and sends to Congress the COFA renewal
agreements.
I wish to begin my time with seeking unanimous consent to
enter into the record President David Panuelo's letter that has
been mentioned throughout the testimony.
Congress will exercise its oversight and approval process
of these agreements over the next year. And I hope we are not
penny wise and pound foolish in funding them ASAP to counter
Chinese influence in the Pacific. Protecting our national
interests in American Samoa and the Pacific region has been
among my main reasons for being in Congress, and this moment
has been a long time coming.
I especially want to echo Ms. Paskal's comments on moving
away from maritime domain awareness to maritime domain
enforcement, which is why I have long been an advocate for
additional Coast Guard assets to be present in the South
Pacific.
One example of how we change and manage U.S. engagement in
the Pacific relates to the strategic, economic, and commercial
issue of protecting American fisheries industry and rights in
the region, particularly our tuna industry. I couldn't agree
more with the testimony of Dr. Peter Watson, that the economy,
future, and fate of American Samoa and the U.S. purse seine
fleet are inextricably linked to one another.
In fact, I appreciate Dr. Watson's appearance. He has a
distinguished career in the Asia-Pacific region, but an
especially long history with the Pacific Islands, and was the
White House lead staff member on President George H.W. Bush's
team in organizing the very first Pacific Island Leaders'
Summit. I was grateful to be invited to participate in that
summit in 1990. He also arranged for five heads of government,
as I recall, to have visits with the President, which I believe
is a record.
So, Dr. Watson, my dear Dr. Watson, I would like to ask you
how current or future proposals to further limit commercial
fishing activities in outlying areas within the U.S. EEZ might
negatively impact the Pacific territories, particularly
American Samoa, if further fishing restrictions are imposed on
the American fleet.
Mr. Watson. Thank you very much for those warm comments,
Congresswoman. I am very concerned about the degradation of
U.S. tuna fishing capabilities, and as it particularly affects
American Samoa.
The fact is that the United States is a member of the
Western and Central Pacific Fisheries Commission, a treaty-
based organization that manages the international fisheries
throughout the region. The WCPFC conservation measure for
tropical tunas establishes a limit for the U.S. fleet of 1,270
fishing days on the high seas, and a separate limit of 558 days
for the U.S. Economic Exclusive Zone, or EEZ.
Historically, the United States has informed the WCPFC that
it will implement these two limits as a single combined limit
of 1,828 fishing days, which can be fished by the fleet on the
high seas in the U.S. EEZ. With most of the EEZ, however,
closed for fishing, most of this effort has been fished on the
high seas. Because some of the WCPFC members have complained
about this, NOAA has gotten weak-kneed, and is proposing to
split the single combined limit into two separate limits.
I am sure all can see the irony in the government saying,
``We are going to take your 558 days and no longer allow them
to be fished on the high seas, but only in the U.S. EEZ. And
oh, by the way, we are closing the remaining waters of the U.S.
EEZ, sorry.''
This is unacceptable. The purse seine fleets that are
operating in and around American Samoa are a strategic asset,
as well as, of course, an important driver of income within
American Samoa.
I would like to come back to this point, if I could, if
there is additional time.
Mrs. Radewagen. I think I am out of time now, aren't I?
Ms. Hageman. Thank you. Yes, and the Chair now recognizes
Mr. Sablan for 5 minutes for questions.
Mr. Sablan. Thank you, Madam Chair, and good afternoon and
welcome to our witnesses.
It is nice to see you again, Dr. Friberg. I am sorry we
missed our lunch date in Palau, but thank you for taking care
of Brian and Ken. I appreciate that.
Mr. Gray, I usually don't do this, but I will make an
exception here, sir, special day. But I want to clear up some
misconceptions about birth tourism, please, that you raised in
your testimony, because you are giving my district, we already
have a little black eye, a bit of a bigger black eye. You state
that, ``In recent years, foreign birth in the Marianas have
exceeded native ones,'' correct?
Mr. Gray. That was the information that I had been given
during my service at the White House.
Mr. Sablan. OK, but wow, because here it is 2023. I do not
seem to get what you mean by recent years.
But, in fact, foreign births in the Marianas have not
exceeded resident births since 2018. And even before the
pandemic, tourist births were going down. And last year, only
three tourists gave birth in the Marianas: two from China, one
from Korea, South Korea.
Madam Chair, I ask that this report of live births by
mother and by mother's resident status from the vital
statistics office of the Commonwealth Healthcare Corporation be
added to the record, please.
Ms. Hageman. Without objection, so ordered.
Mr. Sablan. Thank you, Madam Chair.
And Madam Chair, for context, may I also add to the record
this report by the Center for Immigration Studies on birth
tourism in the United States as a whole? There may be 26,000
birth tourists annually, the Center says, and they enter our
country under a tourist visa.
I think it is important for Members to understand the
Marianas is not the source of birth tourism problem. The report
of live births in the Marianas does indeed reveal a deep
problem, a real problem. However, the huge drop in births among
U.S. population. In 2010, there were 670 births to residents of
the Marianas. In 2022, that number was down to 380 births, a 42
percent decline in births. That decline in birth rate mirrors
the overall population decline in the Marianas, as measured by
our decennial census. We lost 12.2 percent of our population in
that 10-year period, the second-largest decrease of any U.S.
state or territory.
And that population drop is why I introduced the Marianas
Population Stabilization Act, H.R. 560. And I hope, Madam
Chair, the Subcommittee will act on my legislation to shore up
the larger U.S. position in the Western Pacific.
Mr. Gray, you were with the White House national security
staff during the Trump administration?
Mr. Gray. I was.
Mr. Sablan. And you share my concern, and I am sure the
concern of other members of this Committee, about the expanding
influence of China in the Western Pacific. Yes?
Mr. Gray. Absolutely.
Mr. Sablan. I agree with you, sir. Yet, I don't think it
strengthens America's position in the region if our population
there is shrinking.
People usually move away from their homes when they see
better opportunities elsewhere. People move to improve their
quality of life, to get a better education for their children,
for better infrastructure, to earn more money. I can't stop
them from moving.
So, as a national security expert, Mr. Gray, you would
agree it hurts America's position in the Western Pacific vis-a-
vis China if people are leaving the Marianas for a better life
elsewhere. Wouldn't you say?
Mr. Gray. Congressman, I think the most important thing, as
far as my perspective on the Pacific, is that CNMI continue to
have a strong social cohesion and to have an economy that can
continue to sustain itself for years to come. That is my
concern.
Mr. Sablan. I am with that, sir. I cannot agree with you
more. We are hurting now, really bad, and the Federal
Government continues to take that back.
We are a part of the United States, a permanent part of the
United States, because we chose to be. Nobody forced us. By
referendum, we chose to be. We are not other parts of the
insular areas.
And I must say, hearing all our witnesses, the smart ones
too, let me say that none of the three COFA nations, the
Federated States of Micronesia, who just, I understand,
finalized agreements with the United States, and I am very
happy for that; the Republic of the Marshall Islands; and the
Republic of Palau, all these three island nations have the
choice to negotiate with someone else, and yet they are here
negotiating with us.
And the very least we can do, again, Madam Chair, please,
all of us, as Americans in our own better national interest,
let's not wait another 10 years or 8 years, and we go over
passport fees to fund this compact of impact associations. We
have to get serious.
And I am glad for Chairman Westerman's comments, that he is
going to give this every priority. I thank all of you.
My time is over, Madam Chair. I apologize and thank you.
Ms. Hageman. Thank you. The Chair now recognizes Mr.
LaMalfa for his 5 minutes of questioning.
Mr. LaMalfa. Thank you, Madam Chair, my colleague.
Mr. Gray, we referred to a RealClear Defense article and a
quote you had made, that not since 1962 with the Cuban Missile
Crisis, did a foreign power such as China pose such a direct
military threat in close proximity to the U.S. mainland. That
affects our various island partners, as well.
So, how do we make the case to mainland Americans more
strongly that they should care about this issue, as we do?
And what real tangible threats is China's extremely
aggressive presence in the South Pacific posing to our friends
in the islands, as well as here in the United States,
especially with our communications, et cetera?
Mr. Gray. I appreciate that, Congressman. And to
Congressman Sablan's point, I think that as much as a strategic
issue, this is a moral issue. This is a question of Americans
on the mainland and throughout the United States, we need to
stand in solidarity with our nationals and our citizens,
whether they live in CNMI, or Guam, or American Samoa as much
as in Oklahoma, or Texas, or Florida. And I think there is a
moral issue here.
And then there is the strategic issue. And the strategic
issue is, if you are trying to project American power, but just
as important as project American power, if you are trying to
deter Chinese projection of power farther into the Pacific,
being able to deny access to these critical localities, that is
essential.
And I would point out, and this is something that was
shared with me by a very senior Australian official when I was
in government, if you superimpose a map of Imperial Japan's
efforts to get military bases in 1940 over where the Chinese
military has been publicly reported to be seeking bases, it is
almost identical. So, you can see the historical pattern
replaying itself because the geography is immutable, the
geography hasn't changed.
So, I think we need to be mindful that this isn't just a
question of defense; this is a question of China's interest in
playing offense, and we need to be very mindful of that.
Mr. LaMalfa. But how much is that interfering with our
ability here on the mainland just to do normal business?
Mr. Gray. Well, it has a tremendous potential to interfere
with everything from trade, commerce, supply chain issues. In a
world in which China is projecting power well into the second
island chain and beyond, that is not a world that is familiar
to any American who has lived since 1945. We take for granted
our ability to control the Western Pacific, to project power
into East Asia. A world in which China is denying us that
capability is a very, very different economic and geopolitical
world.
Mr. LaMalfa. Thank you.
Mr. Grossman, with the Chinese Communist Party basically
infringing on this economic zone and the maritime space in the
area, how much is that affecting the fishing we have in that
area and the overall economic activity for our partners down
there?
Mr. Grossman. Thank you for that question, Congressman. And
as I mentioned in my remarks, as well as in my written
statement, this is a pretty significant shift in the fishing
throughout the Indo-Pacific and, frankly, globally.
The South China Sea, which we haven't talked about as much
here today, is practically devoid of fishing resources due to
the destruction of coral reef environments in which the fish
breed, pollution, over-fishing, and climate change, among other
factors. So, Chinese IUU fleets, they are referred to as deep
sea fleets, are kind of fanning out across the globe in search
of new fishery resources to include within this second island
area----
Mr. LaMalfa. So, let's emphasize that there. What has the
response been from international partners, U.N. or different
groups, non-government organizations, to hit on this deliberate
depletion, a very aggressive one by China, since they don't
seem to follow any treaties or others on fishing appropriately,
as many other countries do, what are you seeing as a response
in the effort to hold China accountable?
Mr. Grossman. Well, the United Nations certainly is
tracking the issue. They meet on the issue in different,
smaller committee settings.
But, again, IUU, the very definition of it being illegal,
unreported, and unregulated fishing, means that China is doing
this stuff below board, essentially. So, the question is, how
do you stop them from doing it?
And one of the recommendations from my colleague, Mr. Gray,
and you know, I share this sentiment, as well, is that we need
to do more in terms of U.S. Coast Guard deployment to the
region to patrol and monitor these activities.
Mr. LaMalfa. And in our island areas, as well?
Mr. Grossman. Yes.
Mr. LaMalfa. Thank you, Madam Chair. I am sorry about the
time, bouncing back and forth between committees.
Ms. Hageman. Thank you.
Mr. LaMalfa. I yield back.
Ms. Hageman. The Chair now recognizes Congressman Case.
Mr. Case. Thank you, Madam Chair. I hope we can all
stipulate at this point that the PRC is actively, consciously,
and very deliberately expanding its influence across not just
the compact countries, but the entire Pacific, all of the
jurisdictions of the Pacific, and that its intentions are not
to foster an international rules-based order, or to enhance a
free and open Indo-Pacific, or to support commonly-shared
values, or any of the other ties that bind. So, great
testimony, everybody. I think we are beyond that.
And now, how do we deal with it? Mr. Friberg, and by the
way, before I go on to Mr. Friberg, I just want to put a point
on my colleague Mrs. Radewagen's reference to the letter from
former Federated States of Micronesia President David Panuelo,
I don't know if any of you actually did reference it, I think
you did, but it deserves a little bit more attention, a 13-
page, highly itemized description of how China tries to subvert
an entire government. If you want to find out what China is
actually doing in the countries of the Pacific, and around the
globe, for that matter, please read President Panuelo's letter,
I recommend it to any of you. I think that settles the case in
terms of strategy, and tactics, and approach.
So, Mr. Friberg, first of all, great testimony. I loved
your just nice, tight summary of what we are doing, why we are
doing it, and what we need to do. I agreed with virtually
everything you said, from defense, to economic, to immigration,
and all of that is true.
But you know as well as I do that there is an impact from
the immigration side of the compacts to many jurisdictions in
this country, with a particularly severe impact from the
compact residents who are legally in our country but who are
not getting the benefit of Federal services, not getting the
benefit of impact assistance in any appreciable form, and that
this is a critical obstacle to those jurisdictions supporting a
renewed compact.
I say this for myself, straight out: I support the
compacts, I support their re-negotiation, I think they are
critical to our national security. But I cannot accept the
consequences to Hawaii or, for that matter, to Guam, to the
CNMI, to Arkansas, to Washington, to Oregon, to California, to
other jurisdictions of the obligation of hosting compact
migrants with particular needs in economic, health care, social
services, education, in some cases public safety.
You used to work for the Government Accountability Office,
and I think you said in your introduction you authored some 40
reports on the compact countries over a span of 20 years. But
you authored one that was particularly instructive, which was
the report ``Populations in U.S. Areas Have Grown with Varying
Reported Effects,'' which is essentially an analysis of compact
impacts, resident impacts, unreimbursed resident impacts.
And I would ask unanimous consent that this report be
included in the record, Madam Chair.
Ms. Hageman. Without objection, so ordered.
Mr. Case. Thank you. I am going to cite your No. 1
conclusion, at least the one that reaches out to me. The top
three jurisdictions with large compact populations: Hawaii,
Guam, and the CNMI, had $1.8 billion in compact impact
consequence. In other words, the services provided to the
compact residents between 2004 and 2018, I think it was, with
$500 million reimbursed. That is not adequate reimbursement.
So, what are the remaining steps to be taken to adequately
compensate Hawaii and other jurisdictions for the impact of the
migrants, and support the compacts in the process?
Mr. Friberg. Thank you. That is a big question, and I would
note that I don't really author GAO reports, I help a team that
prepares them. So, I have many colleagues that are behind all
of this good work.
I would say, thinking about the compact impact, this was an
issue which arose in the mid-1980s, when Congress first
considered the first round of compacts. And the notion was that
Congress told the Pacific jurisdictions: American Samoa, Guam,
CNMI, and Hawaii, we didn't want there to be adverse effects on
your jurisdictions.
Beginning with the amended compacts in 2003, there was $30
million a year for a 20-year appropriation and authorization as
part of that package. Those funds do end this fiscal year. So,
that has been the extent of sort of a permanent authorization
to address compact impact in the Pacific.
In addition, there have been some congressional
appropriations of discretionary funds.
The recent several-year-ago change in Medicaid eligibility
was, I think, a significant improvement in the lives of the
COFA migrants, but it also provided a Federal share of the cost
of health care, which a lot of the states were picking up----
Ms. Hageman. We will need you to wrap up, thank you.
Mr. Friberg. Thank you. I will stop.
Ms. Hageman. The Chair now recognizes Representative
Gonzalez-Colon for 5 minutes of questioning.
Mrs. Gonzalez-Colon. Thank you, Madam Chair. I am so happy
that, actually, you are leading this hearing on such an
important issue, not just for the United States, but for the
whole region. All of us have traveled to many of the countries,
and we have been seeing the Belt and Road Initiative, and we
also saw many examples of what is happening, whatever the
communist China is doing, investments or upgrades in
infrastructure in countries like North Macedonia, African
countries, and many others. So, this is not new.
What is new here, is that the United States needs to engage
with the Freely Associated Compacts that are going to expire
now in 2023, and we are talking not just Palau in 2024,
Micronesia Islands in 2023, and the Marshall Islands in 2023.
I think what Chairman Westerman brought to the table, it is
important in a bipartisan way that we should actually be
looking forward to receive those negotiations and try to
establish and continue to deter the malign influence of the
communist China in the Pacific region. So, to that end, I do
have questions to Mr. Grossman.
U.S. analysts and officials have long expressed concern
about a communist China investment in commercial seaports,
airports, and other infrastructure projects around the world,
and how those investments facilitate the expansion or
establishment of a formal military presence in those areas.
Similar concerns have also been raised with security agreements
with the communist China to train and provide equipment to
local law enforcement officials.
Could you discuss how this is playing out with respect to
the Indo-Pacific Region and its implications for U.S. security
interests in the region?
And that means how the Government of China is leveraging to
support for infrastructure and security upgrades in Pacific
Island countries to establish a permanent base and weaken U.S.
partnerships in the region.
And, of course, I know in your testimony you mentioned
concerns surrounding the agreement with the Solomon Islands and
the upgrades to their airstrip in Kiribati, which could be an
air base for the Chinese influence. I will be happy to hear
your comments on that.
Mr. Grossman. Thank you, Congresswoman, a lot to unpack
there.
But very briefly, I will say that kind of the poster child
for U.S. concerns about what China is doing in terms of BRI
infrastructure to different countries is Sri Lanka. A number of
years ago, China offered to build up the Port of Colombo in Sri
Lanka. When the bill came due, Sri Lanka couldn't pay. And
China said, ``Well, what else do you have for us?'' And it
turns out China now operates out of Hambantota Port in the
south of Sri Lanka on a 99-year lease. It is very rare that you
see 99-year leases. But for China, this is pretty common
practice.
And the question is, what are their long-term ambitions
there? Is it purely commercial, or is there something else?
I will just make sure everyone understands that Hambantota
is along sea lines of communication within the Indian Ocean,
basically connecting Asia to the Middle East, and to Europe,
and Africa. So, it is a pretty important corridor.
But in the Pacific, we see similar types of activities.
Right after the Solomon Islands switched recognition from
Taiwan to China in 2019, we then had a New York Times expose
about how China was trying to essentially forge a similar deal
on one of the islands, Tulagi, in the Solomon Islands, a 75-
year lease for Tulagi. But once it became exposed, that deal
essentially went away. So, yes, we have concerns about what
they are trying to do through BRI.
And on the policing issue, this is not the first time China
has done this with Solomons. Fiji, you can go back to 2011,
there was an agreement. But now the new government in Fiji is
starting to reconsider whether that is a good idea because we
are conveying to them you may not want to have an authoritarian
regime essentially training your local law enforcement. That
might not be a good idea if you want to maintain a democratic
system.
Mrs. Gonzalez-Colon. Thank you. And I know Mr. Gray
proposed National Security Council-led interagency policy
process, including director-level position focusing on U.S.
territories.
I know my time is going to expire, but I would love to know
more about how we can make that happen, and help tackle those
threats, and strengthen our efforts to counter communist China
malign influence in the region.
Mr. Gray. Yes, thank you, Congresswoman. I would just add
to my written testimony and what I said earlier, that the way
the National Security Council is structured now, there really
isn't any focus specific to our territories. They are treated
as an ancillary part of our Asia Directorate or, in the case of
Puerto Rico and the Virgin Islands, our Western Hemisphere
Directorate, the issues, obviously, are unique, the challenges
are unique, the legal structure is unique.
So, having personnel who are devoted to that issue
specifically, and can work functionally across different issues
and regions, I think that would allow this challenge to receive
the bureaucratic attention that it needs, instead of being
treated as an afterthought, which too often it is now.
Mrs. Gonzalez-Colon. Thank you.
Thank you, Madam Chair. I yield back.
Ms. Hageman. Thank you. The Chair now recognizes Mr. Carl
for 5 minutes of questions.
Mr. Carl. Thank you, Madam Chair, and I am so sorry for
jumping up and down, but nothing like having three committee
meetings going at one time.
Mr. Gray, I have a quick question for you. Thank you all
for being here. The CCP concerns me. I have seen firsthand the
impact of the CCP's use of soft power down in Central and South
America. I have been doing some, for lack of better terms,
research down there.
The CCP is active in countries in our hemisphere, building
everything from road and soccer stadiums. They are doing this
in our backyard, and it deeply troubles me because they are
trying to replace the U.S. influence in these areas. And I
think that that goes without saying.
I am worried similar things are happening in the Indo-
Pacific area. I believe it is incredibly important we must push
back against the efforts of the CCP to spread its influence in
the Indo-Pacific area, which is likely the location for the
future armed conflict.
Mr. Gray, can you talk to me a little bit about how the
PRC's influence has spread across the Pacific Islands?
Mr. Gray. Thanks, Congressman, and you are absolutely right
that this is a Pacific issue, but it is a global issue, as
well.
The way in which the CCP took advantage of our kind of
strategic distraction in the early 2000s and the 2010s, and
they began a process of, you can look at it in kind of a multi-
front way.
First there is infrastructure, like Mr. Grossman alluded
to, BRI, going in and spending vast sums of money, often at
usurious interest rates, to build projects that ostensibly
these small developing states want. Too often, these projects
end up being white elephants. They end up being infrastructure
that doesn't work, or ends up leaving the country worse off
than it was when it began.
They do elite capture. They are very good at taking elites,
Solomon Islands is a great example, wining and dining them in
Beijing, giving them the attention that, frankly, they don't
always get from the United States and our allies, and they do a
very good job at prioritizing for influence and access the
countries that they view as strategic.
So, we have watched as Solomon Islands, Papua New Guinea,
Vanuatu, the Freely Associated States, even to some extent the
U.S. territories, where they view there to be a strategic
interest, they have applied all of these tools of national
power to exert influence, and it has been a steady 15-year
process of moving across the Pacific and beginning to penetrate
farther and farther past the second island chain.
Mr. Carl. I have seen down in Panama, the canal, they did a
project for the Panamanian Government down there and messed it
up. We have the Corps of Engineers down there now trying to
figure out how to fix it. So, it is not the best of quality, I
might add, for future reference, the work that they actually
do.
Given the United States has three territories and
international agreements with the Pacific Island countries that
are so close to China, how can we use those relationships to
push back against the CCP's influence in that region?
Mr. Gray. Well, Congressman, I think that, first, U.S.
territories and the Freely Associated States are, if you look
at it in just strategic terms, they are extraordinary strategic
assets for the United States that have to be continuously
safeguarded and cultivated. We take them for granted at our
peril.
And from a strategic standpoint, having South Pacific
projection in American Samoa, having projection as far into the
Western Pacific as Palau through our compact there, those are
incredibly significant for us.
So, I would say, as a matter of policy, obviously, renewing
the compacts is critical, but then elevating the resources and
the attention that we give to our territories. Congresswoman
Radewagen talked about our Coast Guard station in American
Samoa. That is an easy way to project U.S. power farther into
the South Pacific, combat Chinese illegal fisheries activity,
and to penetrate farther into a subregion where China has been
operating with almost impunity in some ways, and the United
States has been very late to the game. With just a little
investment of resources, we can do a tremendous amount to push
back there.
Mr. Carl. Thank you, Mr. Gray, and thank you again to the
Committee for coming and speaking to us.
Madam Chair.
Ms. Hageman. Thank you. The Chair will now recognize Mr.
Moylan for 5 minutes of questioning.
Mr. Moylan. Thank you, Madam Chair. I want to continue on
with the line of questioning from my Congressman here from
Hawaii, in line with that there.
We talked about the grant there, Mr. Friberg, about the
grant assistance for Guam, CNMI, and Hawaii for us hosting the
COFA migrants, which we are happy to do. But this grant amount
for the last 20 years, we have had objections with that amount.
This $30 million is shared amongst, right? And we have
continuous conversation throughout these years to say this
amount wasn't sufficient. And now we are seeing the Biden
administration not even asking to include this in your
testimony. It is ending, and it is not even going to be
included.
So, if we know it wasn't fair from the start, and now we
are still going to have this going on, how does that help us?
We want to help. Our resources are being used.
But let me ask you a question. Would you see the benefits
of legislation which intends to reauthorize and expand these
grant assistance programs to those states and territories who
continue to be COFA host communities?
In other words, we put legislation out there. Tell us the
benefits of how that can help the hosting nations. This goes to
anyone who wants to start.
Mr. Friberg?
Mr. Friberg. OK, thank you for the question. And I could
just sort of put a point on the relative magnitudes we are
talking about.
Like, in 2018, I think Hawaii was recording $183 million in
compact cost and receiving roughly $15 million. Guam was
recording $147 million per year and receiving probably around
$13 million. And the remaining amount primarily went to the
Mariana Islands, and a small amount went to American Samoa.
That was a fixed amount. So, clearly, very small relative to
the cost of educating, providing health care, the cost of
public safety for these migrant populations.
One thing that was true by the time we got to the 2019 time
period, is about half of the COFA migrants at that point were
on the mainland, very large communities in Arkansas, Washington
State, Oregon, California, Texas, and, frankly, just scattered
throughout the country. Roughly 100,000 people had migrated,
and about half at that point were no longer in Pacific regional
areas. So, I think it is a good question, and it is really a
hard one, I think, to address about what is the compensation
package.
One thing I did suggest in my oral comments and in the
written comments is that right now the compact migrants are not
treated as well as people who are lawful, permanent residents
or have green cards, and they simply have better access to some
Federal programs. And having access to those programs would
reduce some of the cost to some of the jurisdictions who are
providing other social support to those households.
And I think it is really about these COFA families. They
are important parts of our American community. They are
important economically, and it is really making this a
relationship that reaches all the way from those communities
back to the COFA nations, and that is my sort of thought of
this.
Maybe some of my other panel members have other ideas.
Mr. Moylan. I appreciate that, but we are going to continue
to receive the migrants coming on in, and now at this point
without any grant at all. And the Biden administration didn't
even at least request for Congress to consider that
reimbursement, even though we have been shortchanged from the
start. We love our sister nations. We want to help. They come,
and they are going to continue to come, but now we need to help
our hosting nations.
Mr. Gray, can I have your comment on that, please?
Mr. Gray. Congressman, I certainly don't pretend to be an
expert on compact impact, like my some of my other colleagues,
but I will say that if we are going to have these compacts,
which are strategically vital, we have to have a formula in
which the compact impact is mitigated in a way that allows us
to continue, frankly, with the support that we need within the
United States to continue those relationships. And if we don't
have the funding formula correct for compact impact, it is
going to, over time, I think, degrade the support for the
strategic relationships.
So, I completely agree with you that we have to find the
way to mitigate those challenges.
Mr. Moylan. Mr. Grossman, you got a couple of seconds, if
you want.
Mr. Grossman. Yes, I mean, I think it has been sufficiently
covered.
I guess the one thing I would add is that we also have to
keep in mind that in future renewals, other issues will crop up
in COFA re-negotiations, such as I think climate change was an
issue this time, at least for Marshall Islands, perhaps for the
others, as well. And then nuclear testing legacy. So, those are
things that we have to be prepared to have an answer for in the
future when dealing with----
Mr. Moylan. OK. Thank you, sir.
Madam Chair, thank you.
Ms. Hageman. Thank you. The Chair will now recognize
Chairman Westerman for 5 minutes of questioning.
Mr. Westerman. Thank you, Madam Chair. And again, thank you
to the witnesses.
And as we have discussed already, I mentioned this in some
of my opening remarks, the U.S. compacts with the FAS countries
are a balance of extraordinary security and defense right and
strategic stability secured for the United States, and
extraordinary economic gains and stability for the Freely
Associated States.
Ms. Paskal, could a COFA model with less comprehensive or
extensive economic and security cooperation be calibrated and
applied elsewhere to enable maybe a soft bilateral and
multilateral cooperation?
Ms. Paskal. I think, if that offer was made, there would be
several countries that would be interested. In fact, I know of
at least one that was actively interested in it, and it is
partially out of fear of what China is doing.
And a lot of this discussion, as Congressman Case was
saying, OK, what do we do now? But we know China is a problem,
and a lot of this discussion has sort of implied that the
countries are choosing between two systems, two kind of equal
things, China and the United States. And if you have Chinese
police trainers, they are the same basically as American or
Australian police trainers. But they are fundamentally
different.
The Belt and Road Initiative exports a system, BRI can
stand for bribery and repression initiative. What goes into
those countries at the ground level is incredibly socially
disruptive, and many of the countries in the region, for
example, Nauru, are scared, and want to look for another model.
Nauru recognizes Taiwan, Tuvalu recognizes Taiwan. They are
doing so because of what was in the last two pages of President
Panuelo's letter, in which he said, ``These are the problems we
are having with China, that is why we want to recognize
Taiwan.''
And I think there is a big question about why FSM, the core
part of the Freely Associated States, the big part in the
middle, wasn't encouraged to recognize Taiwan. That gets right
to the heart of what some of the U.S. opinions, especially, I
would say, in State, toward the region is. And there is a very
big divergence on the ground among how Defense interacts with
the region and how State interacts with the region. And I think
that is delivering a confused message.
So, from a Defense Department perspective, I think there
would be a lot of support for expanding compacts to other
nations. State, I am not so sure. So, that is a discussion that
maybe would be beneficial to have a little bit more
highlighting on within the U.S. system.
Mr. Westerman. But you see that as beneficial,
strategically, for the United States to do that?
Ms. Paskal. I think it would be incredibly helpful, and it
would be a symbol like no other that the United States is
serious about being in the Pacific.
We will have President Biden going to Papua New Guinea on
May 22. There will be a meeting of Pacific Island leaders
there. That meeting was actually convened by India, and
President Biden is kind of showing up and having the engagement
there to show that there is interest in the region. That sort
of thing is very helpful. But what would be more helpful is
this sort of actual institutional engagement between the
countries that can lead to pathways of interaction that is
military, economic, social, political, creating this defensive
barrier against the spreading of authoritarianism across the
region and bolstering of freedom and democracy across the
region.
Mr. Westerman. Yes, it is pretty sobering to see what has
resulted from places around the world where the Belt and Road
Initiative has been applied.
In your statement, you mentioned a letter from the former
Micronesian President. What specifically does the letter
highlight and that should be of concern?
Ms. Paskal. It is a description of a complete subversion of
sovereignty. He talks about not only bribery of specific
individuals in his government, but just to give you one case
study that he uses, what happened with Sinovac. The United
States delivered enough of its own vaccines for the entire
country, for the entire Micronesia. China was insistent that
Sinovac be accepted. The president said no. Suddenly he found
one of his ministers saying, ``Oh, you know what? We will
accept it just for the Chinese citizens in the country,'' and
then the next thing he knew it was being accepted for the
entire country. It was a total bypassing of any sovereign
decision-making by the president of a country if it went
counter to PRC interests.
The PRC also designated a citizen of FSM to represent the
FSM at an international meeting with the PRC. It is a
destruction of democracy and sovereignty on a scale that is
incredibly hard to imagine, and we are seeing it happen all
across the region.
Mr. Westerman. Thank you. And I have more questions, but I
don't have more time, so I am going to yield back my remaining
10 seconds, Madam Chair.
Ms. Hageman. Thank you, Mr. Chairman. We appreciate you
coming here today to engage in what is an extremely important
discussion.
I listened with great interest, and I think that everybody
does recognize the challenges associated with China, and the
importance of these countries and islands in our South Pacific.
So, it is something that we take very seriously. And the fact
that Chairman Westerman came and engaged with us today, I
think, is a sign of that.
I want to thank the witnesses for your valuable testimony
and the Members for your questions.
I was just looking through some of the materials you have
provided, and that definitely is going to be reading material
that I will take home and spend more time studying, as this
issue is going to be coming up over the next 6 to 8 months, and
I hope that we also will have an opportunity to come and visit
some of the islands as well, to get a firsthand understanding
of the situation that we are dealing with in the South Pacific.
The members of the Committee may have some additional
questions for the witnesses, and we will ask you to respond to
these in writing. Under Committee Rule 3, members of the
Committee must submit questions to the Committee Clerk by 5
p.m. on Friday, May 19, 2023. The hearing record will be held
open for 10 business days for these responses.
If there is no further business, and without objection, the
Committee stands adjourned.
[Whereupon, at 4:04 p.m., the Subcommittee was adjourned.]
[ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]
Submission for the Record by Rep. Radewagen
The President
Palikir, Pohnpei
Federated States of Micronesia
March 9, 2023
T.H. Wesley W. Simina T.H. Reed B. Oliver
Speaker, FSM Congress Governor, Pohnpei State
Government
T.H. Marvin T. Yamaguchi T.H. Alexander R. Narruhn
Speaker, Pohnpei
Legislature Governor, Chuuk State Government
T.H. Arno H. Kony T.H. Lester Danny Mersai
President, Chuuk House of
Senate Speaker, Chuuk House of
Representatives
T.H. Charles Chieng T.H. Nicholas Figirlaarwon
Governor, Yap State
Government Speaker, Yap State Legislature
T.H. Tulensa W. Palik T.H. Semeon Phillip
Governor, Kosrae State
Government Speaker, Kosrae State Legislature
My Dearest Speaker Simina & Members of the 22nd FSM Congress,
Governors of our FSM States, and Leadership of our FSM State
Legislatures,
At the outset, I bring you warmest greetings from your capital of
this Paradise in Our Backyards, Palikir, the Federated States of
Micronesia. I wish you all the greatest of health, and hope that my
letter finds you well.
Speaker Simina: as you know, prior to the election I spoke with you
about preparing a letter to you in the interest of administrative
transition. I write to you today to discuss a topic of significant
importance to our country and under that framework of transition. Now
that our elections have concluded, I have reflected that there will be
a new administration to take the reins of leadership and continue the
important work of taking actions today for our Nation's prosperity
tomorrow. I have publicly committed toward a peaceful transition of
power. That commitment remains firm and unshakeable, and I further
commit through this letter a promise that, prior to the new
administration taking power on May 11, 2023, I will write to you all on
several matters of importance and within the purview of your Executive
Branch.
Many of these matters I will begin briefing you on will be domestic
in nature, and will serve as briefings prior to our State & National
Leadership Conference in April, 2023. By necessity, however, some of
these matters will also be on foreign affairs and foreign policy--
inclusive, for example, of the FSM's current role as Chair of the
Pacific Islands Conference of Leaders (which is comprised of twenty
Pacific Island jurisdictions); as Chair of the Micronesian Presidents
Summit (the political organ of all the five sovereign Micronesia
Presidents); the status of the Micronesian Islands Forum (the political
organ of four sovereign Micronesian countries, each FSM State, Guam,
and the CNMI); the conclusion of negotiations on the Compact of Free
Association; and more. It is on that latter-topic of our foreign
affairs and foreign policy that I seek your kind attention today.
Our foreign policy is often distilled into the following two
points. The first--the FSM is a friend to all, and an enemy to none.
The second--the FSM extends to all peoples and nations that which we
seek: peace, friendship, cooperation, and love in our common humanity.
Over the course of my administration, I have sought to uphold this
foreign policy, which is elegant in its simplicity and inspirational in
its decency.
There is, however, a weakness--a vulnerability, if you will--in our
foreign policy as described above, my dear Speaker and Leaders. Our
foreign policy assumes that those we encounter have good intentions and
mean us well, and that other countries are either friends we haven't
yet met or friends we've established meaningful partnerships with. I
should emphasize that, on the whole, this is the right attitude for us
to take, as it is noble in heart. But it also presents an opening that,
if not watched for, and if not managed, could allow the sovereignty
that we jealously guard to chip away before our own eyes.
I believe that our values are presently being used against us, as
Micronesians, and against our national interest, by persons who would,
and who do, seek to use us so as to achieve a larger objective of their
own. The object of my letter, then, this briefing, is to describe what
we are seeing and what we know; to show how what we know and what we
are seeing is a problem for our country; and, then, to offer a proposal
for our collective consideration.
I would first like to begin by discussing what we are seeing in the
context of our country, but to do so requires defining a couple of
terms, as they are likely to be new to many of us. The terms are
``Political Warfare'' and ``Grey Zone.''
Political Warfare is the use of all means at a nation's command,
short of war, to achieve its objectives. Political Warfare can include
overt activity (e.g. political alliances, economic measures, public
propaganda) and covert activity (e.g. secret support to friendly
elements, bribery, psychological warfare, and blackmail), including
cyber-attacks by taking advantage of any system vulnerabilities. Many
of these activities operate in the ``Grey Zone.''
Grey Zone activities are defined by being below the threshold for a
nation to respond to with force, and are otherwise difficult to handle
by ``normal'' means. Grey Zone activity is, collectively, a blurry set
of activities that can be hard to distinguish from ``normal'' until it
is too late, with an element of rule-breaking and with the aim of
achieving a strategic objective. Grey Zone conflicts involve the
purposeful pursuit of political objectives through carefully designed
operations; a measured, possibly prolonged, movement toward these
objectives (rather than seeking decisive results within a specific
period); acting to remain below key escalatory thresholds so as to
avoid war until the ``right time''; and the use of all the instruments
of national power, particularly non-military and non-kinetic tools.
Simply put, we are witnessing Political Warfare in our country. We
are witnessing Grey Zone activity in our country. Over the course of my
administration, the scope has increased, as has the depth, as has the
gravity.
I appreciate, my dear Speaker and Leaders, that these are
astounding suggestions. They are precisely the sort of suggestions that
require--demand, even--an explanation. I will now provide numerous
examples of this but, before I do, it is worth taking this moment to
emphasize an essential piece of information.
It is a matter of intelligence, gleaned from the now public PRC
whitepaper, that President Xi Jinping has instructed the People's
Liberation Army to be prepared for an invasion of Taiwan by 2027. We do
not know that the PRC will invade at that time, or any other time; but
we do know that the PRC intends to be prepared for the invasion by that
time. We further know that the FSM has a key role to play in either the
prevention of such a conflict, or participation in allowing it to
occur. It is on this basis that Political Warfare and Grey Zone
activity occur within our borders; China is seeking to ensure that, in
the event of a war in our Blue Pacific Continent between themselves and
Taiwan, that the FSM is, at best, aligned with the PRC (China) instead
of the United States, and, at worst, that the FSM chooses to
``abstain'' altogether.
Now that we have defined Political Warfare and Grey Zone activity,
let's review examples of this as it occurs within the FSM.
One example is with regards to the conduct of ``research vessel''
activity in our ocean territory and Exclusive Economic Zone. You may
recall having heard about an alleged weather balloon over the United
States of America earlier this year; while it is plausible the balloon
did record some basic weather data, such as temperature and windspeed,
it is known that the balloon was used for the conduct of espionage on
U.S. territory, security installations, and assets. That same basic
premise is what we have seen in the FSM, only on our seas instead of in
our air, and with ships instead of balloons. The weather balloon in the
United States was a disguise for espionage; research vessels in our
ocean territory are likewise disguised to hide espionage. We are aware
of PRC activity in our Exclusive Economic Zone whose purpose includes
mapping our maritime territory for potential resources, and mapping our
territory for submarine travel-paths. We are aware of PRC activity in
our Exclusive Economic Zone whose purpose includes communicating with
other PRC assets so as to help ensure that, in the event a missile--or
group of missiles--ever needed to land a strike on the U.S. Territory
of Guam that they would be successful in doing so. When we sent our own
patrol boats to our own Exclusive Economic Zone to check on PRC
research vessel activity, the PRC sent a warning for us to stay away.
That is why I initiated a total moratorium on PRC research vessel
activity in the FSM.
One example is with regards to a proposed Memorandum of
Understanding on ``Deepening the Blue Economy.'' Allegedly framed to
support our mutual efforts in the work of Blue Prosperity Micronesia
and the resulting Marine Spatial Plan for the FSM, the MOU as designed
included a number of serious red flags. Amongst these red flags
included that the FSM would open the door for the PRC to begin
acquiring control over our Nation's fiber optic cables (i.e. our
telecommunications infrastructure) as well as our ports. Both our fiber
optic cables and our ports are strategic assets whose integrity is
necessary for our continued sovereignty. To be clear: the entire reason
the East Micronesia Cable Project, for example, is funded by the United
States, Australia, and Japan, is because of the importance of secure
telecommunications infrastructure free from potential compromise.
I had advised our Cabinet that we would deny the Deepening the Blue
Economy MOU in June 2022. The issue was brought up again by the PRC-
side, and in December 2022 I learned that we were mere hours from its
signing. I put a halt to that MOU, and formalized, in writing, our
permanent rejection of it. The evening that I relayed our rejection of
the MOU, Ambassador Huang Zheng had his farewell dinner with Secretary
Kandhi Elieisar. The Ambassador suggested to the Secretary that he
ought to sign the MOU anyway, and that my knowing about it--in my
capacity as Head of State and Head of Government--was not necessary. To
say it again: the same Ambassador who relentlessly shouts that the PRC
does not interfere in the governance of other countries was himself
actively attempting to interfere in our country's governance, so as to
accomplish his mandate beneficial to the PRC but not to the FSM. (It
may not be surprising that the PRC Special Envoy, Qian Bo, pushed this
MOU again during his recent visit to our country.)
One example is with regards to the proposed replacement for
Ambassador Huang, Mr. Wu Wei. Mr. Wu is the Deputy Director General for
the Department of External Security Affairs at the Ministry of Foreign
Affairs. While his curriculum vitae included this information, it
failed to include any amplifying information--such as his duties in
that capacity; his work experience in previous capacities; or his
educational background, such as what university he went to and what he
majored in. When pressed for such amplifying information, the PRC
Embassy provided little, describing that Mr. Wu's focus was on
terrorism. It was through our own investigatory work that we learned of
Mr. Wu's work experience as it relates to the use of clandestine PRC
police offices, i.e., secret police, seen in countries such as Canada
and Australia.
We understand that Mr. Wu would, upon his arrival, be given the
mission of preparing the FSM to shift away from its partnerships with
traditional allies such as the U.S., Japan, and Australia. We know that
Mr. Wu would expand PRC security activity, awareness, and interest in
the FSM. I know that one element of my duty as President is to protect
our country, and so knowing that: our ultimate aim is, if possible, to
prevent war; and, if impossible, to mitigate its impacts on our own
country and on our own people. So, I declined the Ambassador-designate
his position. I instructed the Department of Foreign Affairs to inform
the PRC that we expect their Ambassador to focus on technical and
economic cooperation, and no further than that. As of the time of this
letter, the PRC has not responded--formally or informally--to that
rejection, though they have spoken with some of our senior officials
and elected leaders to note that they're simply awaiting the new
President to take power so Mr. Wu can become the Ambassador of China to
the FSM.
A common theme that the next several examples include is that the
word ``no'' is scarcely, if ever, taken as the final word. On
approximately six occasions within six months, it has been brought to
my attention that the PRC would like to utilize charter flights--
allegedly so as to bring in the necessary workers to complete various
projects, such as the National Convention Center. On each occasion I
have made it clear the answer is ``no''--it is essential, rather, that
these workers arrive via international commercial carriers such as
United Airlines. The response is often the same; getting to the FSM via
United means that their workers require U.S. visas, and the paperwork
to acquire them is allegedly laborious and time-consuming. Maybe that
is true; but what is also true is that having persons arrive in our
country via Guam or Hawaii gives each of us a layer of added
protection. It is a matter of public information that the PRC has used
prisoners and other forms of servant-labor in projects through
ChinaAID; and it is further the case that the FSM is not equipped with
the necessary detection and screening tools and capacity to discern if
a particular incoming person is, say, truly an engineer, or someone
else altogether.
That itself isn't a small matter, either. You can imagine my
surprise when I was followed this past July in Fiji during the Pacific
Islands Forum by two Chinese men; my further surprise when it was
determined that they worked for the Chinese Embassy in Suva; my even
further surprise when it was discovered that one of them was a PLA
intelligence officer; and my continued surprise when I learned that I
had multiple Cabinet and staff who had met him before, and in the FSM.
To be clear: I have had direct threats against my personal safety from
PRC officials acting in an official capacity.
Perhaps of even greater interest, when it comes to that question of
who comes into our country and what do they want, is as it relates to
China's new Special Envoy for the Pacific, Qian Bo. Ambassador Qian was
formerly the Chinese Ambassador to Fiji--and by extension was the one
responsible for authorizing the two Chinese to follow me in Suva, and
to observe U.S. Vice President Kamala Harris' address at the Pacific
Islands Forum despite their lack of accreditation to be in the room at
the time. It is not a coincidence that China chose Ambassador Qian to
be the Special Envoy, nor is it a coincidence that the FSM was the
first country the Ambassador was chosen to visit. (Is it a coincidence
that our own Executive Branch failed to provide me information in time
so as to allow me to gestate on whether or not to approve the visit in
the first place? We'll come back to this later in this briefing).
Ambassador Qian also would have been present during the 2nd China-
PICS Political Dialogue. That itself is noteworthy insofar as that was
the public meeting where the FSM Government found itself represented
not by myself or a Cabinet member or even a member of our Foreign
Service--indeed, not by anyone in our Government at all but, rather, a
private citizen named Mr. Duhlen Soumwei. I said to the PRC that we
would not have formal representation at the meeting, and the PRC went
to the extent of taking one of our citizens and then publicly having
that citizen formally represent us. To say it again: China has
established a precedent of taking our private citizens in multilateral
meetings to formally represent our country without our Government's
awareness or approval thereof.
If the above is shocking or concerning, bear with me as I provide
another example. In October 2021 the FSM joined the first China-PICS
Foreign Ministers Meeting. It was clear from the outset that something
was awry; I noticed, for example, that the draft remarks for our
Secretary's delivery included frequent requests and references to
proposals that nobody in our country had discussed beforehand. For
example, it was suggested that the Secretary request a Free Trade
Agreement with China. A Free Trade Agreement, on its face, isn't
necessarily a bad idea (nor a good idea); but it certainly wasn't
something that we had discussed internally in any form or fashion. I
instructed that our remarks focus on asking China to work with the
United States in combatting Climate Change.
Toward the conclusion of the first China-PICS Foreign Ministers
Meeting, it became clear that the proposed Joint Communique was laced
with several problematic layers of statements that we as, as nation,
had not agreed to. For example, there were references toward
establishing a multitude of offices that our Government wasn't aware
of, some of which could seem benign or harmless (such as the Disaster-
Risk Reduction Cooperation Center, which opened this February 22,
2023--and whose formal functions continue to elude me despite the FSM
flag flying at the opening ceremonies). Regardless, the FSM requested
that countries receive more time to review the Joint Communique before
it went out. We were not alone in this, I should add--former Prime
Minister Josaia Voreqe Bainimarama of Fiji said the same, as did
Premier Dalton Tagelagi of Niue. Instead, however, our requests were
unheeded, and China immediately published the Joint Communique
inclusive of remarks, which were false, that the FSM and the other
Pacific Island Countries had agreed to it, which, in our case, we
hadn't; and that first China-PICS Foreign Ministers Meeting was of
course later cited to be the foundation for the second China-PICS
Foreign Ministers Meeting. That theme continues: the FSM says ``no'',
and our sovereignty is disrespected with the PRC saying we have
achieved a consensus when we have not.
I should emphasize that instances of Political Warfare and Grey
Zone activity in the FSM need not be focused strictly on the most
exciting geopolitical affairs. Malign or harmful influence can also be,
and often is, banal, i.e., boring and unexciting. While I would be
foolish to not explicitly recall China's suggestions in February 2020
that the novel coronavirus wasn't dangerous and so the FSM should open
its borders to Chinese citizens and workers, including the frequent
calls to my personal phone number from Ambassador Huang at the time,
the example I wish to cite now is regarding COVID-19 vaccines.
You will recall that it was January 31, 2020, when the FSM refused
entry to any person coming from a country that had one or more positive
cases of COVID-19 (then described as the novel coronavirus) and that,
for practical purposes, we referenced Guam and Hawaii as being separate
from the rest of the United States. We closed our borders because we
had good intelligence indicating a temporary, yet striking, societal
collapse, inclusive of massive amounts of human suffering. The panacea
or cure we needed was the COVID-19 vaccine.
The FSM received its first doses of COVID-19 vaccines in December
2020 (even prior to the U.S. State of Hawaii, in fact), and we received
more than enough vaccine for every person in the country. Scientific
evidence suggested that the Moderna and Pfizer vaccines were superior
to all others, followed by the Johnson & Johnson vaccine. The various
Chinese vaccines e.g. Sinopharm and Sinovac were, by contrast, not
particularly effective in comparison. Considering that our country
already had arguably the healthiest supply of vaccines of any
jurisdiction in the world; that the vaccines we possessed were the most
effective available; and the danger that community spread still posed
to our communities at the time; the FSM National Government chose to
only allow our citizens to use those three vaccines. It was a medical
decision, based on science and with the intent of protecting our
population. That wasn't good enough for China.
China was on a quest for countries around the world to approve its
vaccines, even though they weren't particularly effective. In the FSM's
context, we explicitly told them about a half a dozen times--or, at
least, that would be how many times I instructed my Cabinet to relay
such instructions--and, yet, the issue kept appearing in COVID-19 Task
Force meetings.
On October 14, 2021, I relayed the final instruction that the FSM
will not accept the Chinese vaccines. ``Let's be clear,'' I said,
``Foreign Affairs will prepare a letter to say `no' to the China
vaccines. Our answer should be very clear that, while we appreciate the
offer, the answer is no because we have more than enough vaccines.'' In
November, 2021--after the Secretary of Health and the Secretary of
Foreign Affairs and myself had changed cellphone numbers due to
incessant calls from Ambassador Huang--the FSM signed an agreement that
we accept the Chinese vaccines. We included various stipulations, such
as that they were to be used only for citizens of China in the FSM; but
that wasn't what China wanted. What China wanted was for the FSM to be
on the list of countries they could publicly promote as having accepted
their vaccines. China got exactly what it wanted.
Another example is in December 2021. During approximately the same
timeframe that the Western & Central Pacific Fisheries Commission (i.e.
the Tuna Commission) was having its annual meetings, China invited
Pacific Island Countries to join a virtual meeting to come up with an
outcomes document called the Guangzhou Consensus. At the Tuna
Commission meetings, China was noteworthy for being the principal actor
in rejecting a consensus from being reached on a core issue: should
vessels that engage in illegal fishing be forever identified as IUU
vessels? China's suggestion was ``no''--no they shouldn't be. But one
of the key outcomes of the Guangzhou Consensus (which itself was a
successor to the first China-PICS Foreign Ministers Meeting whose
outcome documents our country didn't approve before publication) is
that China would work with the Tuna Commission to tackle IUU fishing.
This is in addition, of course, to the ``establishment of an
intergovernmental multilateral fisheries consultation mechanism as a
supplement to the existing mechanism.''
I can recall, at the time, the advice of our Cabinet. ``The
agreement is sufficiently broad and vague,'' they said; ``the agreement
is not legally binding,'' they said. But with China, to be broad and to
be vague is a threat--not a success. And just because something is not
technically legally binding doesn't mean you won't find yourself
beholden to it. One must merely look at Djibouti, which thought itself
the recipient of a new port that quickly became a PLA Navy base;
Zambia, which has seen China take ownership of its public utility
systems; Uganda, which has seen China take ownership of its only
airport--for both commercial and military uses; Ethiopia, which has
seen China take ownership of its mass transportation system; Sri Lanka,
which has seen China take ownership of its key ports. If these
locations seem so foreign to us, I'll remind you that they too began
with documentation very similar to the Deepening the Blue Economy MOU I
rejected in December 2022. We maintain our sovereignty, so far, out of
vigilance--not for any other reason.
That's one of the many reasons I rejected the Common Development
Vision, which was the core outcomes document of the 2nd China-PICS
Foreign Ministers Meeting. I have already written extensively on that
document to our brothers and sisters in the Pacific Islands Forum.
While I attach to this briefing a copy of that letter for your
information, some of the core concepts included China wanting to
possess ownership of our ocean resources, and to create a Marine
Spatial Plan for its own uses such as for deep-sea mining; control of
our fiber optic cables and other telecommunications infrastructure,
which would allow them to read our emails and listen to our phone-
calls; to possess ownership of our immigration and border control
processes, for the use of biodata collection and observation; and to
create sweeping security agreements with our country and our region.
All of this, taken together, is part of how China intends to form a
``new type of international relations'' with itself as the hegemonic
power and the current rules-based international order as a forgotten
relic. That's a direct quote, I should emphasize--a ``new type of
international relations''--and an explicit goal on behalf of China from
the Common Development Vision.
By this point, my dear Speaker and Leaders, I can only imagine that
I have provided enough examples to demonstrate my core message for my
first main idea: the FSM is an unwilling target of PRC-sponsored
Political Warfare and Grey Zone activity.
Those who desire more examples, and more detail, are invited to
reach out to me; we will schedule a briefing. In my love and
unquestionable patriotism for the Federated States of Micronesia, I
have made it a point to ensure that no stone is unturned in ensuring
that the Office of the President is provided with reliable and complete
information, and that I receive information from as many credible
sources as possible. That includes, my dear Speaker and Leaders, our
Nation's own Information & Intelligence Service (IIS), which I created
by Executive Order, and which I intend, and hence recommend, that we
institutionalize beyond my administration through appropriate
legislation. Awareness of this Service's existence is provided as
information to other Leaders, and extensive discussion on how it can be
useful for the next administration is, I hope, a topic of discussion
between myself and the four At-Large Senators-Elect who are equally
eligible to become the next President and Vice President.
Now let us discuss more why Political Warfare is a problem for our
country.
One of the reasons that China's Political Warfare is successful in
so many arenas is that we are bribed to be complicit, and bribed to be
silent. That's a heavy word, but it is an accurate description
regardless. What else do you call it when an elected official is given
an envelope filled with money after a meal at the PRC Embassy or after
an inauguration? What else do you call it when a senior official is
discretely given a smartphone after visiting Beijing? What else do you
call it when a senior official explicitly asks Chinese diplomats for
televisions and other ``gifts''? What else do you call it when an
elected official receives a container filled with plants and other
items? What else do you call it when an elected official receives a
check for a public project that our National Treasury has no record of
and no means of accounting for?
This isn't rare. This happens all the time, and to most of us--not
just some of us. It is at this point that I relay, simply as a point of
information, that 39 out of 50 Members of Parliament in Solomon Islands
received payments from China prior to their vote on postponing
elections that were otherwise scheduled for this year. Have you
personally received a bribe from the PRC? If the answer is ``no'', you
are in the minority. That is why I am submitting proposed legislation
on money laundering, disclosure, and integrity requirements for
Congress' review, and also why I encourage passage of many floating
legislation including the Freedom of Information Act.
You likely would ask for, and certainly deserve, a concise example
of bribery--or attempted bribery. Shortly after Vice President Palik
took office in his former capacity as a Senator, he was invited to the
Chinese Embassy for a dinner with other Members of Congress. The Vice
President was asked by Ambassador Huang if he could sit up front, with
other Senators, and also to accept an envelope filled with money; Vice
President Palik refused, telling the Ambassador to never offer him a
bribe again, and upon doing so was advised by Ambassador Huang
something close to the effect of ``You could be President someday'' as
the rationale for the special treatment.
This past October 2022, when Vice President Palik visited Kosrae,
he was received by our friends at Da Yang Seafoods. Our friends at Da
Yang have a private plane, and they arrived in Kosrae (along with
several senior FSM Government officials) on that private plane. Our
friends told the Vice President that they can provide him private and
personal transportation to anywhere he likes at any time, even Hawaii,
for example; he need only ask.
In our context in the FSM, with the Vice President's story as the
singular exception, I will refuse to name names, but it is not out of
courtesy; it is to keep the emphasis on the problem, and what the
problem is, and how the problem festers, instead of naming or shaming
any particular person or group of people. Senior officials and elected
officials across the whole of our National and State Governments
receive offers of gifts as a means to curry favor. The practical impact
of this is that some senior officials and elected officials take
actions that are contrary to the FSM's national interest, but are
consistent with the PRC's national interest.
I want to be clear that I am professing to you--those who will
succeed my administration, and likely continue to remain in political
power at the National or State level--that if your administration is
like mine, you will have Cabinet who record bilateral meetings and
transmit those recordings to China. You will have Cabinet and/or senior
officials tell the Chinese Ambassador ``I will help you if you help
me'' behind your back. You will have Cabinet accept gifts, such as
envelopes filled with money, and alcohol. You will have Cabinet attend
meetings with foreign officials--sometimes officials from countries the
FSM doesn't recognize, or doesn't recognize yet--without your
knowledge. It isn't going to be just one of them, and what one will
tell you in public versus what they will tell you in private--or behind
your back--may prove to be very different things. It is here that I
wish to emphasize that not all of the political appointees I have been
recently removing from office have engaged in these activities.
So, what does it really look like when so much of our Government's
senior officials and elected officials choose to advance their own
personal interests in lieu of the national interest? After all, it is
not a coincidence that the common thread behind the Chuuk State
secession movement, the Pohnpei Political Status Commission and, a to
lesser extent, the Yap independence movement, include money from the
PRC and whispers of PRC support. (That doesn't mean that persons
yearning for secession are beholden to China, of course--but, rather,
that Chinese support has a habit of following those who would support
such secession).
At best, it means I find out about a visit by the man (Ambassador
Qian Bo) who would have instructed staff to follow me at the Pacific
Islands Forum in Suva less than 48 hours before its occurrence, despite
our Government having to know about it, and prepare for it, weeks
prior, and only for the man to advocate for initiatives I've rejected
(i.e. the Deepening the Blue Economy MOU) and to call such rejections a
totally agreed-upon consensus (i.e. the 2nd China-PICS Foreign
Ministers Meeting). At worst in the short-term, it means we sell our
country and our sovereignty for temporary personal benefit. At worst in
the long-term, it means we are, ourselves, active participants in
allowing a possible war to occur in our region, and very likely our own
islands and our neighbors on Guam and Hawaii, where we ourselves will
be indirectly responsible for the Micronesian lives lost. After all,
this isn't about the United States or Japan or Australia or any other
country--but it must be about our own Micronesian citizens, and the
fact that Guam by itself, and Hawaii by itself, each have Micronesian
populations larger than Yap and Kosrae combined and, together, have a
Micronesian population larger than Pohnpei. In other words: this is
about upholding our duty to our FSM Constitution, to which we swear
allegiance to, including our duty to protect the security and
sovereignty of our own country and our own people.
My dear Speaker & Leaders,
Prior to giving my State of the Nation address, I can recall two of
my Cabinet recommending that we don't explicitly point out our
rejection of the Common Development Vision (though references to
condemning Trump for his fascist insurrection, or severing relations
with Russia for their invasion of Ukraine, were ``fine''). The reason
they recommended against this was simple: ``We are asking for money
from China.''
I am tempted to say that if our national interest, if our
sovereignty, and if our principles can be traded away for temporary
amounts of silver and gold--then we have failed in our duty to our
people. But it does raise a good point, an essential point in fact in
our world of politics and governance: isn't money all that really
matters?
I don' t say this as a joke; I think it is a truth that I cannot
ignore, that you cannot ignore, and that we collectively cannot ignore.
Money is power. Money is freedom. Money is influence. (If money wasn't
important to us, we wouldn't be seeing officials getting bribed in the
first place.) I cannot think of any elected official, me included, who
hasn't been perpetually concerned about money--including how our
country can obtain it, and how our country can ensure it is used for
our nation's benefit. I can scarcely think of elected officials who
don't seek additional home ownership in places like Hawaii, Guam, and
Portland, or operate multiple businesses; I am of course a businessman
myself. Money matters, and if I am to make the argument that our
country is the target of Political Warfare so as to prepare our country
and region to align ourselves with China prior to their invasion of
Taiwan, I must also make the argument that our country can obtain a
better deal without China. (If an invasion of Taiwan seems unlikely,
did we not feel the same about the invasion of Ukraine?--and in this
case, we know about PRC's whitepaper to be ready to invade by 2027). I
am clearly aware that I must make the argument not only in terms of
preventing war and saving lives, but in terms of how we can fill the
gap that would occur if we were to turn off the flow of money from
China.
And that--my dear Speaker and Leaders--is what I have done on our
behalf, and for our collective discussion. In February 2023, I met with
the Honorable Joseph Wu, Foreign Minister of Taiwan, to solicit from
Taiwan what their potential assistance to the FSM could look like if we
switched diplomatic relations to supporting them instead of China, and
what benefits we can get if we don't switch relations formally but do
explore initializing a Taipei Economic & Cultural Representative Office
(TECRO).
Let's begin with what we can do without diplomatic relations. This
March, 2023, I've invited a team from the Taiwan International
Development Cooperation Fund (ICDF) to conduct a technical mission in
the FSM to determine, among other matters, how Taiwan can assist with
agricultural programming, such as tackling food security issues and
establishing food co-ops. We are exploring a Memorandum of
Understanding between Taiwan and the FSM as it relates to medical
referrals, wherein our citizens can receive a higher quality of care
than other jurisdictions and for less cost. (This is the same setup
that Palau and the Marshall Islands enjoy). We are also exploring job
training and scholarships for our students, and also flights from
Taiwan to Guam and the FSM. I relayed to Foreign Minister Wu that this
is acceptable for the short and immediate term i.e. prior to the
conclusion of my administration.
Of course, at the top of any FSM official's agenda is the status of
our sovereign FSM Trust Fund. I was transparent with Foreign Minister
Wu; we project we need an injection of approximately $50,000,000 to
meet our future needs. We can and will receive this, over a three-year
period, if and when we establish diplomatic relations with Taiwan.
Meanwhile, we would also receive an annual $15,000,000 assistance
package which we could divide however we wish (meaning, by extension,
we could also simply send this assistance directly to our FSM States
like we do with assistance from the Compact of Free Association). This
would have immediate and long-term impacts on State Governments'
capacity to implement programming for their residents.
Additionally, Taiwan assures me that they will simply ``pick-up''
any and all projects that China is currently undertaking. The National
Convention Center in Palikir? Taiwan will finish it. The Kosrae State
Government Complex and the Pohnpei State Government Complex? Taiwan
will finish them (using Micronesian labor and Micronesian businesses,
unlike China, inclusive of job training for our laborers). The gyms in
Satowan and Udot? Taiwan will finish them--and so forth.
All of this assistance, of course, would be on top of the greatly
added layers of security and protection that come with our country
distancing itself from the PRC, which has demonstrated a keen
capability to undermine our sovereignty, rejects our values, and uses
our elected and senior officials for their own purposes.
To say it again, my Speaker and Leaders: We can play an essential
role in preventing a war in our region; we can save the lives of our
own Micronesian citizens; we can strengthen our sovereignty and
independence; and we can do it while having our country at large
benefit financially.
My dear Speaker and Leaders,
I love the Federated States of Micronesia, this nation, my nation,
your nation, our nation, too much to not inform each of you about these
important topics, and to warn you of the kinds of threats and
opportunities that face us. I am acutely aware that informing you all
of this presents risks to my personal safety; the safety of my family;
and the safety of the staff I rely on to support me in this work. I
inform you regardless of these risks, because the sovereignty of our
nation, the prosperity of our nation, and the peace and stability of
our nation, are more important. Indeed, they are the solemn duty of
literally each and every single one of us who took the oath of office
to protect our Constitution and our country.
I appreciate that this first briefing is lengthy--but I trust that
you've found its information essential, and its proposals worth our
collective consideration. I look forward to our further discussions on
this topic, and over the next two months I will prepare additional
briefings for your digestion on other items of interest and importance
to this beloved Paradise in Our Backyards, the Federated States of
Micronesia.
Thank you, and God Bless the Federated States of Micronesia.
Sincerely,
David W. Panuelo,
President
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