Foreign Relations: Kwajalein Atoll Is the Key U.S. Defense	 
Interest in Two Micronesian Nations (22-JAN-02, GAO-02-119).	 
								 
The Compact of Free Association continues a defense arrangement  
that has existed between the United States and two Pacific island
nations--Micronesia and the Marshall Islands--since the end of	 
World War II. The United States has exercised only one of the	 
four primary defense provisions contained in the Compact. That	 
provision grants the United States the right to use part of the  
Kwajalein Atoll in the Marshall Islands to test nuclear missiles 
and space tracking operations. The United States has never been  
required to fulfill defense responsibilities under the other	 
three defense provisions contained in the Compact. The Defense	 
Department considers Kwajalein Atoll an important asset that	 
would be costly and difficult to replicate. Ongoing negotiations 
over the Compact are following a course that would preserve the  
existing defense and security relationship between the United	 
States and each of these nations.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-119 					        
    ACCNO:   A02681						        
  TITLE:     Foreign Relations: Kwajalein Atoll Is the Key U.S.       
Defense Interest in Two Micronesian Nations			 
     DATE:   01/22/2002 
  SUBJECT:   Foreign governments				 
	     International agreements				 
	     International relations				 
	     Territories and possessions			 
	     Antiballistic Missile Treaty			 
	     Compact of Free Association			 
	     DOD Quadrennial Defense Review			 
	     Kwajalein Atoll (Marshall Islands) 		 
	     Marshall Islands					 
	     Micronesia 					 
	     North Atlantic Treaty Organization 		 
	     NATO Status of Forces Agreement			 
	     NATO						 
	     Military Use and Operating Rights			 
	     Agreement						 
								 
	     Mutual Security Agreement				 

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GAO-02-119
     
A

Report to Congressional Requesters

January 2002 FOREIGN RELATIONS Kwajalein Atoll Is the Key U. S. Defense
Interest in Two Micronesian Nations

GAO- 02- 119

Letter 1 Results in Brief 3 Background 4 The United States Has Maintained a
Presence at Kwajalein

Atoll but Has Not Exercised the Compact?s Other Principal Defense Rights 10
Continued Access to Kwajalein in the RMI Is the Compelling U. S. Defense
Interest in the Area 14 Current Negotiators Have Expressed Their Intent to
Preserve the

Status Quo on Defense and Security Relations 24 Agency Comments 26

Appendixes

Appendix I: Objectives, Scope, and Methodology 28 Whether and How the United
States Has Exercised Compact Defense Rights and Fulfilled Its Defense
Responsibilities 28

Current U. S. Defense and Security Interests in the FSM and the RMI 29
Defense and Security Issues in the Ongoing Compact

Negotiations 30

Appendix II: Expiring Defense- Related Provisions of the Compact 31

Appendix III: U. S. Military Operations and Facilities on Kwajalein Atoll,
Republic of the Marshall Islands 33 A History of U. S. Operations on
Kwajalein Atoll 33 Current U. S. Activities and Facilities on Kwajalein
Atoll Focus on

Missile Testing and Space Operations 35 U. S. Government Provides Funding
and Employment Opportunities, but Local Kwajalein Issues Have Posed
Difficulties 37

DOD Has Conducted Few Reviews of Possible Alternatives to Kwajalein 39

Appendix IV: Use of Primary Compact- Related Defense Provisions 41

Appendix V: Measuring the Level of FSM and RMI Support for the U. S.
Positions in the United Nations 45

Appendix VI: Comments from the Department of Defense 51 GAO Comments 52

Appendix VII: Comments from the Government of the Federated States of
Micronesia 53 GAO Comments 61

Appendix VIII: Comments from the Government of the Republic of the Marshall
Islands 65 GAO Comments 72

Appendix IX: GAO Contacts and Staff Acknowledgments 75 GAO Contacts 75
Acknowledgments 75

Related GAO Products 76 Tables Table 1: Voting Coincidence of the FSM and
the RMI with the United States in the U. N. General Assembly, 1991- 2000 24

Table 2: FSM and RMI Support for U. S. Positions on Important Issues in the
U. N. General Assembly, 1991- 2000 47 Figures Figure 1: Location of the
Federated States of Micronesia and the Republic of the Marshall Islands 5

Figure 2: The Islands of Kwajalein (foreground) and Ebeye in the Kwajalein
Atoll, RMI 11 Figure 3: Test Launch of Ground- Based Interceptor for the
Missile Defense Program, Kwajalein Atoll, RMI 12

Figure 4: TRADEX Radar on the RMI Island of Roi- Namur 15 Figure 5:
Territorial Extent of Strategic Denial 20 Figure 6: Major Sea Lines of
Communication in the Asia- Pacific Region 22

Figure 7: Location of Kwajalein Atoll in the Central Pacific Ocean 34 Figure
8: ICBM Test and Super RADOT (Recording Automatic

Digital Optical Tracker) 36 Figure 9: Ebeye Housing of Relocated Mid- Atoll
Marshallese

Citizens 39 Figure 10: The Compact?s ?Obligation to Defend? Provision 41
Figure 11: The Compact?s ?Strategic Denial? Provision 42 Figure 12: The
Compact?s ?Defense Veto? Provision 43 Figure 13: The Military Use and
Operating Rights Agreements?

?Military Use? Provisions 44 Figure 14: FSM Voting Coincidence with the
United States in the

U. N. General Assembly, 1991- 2000 48 Figure 15: RMI Voting Coincidence with
the United States in the U. N. General Assembly, 1991- 2000 49

Figure 16: NATO Voting Coincidence with the United States in the U. N.
General Assembly, 1991- 2000 50

Abbreviations

ABM Anti- Ballistic Missile CAT Civic Action Team DOD Department of Defense
FSM Federated States of Micronesia ICBM Intercontinental Ballistic Missile
NATO North Atlantic Treaty Organization RMI Republic of the Marshall Islands
SMDC Space and Missile Defense Command

Lett er

January 22, 2002 The Honorable James V. Hansen Chairman Committee on
Resources House of Representatives

The Honorable Tom Lantos Ranking Minority Member Committee on International
Relations House of Representatives

The Honorable James A. Leach Chairman, Subcommittee on East Asia and the
Pacific Committee on International Relations House of Representatives

The Honorable Doug Bereuter House of Representatives

In 1986, the U. S. government entered into separate international
agreements- known collectively as the Compact of Free Association- with the
Federated States of Micronesia (FSM) and the Republic of the Marshall
Islands (RMI). The Compact provided for the continuation of a defense
arrangement that has connected the United States and these Pacific islands
since the end of World War II. The Compact obligates the United States to
defend these island nations against attack, while providing the United
States with continued access to the Kwajalein Atoll in the RMI, which is
used for missile testing and space tracking activities. Additional rights
were retained by the United States under the Compact- the ability to

deny access to the islands by third- party militaries and block actions by
the island governments that are incompatible with U. S. defense authority
and responsibilities. These rights reflected Cold War concerns, such as
Soviet influence in the Pacific, that existed at the time the Compact
negotiations took place. Certain defense and economic assistance provisions
of the

Compact are due to expire in 2001. 1 Ongoing negotiations to renew these
expiring provisions provide the United States with the opportunity to
reexamine its defense and security interests in the region in light of the
end of the Cold War and the current use of Kwajalein Atoll in the RMI as a
test site for missile defense.

In June 2001, we briefed your staffs on defense and security issues related
to the Compact and the ongoing negotiations taking place between the United
States and the FSM and the RMI. Specifically, we reported on

(1) whether and how the United States has exercised its defense rights and
fulfilled its defense responsibilities under the Compact, (2) current U. S.
defense and security interests in the FSM and the RMI, and (3) the defense
and security issues that are being addressed in ongoing Compact
negotiations. This report summarizes the content of our briefing.

To address these issues, we reviewed the Compact?s defense provisions as
well as the related defense agreements. 2 We also discussed the use of
Compact- related defense provisions, as well as U. S. defense and security
interests in the Pacific, with officials from the Departments of State and
Defense and U. S. intelligence agencies. Our most recent communication

with both departments occurred in October 2001 and our discussion of the
current U. S. defense interests in the FSM and the RMI takes into account
the Department of Defense?s (DOD) most recent strategy and planning
document, the September 2001 Quadrennial Defense Review. In addition, we
reviewed other strategy documents from DOD and public statements made by DOD
and State officials related to the Compact and Asia Pacific security issues.
We also reviewed public negotiating documents and

discussed ongoing negotiations with Department of State officials and
officials from the FSM and the RMI. Finally, we conducted additional audit
work in response to questions raised during our June 2001 briefing and
incorporated this information into the background and other relevant

1 If renewal negotiations are under way but not completed in 2001, the
expiring defense and economic assistance provisions can remain in effect
during a 2- year negotiating window that begins in 2001 and ends in 2003.
Regarding economic assistance, total U. S. Compact assistance, which
includes direct economic assistance, program assistance, and federal

services, to the two countries for fiscal years 1987 through 2001, was
estimated to be at least $2. 6 billion ($ 1.7 billion for the FSM and $890
million for the RMI).

2 The defense- related agreements that accompany the Compact include the
military use and operating rights agreements, the mutual security
agreements, and the Status of Forces Agreement.

sections of this report (see app. I for a detailed discussion of our scope
and methodology, including a summary of this additional work).

Results in Brief The United States has exercised only one of the four
primary defense provisions contained in the Compact of Free Association and
related

agreements. This provision grants the United States the right to use
portions of the Kwajalein Atoll in the RMI, from which the United States
regularly conducts intercontinental ballistic missile tests, missile defense
tests, and space tracking operations. In contrast, the United States has
never exercised its defense rights nor been required to fulfill its defense

responsibilities under the other three primary Compact- related defense
provisions. According to U. S. officials, since the Compact was implemented,
the United States has never (1) had to defend either the FSM

or the RMI against an attack or the threat of an attack, (2) exercised its
right to deny access to the islands by foreign militaries or for military
purposes, or (3) vetoed an action by either government because the action
was incompatible with the U. S. responsibility and authority for security
and defense matters.

Continued access to U. S. facilities on the Kwajalein Atoll is the
compelling U. S. defense or security interest in the FSM and the RMI that U.
S. government officials have identified. According to DOD, Kwajalein remains
an important national asset that would be costly and difficult to replace.
From a broader defense and security perspective, the FSM and the RMI
currently play no role in U. S. strategy in the Asia Pacific region, and DOD
describes these islands as U. S. defense obligations, not U. S. defense
assets. Statements by policymakers that indicate the United States has a
right to deny military access to the islands and a vast area of the Pacific
Ocean- a

widely cited U. S. interest- overstate the breadth of this right, which only
covers the individual islands and their 12- mile territorial waters.
Similarly, frequent references by U. S. officials to the FSM and the RMI and
their proximity to critical commercial and military transit routes overstate
the countries? importance to Pacific transit because the most important sea
lines run north of this area, not through it.

The ongoing Compact negotiations between the United States, the FSM, and the
RMI are following a course that would preserve the existing defense and
security relationship between the United States and each of these countries.
All parties have agreed in principle to renew the expiring defense
provisions of the Compact. If the defense provisions of the

Compact are not renewed by 2003, the one primary Compact- related

provision that will not continue under a separate agreement is the U. S.
right to veto an action by the island governments that the United States
determines to be incompatible with its responsibility and authority for
security and defense matters. The U. S. obligation to defend the islands and

the U. S. right to deny military access to other nations, on the other hand,
continue indefinitely through a related agreement. In addition, access to
Kwajalein has been secured through 2016, also through a related agreement. 3
Finally, according to Department of State officials, agreement on continued
U. S. economic assistance is important for the renewal of the

Compact?s defense provisions, and would provide a positive context for the
exercise of U. S. defense rights and facilitate the advancement of U. S.
interests.

We provided a draft of this report to DOD, the Department of State, and the
Department of the Interior, as well as the governments of the FSM and the
RMI, for comment. The Departments of State and the Interior chose not to
provide comments on the report. DOD, as well as the FSM and RMI

governments, responded that defense rights, such as strategic denial,
granted to the United States under the Compact are important. DOD and the
FSM government stated that the region has not lost strategic importance for
U. S. interests. In its comments, the RMI government stressed its strategic
significance and historic contribution to the United

States as a site of nuclear tests. The RMI government also expressed the
view that we had not properly characterized the relationship between the
United States and the United Nations (U. N.) Trust Territory of the Pacific
Islands at the time of Compact negotiations. Where we agreed that additional
information was appropriate, we made minor changes to the report.

Background Located just north of the equator in the Pacific Ocean are the
two island nations of the FSM and the RMI. The FSM is a grouping of 607
small islands in the western Pacific that lie about 2,500 miles southwest of
Hawaii (see fig. 1). The FSM has a total land area of about 270 square miles
and is

comprised of four states- Chuuk, Pohnpei, Yap, and Kosrae- with an estimated
total 2000 population of 107,000, according to FSM officials. The RMI is
made up of more than 1, 200 islands, islets, and atolls, with a total land
area of about 70 square miles. The Marshall Islands are located in the 3 In
September 1999, the United States exercised its right to unilaterally extend
the

agreement that grants access to the atoll until 2016.

central Pacific about equidistant from Hawaii, Australia, and Japan. The
Marshall Islands had a 1999 total population of 50, 840, according to the
RMI census.

Figure 1: Location of the Federated States of Micronesia and the Republic of
the Marshall Islands 120ï¿½E 135ï¿½E 150ï¿½E 165ï¿½E 180ï¿½

165ï¿½W 150ï¿½W 135ï¿½W 120ï¿½W North Korea PACIFIC

United OCEAN

States China

South Korea Japan

30ï¿½N Taiwan

Commonwealth of the Northern

Hawaii Mariana Islands

Philippines 15ï¿½N

Guam Republic of the Marshall Islands

Palau Federated States

of Micronesia Kiribati

0ï¿½ Papua Indonesia

New Guinea 15ï¿½S Australia

During the Second World War, the United States engaged in a Pacific campaign
that liberated the islands of Micronesia from Japanese control. To
administer these islands, the United Nations created the Trust Territory of
the Pacific Islands in 1947. The United States entered into the trusteeship
with the U. N. Security Council and became the administering authority of
the four current states of the FSM, as well as the Marshall Islands, Palau,
and the Northern Mariana Islands. The U. N. trusteeship

agreement made the United States financially and administratively
responsible for the region. In addition, the agreement, which designated
this Trust Territory as a strategic trusteeship, granted the United States
the

ability to establish military bases, station armed forces, and close off any

area of the Trust Territory for security reasons. During Senate
consideration of this agreement, Secretary of State George C. Marshall,
General Dwight D. Eisenhower, and Admiral Chester A. Nimitz, among others,
remarked that the agreement gave the United States the complete and
exclusive military control over the islands that was necessary to deny other
militaries access to the islands and prevent their use as a springboard for
aggression against the United States.

In 1986, the United States entered into the Compact of Free Association with
the FSM and the RMI. Through this Compact, the two Pacific Island nations
became Freely Associated States and were no longer subject to U. S.
administration under the U. N. Trust Territory of the Pacific Islands. The
Compact, which consists of separate international agreements with each
country, was intended to achieve three principal goals: (1) secure
selfgovernment

for each country; 4 (2) assist the FSM and the RMI in their efforts to
advance economic development and self- sufficiency; 5 and (3) ensure certain
national security rights for the FSM, the RMI, and the United States.

The defense and security relationships between the United States and the FSM
and the RMI are governed by Title Three of the Compact of Free Association
and three Compact- related agreements- the Status of Forces

Agreement, 6 the Military Use and Operating Rights Agreement, and the 4 The
first goal has been met. The FSM and the RMI are independent nations and
members of international organizations such as the United Nations. However,
both countries maintain a special relationship with the United States
through the Compact, and citizens of both nations are able to live and work
in the United States with few restrictions. 5 The second objective of the
Compact, promoting economic development and selfsufficiency (a term that is
not defined in the Compact), was to be accomplished primarily through direct
financial payments to the FSM and the RMI. Between 1986 and 1998, the

United States provided about $1. 6 billion in direct economic assistance to
the FSM ($ 1.08 billion) and the RMI ($ 510 million) for general government
operations, capital expenditures, and specific sectors, such as energy,
communications, maritime surveillance,

health, and education. In 2000, we reported that both nations had made some
progress in achieving economic self- sufficiency but remain heavily
financially dependent on the United States. See Foreign Assistance: U. S.
Funds to Two Micronesian Nations Had Little Impact

on Economic Development (GAO/ NSIAD- 00- 216, Sept. 22, 2000). By including
program assistance and federal services in economic assistance totals, total
Compact assistance for fiscal years 1987 through 2001 is estimated to be at
least $2. 6 billion-$ 1. 7 billion for the FSM and $890 million for the RMI.

6 The Status of Forces Agreement provides parameters for the activities of
U. S. personnel and equipment in the FSM and the RMI.

Mutual Security Agreement. The provisions of Title Three expire in 2001, but
they can remain in effect during a 2- year negotiating window that ends in
2003. 7 If Title Three is not renewed by 2003, the Mutual Security Agreement
enters into force and preserves key aspects of the defense and

security relationship between these countries. There are four primary U. S.
defense rights and responsibilities contained in Title Three of the Compact
and the Military Use and Operating Rights Agreement between the United
States and the RMI (see app. II for a listing of other defense provisions
contained in Title Three of the Compact that

are due to expire in 2001):  Title Three obligates the United States to
defend the FSM and the RMI against an attack or the threat of attack in the
same way it would defend

itself and its own citizens. According to officials at DOD, this defense
guarantee is stronger than the U. S. commitment to defend its North Atlantic
Treaty Organization (NATO) allies from outside aggression. 8 If no agreement
is reached with the FSM and the RMI on extending Title Three?s defense
provisions, the United States retains a lesser, albeit

7 The military use and operating rights agreements with both countries also
expire in 2001; although as previously noted, in September 1999, the United
States exercised its option to unilaterally extend its agreement with the
RMI for an additional 15 years. This same agreement with the FSM must be
extended by mutual agreement. The Status of Forces Agreement remains in
effect as long as Title Three or the Military Use and Operating Rights
Agreement or the Mutual Security Agreement remains in effect, whichever is
longer. Thereafter the Status of Forces Agreement remains in force until
terminated by a signatory government. 8 DOD has indicated that defense
commitment contained in the Compact is unique for two reasons: (1) it
requires the United States to defend the FSM and the RMI in the event of a
threat of an attack and (2) it obligates the United States to defend the
territory and people of the FSM and the RMI ?as the United States and its
citizens are defended.? In contrast to the Compact?s defense guarantee, the
Article V defense commitment contained in the 1949 North Atlantic Treaty
(NATO) states that each member of the alliance will take ?such action as its
deems necessary, including the use of armed force? in the event an armed
attack on a member state takes place. This represents a lesser obligation.

significant, obligation to defend the islands through its mutual security
agreements with each country. 9  Title Three provides the United States
with the right of ?strategic

denial,? the ability to prevent access to the islands and their territorial
waters by the military personnel of other countries or the use of the
islands for military purposes. This right does not expire with Title Three,
because the mutual security agreements between the United States and the FSM
and the RMI contain this right.

 Title Three also grants the United States a ?defense veto? over actions by
the governments of the FSM or the RMI that the United States determines are
incompatible with its authority and responsibility for

security and defense matters in these countries. Unlike the U. S. obligation
to defend the islands and the right of strategic denial, the U. S. defense
veto will expire in 2001 unless Title Three of the Compact is extended (or
2003 if negotiations are ongoing for an additional 2 years).

 Finally, through the Military Use and Operating Rights Agreement with the
RMI, the United States secured continued access to military facilities on
Kwajalein Atoll. 10 At the time the Compact was negotiated (1969- 1986), the
United States was concerned about the use of the FSM and the RMI as
springboards for aggression against the United States, as they were in World
War II, and the Cold War incarnation of this threat- the Soviet Union.
Australia, New

9 DOD also stated that under the mutual security agreements with the FSM and
the RMI the United States undertakes an obligation that is similar to the
one it assumes with regard to its other Pacific allies- Australia, Japan,
the Philippines, and South Korea. In these agreements, the United States
recognizes that an attack on the other country would constitute a threat and
danger to the United States and would act to meet this threat. However, once
again, the U. S. commitment to the FSM and the RMI is stronger because it
covers threats of attacks as well as actual attacks. The other difference
between these obligations is that in the case of Australia, Japan, the
Philippines, and South Korea, the

commitment to come to one another?s defense is mutual, while in the case of
the FSM and the RMI this obligation solely rests with the United States.

10 A similar agreement with the FSM provided the U. S. Coast Guard with
access to sites on Yap Island until 1992. The Coast Guard, which used these
sites as part of its LORAN (Long Range Aid to Navigation) network, left Yap
in 1987. Originally the Coast Guard had planned to use the Yap site until
1990, but the 1,000- foot- tall radio tower on the island was condemned.
Instead of rebuilding on Yap, the Coast Guard decided to move the station to
Guam.

Zealand, and the United States practiced a coordinated Pacific- wide policy
of strategic denial. This policy was successful in preventing the Soviet
Union from establishing a diplomatic mission in the Pacific islands until
1990, when it did so in Papua New Guinea, and limited Soviet efforts to
establish economic ties and enter into commercial fishing agreements. 11 The
United States and its allies blocked these diplomatic and economic efforts
by the Soviet Union out of concern that closer relations with Pacific

island governments could eventually lead to Soviet political involvement in
and military access to the region.

However, since the Cold War ended, the security environment in the Asia
Pacific region has changed. The coordinated Pacific- wide policy of
strategic denial ended with the dissolution of the Soviet Union; and the

United States does not exhibit the same degree of concern about the
influence of other foreign governments in the Pacific islands today. For
example, China has seven embassies in Pacific Island countries, 12 conducted
$168 million worth of bilateral trade with the South Pacific in 1999,
reportedly provided millions of dollars in economic assistance, and

built a civilian space launch tracking facility in Kiribati- an island
nation southeast of the FSM and the RMI. Taiwan also has a presence in some
Pacific Island nations through diplomatic and economic ties and annual port
visits by navy cadets. However, while China and Taiwan may have made greater
diplomatic and economic inroads into the Pacific than the Soviet Union did,
they lack the military power projection capabilities that defined the Soviet
threat. The former Soviet Union was considered an expansionist superpower
with a large ?blue water,? or ocean- going, navy that was oriented toward
the Pacific and capable of threatening the United

States and its allies. In contrast, China, for instance, is currently
considered to be a regional military power without a developed blue water
naval capability or power projection capabilities that extend out far beyond
its coastal waters.

11 The Soviet Union entered into a commercial fishing agreement with
Kiribati in 1985. The agreement did not include shore access by either
Soviet trawlers or aircraft. A 1987 agreement with Vanuatu did provide
periodic shore access, but the Soviet Union terminated this agreement after
only 1 year. It was not until the Soviet Union entered into a fishing
agreement with Papua New Guinea in 1990 that it acquired both shore access
and the right to station trawlers in a country?s waters.

12 One of these embassies is located in the FSM. The other six are located
in Papua New Guinea, Samoa, Tonga, Fiji, Vanuatu, and Kiribati.

The United States Has While the United States has maintained facilities on
Kwajalein Atoll for Maintained a Presence

military use, it has not exercised its other primary defense rights nor has
it been required to fulfill its responsibilities contained in the Compact:
(1) it at Kwajalein Atoll but has not had to defend the FSM and the RMI from
an attack or the threat of Has Not Exercised the

an attack; (2) it has not invoked its right to deny access to the islands by
Compact?s Other foreign militaries or for military purposes; and (3) it has
never had to veto an action by either the FSM or the RMI because the action
was

Principal Defense incompatible with the U. S. responsibility and authority
for defense and

Rights security matters. As a result, these provisions remain untested.

Kwajalein Rights Exercised The United States has made extensive use of its
access rights on Kwajalein Atoll in the RMI, which it secured through the
Military Use and Operating Rights Agreement with that country (see fig. 2).
The United States regularly conducts intercontinental ballistic missile
(ICBM) tests, missile defense tests, and space tracking operations from
facilities on the atoll that are

under the authority of the U. S. Army (see fig. 3). Several ICBM tests are
held annually. Regarding missile defense testing activity, a seventh
national missile defense test was held in December 2001. Finally, equipment
on the atoll is used for space- related activities such as observing space
objects and tracking foreign launches (see app. III for more detailed
information on U. S. operations and facilities on Kwajalein Atoll).

Figure 2: The Islands of Kwajalein (foreground) and Ebeye in the Kwajalein
Atoll, RMI

Source: U. S. Army Space and Missile Defense Command Web site.

Figure 3: Test Launch of Ground- Based Interceptor for the Missile Defense
Program, Kwajalein Atoll, RMI

Source: U. S. Army Kwajalein Atoll Command briefing.

No Other Provisions According to DOD officials, the United States has never
had to defend the Invoked

FSM or the RMI. 13 DOD and Department of State officials have also stated
that the United States has never invoked its right of strategic denial or
utilized its defense veto. 14 However, a May 2001 port visit by three
Taiwanese naval vessels in the RMI almost provided a test of these two
provisions. In January 2001, the government of the RMI sought approval from
the U. S. government for a 3- day port visit by the Taiwanese ships. The

United States denied this request in a diplomatic note but did so without
mentioning the strategic denial or defense veto provisions of the Compact.
15 Even though the United States did not cite these provisions in its
written denial, the RMI, in its reply, argued that the strategic denial and

defense veto provisions were not appropriate in this case and that the
government?s ability to conduct its own foreign relations must be respected.
The United States dropped its objection to the proposed visit following this
appeal and a February 2001 port visit by these same ships in Palau. 16 (See
app. IV for time lines detailing the history of the four principal

Compact defense provisions.) 13 The likelihood of an attack on these areas
is small. According to portions of a 1999 DOD Assessment of U. S. Defense
and Security Interests in the region provided to us by the FSM and the RMI,
no outside threat is likely to emerge over the next 10 to 20 years; there
are no compelling security interests that will manifest themselves in a any
threat to the FSM or the RMI; and no Asian country will have the military
reach to pose a credible threat in the foreseeable future. The U. S.
military presence on these islands is limited to about two dozen people
stationed at Kwajalein and several Civic Action Teams (CAT). Neither country
maintains its own military. See app. II for a description of the CAT teams.

14 According to officials from DOD and the Department of State, the United
States was considering use of the defense veto to stop a plan proposed by
the RMI government in the 1990s to store nuclear waste on its territory.
This plan was later dropped, without U. S. intervention, after a change in
government in the RMI.

15 However, press reports from the Marshall Islands and Taiwan, as well as
Jane?s Defence Weekly, characterized this U. S. denial as an assertion of
its rights under the Compact of Free Association. 16 The Palau visit
occurred over repeated U. S. objections that cited the defense veto
provision of the Palau Compact of Free Association, which is identical to
the provision in the Compact of Free Association between the United States
and the RMI. However, Department of State officials told us that the United
States did not officially invoke the defense veto provision.

Continued Access to Continued access to the Kwajalein Atoll in the RMI is
the compelling U. S.

Kwajalein in the RMI Is defense or security interest in the FSM and the RMI
that U. S. officials have identified. U. S. facilities located on Kwajalein
complement the geographic

the Compelling U. S. characteristics that have helped to make the atoll an
important part of U. S. Defense Interest in the

ICBM testing, missile defense testing, and space surveillance operations.
Area

From a broader regional security perspective, the FSM and the RMI are not
currently strategically important to the United States. In addition, other
defense and security interests cited by U. S. officials, such as the right
of strategic denial, the proximity of vital transit routes, and support in
the

United Nations, have been overstated. Kwajalein Is Important to

Senior U. S. policymakers agree that continued access to missile testing and
U. S. Missile Testing and

space- tracking facilities on the Kwajalein Atoll in the RMI is the most
Space Operations

important U. S. defense interest in the FSM and the RMI. DOD has described
the U. S. Army facility on Kwajalein Atoll, known as the Ronald Reagan
Ballistic Missile Defense Test Site, as an important and unique national
asset that would be difficult and expensive to replace. In addition, the DOD
agency responsible for missile defense testing, the Ballistic Missile
Defense Organization (now the Missile Defense Agency), has determined that
currently no acceptable alternative site exists for missile defense testing
against ICBM class threats. The atoll has been the test site for ballistic
missile systems for decades. The facility, which is one of two

sites listed in the 1972 Anti- Ballistic Missile (ABM) Treaty between the
United States and the Soviet Union, is used for long- range missile defense
testing among other missions. 17 According to the U. S. Army Space and
Missile Defense Command (SMDC), the testing range?s remote ocean location in
a sparsely populated area provides an acceptable environment for ballistic
missile testing with minimal environmental impact; and the atoll?s location
near the equator is beneficial for space object and foreign

launch observation. To support missile testing activities, Kwajalein Atoll
17 The ABM Treaty between the United States and Soviet Union was negotiated
to limit the testing and deployment of antiballistic missile systems. On
December 13, 2001, the United States gave Russia, the Ukraine, Kazakhstan,
and Belarus formal notice of its decision to invoke Article 15 of the ABM
Treaty and withdraw from the agreement. Article 15 states that notice shall
be given 6 months in advance of the party?s actual withdrawal. Therefore,
the terms of the treaty remain in effect until June 2002. In addition, the
Ballistic Missile Defense Organization has proposed to increase the
operational realism of missile defense testing by developing new or expanded
facilities. These facilities will be used in conjunction with Kwajalein
Atoll as part of an integrated missile defense test bed.

has become the home to sophisticated radar, optics, and telemetry equipment
(see fig. 4).

Figure 4: TRADEX Radar on the RMI Island of Roi- Namur

Source: GAO.

FSM and RMI Currently From a more regional or global point of view, the FSM
and the RMI Lack Broad Strategic

currently play no role in the execution of U. S. defense and security
Importance for United strategy. The East Asia Strategy Report, published
periodically by DOD since 1990, refers to these countries as U. S. defense
obligations, not as U. S. States

defense assets. 18 Congressional hearings on U. S. defense and security
issues in the Asia Pacific region since 1997 have been devoid of references
to these countries. In addition, the United States has never officially
responded to an offer the FSM, Guam?s neighbor, made in 1998 to preposition
military forces in its territorial waters. Portions of a 1999 DOD Assessment
of U. S. Defense and Security Interests in the region provided to

us by the FSM and the RMI also concluded the United States has no current
requirement to preposition equipment in either of these countries. 19
Finally, the former and current ambassadors to these countries, as well as
representatives from DOD?s Pacific Command, have told us that the FSM is no
longer strategically important to the United States, while the RMI only

remains important because of Kwajalein. 20 In 2001, two reports called for
increasing the U. S. presence in the Western Pacific, but neither offered
any definite role for the FSM or the RMI. DOD?s 2001 Quadrennial Defense
Review, released on September 30, sets out a

new strategic vision for defense planning purposes. The review noted the U.
S. overseas presence posture, concentrated in Western Europe and Northeast
Asia, was inadequate for the new strategic environment in which U. S.
interests are global and potential threats are emerging in other areas of
the world. The report called for, among other things, increasing U. S.

presence in the Western Pacific. As a result, the Navy will increase its air
craft carrier presence in the Western Pacific and explore basing options for
18 There is a single reference to the value of Kwajalein as a test facility
for missile defense in the 1998 report.

19 These statements and actions are consistent with U. S. views expressed
during congressional hearings on the Compact in 1984. During those hearings,
the Assistant Secretary of Defense for International Security Affairs stated
that the United States did not plan to seek additional defense sites in the
islands, and a former State Department official with extensive experience in
the area concluded the United States did not have any current or projected
basing requirements in the FSM. Neither the FSM nor the RMI were considered
as fallback positions for U. S. defense sites in Japan and the Philippines.
20 While attesting to the fact that the FSM and the RMI were not
strategically important, officials from the U. S. Pacific Command noted
their geographic importance. One official also added that U. S. presence in
the FSM and the RMI promotes stability and that any

pullback could provide an opportunity for other countries to fill any vacuum
left by the United States.

an additional three to four naval combat vessels and guided cruise missile
submarines in that area, while the Air Force will ensure that sufficient
refueling and logistics support capabilities are in place. DOD has stated
that the FSM and the RMI may not ultimately be involved in any of the above
decisions. A 2001 RAND report on U. S. force posture in Asia 21 reached some
of the same conclusions as the Quadrennial Defense Review

when it highlighted Guam as the most suitable location for an increased U.
S. Air Force presence in the region.

Other U. S. Interests Are In addition to Kwajalein, U. S. policymakers have
cited three main U. S.

Overstated interests in the FSM and the RMI: strategic denial, sea lines of
communication, and support from the FSM and the RMI for U. S. positions

in the U. N. General Assembly. However, assessments concerning strategic
denial and its contribution to U. S. security are mixed. Furthermore, our
analyses concluded that the effect of strategic denial, the importance of
sea lines of communication in the region, and the degree of support received
from the FSM and the RMI for U. S. positions in the United Nations have been
overstated.

Strategic Denial: No Consensus First, there is a lack of consensus about the
value of strategic denial in the

on Value, Effect Overstated post- Cold War era. Different elements of DOD
and the Department of State

have offered a range of opinions on the subject, calling the policy
everything from ?essential? to ?irrelevant.? In the past 3 years, strategic
denial has been described as

 ?essential? to counter future uncertainty in the region, by the Office of
the Assistant Secretary of Defense for International Security Affairs;  ?a
very real interest,? if not as urgent as during the Cold War, by the

Assistant Secretary of State for East Asia and the Pacific;  ?a prudent
insurance policy? for U. S. security in the Pacific, by the Department of
State?s Office of Compact Negotiations; and

 ?a policy of the past? that is ?irrelevant now with the end of the Cold
War,? by the Commander in Chief, Pacific Command.

Furthermore, statements that have overstated the scope of strategic denial
raise questions about the value assigned to this U. S. right and its 21 RAND
Project Air Force, The United States and Asia: Toward a New U. S. Strategy
and Force Posture (Santa Monica, CA: RAND, 2001).

contribution to U. S. defense and security interests. Strategic denial only
covers the land and the 12- mile territorial waters around each island of
the FSM and the RMI (see fig. 5). The geographic limits of strategic denial
were defined by section 461( c) of the Compact, which states that the FSM
and

the RMI include the land and water areas to the outer limits of the
territorial sea and air space above such areas as recognized by the United
States. The United States, as a result of its acceptance of most of the
provisions in the 1982 U. N. Convention on the Law of the Sea as customary
law, recognized the 12- nautical mile limit for the FSM and the RMI?s
territorial seas and therefore for strategic denial. However, various
statements by U. S. and foreign officials have described strategic denial as
exclusive U. S. military control over a large, contiguous area of the
Pacific

Ocean. Specifically,  An official in the Office of Compact Negotiations at
the Department of State described strategic denial as ?the most significant
U. S. interest at the time the Compact was negotiated? because of the value
placed on

denying military access to ?over half a million miles of the Pacific Ocean
between Hawaii and Guam? in a paper presented at the 2001 Island State
Security Conference.

 The Assistant Secretary of State for East Asia and the Pacific testified
at a 1998 congressional oversight hearing on the Compact that strategic
denial ?means taking a vast stretch of the Pacific and maintaining U. S.

military control and ensuring we could deny access to the ships of other
countries.?  A staff briefing paper submitted for the record during the
same 1998

hearing stated that the U. S. right of strategic denial and defense veto
gave the United States ?exclusive military rights and legal defense veto
over third party use of any land, ocean, or airspace of the islands.? This
paper stated that strategic denial included the islands? 200- mile exclusive
economic zone, ?an area larger than the continental United States? (see fig.
5).

 The RMI Minister of Foreign Affairs and Trade testified in the 1998
hearing that the RMI ?provides the United States strategic denial rights
over 1 million square miles of the Central Pacific.?

 Finally, in a paper presented at the 2001 Island State Security
Conference, the Executive Director of the Joint Committee on Compact
Economic Negotiations for the FSM stated that ?strategic denial and the
defense and security concessions in the Compact established an
internationally recognized U. S. zone of influence covering the 1, 000,000
square miles of the FSM?s exclusive economic zone in the western Pacific.?

These statements, if taken literally, not only overstate the scope but also
the effect of strategic denial. While the right of strategic denial
prohibits third countries from establishing land- based operations in the
FSM and the RMI, the United States cannot use this right to prevent ships
from conducting military activities outside of the 12- mile territorial
waters of these countries. For example, in the mid- 1980s and early 1990s,
there were

numerous reports of Russian trawlers collecting information in the waters
around Kwajalein. 22 Further, the United States recognizes that under
international law and custom, military vessels have a right to ?innocent
passage? through the coastal waters of the islands. According to DOD and the
Department of State, these rights are identical to those that the United
States exercises in its own territorial waters. However, Department of
Defense officials have noted that in denying third- country access to land
facilities, the right of strategic denial limits the ability of other
nations to

undertake long- term naval operations in the area, and makes activities in
the region, such as surveillance, more costly. 22 A program manager for the
Ballistic Missile Defense Organization on the Kwajalein Atoll stated in his
1984 congressional testimony that these ships were observed to be as close
as 3 miles from the Kwajalein facility.

Figure 5: Territorial Extent of Strategic Denial

Note: The land masses that make up the Kwajalein Atoll, as well as the other
atolls and islands in the FSM, the RMI, and Palau are too small to show on a
map of this scale.

Source: GAO. Derived from information provided by the National Imagery and
Mapping Agency, Department of Defense.

Key U. S. Sea Routes Do Not Run The importance of sea lines of
communication, or sea routes, that run near

through the FSM or the RMI or through the FSM and the RMI is another area in
which the value of U. S.

interests has been overstated. While U. S. policymakers have stated that the
critical commercial and military transit routes run near or through the FSM
and the RMI, there is evidence to the contrary. Officials from the
Department of the State and the U. S. Army in the RMI told us that one of
Kwajalein?s positive qualities was its isolated location, away from
commercial shipping lines. In addition, a 1992 analysis of U. S. defense
interests in the Pacific Islands stated that the FSM and the RMI lie well to

the south of many north Pacific sea and air lines in peacetime; it is only
when these north Pacific lines are threatened that air and sea movements
would shift southward to minimize adversary interdiction. 23 Our analysis of
U. S. trade flows in the Pacific supports these two assessments. Of the less
than 23 percent of total U. S. trade that crosses the Pacific, more than

61 percent (or about 14 percent of total U. S. trade) involves Japan, China,
Taiwan, and Korea, all of which lie north of the FSM and the RMI. 24 Other
discussions of Pacific sea lines by U. S. officials and policy analysts have
concentrated on chokepoints in Southeast Asia (see fig. 6). An analysis of
these chokepoints in a 1996 National Defense University publication, stated
that in the event all the strategic straits in Southeast Asia are closed or
blocked, trade flows originating from the Middle East and South Asia could

be rerouted south of Australia. Depending on the final destination of these
goods, the rerouted ships could possibly pass near or through the FSM.
Although the chokepoints analysis does not specifically illustrate how U. S.
trade flows from this area would be affected, it appears they would transit
south of the FSM and the RMI in this scenario.

23 Portions of a 1999 DOD Assessment of U. S. Defense and Security Interests
in the region provided to us by the FSM and the RMI also concluded that the
most active sea and air lines of communication linking the west coast of the
United States with the Pacific and Southwest Asia theaters run north of the
FSM, the RMI, and the Commonwealth of Northern Mariana Islands (CNMI) into
the Philippine Sea (see fig. 1 for location of CNMI). Asia- Pacific trade
flows, specifically those between Yokohama, Japan and Brisbane, Australia
pass through the FSM.

24 We approximated the amount of trade crossing the Pacific by examining
trade flows into and from U. S. ports on the west coast of the United
States. Trade to and from countries in the Western Hemisphere was excluded
from these calculations. However, included in the less than 23 percent of U.
S. trade flows that may have crossed the Pacific Ocean, are shipments from
Europe that might have arrived in west coast ports via the Panama Canal.
Consequently, the conclusion that could be reached from the information
above that up to

9 percent of all U. S. trade crosses the Pacific through or south of the FSM
and the RMI, is in all probability an overestimation. For instance, by
subtracting out U. S. trade with the European Union that may have transited
the Panama Canal, the percentage of U. S. trade crossing the Pacific through
or south of these islands falls to under 6 percent.

Figure 6: Major Sea Lines of Communication in the Asia- Pacific Region

Japan South Korea

Pacific China

Ocean

Taiwan Hong Kong Myanmar

Vietnam Laos

Commonwealth of the Northern Thailand

Mariana Islands Republic of the Philippines

Kampuchea Marshall Islands

Philippine Guam

South Sea

China Sea

Strait of

Spratly Palau Islands

Federated States of Micronesia Malacca

Malaysia Singapore

Malaysia Borneo

Indonesia Strait of Sunda

Coral Sea Lombok Strait

Australia

Source: GAO. Derived from information in John H. Noer and David Gregory,
Chokepoints: Maritime Economic Concerns in Southeast Asia (Washington, D.
C.: National Defense University Press, 1996).

Support in U. N. Overestimated Finally, the level of support from the FSM
and the RMI for U. S. positions in the U. N. General Assembly has been
overestimated. Although U. N. voting does not directly relate to U. S.
defense and security interests, U. S.

government officials consistently referred to the support of these countries
in the United Nations as one aspect of the strategic importance of these
countries to the United States. In fact, an official in the Department of
State?s Bureau of International Organizations called the FSM ?the number

one friend of the United States at the United Nations,? while the RMI was
referred to as ?one of the better members? of the General Assembly. These
assessments were based on measures of voting coincidence that appeared

in the 2000 edition of the department?s report to Congress, Voting Practices
in the United Nations. In 2000, the FSM was said to have voted with the
United States 100 percent of the time, while the RMI was credited with
casting an identical vote about 74 percent of the time. However, the

Department of State?s methodology does not take into consideration those
occasions when the countries were absent or abstained from voting. 25
Including these absences and abstentions drops the countries? voting

coincidence numbers to about 54 percent and 52 percent, respectively (see
table 1). While these countries have agreed with the United States about as
often as the average NATO country, support on a few issues identified as
important by the Department of State, such as votes involving the Middle
East and other issues where the United States is often isolated, and the
numbers reported in the Department of State report have led to a perception
of much stronger support than our analysis indicates (see app. V for more
discussion of the Department of State report Voting Practices in the United
Nations).

25 While the Department of State report excludes absences and abstentions
from its own voting coincidence methodology, it does caution that
abstentions and absences can make a mathematical difference, sometimes
major, in the voting coincidence results.

Table 1: Voting Coincidence of the FSM and the RMI with the United States in
the U. N. General Assembly, 1991- 2000 1991 1992 1993 1994 1995 1996 1997
1998 1999 2000 RMI

Department of State 39. 5% 60. 5% 55.8% 65. 5% 65. 1% 68. 5% 74.4% 81.6% 74.
5% 73.9% GAO methodology 24. 3% 35.6% 40.0% 46. 8% 49. 4% 47. 4% 44.4% 48.4%
53. 2% 52.3%

FSM

Department of State 26. 2% 63. 6% 55.0% 69. 2% 66. 7% 64. 4% 100.0% 100.0%
100.0% 100.0% GAO methodology 15. 7% 28.8% 36.7% 46. 8% 48. 2% 37. 2% 48.6%
56.3% 42. 9% 53.8%

Note: GAO methodology includes abstentions and absences. Sources: GAO
analysis and Report to Congress on Voting Practices in the United Nations,
1991- 2000.

Current Negotiators The ongoing Compact negotiations 26 have resulted in
agreements in Have Expressed Their

principle between the United States and the FSM and the RMI, respectively,
to continue their existing defense and security relationships. Without a
Intent to Preserve the

renewal of the Compact?s defense provisions, one of the four primary U. S.
Status Quo on Defense

defense rights and responsibilities will completely expire at the end of the
and Security Relations

negotiating period in 2003- the U. S. defense veto. U. S. officials believe
that continued economic assistance is important to reaching a final
agreement on renewing the Compact?s defense provisions, providing a
favorable environment for the United States to exercise its defense rights,
such as strategic denial and Kwajalein access, and advancing U. S.
interests.

Agreement in Principal All parties to the current Compact negotiations have
expressed their intent Reached on Extending to preserve the status quo on
defense and security matters. During

Defense Provisions negotiations with each country, the United States and the
FSM and the RMI,

respectively, have issued joint statements calling for the continuation of
the defense and security relationship set forth in Title Three of the
Compact. If such an agreement is reached, the U. S. defense veto would be
extended as well as the U. S. obligation to defend these countries as the
United States defends itself and its citizens. If an agreement on economic
assistance is 26 There have been four formal negotiating sessions held
between the United States and the

FSM since November 1999. The fourth session was held in December 2001. The
inaugural negotiating session with the RMI was held in October 1999; but,
the first substantive round of negotiations did not occur until July 2001
due to the election of a new President of the RMI in early 2000. The most
recent round of negotiations was held in December 2001.

not reached by 2003, the defense veto will expire; and the United States
will retain a lesser, albeit still significant, obligation to defend the FSM
and the RMI. According to a representative from DOD?s Pacific Command, U. S.
defense interests would not be hurt by the loss of the defense veto.
Finally, the United States has already secured continued access to Kwajalein

through 2016, by exercising its option to unilaterally extend the Military
Use and Operating Rights Agreement with the RMI.

U. S. Rights and Interests Officials from the Department of State?s Office
of Compact Negotiations Facilitated by Economic have indicated that the
agreement in principle to extend the defense and

Assistance security provisions contained in Title Three is part of a package
(as

indicated in the joint statements signed by the parties) that would also
include continued U. S. economic assistance, as well as various other
measures, such as increased accountability over the use of Compact funds. In
addition, statements from both DOD and the Department of State have
described linkages between continued economic assistance and the ability of
the United States to exercise its defense rights. A June 2001 statement, by
a representative from the Department of State?s Office of Compact
Negotiations, argued that continued economic assistance was justified by U.
S. interests such as strategic denial, political and economic stability,
support for U. S. positions in international and regional organizations,

access to Kwajalein, and the need to provide a positive context for the
United States to exercise its defense rights. Similarly, in a June 2000
congressional hearing on the Compact, an official from the Office of the
Assistant Secretary of Defense for International Security Affairs, stated
that providing continued Compact assistance was in the best interest of the
United States because it helps preserve access to key defense interests for
our forces while denying potentially hostile forces access to U. S. economic
and defense interests in the region. Finally, the Executive Director of the
Joint Committee on Compact Economic Negotiations for the FSM, has

stated that the defense rights delegated to the United States under the
Compact are linked to the economic assistance provided by the United States.
Furthermore, it is the FSM?s position that the economic, political,

and security goals of the Compact are closely interrelated; thereby making

continued economic assistance an important part of the sustained political
development and economic advancement necessary to attain the mutual security
goals of the FSM and the United States. 27

Agency Comments We provided a draft of this report to DOD, the Department of
State, and the Department of the Interior, as well as the governments of the
FSM and the RMI, for comment. The Departments of State and the Interior
chose not to provide comments on the draft report. Regarding its decision
not to submit comments, the Department of State said that it had been
working with us since June 2001, when we presented this material in
briefings to congressional staff, and had, during that time, made its views
on U. S.

defense interests in the FSM and the RMI known. DOD emphasized in its
comments that the U. S. right to exclude third- country militaries from the
territory of the FSM and the RMI remains an important one due to future
uncertainty about events in the region. It also noted that it would be
unwise

to assume that the end of the Cold War has lessened the strategic importance
of Micronesia to U. S. interests. In our response to DOD?s letter, we cite a
passage from a DOD assessment that states that the strategic

importance of the FSM and the RMI has in fact lessened over the past 50
years. The FSM government also disagreed with our conclusion that the FSM
currently lacks broad strategic importance for the United States and that
the importance of certain security interests involving the FSM has been
overstated. In its comments, the RMI government stressed its strategic
significance and historic contribution to the United States as a site of
nuclear test and argued that the rights granted to the United States under
the Compact have been significant. The RMI government also expressed the
view that we have not properly characterized the relationship between the
United States and the U. N. Trust Territory of the Pacific Islands at the
time of Compact negotiations and thus had overemphasized the U. S. desire to
address Cold War concerns in the Compact, while de- emphasizing the role
other issues played in the negotiations. We disagree with most points made
by the FSM and RMI governments; and, in responding to comments

from these two countries, have made reference to report passages that
support our views. The RMI government also stated that we should distinguish
between economic assistance provided to the FSM and the 27 The RMI?s
negotiating team was formed in August 2001. The RMI presented its official
negotiating position in December 2001.

RMI. We agree, and have provided separate assistance figures for each
country. Comments received from DOD, as well as the FSM and RMI governments,
and our assessments of them are included in appendixes VI

through VIII. We are sending copies of this report to the Secretary of
Defense, the Secretary of State, the Secretary of the Interior, the
President of the FSM, the President of the RMI, and interested congressional
committees. We will also make copies available to other interested parties
upon request.

If you or your staff have any questions regarding this report, please call
me at (202) 512- 4128. Other GAO contacts and staff acknowledgments are
listed in appendix IX.

Loren Yager Director, International Affairs and Trade

Appendi Appendi xes x I

Objectives, Scope, and Methodology In June 2001, we briefed the staffs of
the Chairman of the House Committee on Resources, the Ranking Minority
Member of the House Committee on International Relations, the Chairman of
the Subcommittee on East Asia and the Pacific, House Committee on
International Relations, and

Congressman Bereuter on defense and security issues related to the 1986
Compact of Free Association and the ongoing negotiations taking place
between the United States and the Federated States of Micronesia (FSM)

and the Republic of the Marshall Islands (RMI). Specifically, our briefing
addressed (1) whether and how the United States has exercised its defense
rights and fulfilled its defense responsibilities under the Compact, (2) the
current U. S. defense and security interests in the FSM and the RMI, and

(3) defense and security issues that are being addressed in the ongoing
Compact negotiations.

Since June, we have conducted additional audit work in response to questions
raised during those briefings. These questions prompted us to address the
uniqueness of the U. S. obligation to defend these islands, the influence of
foreign governments in the region, and the utility of some defense
provisions in the current Asia- Pacific security environment. 28

Whether and How the To address this objective, we reviewed the Compact?s
defense provisions

United States Has (Title Three) as well as the related defense agreements
(the mutual security agreements, the military use and operating rights
agreements, and the

Exercised Compact Status of Forces Agreement) and discussed these documents
with

Defense Rights and Department of Defense (DOD) and Department of State
officials to identify Fulfilled Its Defense the principal defense and
security provisions. We also reviewed the

congressional hearing record on the Compact, going back to 1984 oversight
Responsibilities

hearings, to determine the specific defense and security provisions that
were focused on in statements and discussions. We then discussed the 28 This
additional work has involved noting the language contained in other U. S.
defense treaties; documenting the Department of Defense (DOD) and Department
of State?s

interpretation of the U. S. obligation to defend the FSM and the RMI;
interviewing officials from DOD (Office of International Security Affairs,
U. S. Commander in Chief Pacific Command); reviewing analyses of the pre-
and post- Cold War security environment in the Pacific, such as Oceania and
the United States, The South Pacific: Emerging Security Issues and U. S.
Policy, and The United States and the Pacific Islands by John Dorrance, and
statements on defense policy from Australia and New Zealand; and analyzing
information on the diplomatic, economic, and military presences and
capabilities of the Soviet Union (mid- 1980s through the early 1990s), China
(late 1990s through the present), and other foreign nations in the region
gathered from presentations by regional experts and other sources.

degree to which the U. S. government has invoked its defense rights or
discharged its defense responsibilities with these same officials (DOD
agencies interviewed included the Office of the Secretary of Defense, the
Office of the Joint Chiefs of Staff, the U. S. Pacific Command, the U. S.
Army Space and Missile Defense Command, and the Ballistic Missile Defense
Organization. Department of State offices interviewed included the Bureau of
East Asia and Pacific Affairs, the Office of the Legal Advisor, and the

Office of Compact Negotiations). We also interviewed Department of State
officials and reviewed Department of State documentation pertaining to the
recent visit of Taiwanese ships to the RMI and Palau. To review U. S.
operations at Kwajalein Atoll, we visited the atoll islands of Kwajalein and
Roi- Namur in April 2000 to tour the facilities and discuss DOD activities
on the islands with U. S. government officials, including the range
Commander, as well as contractor personnel. We also visited the nearby
island of Ebeye

and toured facilities built by the U. S. military, as well as housing used
by relocated mid- atoll Marshallese citizens. We also discussed Ebeye
development projects involving schools, hospitals, and infrastructure
improvements, with local development authority officials and reviewed

associated documentation. 29 Current U. S. Defense

To conduct our work in this area, we discussed U. S. defense and security
and Security Interests interests in the FSM and the RMI with officials from
DOD, the Department of State, the Central Intelligence Agency, and the
Defense Intelligence in the FSM and the RMI Agency. Furthermore, we obtained
the views of the former U. S. Ambassador to the FSM and the current and
former U. S. ambassadors to the RMI. We reviewed DOD reports (2001
Quadrennial Defense Review, East Asia Strategy Reports 30 and classified
assessments of U. S. defense and

security interests in the countries), statements by the Commander in Chief
of the U. S. Pacific Command, congressional testimony on the Compact (from
1984 through 2000) and U. S. defense interests in the Asia Pacific region
(from 1998 through 2000), and the 2001 RAND report entitled The United
States and Asia: Toward a New U. S. Strategy and Force Posture.

We also reviewed the legislative history of the Compact. 29 A discussion of
development projects on Ebeye can be found in Foreign Assistance: U. S.
Funds to Two Micronesian Nations Had Little Impact on Economic Development
(GAO/ NSIAD- 00- 216, Sept. 22, 2000). 30 The East Asia Strategy Report has
been issued periodically by DOD since 1990. Editions were published in 1992,
1995, and 1998; we reviewed these issues.

For our examination of the scope and effect of strategic denial, we reviewed
the 1982 United Nations (U. N.) Convention on the Law of the Sea, received a
legal interpretation of the relevant Compact provision from DOD and the
Department of State, located and examined statements in the congressional
record, interviewed officials from DOD and the Department of State, and
worked with the National Imagery and Mapping Agency to produce a map of the
territorial boundaries of the FSM and the RMI.

For our examination of important sea lines of communication, we reviewed
statements from congressional hearings on the Compact that referred to these
sea routes; analyzed Department of Commerce data on U. S.- Pacific trade
flows (2000 data on total trade by U. S. Pacific ports); explored the issue
of chokepoints in academic papers, government documents, and

Chokepoints: Maritime Economic Concerns in Southeast Asia; and studied works
on U. S. interests in the region written by former U. S. officials, such as
The United States and the Pacific Islands, by John

Dorrance. Finally, for our examination of voting in the U. N. General
Assembly, we analyzed the data on the voting behavior of the FSM and the RMI
contained in the Department of State?s annual report Voting Practices in the
United Nations and data from the United Nations on voting margins, and
interviewed current and former Department of State officials from the Bureau
of International Organization Affairs, the Bureau of East Asia and Pacific
Affairs, and the U. S. Mission to the United Nations.

Defense and Security To address our third objective, we examined the Compact
and its related

Issues in the Ongoing agreements to determine the status of certain defense
provisions after

2001; interviewed officials from DOD and the Department of State as well
Compact Negotiations as the FSM and RMI governments; and reviewed joint
communiquï¿½s issued in 2001 by the U. S. government and the governments of
the FSM and the RMI, regarding negotiating principles related to defense
matters.

We performed our work at various points from December 1999 through October
2001, simultaneously with our efforts for other related assignments. Our
work was conducted in accordance with generally accepted government auditing
standards.

Expiring Defense- Related Provisions of the

Appendi x II

Compact As mentioned in this report, the defense veto contained in the
Compact?s Title Three is due to expire in 2001 (or 2003 if negotiations
continue for an additional 2 years). In addition to this provision, Title
Three contains other provisions that are due to expire in 2001 or 2003.
These include provisions stating that:  The government of the United States
shall not, in the FSM or the RMI, test by detonation or dispose of any
nuclear weapon, nor test, dispose of, or discharge any toxic chemical or
biological weapon.  The government of the United States may invite members
of the armed

forces of other countries to use military areas and facilities in the FSM or
the RMI, in conjunction with and under the control of U. S. armed forces. 
If, in the exercise of its authority and responsibility under Title Three,

the government of the United States requires the use of areas within the FSM
or the RMI in addition to those for which specific arrangements are
concluded, it may request the government concerned to satisfy those
requirements through leases or other arrangements. The FSM or RMI
governments shall sympathetically consider any such request and shall
establish suitable procedures to discuss it with and provide a prompt
response to the U. S. government.

 The government of the United States shall provide and maintain fixed and
floating aids to navigation in the FSM and the RMI at least to the extent
necessary for the exercise of its authority and responsibility under Title
Three.

 Subject to the terms of the Compact and related agreements, the government
of the United States, exclusively, shall assume and enjoy, as to the FSM and
the RMI, all obligations, responsibilities, rights and benefits of  any
defense treaty or other international security agreement applied

by the government of the United States as Administering Authority of the
Trust Territory of the Pacific Islands as of the day preceding the effective
date of the Compact and  any defense treaty or other international security
agreement to which

the government of the United States is or may become a party that it
determines, after appropriate consultation with the FSM or RMI government,
to be applicable to the FSM or the RMI.  Any citizen of the FSM or the RMI
shall be eligible to volunteer for

service in the armed forces of the United States. (Of note, volunteers must
meet the required mental, physical, and moral qualifications to join the U.
S. armed forces. For 1998, 42 FSM citizens and 8 RMI citizens

enlisted in the U. S. Army).

 The government of the United States shall have enrolled, at any one time,
at least two qualified students, one each from the FSM and the RMI, in each
of the U. S. Coast Guard Academy and the U. S. Merchant Marine Academy. 
The governments of the United States and the FSM or the RMI shall

establish two Joint Committees empowered to consider disputes under the
implementation of Title Three and its related agreements.

In addition to these Title Three provisions, the Military Use and Operating
Rights Agreement with the FSM, which authorizes up to four Civic Action
Teams (CAT) in the FSM, will also expire in 2001. There are currently three
CATs in the FSM. CATs are to conduct activities that focus on the special
development needs of the country and are to provide training for the local

population in general engineering skills. CAT teams work on projects (such
as roads and school improvements) that the host governments identify. The
teams are composed of one officer and 12 enlisted men and are shared between
the Army, Navy, and Air Force. The CAT team budget for fiscal year 2001 was
close to $2 million, according to a DOD official. This official told us that
while CAT costs are to be shared between the United States and

host governments, the United States has not been receiving the required
funds from the FSM. The U. S. government has raised concerns that CAT teams
are idle too much of the time and work on projects that quickly fall into
disrepair.

U. S. Military Operations and Facilities on Kwajalein Atoll, Republic of the
Marshall

Appendi x II I Islands The United States has maintained a military presence
in the Marshall Islands for several decades, and DOD currently conducts
ballistic missile and missile defense testing on Kwajalein Atoll. U. S.
equipment on the atoll also allows for space observation, identification,
and tracking activities. The U. S. government, which provides funding to the
landowners of the Kwajalein Atoll through the RMI government and is a key
employer in the RMI, has also experienced some difficulties with the local
Marshallese

population. No recent studies have been completed regarding whether there is
an acceptable alternative site to Kwajalein Atoll for all U. S. defense-
related activities conducted there.

A History of U. S. The United States has had a military presence on the
Marshall Islands in the Operations on central Pacific Ocean since liberating
the islands from the Japanese in 1944

in Operation Flintlock. The U. S. government conducted nuclear tests in
Kwajalein Atoll these remote islands near the equator during the 1940s and
1950s, 31 and a military base was constructed on Kwajalein Atoll to support
this testing (see fig. 7). In 1959 Kwajalein was selected as the testing
site for the NIKEZEUS Anti- Missile System. In 1964, control of this missile
testing range was transferred from the U. S. Navy to the U. S. Army. During
the 1960s and

1970s, the range was used to test rocket systems such as NIKE- ZEUS, Sprint/
Spartan, and Minuteman. 31 Nuclear testing in the Marshall Islands is
discussed in our previous report- Foreign Relations: Better Accountability
Needed Over U. S. Assistance to Micronesia and the Marshall Islands (GAO/
RCED- 00- 67, May 31, 2000).

Figure 7: Location of Kwajalein Atoll in the Central Pacific Ocean Canada
Russia

United States

Japan China

2180 2142 miles miles

miles Hawaii

2136 Kwajalein Atoll Marshall Islands miles

2220 Australia

Source: GAO. Derived from U. S. Army at Kwajalein Atoll command briefing.

Kwajalein Atoll is currently home to missile and missile- defense testing
and space tracking facilities that use land provided to the U. S. government
under a Compact- related agreement, the Military Use and Operating Rights
Agreement with the RMI. In September 1999, the U. S. government exercised
its right to unilaterally extend the agreement, giving the United States
access to Kwajalein Atoll until 2016. The RMI government pays

Kwajalein Atoll landowners for U. S. use of the atoll. Most U. S. equipment
is located on the Kwajalein Atoll islands of Kwajalein and Roi- Namur,
though

some equipment is maintained on five other islands in the atoll. 32 The U.
S. testing range on Kwajalein is under the authority of the U. S. Army Space
and Missile Defense Command (SMDC), and as of June 2001, it became
officially known as the Ronald Reagan Ballistic Missile Defense Test Site.
The test site, which is government owned and contractor operated, 33 is home
to about 75 U. S. government personnel as well as about 1,600

contractor staff and 1,000 family members. SMDC estimates that the facility
represents a $4 billion investment. Current U. S. Activities

The U. S. range on Kwajalein Atoll is used for intercontinental ballistic
and Facilities on missile (ICBM) testing (see fig. 8). One ICBM system that
currently uses Kwajalein for testing is the Minuteman III. Three tests per
year of this Kwajalein Atoll Focus

system, which was developed in the late 1950s, occur at Kwajalein. Another
on Missile Testing and ICBM system is the Peacekeeper (one test/ year), the
newest U. S. ICBM strategic weapon system. 34 Furthermore, this range is
used for long- range Space Operations

missile defense testing. Seven national missile defense tests have been
conducted, with the most recent test in December 2001. 35

32 These islands are Gagan, Meck, Illeginni, Legan, and Ennylabegan. 33
Raytheon currently holds two key contracts at the Kwajalein range:
Integrated Range Engineering and Kwajalein Logistics Support.

34 In recent congressional testimony regarding DOD?s 2002 budget, the
Secretary of Defense stated that the Peacekeeper is a missile ?whose time
has come and gone,? and he proposed deactivating the Peacekeeper system over
a 5- year period.

35 Two of these flight tests did not involve intercept attempts. Of the
remaining five flight tests, three resulted in intercepts.

Figure 8: ICBM Test and Super RADOT (Recording Automatic Digital Optical
Tracker)

Source: U. S. Army at Kwajalein Atoll/ Kwajalein Missile Range mission
photos.

Range equipment is also used to conduct space observation, identification,
and tracking activities. The range has provided more than 32, 000
observations for updating the catalog of near- earth and deep- space
objects. It also responds to assignments for the tracking of new foreign
launches

(commercial and military, announced and unannounced) and provides radar
images of high- interest satellites. The facility also supports the

National Aeronautics and Space Administration?s manned and unmanned space
operations and experiments.

To support these activities, the missile range at Kwajalein possesses a
unique collection of technical equipment. The core of the range?s
instrumentation is the Keirnan Reentry Measurements Site, a sophisticated
radar suite. The radar sensors are located on the island of Roi- Namur. Data
are collected across the radar frequency spectrum with a high degree of
accuracy and are analyzed by the Massachusetts Institute of Technology?s

Lincoln Laboratory and other facilities. The Kwajalein range also has
ground- based optics such as tracking instruments, ballistic cameras, and
documentary photography systems. In addition, twelve antennas are used to
receive, record, and process flight data. Furthermore, the range has a deep-
water acoustic sensor array located in the ocean area off the east reef of
Kwajalein Atoll that can determine the precise location of reentry

vehicle impacts. A submersible vehicle is also available to locate debris
within the Kwajalein lagoon. Finally, the range has a launch site on Meck
Island, with additional launch facilities on other RMI islands as well as
Wake Island. U. S. Government

The U. S. military presence on Kwajalein Atoll has led to tension with the
Provides Funding and

Marshallese population on the atoll over the years. For example, there were
four periods of protests by Marshallese landowners of the Kwajalein Atoll
Employment prior to enactment of the Compact. 36 According to an SMDC
official, these Opportunities, but

protests occurred because landowners were concerned that (1) the U. S.
government was not paying enough for its use of various Kwajalein Atoll
Local Kwajalein Issues islands 37 and (2) following enactment of the
Compact, all payments to Have Posed Difficulties landowners and future
negotiations regarding use of the atoll would be conducted on a government-
to- government basis, bypassing any direct dealings with landowners. During
the protests, the landowners occupied

Kwajalein Atoll islands, including Kwajalein and Roi- Namur. While no 36 The
four protests covered the following periods: (1) September- November 1978,
(2) JulyAugust 1979, (3) June- October 1982, and (4) November- May 1986. 37
A 1982 agreement between the Marshallese government and Kwajalein landowners
and the Military Use and Operating Rights Agreement determine Kwajalein-
related payments.

For fiscal year 2000, the RMI government transferred almost $13 million in
U. S. government funding to Kwajalein landowners and the Kwajalein Atoll
Development Authority, according to the Department of the Interior (the
agency responsible for disbursing and monitoring U. S. funding to the RMI).

major missile tests were delayed or cancelled as a result of the protests,
two test missions scheduled for August 1979 were cancelled. 38 Protests
during the 1980s reportedly disrupted the community on Kwajalein and put

a strain on security forces. Furthermore, the range is a top employer in the
Marshall Islands, with about 1, 400 Marshallese employed at the facility and
earning a higher wage than is reportedly available elsewhere in the country.
These Marshallese

who are employed at the range are generally not permitted to live on
Kwajalein Island and so live on the small nearby island of Ebeye. 39 In
addition, in 1965 the U. S. Army relocated Marshallese citizens living on
mid- atoll islands to Ebeye so that ballistic missile testing could be
conducted more safely within the mid- atoll area. Ebeye is severely
overcrowded, with more than 9,300 people living on about 90 acres of land

(see fig. 9). Efforts to improve the quality of life on the island, such as
the provision of electricity and potable water, have experienced failures in
recent years. Conditions on the island have reportedly deteriorated over the
last decade, though numerous efforts are now being planned or are

under way to improve the quality of life on Ebeye. 38 These tests involved
the High Altitude Density Measurement Program and the Environmental Rocket
Sounding System. According to an U. S. Army Space and Missile Defense
Command official, these were not considered major missions, and no
information was available regarding whether these tests were rescheduled.
This official also said that the tests were cancelled because a landowner
refused to allow the Marshallese protestors on the island of Omelek to take
shelter for the rocket launches. 39 Marshallese who work on the Kwajalein
Atoll island of Roi- Namur live on the island of Enniburr. This is a much
smaller number of Marshallese workers (150) compared to the number of
workers at the Kwajalein Atoll island of Kwajalein (about 1,400).

Figure 9: Ebeye Housing of Relocated Mid- Atoll Marshallese Citizens

Source: House Committee on International Relations, staff photo.

DOD Has Conducted In 1979, DOD conducted an analysis of possible locations
for relocating

Few Reviews of U. S. facilities on Kwajalein Atoll. Key criteria used to
determine the best alternative site were political supportability, land
availability, and Possible Alternatives population distribution. DOD
determined that the Northern Mariana to Kwajalein

Islands were the best alternative to Kwajalein Atoll for establishing a
major DOD test range, with an estimated investment cost of over $2 billion
(in 2000 dollars). Other alternative sites were located in the state of
Chuuk in the FSM and in Kiribati, located southeast of the RMI. DOD
officials now view this study as outdated. DOD has not conducted a detailed
study

examining potential alternative sites for all the activities undertaken at
that

U. S. facility on Kwajalein since 1979. However, the DOD agency responsible
for missile defense testing, the Ballistic Missile Defense Organization, has
conducted some analysis of alternatives to Kwajalein and has determined that
currently no acceptable alternative site exists for

missile defense testing against ICBM class threats.

Use of Primary Compact- Related Defense

Appendi x V I Provisions The United States acquired four primary defense and
security rights and responsibilities as a result the Compact of Free
Association and its related agreements: (1) the obligation to defend the FSM
and the RMI against attack; (2) the right to deny access to foreign
militaries and foreign military

activity (strategic denial); (3) the right to prevent the FSM and the RMI
governments from acting in a way that is incompatible with U. S. authority
and responsibility for defense and security matters (defense veto); and (4)
the right to use certain land (i. e., Kwajalein Atoll in the RMI) for
military purposes. Figures 10 through 13 describe the legal provisions in
which

these rights and responsibilities are contained, the extent that each
provision has been used since the Compact was enacted in 1986, and what
happens to each provision if agreement is not reached on its renewal

before the negotiating period ends in 2003.

Figure 10: The Compact?s ?Obligation to Defend? Provision

Source: GAO.

Figure 11: The Compact?s ?Strategic Denial? Provision

a According to the Department of State, the United States did not specify
which Compact provision( s) were the basis for its objection. b The three
ships made a similar visit to Palau in February 2001 despite repeated
objections from the

United States. According to the Department of State, in its objections, the
United States referred to the provisions of Title Three, Article One of the
Compact of Free Association with Palau (which includes the provisions
granting strategic denial and a defense veto) and specifically cited the
defense veto provision.

Source: GAO.

Figure 12: The Compact?s ?Defense Veto? Provision

a According to the Department of State, the United States did not specify
which Compact provision( s) were the basis for its objection. b The three
ships made a similar visit to Palau in February 2001 despite repeated
objections from the

United States. According to the Department of State, in its objections the
United States referred to the provisions of Title Three, Article One of the
Compact of Free Association with Palau (which includes the provisions
granting strategic denial and a defense veto) and specifically cited the
defense veto provision.

Source: GAO.

Figure 13: The Military Use and Operating Rights Agreements? ?Military Use?
Provisions

Source: GAO.

Measuring the Level of FSM and RMI Support

Appendi x V

for the U. S. Positions in the United Nations While the support of the FSM
and the RMI for U. S. positions in the United Nations is not directly
related to U. S. defense and security interests, U. S. officials cite this
support and support in other international fora 40 as a reason for why these
islands are strategically important to the United States. The primary source
that officials refer to in these statements is the Department of State?s
annual report on Voting Practices in the United Nations. 41 This report,
which has used a consistent methodology to compare the votes cast by
countries in the U. N. General Assembly with U. S.

votes, has been incorrectly interpreted and used to overstate the level of
support provided by the FSM and the RMI. 42 By excluding instances where
these countries were absent or abstained in their interpretation of this
report, 43 officials have overlooked the report?s cautionary message in its
methodology section. The report indicates that abstentions and absences are
often difficult to interpret, but they make a mathematical difference,
sometimes major, in the voting coincidence results. The case of Palau, a
country near the FSM and the RMI, illustrates this point. An official in the
Bureau of International Organizations at the Department of State
characterized Palau as the number- two friend of the United States in the

40 The FSM cites its support of U. S. positions to refrain from signing on
to the U. N. Convention on Land Mines and entering into the South Pacific
Nuclear Free Zone as examples of its support of the U. S. defense and
security objectives. These officials also stated that the U. S. ability to
transit nuclear- powered naval vessels through the FSM?s

territorial waters contributed to the defense of the islands; this activity
would be prohibited if the FSM were incorporated into the South Pacific
Nuclear Free Zone.

41 The Foreign Operations, Export Financing, and Related Programs
Appropriations Act of 1990 required the Department of State to submit this
report on an annual basis and follow the format used in its 1988 Report to
Congress on Voting Practices in the United Nations.

42 In 1993, the Department of State began including a second measure of
voting coincidence that took into account consensus voting in its reports. A
resolution is adopted by consensus in the U. N. General Assembly if no
country calls for a vote after the resolution is presented

by the President for passage. Records of which countries are in attendance
when consensus is reached are not kept; therefore, including resolutions
adopted by consensus in voting coincidence requires using a proxy measure to
estimate attendance. This methodology increases the percentage of the time a
country agrees with the United States in the U. N. General Assembly.

43 Abstaining from a vote requires a country to take an affirmative action,
akin to casting a vote. Department of States officials stated that
abstentions can be difficult to interpret and the reasons for abstaining
vary. A country may not want to express an opinion on a contentious issue or
contradict an ally, or a country may not have an official position on an
issue or the representative at the United Nations may have not received
instructions on how to vote. In certain circumstances, the voting practices
report has favorably interpreted abstentions because, combined with
dissents, they prevented a resolution from receiving an absolute majority
despite passing.

General Assembly because of its 100- percent voting coincidence with the
United States in 2000. However, this percentage is based on just 11
identical votes cast out of a possible 65 votes (about 17 percent) because
Palau?s 2 abstentions and 52 absences are not included in the voting
coincidence percentage. Table 1 in our letter shows these differences for
the FSM and

the RMI. The FSM and the RMI have also gained visibility by supporting the
United States on important issues in the General Assembly. Each year the
Department of State report highlights about 13 votes (or 18 percent of total
General Assembly votes) on issues the United States considers important,
such as arms control, Middle East issues, and human rights. 44 On some of
these issues, the United States is one of only a few dissenters, making FSM

or RMI support highly visible. However, officials from the Department of
State and the FSM concede that this support has more symbolic significance
than actual significance given the overwhelming margins on

these votes. For instance, during the 2000 General Assembly, the FSM joined
the United States and Israel as the only dissenters on a resolution
concerning the risk of nuclear proliferation in the Middle East (the RMI was
one of only 8 countries who abstained), and the RMI joined the United

States and Israel as the only dissenters on a resolution critical of the U.
S. embargo of Cuba (the FSM was absent). 45 The vote totals for these
resolutions were 157- 3- 8 (for- against- abstain) and 167- 3- 4
respectively. 46 Table 2 contains information on the number of votes the FSM
and the RMI have cast that are either identical to or the opposite of United
States votes

44 The Bureau of International Affairs at the Department of State is
responsible for identifying these important votes. 45 The FSM points to its
support of U. S. positions on Cuba as recognition of its special
relationship with the United States. Officials from the FSM Compact
negotiating team stated that the FSM comes under extreme pressure from other
members of the G- 77, a U. N. group made up of developing countries, to
abandon its support of the United States on Cuban

issues. However, on Middle East issues, these officials said that FSM
support for Israel is due more to the fact that Israel was the first country
to establish diplomatic relations with the FSM than deference to the United
States. The desk officer for the FSM and the RMI at the Department of State
also attributed support for Israel in the General Assembly to economic
assistance provided by Israel in the past to these countries.

46 Vote margins on General Assembly resolutions typically are large adding
to the argument that FSM and RMI support is largely symbolic. During the 10-
year period since the FSM and the RMI became members of the United Nations,
eight votes was the smallest margin by which a resolution was adopted.

on important issues, as well the number of times they have abstained or been
absent, since their induction into the United Nations in 1991.

Table 2: FSM and RMI Support for U. S. Positions on Important Issues in the
U. N. General Assembly, 1991- 2000 FSM 1991 1992 1993 1994 1995 1996 1997
1998 1999 2000

Identical votes 4 8 10 10 8 7 9 6 7 9 Opposite v otes 12 10210 0 00
Abstentions 322 55 3 3321 Absences 440 00 1 1141

RMI 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Identical votes 8 12 10 10 8 8 9 5 5 8 Opposite v otes 12 11312 0 21
Abstentions 222 43 3 1222 Absences 100 01 0 1340

Source: Department of State Voting Practices in the United Nations, 1991-
2000.

While the level of support by the FSM and the RMI for U. S. positions in the
U. N. General Assembly has been overstated, these countries have, in recent
years, achieved a level of support that resembles the average North Atlantic
Treaty Organization (NATO) country (see figs. 14 through 16). 47 A closer
look at the voting profiles of the FSM, the RMI, and NATO also reveals the

importance of acknowledging abstentions and absences in measures of voting
coincidence. For example, in 2000, the FSM cast 35 votes (out of 65)
identical to those cast by the United States, while the RMI and the average

NATO country each cast 34 identical votes. However, due to the exclusion of
abstentions and absences from its calculations, the Department of State
reported voting coincidence percentages for the FSM, the RMI, and the 47
However, the level of support provided by the FSM and the RMI does not rise
to the level of the strongest U. S. allies in the United Nations- Israel and
the United Kingdom. For

instance, in 2000, Israel voted the same way as the United States on about
77 percent of all General Assembly votes and the United Kingdom did so over
58 percent of the time. In contrast, the FSM and the RMI voted with the
United States about 54 percent and 52 percent, respectively.

average NATO country that ranged from about 100 percent for the FSM to 74
percent for the RMI to 63 percent for NATO.

Figure 14: FSM Voting Coincidence with the United States in the U. N.
General Assembly, 1991- 2000

Source: GAO analysis of the Department of State?s Voting Practices in the
United Nations, 1991- 2000.

Figure 15: RMI Voting Coincidence with the United States in the U. N.
General Assembly, 1991- 2000

Source: GAO Analysis of the Department of State?s Voting Practices in the
United Nations, 1991- 2000.

Figure 16: NATO Voting Coincidence with the United States in the U. N.
General Assembly, 1991- 2000

Source: GAO Analysis of the Department of State?s Voting Practices in the
United Nations, 1991- 2000.

Appendi x VI

Comments from the Department of Defense Note: GAO comments supplementing
those in the report text appear at the end of this appendix.

See comment 1. See comment 2.

GAO Comments The following are GAO?s comments on the letter from DOD dated
December 7, 2001.

1. This report does not determine whether the right of strategic denial is
essential. However, we did find that (1) strategic denial has never been
invoked (see p. 13); (2) there is a lack of consensus among U. S.
policymakers concerning its value in the post- Cold War era (see p. 17); and
(3) the scope and effect of this right have been overstated in public
statements by officials from the United States, the FSM, and the RMI

(see p. 18). 2. The cited DOD study reached a different conclusion on how
the

strategic importance of Micronesia has changed over time than the one
reported in DOD?s letter. According to unclassified portions of this 1999
assessment, the strategic importance of Micronesia to the defense

of American national interests has clearly lessened in the 50 years since
World War II. The study explained that this is the result of a number of
factors, including the advent of intercontinental, nuclear- armed missiles;
refuelable, long- range aircraft; and ballistic missile- carrying
submarines, as well as increases in the operating range and at- sea
endurance of America?s surface naval forces. Finally, the study stated

that the end of the Cold War appears to have removed the only current blue-
water navy and long- range aviation threat to U. S. forces in the Pacific.
This is consistent with our conclusion about the FSM and the RMI?s current
lack of broad strategic importance to the United States (see pp. 16- 17).

Comments from the Government of the

Appendi x VII

Federated States of Micronesia Note: GAO comments supplementing those in the
report text appear at the end of this appendix.

See comment 1. See comment 2.

See comment 3.

See comment 4. See comment 5.

See comment 6.

See comment 7.

See comment 1. See comment 8. See comment 9.

See comment 10. See comment 11.

See comment 12. See comment 13.

See comment 14.

See comment 15. See comment 16.

GAO Comments The following are GAO?s comments on the letter from the
government of the FSM dated November 19, 2001.

1. We consulted with DOD on numerous occasions following September 11, 2001,
to ensure that the conclusions reached in this report still reflected
current U. S. interests in the Asia Pacific region. In addition,

on pp. 16- 17 we discuss the Quadrennial Defense Review, which, when it was
released on September 30, set out a new strategic vision for defense
planning purposes. Finally, with regard to the future Asia Pacific security
environment, DOD did not, in response to our request, provide us with
specific information on how the Compact?s defense provisions might aid the
United States in its response to potential threats such as conflict on the
Korean Peninsula, territorial disputes in the South China Sea and Northeast
Asia, and separatism in Indonesia.

2. We acknowledge that such statements have and continue to be made by
senior U. S. policymakers. We examined these statements and gave officials
at both DOD and the Department of State the opportunity to provide specific
examples of the FSM?s strategic importance in the current security
environment. In response, we received some general information, such as the
views of several DOD officials concerning the utility of strategic denial,
which are noted on p. 19. However, this information did not change the
conclusion we reached on pp. 16- 17

about the FSM currently lacking broad strategic importance for the United
States. DOD reached a similar conclusion in its 1999 assessment of U. S.
interests in the Freely Associated States (FAS) - the FSM, the RMI, and
Palau. See p. 52, comment 2 for additional information on DOD?s conclusion.

3. We maintain that the effect of strategic denial, the importance of sea
lines of communication in the region, and the degree of support received
from the FSM for U. S. positions in the United Nations have been overstated.
See p. 63, comments 9- 12 and 14, and p. 64, comment 16 for more detailed
information.

4. Our report concludes that continued U. S. access to facilities on the
Kwajalein Atoll in the RMI is both the key and compelling U. S. defense
interest in the FSM and the RMI. In this context, ?key? means important,
fundamental. Kwajalein is the most important U. S. defense

interest in the two countries. In this context, ?compelling? means
convincing. Among the U. S. interests commonly cited in the FSM and

the RMI, including Kwajalein, strategic denial, sea lines of communication,
and U. N. support, we found the evidence supporting Kwajalein?s importance
most convincing. 5. See comment 2. We repeatedly sought to obtain the
factual and detailed

underpinnings that support Dr. Campbell and Mr. Smith?s statements, but DOD
did not provide this information.

6. See comment 1. The focus of this report is on current U. S. defense
interests in the FSM and the RMI. However, we examined the potential role of
the FSM and the RMI with regard to the Quadrennial Defense Review on pp. 16-
17 and noted DOD?s views that the FSM and the RMI may not be included in DOD
plans to increase the U. S. presence in the Western Pacific.

7. The official U. S. Pacific Command position on the strategic importance
of the FSM is classified. This information, as well as classified details of
the 1999 DOD Assessment of U. S. Interests in the FAS, was presented to the
requesters of this report in June 2001. Further, the views from the U. S.
Pacific Command officials, which are included in our report, were collected
from individuals specifically designated by the Command to respond to our
questions.

8. The U. S. Pacific Command has told us that the United States has access
to airfields throughout the FAS. According to the Air Mobility Operations
Center within the Pacific Command Air Force Operations Center, the U. S. Air
Force (USAF) does not use Yap and Chuuk for refueling as a matter of routine
operations. As a rule, when USAF

fighters transit the Pacific Command?s Area of Responsibility they have
tanker escort, which means they do not need to refuel on the ground. The Air
Mobility Operations Center does not keep track of fighter refueling and
cannot verify whether any USAF fighters have refueled at Yap or Chuuk.
However, a Pacific Command representative stated that it is quite possible
that the Marines or Navy could have dropped in for fuel, but there is no way
to provide an accounting of how many times and for what reasons. He stated
that there have been literally hundreds

of flights transiting the Pacific Command?s Area of Responsibility in
support of Operation Enduring Freedom. U. S. pilots are given a great deal
of latitude; and, given countless possible scenarios, some could have
dropped into the FSM to refuel. Finally, he stated that Palau and Guam have
also been used recently for refueling purposes, with Guam used more often
than small airfields when it is convenient. However,

carrier- based aircraft transiting the Pacific Command?s Area of
Responsibility might find a more direct route by flying through the FSM or
the RMI rather than Guam. 9. This report does not conclude that the value of
strategic denial is overrated. However, we did find that (1) strategic
denial has never been

invoked (see p. 13); (2) there is a lack of consensus among U. S.
policymakers concerning its value in the post- Cold War era (see p. 17); and
(3) the scope and effect of this right have been overstated in public
statements by officials from the United States, the FSM, and the RMI

(see p. 18). Finally, with regard to the effective area of strategic denial,
we acknowledge both the right to deny land access and the potential effect
of this denial on the ability of other countries to conduct longterm naval
operations (p. 19).

10. See p. 21, footnote 24 for a discussion of U. S. trade flows. Our
analysis illustrates that most U. S. Pacific trade passes well north of the
FSM and the RMI. 11. Of note, the examples offered here ignore the fact that
strategic denial would prevent the use of the FSM by a third- party military
to threaten

Guam or sea lines. Also, in response to our questions on how U. S. interests
would be affected if a third- party military had a presence in the FSM or
the RMI, DOD focused exclusively on potential surveillance

activities, not threats to Guam or shipping. 12. We have carefully examined
these route charts and determined that

they support our finding that the major sea lines of communication between
the United States and Guam as well as key trading partners in Asia run north
of the FSM and the RMI. In addition, we have amended

footnote 23 on p. 21, to note that there are sea lines running between
Australia and Japan that transit the FSM. Finally, these route charts appear
to show that major sea lines between the United States and

Australia lie close to 2000 kilometers away from the nearest point in the
FSM.

13. We provided a classified briefing to our requesters in June 2001. This
briefing included a discussion of contingency war plans and operational
scenarios, as well as other information gathered from U. S. defense and
intelligence agencies.

14. These specific instances of FSM support for U. S. positions were
included in the draft provided to the FSM for comment (see app. V, p. 45,
footnote 40, and p. 46, footnote 45). 15. Information on FSM citizens
serving in the U. S. armed forces was included in the draft provided to the
FSM for comment (see app. II,

p. 31). 16. This report recognizes that absences and abstentions are an
issue for

all the coincidence numbers reported in the Department of State report in p.
23, footnote 25. Our methodology, which accounts for these absences and
abstentions, was described as fair and valid by a former Department of State
official who prepared the U. N. voting report for the past 12 years. We also
compare the FSM favorably with U. N. support received from NATO on p. 23
(see also app. III, pp. 47- 48). Our analysis of NATO voting on pp. 47, 48,
and 50 applies the same

methodology that we used to calculate the voting coincidences of the FSM and
the RMI. Finally, we discuss FSM support on issues identified as important
by the Department of State on pp 46- 47. However, we note that lopsided vote
margins in the U. N. General Assembly means this support is largely
symbolic.

Comments from the Government of the

Appendi x VI II

Republic of the Marshall Islands Note: GAO comments supplementing those in
the report text appear at the end of this appendix.

See comment 1. See comment 2.

See comment 3. See comment 3.

See comment 4.

See comment 4. See comment 5.

See comment 6. See comment 7.

See comment 8. See comment 9.

GAO Comments The following are GAO?s comments on the letter from the
government of the RMI dated November 19, 2001.

1. This report mentions two incidents where the defense veto, though not
formally invoked, may have had some relevance. On p. 13 in footnote 14, we
note that the RMI government once considered a plan to store third country
nuclear waste in the RMI. The threat of the United States possibly invoking
the defense veto, along with a change in RMI government leadership, may have
been responsible for the RMI government?s final decision against providing
storage. Furthermore, on p. 13 we noted initial U. S. government objections
to a 2001 RMI port call by Taiwanese ships. While the U. S. government never
mentioned

the Compact?s defense veto provision during this incident, the RMI did cite
the provision as not being appropriate in this particular instance. Finally,
our objective was to determine which of the key provisions had been formally
invoked, and both DOD and the Department of State have told us the defense
veto remains unused. This report also does not attempt to assign value to
the defense veto provision based on its lack of usage.

2. This report chose not to speculate on the role strategic denial may have
played in deterring third country militaries from seeking to use the RMI,
because data are not available to determine whether there are any third
countries that would have had an interest in engaging in activities in the
RMI in the absence of this right. We maintain that the evidence shows

that the scope and effect of strategic denial have been overstated in public
statements by officials from the United States, the FSM, and the RMI (see p.
18). 3. This report does not conclude that hostile actors or foreign powers
will never again attempt to transit RMI waters or develop a presence in the

RMI. Rather we note on p. 13 in footnote 13 that portions of a 1999 DOD
assessment, provided to the RMI, stated that no outside threat to the FSM
and the RMI is likely to emerge over the next 10 to 20 years, and there are
no compelling security interests on the part of any Asian countries that
would manifest themselves in any threat to the FSM and the RMI. This
assessment also stated that no Asian country will have the military reach to
pose a credible threat or domineering presence in the foreseeable future.

4. This report does acknowledge the importance of nuclear and missile
defense testing in the U. S.- RMI relationship. Appendix III discusses U. S.
activities in the Marshall Islands over the past 50 years. This report also
notes that Kwajalein Atoll is cited by DOD as an ?important and unique
national asset that would be difficult and expensive to replace,? thus
giving prominence to the RMI location where missile and missile defense
testing occurs (see pp. 3 and 14). Reviewing U. S. nuclear testing
activities in the Marshall Islands was outside the scope of our review,
though the issue is mentioned in appendix III. For a discussion of the
amount the United States has spent to address nuclear testing- related
issues in the Marshall Islands, see our report Foreign Relations: Better
Accountability Needed Over U. S. Assistance to Micronesia and the Marshall
Islands (GAO/ RCED- 00- 67, May 31, 2000).

5. This report states that the negotiation of expiring defense and economic
Compact provisions provides the United States with the opportunity to
reexamine its defense and security interests in the RMI and the FSM. We
believe that this is a reasonable and prudent course of action and one that
in no way suggests that the United States should

unilaterally choose to end or alter commitments that require mutual
termination by all parties involved. Of note, in a 1996 testimony, a
Department of State official stated that while U. S. defense arrangements
with the Freely Associated States (FAS) - the FSM, the RMI, and Palau - have
contributed measurably to the security of the

United States and the FAS, it is necessary to review the entire range of
Compact security provisions in light of new global conditions and stringent
fiscal realities as we near the end of the Compact period.

6. The U. S. obligation to defend the RMI and the FSM is mentioned in this
report on p. 7 in order to demonstrate the unique relationship between the
United States and the two Pacific Island nations, and is never referred to
as a burden. This report also states on p. 8 that strategic denial, the
defense veto, and access to RMI land are key provisions of the Compact that
provide rights to the U. S. government. 7. We agree that the factors
discussed by the RMI government over the

next three pages- the relationship that developed between the United States
and the RMI as a result of U. S. administration of the Marshall Islands
under the U. N. trust, and U. S. nuclear testing during the 1940s and 1950s-
played a key role in establishing an important framework

for Compact negotiations. However, we maintain, after carefully reviewing
the Compact?s legislative history, that the Compact?s specific security and
defense provisions reflected Cold War concerns that

existed at the time of the negotiations. We also note that the RMI
government did not disagree when we cited three goals of the Compact in a
September 2000 report that are also listed in this report: (1) securing
self- government for the RMI and the FSM, (2) assuring certain national
security rights for the RMI, the FSM, and the United States; and (3)
assisting the RMI and the FSM in their efforts to advance economic self-
sufficiency. Our earlier report also noted U. S. concerns about an expanded
Soviet Union military presence in the Pacific at the

time of Compact negotiations. In addition, a 1999 DOD assessment points out
that the Compact was negotiated during the Cold War era in a vastly
different politico- military and security environment, and a State

Department official testified at a 2000 congressional hearing that the
Compact was negotiated and enacted during the Cold War, when the Soviet
Union had a growing presence in the Pacific.

8. Pages 1 and 6 of this report state that the Compact consists of two
separate international agreements, one between the United States and the
RMI, the other between the United States and the FSM.

9. We have revised footnote 5 on p. 6 of the report to show direct Compact
funding provided to the RMI and the FSM separately for fiscal years 1986
through 1998. Further, on p. 2, footnote 1 and p. 6, footnote 5, we have
separated total estimated Compact assistance (direct funding as well as U.
S. programs and federal services) for the RMI from the total estimated
assistance provided to the FSM.

Appendi x IX

GAO Contacts and Staff Acknowledgments GAO Contacts Emil Friberg (202) 512-
8990 Leslie Holen (415) 904- 2277 Acknowledgments In addition to those named
above, Ron Schwenn, Mary Moutsos, Mark

Speight, and Rona H. Mendelsohn made key contributions to this report.

Related GAO Products

Compact of Free Association: Negotiations Should Address Aid Effectiveness
and Accountability and Migrants? Impact on U. S. Areas (GAO- 02- 270T, Dec.
6, 2001).

Foreign Relations: Migration From Micronesian Nations Has Had Significant
Impact on Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands
(GAO- 02- 40, Oct. 5, 2001).

Foreign Assistance: Lessons Learned From Donors? Experiences in the Pacific
Region (GAO- 01- 808, Aug. 17, 2001).

Foreign Assistance: U. S. Funds to Two Micronesian Nations Had Little Impact
on Economic Development (GAO/ NSIAD- 00- 216, Sept. 21, 2000).

Foreign Assistance: U. S. Funds to Two Micronesian Nations Had Little Impact
on Economic Development and Accountability Over Funds Was Limited (GAO/ T-
NSIAD/ RCED- 00- 227, June 28, 2000).

Foreign Relations: Better Accountability Needed Over U. S. Assistance to
Micronesia and the Marshall Islands (GAO/ RCED- 00- 67, May 31, 2000).

(320069)

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a

GAO United States General Accounting Office

Page i GAO- 02- 119 U. S. Defense Interests in Micronesia

Contents

Contents

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Contents

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Appendix I

Appendix I Objectives, Scope, and Methodology

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Appendix I Objectives, Scope, and Methodology

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Appendix II

Appendix II Expiring Defense- Related Provisions of the Compact

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Appendix III

Appendix III U. S. Military Operations and Facilities on Kwajalein Atoll,
Republic of the Marshall

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Appendix III U. S. Military Operations and Facilities on Kwajalein Atoll,
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Appendix III U. S. Military Operations and Facilities on Kwajalein Atoll,
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Appendix III U. S. Military Operations and Facilities on Kwajalein Atoll,
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Appendix III U. S. Military Operations and Facilities on Kwajalein Atoll,
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Appendix IV

Appendix IV Use of Primary Compact- Related Defense Provisions

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Appendix IV Use of Primary Compact- Related Defense Provisions

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Appendix V

Appendix V Measuring the Level of FSM and RMI Support for the U. S.
Positions in the United Nations

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Appendix V Measuring the Level of FSM and RMI Support for the U. S.
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Appendix V Measuring the Level of FSM and RMI Support for the U. S.
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Appendix V Measuring the Level of FSM and RMI Support for the U. S.
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Appendix V Measuring the Level of FSM and RMI Support for the U. S.
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Appendix VI

Appendix VI Comments from the Department of Defense

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Appendix VII

Appendix VII Comments from the Government of the Federated States of
Micronesia

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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VII Comments from the Government of the Federated States of
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Appendix VIII

Appendix VIII Comments from the Government of the Republic of the Marshall
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Appendix IX

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