To watch a video of Senator Manchin’s opening remarks click here.

The watch a video of Senator Manchin’s questioning click here. 

Washington. DC – U.S. Senator Joe Manchin (D-WV), Ranking Member of the U.S. Senate Energy and Natural Resources Committee, raised concerns about China’s growing influence on the Freely Associated States during a hearing discussing U.S. interests in the Pacific Islands. 

“In Palau, Micronesia and the Marshall Islands – what’s the atmosphere there?,” Ranking Member Manchin asked. “If China comes in with more money are they going to have control over these areas? It’s so geopolitically important for us. I know they [China] are trying to expand fueling stations and agreements. I have a deep concern over what’s going on and the approach that China has systematically taken to be very much involved and in control in that part of the world.” 

“It is clear that China is moving aggressively to expand its influence within both Southeast Asia and the Pacific. I will say though to your current question, of is this a dollar and cents issue to the Pacific Island states that we share far, far more with the Pacific Island states than merely a transactional economic relationship. We share bedrock values of democracy. We share values related to military service. The questions that you had about whether the sacrifices of the WWII era generation have been forgotten by the new generation – I will say that is absolutely not the case. As I noted in my testimony, citizens of these three countries serve in the U.S. Armed Forces at a rate far in excess of most U.S. states. They’re very small populations so that service is reflected out in every town, every family,” said Ms. Sandra Oudkirk, Deputy Assistant Secretary for Australia, New Zealand, and Pacific Islands at Bureau of East Asian and Pacific Affairs, U.S. Department of State. 

“Mr. Gootnick explained that substantial portions of the budgets of the Associated States come from our financial assistance. In May, there was an article published in the Chinese government owned, China Daily, that said the Chinese government considers relations with Micronesia strategically important and went on to say that China stands ready to bring the relationship with Micronesia to a new level. China has a way of moving in areas where it seems like they are benevolent movements and then all of a sudden they have strings attached where they come in and take over. We’ve seen this in different parts of the world. Have there been any experiences in these three countries,” Ranking Member Manchin asked. 

“We have seen Chinese economic coercion most clearly in tourism in Palau. Tourism is a main stay of the economy there. The Chinese economic coercion - whether it is against Palau, Korea, Japan or the Philippines – tends to be a very blunt, very visible tool. It’s not subtle. It’s very direct, and it’s meant to be seen. Which is why it is so important that the United States remain involved, keep our economic relationship with these countries non-coercive, free, reciprocal and sovereign. I think it is so important that the United States start as part of our Indo-Pacific strategy stresses the importance of sovereignty, for big countries like the United States and for small countries like the Freely Associated States. That bedrock principle of sovereignty for us is really important when we speak to our foreign partners many of which are much smaller than us. Because that’s not necessarily how other economic actors treat those countries,” said Ms. Oudkirk. “The threat from China—the tantalizing option of sweetheart deals and concessionary lending—is not just present in the Freely Associated States contracts, but it is even more present in other Pacific Island countries.”

“We are quite aware of Chinese ambitions. That is why our national defense strategy is reorienting our entire enterprise toward strategic competition with near-peer competitors like China. It is a particular challenge in this region because, as my colleague said, these are small and somewhat vulnerable states. We find a lot of enthusiasm for the defense relationship in the Freely Associated States. It’s already been mentioned the rate at which they join the military. We also help patrol their EEZ’s (exclusive economic zone) through our naval cooperation and our coast guard. We do training and exercising related to humanitarian affairs, disaster relief. As part of that training we are building facilities and giving our service members the opportunity to have real world experience in engineering and that benefits the local population. But it’s a persistent challenge, and we can’t give space for the Chinese to crowd us out or change the nature of our relationship with the Freely Associated States. We’ve got to be persistent and nimble ourselves and bring in likeminded partners. We have a lot of interest from Australia, New Zealand and Japan to also be active in these states. It’s something we are quite aware of and work on daily,” said The Honorable Randall Schriver, Assistant Secretary of Defense for Indo-Pacific Security Affairs, U.S. Department of Defense. 

The Freely Associated States 

The three Freely Associated States are:

• The Republic of the Marshall Islands,
• The Federated States of Micronesia, and
• The Republic of Palau.

All three are independent, self-governing, sovereign nations, with full control over both internal and external affairs, except in the area of defense.

The Trust Territory of the Pacific Islands  

Stemming from World War II, the United Nations Trust Agreement gave the United States “full powers of administration, legislation, and jurisdiction,” but not sovereignty, over the Marshall, Caroline, and Northern Mariana Islands.  

In recognition of the strategic value the islands had played in Japan’s campaign of expansion during World War II, the Trust Agreement expressly authorized the United States to establish military bases and to station armed forces in the Territory in order to “ensure … the maintenance of international peace and security.”

The Trust Agreement also obligated the United States to foster the development of self-government; promote economic development; protect health and human rights; and promote education.  In the 1980s and 1990s, the Federated States of Micronesia, the Republic of Palua, and the Republic of the Marshall Islands became independent countries.

The Compacts of Free Association

The United States entered into “Compacts of Free Association” with the three new countries.  The compact with the Republic of the Marshall Islands and the Federated States of Micronesia went into effect in 1986, and the one with the Republic of Palau went into effect in 1994.

The compacts ended the United Nations trusteeship, gave the United States continued access and control of defense sites in the islands, and provided them financial assistance and access to various domestic programs. They also allowed citizens of the Freely Associated States to migrate to the United States.

The original compact with the Marshall Islands and Micronesia provided a combined total of $2.5 billion to the two countries over a 15-year period. 

This compact was amended in 2003 (resulting in separate compacts with the Marshall Islands and Micronesia).  

• The amended compacts extended financial assistance to the Marshall Islands and Micronesia for 20 years, through 2023.  
• The amended compacts provided an additional $3.6 billion, which was split—
• $1 billion for the Marshall Islands; and
• $2.1 billion for Micronesia.
• Financial assistance under the amended compacts takes the form of grants and trust fund contributions.
• Grants support education, health, and economic and infrastructure development, with highest priority given to education and health.
• Grant payments are designed to decrease over time as trust fund contributions increase.
• The trust funds are intended to provide a source of income when the grants end in 2023.
• The original compact with Palau provided $574 million over a 15-year period, through 2009.
• It was amended in 2010 (though Congress did not approve it until 2017) to provide Palau with an additional $216 million through 2024.
• Part of the payments to Palau are in the form of contributions to a trust fund ($70 million under the original compact and an additional $30 million under the amended compact).

The hearing also featured testimony from representatives from the Department of the Interior and the Government Accountability Office. To read the witnesses’ testimonies, click here.

To watch the hearing in full click here.

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