US Failure to Back Funding Opens Door to China: Pacific Islands

The inability of the US Congress to pass funding bills has set back approval of key funding, not just for Ukraine, but a range of Pacific Island nations.

Leaders of Pacific Island states allied with the US have become increasingly anxious about the US budget impasse that has delayed approval of vital new funding packages – and warned that China is actively seeking to shift their allegiances.

The Federated States of Micronesia (FSM), the Marshall Islands (RMI) and Palau agreed to new 20-year funding programmes with the United States last year under which Washington provides economic assistance, while gaining exclusive military access to strategic swaths of the Pacific.

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But despite bipartisan support for the new programmes, known as Compacts of Free Association (COFA), the funding is yet to be approved by Congress months later – even though the additional amount currently needed is a relatively small $2.3bn.

Republican James Risch, of the Senate Foreign Relations Committee, led a 24-senator bipartisan group in sponsoring an amendment to include COFA funding in the contentious $95-billion wartime aid package for Ukraine, Israel and Taiwan which was passed by the Senate this week.

Congressional aides say they are still working to find other ways of approving the funding, including by possibly adding it to emergency spending bills in March, but add there is no guarantee of success

The presidents of the three COFA countries have written repeatedly to congressional leaders stressing the need to approve the legislation, according to copies of the letter seen by Reuters.

Delay ‘playing into the China’s hands’

In a joint letter to Senate leaders, dated 6 February, they said the legislation was needed to “strengthen our associations and enable them to endure.”

It warned that the delay had “generated uncertainty among our peoples” and “resulted in undesirable opportunities for economic exploitation by competitive political actors in the Pacific.”

“We … cannot overstate the importance to all of our nations of final approval by the US Congress,” they wrote.

A 9 February letter from Palau’s president, Surangel Whipps, was explicit in warning that any delay played into the hands of China and politicians in Palau who wanted to accept Chinese economic inducements to shift the island nation’s diplomatic recognition of Taiwan to Beijing.

Letters dated from 12 and 13 February from the Marshall Islands President Hilda Heine carried similar warnings.

Copies of the letters from the individual leaders were made available to Reuters, but their recipients were not disclosed.

“There have been ‘carrot and stick’ efforts from the PRC to shift our alliances – including discontinuing support for Taiwan,” Heine wrote, referring to the People’s Republic of China. “Further delay … threatens to undermine confidence in the US and to encourage some to agree to PRC enticements.”

Palau and Micronesia will sign updated security deals with the US over coming days. — There has been concern among Pacific island states about Beijing’s growing influence in the region, and offers of substantial aid packages for nations prepared to ‘swap sides’. Photo: Reuters.

Strategic allies

The letters stressed the strategic importance of the COFA states, noting that they cover an expanse of the Pacific larger than the 48 contiguous United States and that Palau has hosted US missiles and early warning radars, while the Marshall Islands has the main US intercontinental ballistic missile testing range.

The Biden administration has repeatedly urged Congress to approve the COFA funding and stressed that China is waiting to take advantage.

“We reiterate our call on Congress to pass Compacts-related legislation as soon as possible,” a state department spokesperson said when asked about the delays.

The White House’s senior director for east Asia, Mira Rapp-Hooper, told the US Institute of Peace thinktank on Thursday that getting the COFAs funded was “really second-to-none in terms of our strategic tasks that we have to take on this year.”