With the U.S. fiscal year approaching an end and no new funding plan in place, multiple tiny island nations in the Indo-Pacific risk being cut off from Washington’s economic support just as China is trying to woo them away from their military alliance with the U.S.
Palau, the Federated States of Micronesia and the Marshall Islands, known collectively as the Freely Associated States, risk falling between several U.S. policy cracks in coming weeks and months despite bipartisan support in Congress to renew the Compacts of Free Association (COFA) that govern their relations with the U.S. The worry is that the longer the uncertainly lasts, the more attracted the islands’ populations will be to approaches from China.
Micronesia and the Marshall Islands will see their economic aid expire at the end of the fiscal year on Sept. 30 if Congress doesn’t enact a continuing resolution. Even if lawmakers can agree on a continuing resolution, there’s no certainty that they would include the aid, opting instead to wait for full appropriations bills or a package that also reauthorizes the nations’ updated COFA.
The funding uncertainty overlaps with unfinished negotiations with the Marshall Islands on its new pact, leaving Congress to make decisions about spending for the three nations without seeing the revised pact. Palau’s funding doesn’t expire until the end of fiscal 2024, but its future is closely linked with those of the other two countries.
“We’re waiting to get the final negotiation from RMI [Republic of the Marshall Islands],” House Natural Resources Chairman Bruce Westerman, R-Ark., said in an interview. “I see we’ve got kind of two hurdles to cross. The first one is what do we do with a CR, if there’s a CR, or what do we do in an appropriations package to bridge the gap until we get the COFAs.”
Westerman’s committee has jurisdiction over COFA, and he led a congressional delegation to the three countries last month.
The Biden administration signed memorandums of understanding with Palau, Micronesia and the Marshall Islands in January to renew the COFA for another two decades. Under the compacts, the U.S. sends economic assistance to the countries, whose populations combined are less than 200,000, and provides their citizens with other benefits in exchange for a U.S. military presence on their territories.
Palau and Micronesia finalized the terms of their respective compacts with the U.S. in May, but the State Department is still wrangling over final technical details with the Marshall Islands. Westerman said that U.S. Postal Service and Federal Aviation Administration issues were among the outstanding issues.
The White House’s fiscal 2024 budget request included a proposal for over $7.1 billion in mandatory spending over the next 20 years to implement the revised COFA. Lawmakers ultimately are expected to appropriate implementing funds in the same legislative package that provides authorization, as they did at the last renewal in 2003, according to lawmakers and staffers working on the issue.