Why the Compacts of Free Association Matter to Washington

In early June, virtual meetings were held between officials from the U.S. State Department and representatives of the Federated States of Micronesia, the Marshall Islands, and Palau. The meetings were part of the process for renegotiating the Compacts of Free Association that these countries have with the United States, which are currently due to expire at the end of 2023 (2024 for Palau). These treaties provide the Pacific Island nations with considerable economic support, but also give the U.S. strategic access to their surrounding waters and airspace. 

Efforts to reestablish these agreements well ahead of their expiry can be seen as a sign of the United States seeking to reaffirm its presence in the western Pacific. These three Pacific Island nations have gained increasing importance to the foreign policy and security interests of the United States in recent years as the region has become a more contested space. 

These compacts form a significant component of Washington’s military primacy in the Indo-Pacific. They allow for the United States to maintain lines of communication into both the East China and South China Seas and sea-lanes that account for most of the commodity trade that moves through Asia. Although the norms that the United States has guaranteed through this region are currently under threat from revisionist activity on the part of China, the U.S. presence is part of what prevents these norms from being completely undermined. 

The Micronesian region, with its strategic location between major maritime routes, its significant natural resources, and states with diplomatic recognition of Taiwan, has made it of considerable interest to China. The region forms the “second island chain” in Chinese strategic thinking, which extends from Japan down to the island of New Guinea. The U.S. presence in this chain prevents China from being able to project power out into the open seas, but also, most importantly, restricts China’s ability to absorb Taiwan by force.

These circumstances make weakening the islands’ relationship with the United States crucial to China’s strategic aims. Beijing is already offering incentives to the region in order to try and facilitate a break. Although it currently does not have diplomatic relations with either Palau or the Marshall Islands, China has recently been highly active in the Federated States of Micronesia (FSM). China has built personal residences for the president, vice president, the parliament’s speaker, and the country’s chief justice, as well as a new sports stadium. It has also provided funding for the maintenance of roads and airfields in outer islands, and donated ships in order to improve transport between islands. 

While Beijing is making these efforts to try and bring states throughout the Pacific into its orbit, the United States appears committed to maintaining the compacts as part of renewed engagement in the Pacific. While U.S President Donald Trump may not comprehend the importance of the country’s network of alliances and agreements, he does have an instinctive understanding of the rise of China and the challenge this creates for the United States. Understanding of the China challenge has found broad consensus within Washington, with an recognition that the Pacific is now the primary theater for the United States and its security engagements. This enables “the blob” to be able to add substance to Trump’s bluster, rather than be left sidelined by his daily whims.

As Benjamin Rimland and Patrick Buchan wrote for The Diplomat at the beginning of May, the new Pacific Deterrence Initiative (PDI) – which is to be included in the National Defense Authorization Act for Fiscal Year 2021 – “will lay the groundwork for the U.S. Pacific presence for decades to come.” This initiative will require a consolidation of the compacts of free association with the FSM, Marshall Islands, and Palau as one of the foundations on which U.S. activity in the Micronesian region is built (alongside the U.S. territory of Guam).

For the Micronesian countries, this enhanced regional engagement should strengthen their hands in the renegotiating of their compacts with the United States. It should give them enough leverage to have their concerns about the relationship taken seriously by Washington, and the benefits that the U.S. provides to be given greater clarity and commitment.

If the terms in which the United States engages in Micronesia are framed solely through the lens of strategic competition with China there is a risk that it will undermine the legitimacy needed to be able to facilitate these strategic goals. If these goals are to include the human flourishing that the wider free and open Indo-Pacific strategy promises, then the Micronesians themselves need to experience these benefits. 

This will require taking the concerns of Pacific Islands about climate change seriously, as well as the United States taking responsibility for the continued effects of their nuclear testing in the region. It’s the burden of small states that they require a sympathetic ear, while great powers do not. For the U.S. to maintain its legitimacy within Micronesia it will need to prove its ears are more receptive than those of its ideological challenger.