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To counter China’s growing influence, the US is reaching out to some of the Pacific’s smallest countries

U.S. Secretary of State Mike Pompeo, Federated States of Micronesia President David Panuelo, Marshall Islands President Hilda Heine and Palau's Vice President Raynold Oilouch hold a news conference after their meetings in Kolonia, Federated States of Micronesia August 5, 2019. REUTERS/Jonathan ErnstReuters

  • The US and its partners have sought to counter China's rising influence around the world.
  • In the Asia-Pacific, Washington has turned its attention to some of the smallest countries in the region, which are also being courted by Beijing.
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Earlier this month, Mike Pompeo became the first American secretary of state to visit the Federated States of Micronesia, where he announced that Washington had begun negotiations to renew important security pacts that it maintains with several Pacific island nations.

These agreements, known as Compacts of Free Association, grant the US exclusive military access to the land, air and sea routes of Micronesia, as well as Palau and the Marshall Islands. China has recently tried to deepen its economic and diplomatic ties with these countries, which together are known as the Freely Associated States.

In an email interview, Michael S. Chase and Derek Grossman of the RAND Corporation analyze the importance of these countries for US strategy in the Asia-Pacific and the rationale for China's engagement with them.

World Politics Review: What is the geostrategic significance of the Compacts of Free Association for the United States?

Cruickshanks/Oceania ISO 3166 via Wikimedia Commons

Michael S. Chase and Derek Grossman: US-China competition for influence is increasingly extending to the Pacific islands, including the geostrategically vital region of the Freely Associated States, located in the North Pacific. Palau, the Federated States of Micronesia and the Marshall Islands together occupy an ocean area roughly the size of the continental United States.

The unique agreements governing US relations with these island nations, known as Compacts of Free Association, offer the US military exclusive and secure access to the land, sea, and air routes of this enormous region. This is particularly important because their location contains sea lines of communication linking US military forces in Hawaii to those deployed throughout the Pacific, as well as to allies and partners in the Asia-Pacific region. In return, the Freely Associated States receive economic assistance and a defense guarantee from the US, among other benefits.

History underscores that these island nations play a vital role in US defense strategy, as the Compacts of Free Association effectively deny access to potentially hostile actors in this strategically important part of Oceania. These advantages are very likely among the factors that have made the area particularly attractive to China. Beijing's engagement is part of a broader effort to increase its influence in the Pacific islands as a whole, and to further reduce the number of remaining diplomatic partners that Taiwan has. There are 17 countries around the world that recognize Taiwan rather than China, and six within the Pacific, including Palau and the Marshall Islands.

Beijing is also seeking to incorporate the Freely Associated States into President Xi Jinping's signature Belt and Road Initiative by boosting investment and economic assistance.

WPR: How has China deepened its ties with the Freely Associated States in recent years, and what are Beijing’s reasons for doing so?

REUTERS/Farah Master

Chase and Grossman: China has aimed to increase its influence primarily through strengthening its economic ties in recent years. For example, in Micronesia, the only member of the Freely Associated States that recognizes China rather than Taiwan, Beijing has engaged in numerous infrastructure development projects.

Tourism is another important instrument of Chinese leverage. China temporarily increased tourism to Palau from around 2011 until 2015, but the numbers dropped off sharply in 2017, probably as punishment for Palau's refusal to switch its diplomatic recognition from Taiwan to Beijing.

China may also be interested in gaining access to Rongelap Atoll, part of the Marshall Islands, as a means to keep tabs on the Ronald Reagan Missile Defense Test Site at the remote but strategically located Kwajalein Atoll.

Overall, China's motives in the North Pacific likely include a desire to drive a wedge between the Freely Associated States and Washington, a goal that could become especially important if US-China relations continue down their current confrontational path.

Even if tensions between the US and China ease, however, Beijing will still view the these island nations as relevant to the Belt and Road Initiative and to its efforts to pry away Taiwan's diplomatic partners. Although Beijing has primarily focused on diplomatic and economic engagement so far, at least one Chinese observer, Liang Jiarui of the Pacific Islands Research Center at Liaocheng University, has alluded to the possibility of a long-term military presence in the region.

Liang argues for the establishment of "strategic fulcrum ports" in the Pacific to secure Chinese maritime access. These ports could provide China's navy with supply points that would help narrow the gap in hard power between China and the United States.

WPR: How might China’s increasing influence in the Freely Associated States complicate US negotiations to extend the Compacts of Free Association? What can the US do to maintain favorable conditions for the compacts into the future?

NICOLAS ASFOURI/AFP/Getty Images

Chase and Grossman: Now more than at any time since gaining their independence, Palau, Micronesia and the Marshall Islands may feel compelled to search for alternative sources of revenue if the United States is unable to continue its financial support at sufficient levels.

China seems ready to step in and supply those funds, with an eye toward advancing its position in the region, as demonstrated by Beijing's recent donation of $2 million to Micronesia's trust fund. That gift came just ahead of Pompeo's trip to Micronesia earlier this month.

The US should thus turn its attention to renewing its crucial economic support arrangements for these island nations, which are set to expire at the end of fiscal year 2023 for Micronesia and the Marshall Islands and 2024 for Palau. Washington should also continue to conduct high-level diplomatic engagements, such as Pompeo's trip to Micronesia and the historic meeting between the three leaders of the Freely Associated States and President Donald Trump at the White House in May.

Such visits and meetings serve as an essential means of demonstrating the importance the US attaches to all three island nations in the context of its Indo-Pacific strategy.

At the same time, the US and its regional allies and partners, including Australia, Japan, New Zealand and Taiwan, will need to do more than just maintain appropriate levels of funding and conduct high-level meetings. They also will need to engage with other issues of importance to Micronesia, Palau and the Marshall Islands—including public health, economic development, natural disaster preparedness, climate change and fisheries management—to sustain this strong partnership.

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