Pacific Islands Renegotiate U.S. Payments

Fellows Fall 1999

By Colin Woodard

June 08, 2009

YAP, FEDERATED STATES OF MICRONESIA, Fall 1999 -- Washington's hands-off approach to the grant payments it has sent to the Marshall Islands and Federated States of Micronesia (FSM) over the past 15 years is widely regarded as a failure. But those grant payments to the former US wards will expire in 2001. Sources in all three countries say the United States has a chance to set things right as it negotiates the provisions.

"The US is willing to help us, but there should be more restrictions on how we spend the money," says Vincent Figir, governor of Yap State, which is generally considered the most effective government in the region. "There wasn't enough accountability or strings attached [to the US money], so far too many people decided they would benefit personally," Mr. Figir says.

US negotiator Allen Stayman has been sending a message in a similar vein. "We want to know what happened over the last 13 years before we make any decisions about the future," he says. Key congressional leaders have asked the Government Accounting Agency (GAO) to go to the region and assess how the US grants were spent.

Until the GAO gets answers, Mr. Stayman says it's "premature to be talking about future aid."

Sen. Peter Christian, the FSM's negotiator, says his country welcomes the opportunity to explain itself. "We spent the first 10 years of the Compact just organizing a system of government," he says. "Now we have the time, experience, and institutions to focus on economic development.... I think we're on the right track."

Asterio Takesy, former FSM foreign minister, says the US should place future money in a trust fund, rather than annual payments. "Not just the FSM, but any child that is trying to establish itself should be given room to make mistakes so that it can grow from them," he says. "If you keep spoon-feeding us we will never become self-reliant."

Marshall Islands officials have taken a tougher stance, arguing it's none of Washington's business what they do with the money. They say it's not foreign aid because the US gets something in return: extensive military rights and access.

The Marshall Islands' more antagonistic stance reflects a strong bargaining position. Unlike the FSM, the Marshalls have something the US wants: continued base rights at Kwajalein Atoll. The $ 4 billion Kwajalein Missile Range is currently the only place in the world where the US can test components of the newly revived National Missile Defense program.

A recent change in governments isn't expected to change the Marshall Islands' negotiating strategy, but may soften the rhetoric. Negotiations with both countries are scheduled to continue later this winter.

The Republic of Palau, another part of America's vast Pacific Trust Territory, became independent in 1994. Its grant payments won't expire for another eight years. The remainder of the Trust Territory - the Marianas Islands - chose to become a US commonwealth, similar in status to Puerto Rico.