Opinion: Micronesia in the Headlines

Photo: Pacific Women in Politics

The rise of China and its role in the region is driving U.S. “re-engagement” with the island Pacific. In the case of those Micronesian states who have Compacts of Free Association with the United States (COFA), the narrative around the latest renewal of economic provisions of the Compacts has been charged by the “China threat” and island state recognition of Taiwan vs. the PRC. But in U.S. and international drive-by reporting on these Micronesian states—and breathless observations on geopolitical competition—the real dynamics of the region are overlooked. If your comfort zone is merely geopolitics and military strategy, then understanding micro-state agency, underdevelopment, and dependency will almost certainly be absent in your analysis. Paradoxically, a better understanding of the COFA states themselves might inform the dynamics of geopolitics and what is the early phase of an intensifying U.S. China competition. But first, one has to get past the headlines.

As the victor in WWII, the U.S. considered the Pacific (and the terrain) its domain. The COFA states are the penultimate expression of this desired American sphere of influence. Under COFA agreements, the U.S. has unfettered military access and rights of strategic denial over a broad area of the north central Pacific (as large as the continental US). The security agreements with COFA states are clear and in effect. The economic provisions of these agreements over the past 40 years, however, have done little to assist sustainable economic development in the region. The new COFA benefits provisions—for another two decades—are what has been the source of recent angst.

If Washington had once been able to accomplish its strategic goals in the COFA states (and the region writ large) on the cheap, those days are over. China is now establishing economic and diplomatic roots in the region. In the shadow of U.S.-led underdevelopment, China has been eager to facilitate development projects and promote diplomatic relations. The legacy of U.S. satisfaction with an arena of strategic interest being underdeveloped add to the reputational risk Washington now faces. It should not be a surprise that China seeks to opportunistically leverage American hubris. 


The recent headlines on the strategic risks posed by U.S. inaction on COFA state agreements include the voices of leaders of the Micronesian states themselves. Their approach was two-pronged. One plank calls on the U.S. to act expeditiously to prevent a fiscal cliff that COFA states face in basic governmental operations. The other, identifies the economic incentives that China might offer as the COFA economic packages were stuck in Washington and, by extension, the knock-on reputational damage from U.S. inaction. Both of these are rooted in the current reality of COFA state experiences. 

The ground truth is that COFA states remain caught in a “dependency trap” for basic government operations. This Washington -granted dollar-dependency has extended from the days of United Nations Trust Territory of the Pacific Island (TTPI) to the present. However, COFA states are also finding agency in the rising geopolitical competition. Significantly, both continuing COFA dependency and increasing COFA agency are the product of U.S. policies.  

It has been U.S. security interests that have singularly driven the U.S. view of the region since WWII. Sustainable economic development, if it were ever a serious objective for the United States, is an unfulfilled aspiration. In the geopolitical competition engendered by an ascendant China, economic development no longer must be discounted by COFA states in their dependency existence.

What outsiders to the region miss (and the near breathless headlines do not anticipate) is that passage of the COFA agreements in Washington is not going to change the long-established dependency trap. Economic development will not flow from these agreements. As the headlines betray, strategic denial and military access remains the primary U.S. objective. While the U.S. Indo Pacific Strategy looks to outsource development support for the Pacific Islands to “like-minded” Japan, Australia and Korea, there is no real plan for development in the region. As many in Washington decry expanding Chinese economic influence in Micronesia and the region, few understand that it is U.S. policy that has created the hospitable environment for Chinese effect.

The second order of the headline angst over Washington gridlock is the Taiwan vs. China subplot. In essence, this headline over diplomatic alignments in the region contrasts an island state choice between (1) a democratic Taiwan and (2) an autocratic and communist China. Looking past the inherent paternalism in the fact that Washington, Tokyo, and Canberra recognize the PRC and not Taiwan, ignoring the engine of China’s on-going economic penetration and diplomatic successes in the region is an act of willful blindness. The PRC’s “predatory economic activities” and the “lure” of PRC economic incentives, speaks first to U.S. underdevelopment of the region and second to those who would fill the gap. But grasping this problematic headline polemic is not something that is appreciated in the headlines that have primarily focused on U.S. military interests.

The U.S. playbook in response to China has largely been one of block-and-tackle. Yes, there are some relatively (small) symbolic commitments (mostly unfunded to-date) around climate change, the “Blue Pacific,” and new diplomatic outposts. The most demonstrative acts, however, are focused on new security agreements and U.S. Coast Guard policing the Pacific (through local “shiprider” arrangements) to highlight nefarious (Chinese) UUI fishing practices. Some island states will welcome strategic balancing, and most will support enforcement measures that protect their EEZ resources. Just beneath the surface of official U.S. approaches, however, are allegations of elite capture and corruption associated with PRC. Whether it is islanders’ corruption or Chinese bribes, it seems that better islander governance, not more island development is the American prescription. This U.S. approach is a long way from the development of infrastructure and provision of capital for economic expansion that is sorely needed in the underdeveloped region.

For Guam, the underdevelopment in COFA states has best been represented by the migration of COFA state citizens. The impact is changing Guam’s demography. But passage of the new Compact language is a step backward. The last Compact agreements provided Guam reimbursement for expenses related to the impact of “habitual residents” from the COFA States. In the new COFA agreements, this language has been repealed. 

Guam received over $250 million in Compact Impact reimbursements since 2008, and this amount was still several hundred million below the estimated costs Guam has experienced in areas of public safety, public education, and public health. Beginning in 2024, the new reimbursement amounts will be $0. It is not that Guam will not have expenses related to COFA state migrant’s impact in Guam. It is just that the federal government has repealed the process for Guam to receive funding. 

In the COFA-risk headline and Guam-specific context, the on-going “China competition” narrative masks a larger impairment that Washington faces in getting things done. The dysfunction that halted fiscal resources for the COFA agreements is just the tip of the iceberg. Passage of COFA agreements is just the beginning of the challenges, not the end. 

For the COFA states the new agreements are a basement, not a ceiling. Economic opportunities in the COFA states will remain stagnant, even while U.S. security requirements increase (including developing recoverable military infrastructure and possibly basing offensive long range strike weapons). Sea-level rises seem unlikely to abate. Adequate delivery of basic health care and education will likely continue to be suboptimal. And, COFA states will continue their long history of dependence on U.S. funding for basic government operations. COFA migrants will continue to leave their countries in search of better economic and educational opportunities. For those of us in Guam, the new agreements are a reminder that the brunt of Washington’s actions are as frequently a burden as they are a benefit. It does not take a strategist to see that COFA states will be in the hunt for competitive alternatives to continued dependency. COFA agreement passage, then, and a headline heralding it, will not fix this micro-state dilemma or the burdens that are dispersed.

It is possible that Micronesia is a microcosm for the larger geopolitical challenges the U.S. faces. The headlines will recede now that COFA agreements have been approved in Washington, but the real contest for influence in the region is just beginning to heat up. Americans will no doubt feel betrayed, or impotent, when the simple headline framings fail to deliver the results that are anticipated. The projection of American power, and the competition with China in COFA states (and the Pacific), however, are much more complex than Washington’s premier analysts and the headlines that followed have projected. The headlines and analysis around U.S.-China relations in semiconductors, electric vehicles, biotechnology and “de-risking” trade or even Tik Tok, all manifest an urgency for action in Washington. If the recent COFA headlines are an indicator, Americans are in for a long season of disappointment in a U.S. competition with China. Headlines may deliver a quick sugar rush of projection, but the U.S.-China competition has barely begun.

This article appeared first on The Guam Daily Post. The authors are members of the Pacific Centre for Island Security.

The opinions expressed in this article are those of the author and do not necessarily reflect the opinions of this publication.

Newsletter
Nauru-Airlines
Hydroflux