[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


    HOW THE COMPACTS OF FREE ASSOCIATION SUPPORT U.S. INTERESTS AND
                      COUNTER THE PRC'S INFLUENCE

=======================================================================

                           OVERSIGHT HEARING

                               BEFORE THE

                        INDO-PACIFIC TASK FORCE

                                 OF THE

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                        Wednesday, June 14, 2023
                               __________

                           Serial No. 118-38
                               __________

       Printed for the use of the Committee on Natural Resources
       

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        Available via the World Wide Web: http://www.govinfo.gov
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                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
52-524 PDF                  WASHINGTON : 2023           
          
      

                     COMMITTEE ON NATURAL RESOURCES

                     BRUCE WESTERMAN, AR, Chairman
                    DOUG LAMBORN, CO, Vice Chairman
                  RAUL M. GRIJALVA, AZ, Ranking Member

Doug Lamborn, CO		     Grace F. Napolitano, CA
Robert J. Wittman, VA		     Gregorio Kilili Camacho Sablan,
Tom McClintock, CA		         CNMI
Paul Gosar, AZ			     Jared Huffman, CA
Garret Graves, LA		     Ruben Gallego, AZ
Aumua Amata C. Radewagen, AS	     Joe Neguse, CO
Doug LaMalfa, CA		     Mike Levin, CA
Daniel Webster, FL		     Katie Porter, CA
Jenniffer Gonzalez-Colon, PR	     Teresa Leger Fernandez, NM
Russ Fulcher, ID		     Melanie A. Stansbury, NM
Pete Stauber, MN		     Mary Sattler Peltola, AK
John R. Curtis, UT		     Alexandria Ocasio-Cortez, NY
Tom Tiffany, WI			     Kevin Mullin, CA
Jerry Carl, AL			     Val T. Hoyle, OR
Matt Rosendale, MT		     Sydney Kamlager-Dove, CA
Lauren Boebert, CO		     Seth Magaziner, RI
Cliff Bentz, OR			     Nydia M. Velazquez, NY
Jen Kiggans, VA			     Ed Case, HI
Jim Moylan, GU			     Debbie Dingell, MI
Wesley P. Hunt, TX		     Susie Lee, NV
Mike Collins, GA
Anna Paulina Luna, FL
John Duarte, CA
Harriet M. Hageman, WY
                                     

                    Vivian Moeglein, Staff Director
                      Tom Connally, Chief Counsel
                 Lora Snyder, Democratic Staff Director
                   http://naturalresources.house.gov
                                 ------                                

                        INDO-PACIFIC TASK FORCE

                  AUMUA AMATA C. RADEWAGEN, AS, Chair

             GREGORIO KILILI CAMACHO SABLAN, CNMI, Co-Chair

Bruce Westerman, AR                  Raul M. Grijalva, AZ
Doug Lamborn, CO                     Ruben Gallego, AZ
Robert J. Wittman, VA                Katie Porter, CA
Tom Tiffany, WI                      Teresa Leger Fernandez, NM
Jim Moylan, GU                       Melanie A. Stansbury, NM
Harriet M. Hageman, WY               Ed Case, HI

                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, June 14, 2023.........................     1

Statement of Members:

    Radewagen, Hon. Aumua Amata Coleman, A Delegate in Congress 
      from the Territory of American Samoa.......................     1
    Sablan, Hon. Gregorio Kilili Camacho, A Delegate in Congress 
      from the Territory of the Northern Mariana Islands.........     3
    Westerman, Hon. Bruce, a Representative in Congress from the 
      State of Arkansas..........................................     4
    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona...........................................     5

Statement of Witnesses:

    Short, Albert V., Colonel, U.S. Army (Ret.), Former Chief 
      Negotiator for 2003 Compact of Free Association, Lorton, 
      Virginia...................................................     6
        Prepared statement of....................................     8
        Questions submitted for the record.......................    11
    Lum, Thomas, Specialist in Asian Affairs, Congressional 
      Research Service, Washington, DC...........................    13
        Prepared statement of....................................    15
        Questions submitted for the record.......................    21
    Paskal, Cleo, Non-Resident Senior Fellow, Foundation for 
      Defense of Democracies, Washington, DC.....................    27
        Prepared statement of....................................    29
        Questions submitted for the record.......................    37

    Newsham, Grant, Colonel, U.S. Marine Corps (Ret.), Honolulu, 
      Hawaii.....................................................    39
        Prepared statement of....................................    41
        Questions submitted for the record.......................    48
                                     


 
OVERSIGHT HEARING ON HOW THE COMPACTS OF FREE ASSOCIATION SUPPORT U.S. 
               INTERESTS AND COUNTER THE PRC'S INFLUENCE

                              ----------                              


                        Wednesday, June 14, 2023

                     U.S. House of Representatives

                        Indo-Pacific Task Force

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The Task Force met, pursuant to notice, at 10:03 a.m. in 
Room 1324, Longworth House Office Building, Hon. Aumua Amata 
Coleman Radewagen [Chairwoman of the Task Force] presiding.
    Present: Representatives Radewagen, Westerman, Lamborn, 
Wittman, Tiffany, Moylan, Hageman; Sablan, Grijalva, Gallego, 
Porter, Stansbury, and Case.

    Mrs. Radewagen. The Indo-Pacific Task Force will come to 
order.
    Without objection, the Chair is authorized to declare a 
recess of the Task Force at any time.
    The Task Force is meeting today to hear testimony on how 
the Compacts of Free Association support U.S. interests and 
counter the PRC's influence.
    Under Committee Rule 4(f), any oral opening statements at 
hearings are limited to the Chair and the co-Chair. I therefore 
ask unanimous consent that all other Members' opening 
statements be made part of the hearing record if they are 
submitted in accordance with Committee Rule 3(o).
    Without objection, so ordered.
    I ask unanimous consent that the gentlewoman from Puerto 
Rico, Mrs. Gonzalez-Colon, be allowed to sit and participate in 
today's hearing.
    Without objection, so ordered.
    I will now recognize myself for an opening statement.

STATEMENT OF THE HON. AUMUA AMATA COLEMAN RADEWAGEN, A DELEGATE 
        IN CONGRESS FROM THE TERRITORY OF AMERICAN SAMOA

    Mrs. Radewagen. Talofa lava and good morning. There is no 
more fitting way for me to begin this proceeding than to 
express my heartfelt gratitude to Chairman Westerman and 
Ranking Member Grijalva for entrusting this mission to me as 
Chair, and to my esteemed Pacific Island colleague from CNMI, 
the Honorable Gregorio Kilili Sablan, as co-Chair. By doing so, 
they have empowered the people of the Pacific Islands, whose 
past and future under the American flag comes first in our 
minds and our hearts.
    Our duty is to better enable the House Natural Resources 
Committee and Congress to determine how best to protect 
American values and interests in the Pacific. Chairman 
Westerman and Ranking Member Grijalva, with the help of the 
distinguished members of this Task Force, we won't let you 
down.
    The Pacific region is critical for U.S. interests and 
security. The United States has a vested interest in and duty 
to protect U.S. homeland territories like my home, American 
Samoa, and the Freely Associated States from rising influence 
from the People's Republic of China. The Compacts of Free 
Association are vital to that endeavor and the broader U.S.-
China competition.
    My work on this enterprise is informed by my participation 
in the September 2022 Pacific Island Leaders Conference in 
Honolulu with heads of State and Government from the PIF 
nations, including FAS and chief executives from U.S. 
territories. I also participated in the first-ever U.S. Pacific 
Islands Country Summit held in Washington, DC. I approach this 
Task Force with a keen recollection of my participation in the 
U.S. Pacific Islands Summit declaration that confirmed that 
COFA is a high priority and one of the cornerstones of U.S. 
Pacific cooperation.
    I was reminded of these historic gatherings of U.S. and 
Pacific Island leaders when I recently had the honor of 
attending the sovereign nation of Samoa's Independence Day 
celebration earlier this month at the invitation of my friend, 
Prime Minister Afioga Fiame Naomi Mata'afa. While joining her 
and other heads of State and Government in Apia, the message I 
heard was loud and clear: The United States must continue to 
engage in the historic relations with the U.S. territories or 
its FAS partners.
    As we gather now for this Task Force hearing, we must 
continue to show our commitment to the region, and our resolve 
to challenges, and respond to any threat posed by the PRC. We 
will do this in a manner that meets U.S. interests and supports 
Pacific Island communities in our territories and the FAS.
    The Indo-Pacific Task Force will enable Congress to rise to 
this challenge. The Administration must work with the 
leadership of the Committee and Congress to ensure that we have 
what we need to enact COFA, and can enact agreements that are 
fair and just, reasonable and responsible, and protect both 
U.S. interests in the Pacific and the sovereignty of our 
Pacific partners.
    But this isn't just about U.S. interests, but also that of 
the people who live in the FAS. The COFA agreements are a 
symbol of democracy, good governance, transparency, and the 
rule of law. We have seen in the FAS that the PRC is the 
antithesis of those values. We just need to look at President 
Panuelo's letter of PRC activities in the FSM.
    I want to welcome all the Members who sit on this Task 
Force as we address the issues affecting the United States in 
the Pacific. We all come from a broad and diverse background, a 
key American strength. Through this diversity we will deliver 
for the American people as we shepherd the COFA agreements 
through Congress and address the issues and challenges the 
United States faces in the Pacific. We do this not just for 
this generation, but for generations to follow.
    The United States will not walk away from its historic 
relations with our FAS partners. The whole world is watching 
what we do, and our adversaries are going to challenge us on 
our commitments. But we are committed to our partners and to 
the Pacific.
    There is a lot that needs to be done, and I look forward to 
getting to work and hearing from our witnesses today.
    The Chair now recognizes the co-Chair for any statement.

    STATEMENT OF THE HON. GREGORIO KILILI CAMACHO SABLAN, A 
DELEGATE IN CONGRESS FROM THE TERRITORY OF THE NORTHERN MARIANA 
                            ISLANDS

    Mr. Sablan. Thank you, Madam Chair. Good morning, everyone. 
I think, after listening to the Chair's remarks, she has 
covered everything else so well. So, I should just yield.
    But it is true, today is, indeed, a very important day, 
historic in some ways, because it marks the beginning of what I 
hope and I believe will be a successful bipartisan effort to 
renew the financial provisions of the Compacts of Free 
Association and other provisions of the Compacts with our good 
friends and neighbors in the Pacific: the Republic of the 
Marshall Islands, Palau, and the Federated States of 
Micronesia.
    There can be no doubt that renewing the financial 
provisions of the Compact is essential to our nation's security 
posture in the Indo-Pacific region, and will go a long way in 
countering adversarial nations' gaining a foothold in the 
region, efforts that may have started already.
    The United States has enjoyed friendly relations with the 
Freely Associated States for more than four decades, and the 
people of Micronesia have enjoyed a friendly relationship with 
the United States for over 70 years, almost eight decades. 
Their representatives are consistently supportive of U.S. 
policies at the United Nations and other international 
organizations, and their citizens volunteer for the U.S. 
military in numbers that are highest per capita than residents 
of many of, if not all, the 50 states.
    The Compacts give the U.S. responsibility for the COFA 
nations' defense, and provide the United States with the 
exclusive military use rights. And this relationship enables 
the United States to maintain critical access to this strategic 
area in the Indo-Pacific region.
    I want to commend Chairman Westerman and Ranking Member 
Grijalva for creating this Indo-Pacific Task Force to provide 
for a bipartisan process for both informing our House 
colleagues of the importance of renewing the Compacts and 
building support for their passage.
    And although there is currently bipartisan support for 
renewing the Compacts, our experience with the renewal 
agreement of the latest Palau Compact tells us that a more 
sustained, robust effort will be required if we are to avoid an 
almost decade-long delay in passing these additional renewal 
agreements, and this is a really good start.
    There is no easy way that our nation will be able to 
maintain our influence in what is becoming an increasingly 
strategic, important, and contested area of the world without 
continuing our partnership with the COFA nations and other 
Pacific Island nations. And that partnership must resume by 
Congress swiftly passing the Compact renewal agreements as they 
are transmitted to us by the Administration.
    I commend the work of the Administration Special Envoy, 
Ambassador Joseph Yun, and the Assistant Secretary for Insular 
Affairs for the tremendous progress achieved in having signed 
memoranda of understanding with all three Compact countries on 
the basic levels of Compact funding for the next 20 years, and 
so far two Compact renewal agreements. I have little doubt that 
Ambassador Yun will be able to complete the Compact renewal 
with the remaining nation in due time.
    I welcome our excellent panel of witnesses, who I suspect 
will reinforce the importance of the COFA renewals when we hear 
from them shortly.
    Thank you, Madam Chair, and I yield back.

    Mrs. Radewagen. The Chair will now recognize Chairman 
Westerman for his opening statement.

  STATEMENT OF THE HON. BRUCE WESTERMAN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ARKANSAS

    Mr. Westerman. Thank you, Chair Radewagen, and thank you to 
the witnesses for being here today.
    Today is a significant day, as it marks the inaugural 
gathering of this Committee's bipartisan Indo-Pacific Task 
Force.
    I would like to again take a moment to thank Ranking Member 
Grijalva, Chair Radewagen, and co-Chair Sablan for their 
efforts in helping in the work to put this important initiative 
together.
    Acting within the jurisdiction of the House Committee on 
Natural Resources, the mission of the Task Force will be to 
provide focus and conduct oversight on issues facing the U.S. 
territories and the Freely Associated States in the Indo-
Pacific region, including Compacts of Free Association between 
the United States and the Freely Associated States.
    The People's Republic of China is an existential threat to 
the United States. The PRC seeks to undermine U.S. interests in 
the Pacific, particularly when it comes to the Freely 
Associated States. It is imperative that we find ways to 
counter the PRC's malign influence and to protect U.S. 
interests in the region.
    I think we can all agree, as Americans, that we have a duty 
to respond to threats to our homeland and to our friends in the 
Pacific. We will meet this threat head on and will not stand 
idly by in the face of Chinese aggression.
    As we carry out this hearing and complete the future work 
of the Task Force, I want to make it clear that when I say and 
when other members of the Task Force refer to ``China'' and 
``Chinese influence,'' we are referring to the Chinese 
Communist Party. We recognize and firmly believe in the 
distinction between the totalitarian regime in Beijing and the 
Chinese people who long for democracy and freedom from 
autocratic rule.
    With that in mind, this Task Force looks to find an 
appropriate response to rising Chinese influence in the 
Pacific. Countering Chinese influence is a major challenge, as 
the PRC often operates within the gray zone. This makes it 
difficult to find a reciprocal response, so we must find and 
understand measures within our toolkit that enable the United 
States to push back against PRC malign activity.
    The Compacts of Free Association are one such measure. The 
Compacts are critical to the future of the U.S. and the Freely 
Associated States relationship. Thus, we are gathered here 
today to hear from this excellent panel of witnesses to better 
understand the Compacts of Free Association and how they 
support U.S. interests and counter the PRC's influence.
    This hearing will lay the groundwork for future hearings 
and Committee review, and as we review the newly-negotiated 
Compact agreements. There will be tough issues that we will 
need to work out when the appropriate time comes, but I hope 
this hearing will provide the basis for this Task Force to 
carry out its important mission.
    Thank you, Madam Chair, and I yield back.

    Mrs. Radewagen. The Chair will now recognize Ranking Member 
Grijalva for his opening statement.

  STATEMENT OF THE HON. RAUL M. GRIJALVA, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Mr. Grijalva. Thank you very much, Madam Chair. And as co-
Chair Sablan mentioned, I associate myself with the comments 
that you made in your opening comments, as well as Chairman 
Westerman.
    I am grateful for both your leadership on this Task Force, 
and I should say that I am very appreciative of Chairman 
Westerman's raising the profile of this part of our 
jurisdiction to this Task Force and to the importance of what 
we are going to be discussing here. It is very much 
appreciated, very much needed. And any time the Little 
Committee That Could can raise its profile and assert its 
jurisdiction, it is a good thing.
    [Laughter.]
    Mr. Grijalva. For nearly four decades, the United States 
has maintained a special relationship with the Freely 
Associated States. Through agreements known as the Compacts of 
Free Association, the United States and these sovereign 
countries have outlined a mutually beneficial relationship that 
provides the United States important military access to the 
Pacific in exchange for the United States supporting the Freely 
Associated States economically, and allowing their citizens to 
live, study, and work in the United States.
    The United States' ability to deliver on its duty to the 
Freely Associated States and the U.S. territories of the 
Pacific is directly related to the prevention of the People's 
Republic of China's Government's further encroachment in the 
region, and the endurance of our aligned defense and security 
interests.
    The Chinese Government, as Chairman Westerman mentioned, 
knows that the weaker the economies in the Indo-Pacific region 
are, the more power and influence they will have in the region. 
That is why it is so important to remember that our 
relationship with the Freely Associated States and the U.S. 
territories in the Pacific is not a one-sided situation. It is 
a mutually beneficial relationship.
    I want to reiterate that as the Task Force begins its work 
to examine the significant military and security value of the 
Pacific Islands, we cannot lose sight of our responsibility to 
the Freely Associated States and U.S. territories in the region 
and to their people.
    I also want to emphasize that Congress doesn't have time to 
lose in negotiating the new Compacts of Free Association if we 
want to maintain long-term stability. The Task Force must keep 
these challenges in mind. And as we consider solutions for our 
mutual defense, national security, and economic interest, this 
Task Force will play a significant role in that process.
    And with that, Madam Chair, I yield back.

    Mrs. Radewagen. I will now introduce our witnesses.

    Mr. Albert V. Short, Colonel, U.S. Army, retired, and 
former Chief Negotiator for the 2003 Compact of Free 
Association, Lorton, Virginia; Dr. Thomas Lum, Specialist in 
Asian Affairs, Congressional Research Service, Washington, DC; 
Ms. Cleo Paskal, Non-Resident Senior Fellow, Foundation for 
Defense of Democracies, Washington, DC; and Mr. Grant Newsham, 
Colonel, U.S. Marine Corps, retired, Honolulu, Hawaii.

    Let me remind the witnesses that, under Committee Rules, 
they must limit their oral statements to 5 minutes, but their 
entire statement will appear in the hearing record.
    To begin your testimony, please press the talk button on 
the microphone.
    We use timing lights. When you begin, the light will turn 
green. When you have 1 minute left, the light will turn yellow. 
And at the end of 5 minutes, the light will turn red and I will 
ask you to please complete your statement. I will also allow 
all witnesses on the panel to testify before Member 
questioning.
    The Chair now recognizes Mr. Short for 5 minutes.

STATEMENT OF ALBERT V. SHORT, COLONEL, U.S. ARMY (RET.), FORMER 
CHIEF NEGOTIATOR FOR 2003 COMPACT OF FREE ASSOCIATION, LORTON, 
                            VIRGINIA

    Mr. Short. Good morning, Madam Chair, Ranking Members of 
the Subcommittee. I am Albert V. Short, Colonel, U.S. Army, 
retired, and former Chief of Staff in the office that 
established the Compacts of Free Association enacted in 1986. 
Twenty years later, I was chief negotiator on the amended 
Compacts of Free Association in 2003. This time around, I am 
leaving all the heavy lifting to others, so today my remarks 
are my opinions, and not on behalf of the Administration, other 
persons, organizations, or institutions.
    First, I must commend the Committee for conducting this 
series of hearings that focuses on the strategic imperatives in 
the region, including the renewal of the Compacts, but taken 
into the context of the threat and the impending threats posed 
by the People's Republic of China, the PRC.
    The renewal of the Compacts is based on proposals being 
negotiated by the Administration, and will be ultimately 
approved by the Congress. It is an urgent matter, and it 
supports U.S. interests not only in Micronesia, but in the 
broad Indo-Pacific Region.
    One really cannot examine U.S. interests in Micronesia and 
the Pacific Islands in general without harkening back and 
considering World War II, where we experienced 100,000 
casualties and expended hundreds of millions of dollars in 
capturing these and other islands on the march to Japan.
    I joined the negotiations in 1979, and at that time there 
was still a number of World War II veterans in the Congress, 
and their very clear and strong guidance to the Administration 
was, ``You must bring to this body Compacts that include 
strategic denial.''
    Well, what is strategic denial? Really, it is the ability 
of the United States to foreclose this area, not only the 
islands, but also the waters and airspace from any third party. 
Further, we have that right, even if the Compact is terminated, 
so it is a unilateral right on the part of the United States to 
continue or to terminate.
    Separate from this standalone strategic denial that I just 
spoke about, as long as the Compact is in effect, the FAS 
governments, the foreign Freely Associated State governments, 
have the obligation to cease and desist from any action that 
the United States unilaterally determines is prejudicial to our 
defense and security arrangements. It is a very, very powerful 
provision.
    Fortunately, for now over 40 years, we have never had to 
invoke our defense prerogatives. However, with the ever-
increasing influence of the PRC, we can't forecast or preclude 
the use of that authority in the future.
    The Compacts of Free Association have been very much of a 
success story. But a high priority for the PRC has been to 
basically disrupt and undermine the authorities that are 
contained in the Compacts.
    Really, what are our defense and security benefits that 
directly accrue to the United States from the Compact 
relationship?
    And further, why should the Congress approve these 
Compacts?
    And will they support our interests, long term?
    First, it will continue an 80-year relationship, 40 years 
under the Compacts of Free Association.
    Second, it will support democratic governments that serve 
as a role model for others in the Pacific and elsewhere.
    Third, the FAS serves as a bulwark for our defense and 
security concerns in the North Pacific. It protects our vital 
sea and air lines of communication to Asia. This is, if you 
will, the second tier when you look at it through the prism of 
the PRC.
    Fourth, we have the right to install defense and security 
installations as needed.
    Fifth, the Kwajalein facility is a key element in our space 
and missile defense development programs. And DoD has recently 
announced the forthcoming installation of a radar facility in 
Palau focused on North Asia.
    Sixth, our capability to deny any third-party access to the 
Freely Associated States and their economic zones effectively 
neutralizes this area in the Pacific.
    So, the Congress soon will be called upon to approve the 
renegotiated Compacts, and this endeavor should set a course 
correction for our relationship not only with the Freely 
Associated States, but with the region.
    Again, I thank the Chair, the Majority, and the Ranking 
Member for the opportunity to appear today, and I look forward 
to your questions. Thank you.

    [The prepared statement of Mr. Short follows:]
 Prepared Statement of Albert V. Short, Colonel, U.S. Army (retired); 
  Former, Chief Negotiator, Amended Compacts of Free Association, 2003
    Good morning, Chair, ranking member, and distinguished members of 
the Subcommitee. I am Albert V. Short, Colonel U.S. Army (retired), 
former Chief of Staff in the Offce for Micronesian Political Status 
Negotiations in the NSC 1979 to 1986, and Chief Negotiator on the 
Amended Compacts of Free Association, in 2003. This time around, I am 
leaving all the heavy lifting to others, thus my remarks are my 
opinions and not any other person, organization, or institution.
    I commend the Commitee for conducting this series of hearings to 
focus on the strategic imperatives in the region, including renewal of 
the Compacts in the context of the threats posed by the People's 
Republic of China, (PRC) in the Indo-Pacific region.
    This morning, I will address how the Compacts of Free Association 
support U.S. interests in the Indo-Pacific region and I'll highlight 
the urgency of renewing these compacts in this session of Congress.
    There were two seminal events in the 1970s that shaped our 
relationship with the Freely Associated States, (FAS). One was the 
formation of the Congress of Micronesia which was the first 
comprehensive attempt at self-government instituted by the then Trust 
Territory Administration. Second, was the so-called Hilo Principles 
which were negotiated in Hawaii in the late 70s and set the parameters 
for the free association relationship with what was to become Palau, 
the Federated States of Micronesia, and the Republic of the Marshall 
Islands.
    The Hilo Principles recognized the benefits to the U.S. and the new 
island governments of a transition from trusteeship to sovereignty 
consistent with the right of independence for the Micronesian States, 
including their ability to carry out the functions of government in 
their own name and right, and to conduct their own foreign affairs, 
with the one caveat that the United States would be responsible for 
their security and defense.
    Those underlying goals embodied in the so-called Hilo Principles 
and the Compact continue to guide our relationship now through three 
cycles of the compacts for nearly 50 years . . . so we must be doing 
something right.
    I should note that the chairperson, Representative Radewagen, has a 
direct connection to the early development of democracy in the then 
Trust Territory. Her father, Peter Coleman, was the first Samoan 
graduate from Harvard University, and was at that time the acting High 
Commissioner and the Deputy High Commissioner in the Trust Territory 
when the Congress of Micronesia was formed, and the process of self-
government commenced. She was raised in the Marshall Islands and 
Saipan, if I am not mistaken, and has first-hand knowledge and 
understanding of how the U.S.-Freely Associated State relationship has 
prospered over these many years.
    One cannot examine U.S. interests in Micronesia, and the Pacific 
Islands in general without taking into consideration World War II where 
we experienced 100,000 casualties and expended hundreds of millions in 
capturing the islands on the march to Japan and the wars end.
    I joined the U.S. negotiating team in 1979 and at that time there 
were still many World War II veterans in Congress and their guidance to 
the administration was clear: Do not bring compacts to this body that 
do not include strategic denial so we will not have to liberate these 
islands again from a new enemy.
    While these memories may dim with the passage of the so-called 
``greatest generation'' the need for security in this area has 
transitioned to a newer generation.
    What is strategic denial? It is the ability of the United States to 
foreclose the area not only to the islands, but also the waters and 
airspace from any third party. Further, we have the right to request 
the Micronesian government to cease and desist from any action that we 
unilaterally determine is prejudicial to our defense and security 
responsibilities in their domain.
    Thus, we have provided a security guarantee to Micronesia much more 
all-encompassing than we have for any other ally, including NATO.
    Fortunately, we have never had to invoke our defense prerogatives 
in the Freely Associated States, however, with the ever-encroaching 
influence of the People's Republic of China (PRC) we cannot foreclose 
or forecast the use of this authority in the future.
    The Micronesian States are sovereign. They conduct their own 
foreign affairs, and domestic activities and govern themselves with the 
one exception that the United States is totally responsible for their 
security and defense. They are members of the United Nations and in 
that context have been very helpful to the United States interests in 
the U.N. and elsewhere.
    Regarding the PRC, I will make passing reference to the threat and 
later speakers will get into much more detail. I will focus on how the 
compacts directly support our interest in the region.
    Why are we interested in this far-flung area in the middle of the 
North Pacific?
    First, it is a huge area when you include the Exclusive Economic 
Zones (EEZs) of the three Freely Associated States. This is an area 
approximately 3000 miles East to West, and 1000 miles North to South 
that stretch stretches from west of Hawaii almost to the Philippines. 
It is astride the main logistical route between the United States and 
Asia, so anyone who controls this area controls communication to the 
so-called frontline States . . . Korea, Japan Taiwan Philippines, and 
Southeast Asia.
    Worldwide shipping in the Pacific either leaves North Asia, China, 
Philippines and Southeast Asia and transits west to the U.S. West coast 
or the Panama Canal via Micronesian territorial waters. Otherwise, it 
goes south through the South China Sea and the Straits of Malacca, and 
we are all aware of what the Chinese are doing in the South China Sea. 
We don't want to see the same sort of activity in the central Pacific.
    When we consider the Freely Associated States (FAS) and the 
associated compacts supporting our national interests, the first issue 
is simply location, location, location . . . It is like real estate. 
The FAS sit squarely on the main communications line between our West 
Coast, Hawaii and the Asian literal.
    The compacts and their subsidiary agreements include several 
Military Use and Operating Rights Agreements with the principle one for 
the space and missile test range activity at Kwajalein Atoll in the 
Marshall Islands. This is our only long-range missile test facility 
where we can fire missiles from the U.S. West Coast or at sea into the 
Kwajalein lagoon. We have used this facility for many years and in 2003 
we renegotiated the lease for 50 years. This is a one-of-a-kind 
facility and vital for testing our strategic capabilities.
    Recently, the Department of Defense (DoD) has announced that they 
intend to develop a technical radar communications facility at Angaur 
island in the Palau archipelago.
    We have military operating rights in all the FAS most of which have 
not been used over the years, but they are there should the need arise.
    The United States appears to be emerging from a period when it took 
the Indo-Pacific Island States for granted and this has provided an 
opportunity for others to make gains at our expense.
    The PRC threat to the Freely Associated States and ultimately the 
U.S. territories and the Indo-Pacific area is rather unique. In the 
1980s, Khruschev went to Vladivostok and made a statement ``we are a 
Pacific power''. Everyone got concerned about Russian expansion in the 
area, however that activity pales into insignificance compared to the 
present and potential future actions by the PRC.
    In understanding the PRC threat, we must get beyond our usual 
binary thinking where on one hand you have peace, and on the other you 
have war . . . this is an on/off switch. In the PRC view they deal with 
political warfare, a concept called ``struggle''. There is a continuum 
of actions all coordinated . . . military, economic, political, social, 
all focused on a common goal with many intermediate activities that 
support the end game. We must start thinking out-of-the-box when we are 
responding to, and hopefully preempting PRC activities that are 
detrimental to our interests.

    While we address the support that the compacts provide to the 
United States, we also must recognize that the Freely Associated States 
have certain characteristics that make them vulnerable to third party 
exploitation:

     They are remote and geographically isolated in the central 
            pacific,

     They have a very thin population, about 200,000,

     They lack natural resources (except fish),

     They have poor infrastructure and generally fragile 
            governments because of the small population and weak 
            economy.

    While the Freely Associated States have made significant progress 
in the last 40 years, with the noted shortcomings they still will 
require U.S. assistance. This includes programmatic support especially 
in infrastructure, education, and health. The compacts as renegotiated 
will continue grant assistance for another 20 years again with emphasis 
on infrastructure, health, and education.
    The Compacts of Free Association provide a framework for a 
relationship but that is the formal side. To be effective the 
relationship must be much deeper than a piece of paper and a few 
signatures. Over 40 years, we have built an effective relationship with 
the Micronesian States, but it can always be beter. When we are seeking 
to support our long-term interests, people to people relationships-
built over time and built on common bonds our key.
    The Peace Corps is a classic example of relationship building. 
During the trusteeship, we had more Peace Corps volunteers in 
Micronesia than anywhere else in the world. However, that program was 
ended, perhaps for all the wrong reasons. It is now time to reestablish 
the Peace Corps in Micronesia and build grassroots relationships, as we 
did in the 60s and 70s.
    We have U.S. embassies in all the Micronesian capitals and capable 
foreign service personnel and local nationals who solve low levels and 
sometimes high-level issues that come between any two nations on a 
daily basis.
    CINCPAC, in Hawaii, has been a key element in building effective 
relations with the Micronesian States. On one hand it facilitates 
Micronesian recruitment for the U.S. armed forces where they serve in 
large numbers. It also has frequent meetings and exchanges in Honolulu 
and in the FAS on security and defense issues.
    In these small nations, person-to-person communication is perhaps 
more vital then when dealing with NATO or Japan or some other world 
power.
    Supporting U.S. interests also includes ensuring that the economic 
and other support that we provide to the Freely Associated States are 
properly spent and achieves the results for which the money was 
provided.
    This can create a problem. On the one hand the Freely Associated 
State is cognizant of their sovereignty and its right to run their own 
affairs. On the other hand, from the U.S. perspective, we are providing 
significant U.S. support, and we want to ensure that it goes for the 
intended purpose. The issues are accountability by the donor and 
sovereignty on the part of the recipient.
    In the first compacts, the U.S. simply wrote checks to the 
Micronesian governments. While there was guidance in the compacts as to 
where the money was supposed to go there was litle oversight and 
accountability and the results were less than satisfactory. The result 
was a burgeoning bureaucracy and key elements such as education, 
health, and infrastructure were neglected.
    In the amended compacts (2004), we developed a Fiscal Procedures 
Agreement based on the concept that the funds received by the FAS 
should be accounted for on the same basis as federal funds provided to 
state and local governments.
    There was some resistance on the part of the FAS to this fiscal 
oversight, but we worked out an acceptable agreement that has been 
administered by the Office of Territorial Affairs in the Department of 
the Interior and it has worked reasonably well for the last 20 years.
    The success of this oversight is not necessarily based on the 
agreement, but the people who implemented it, they were primarily 
career civil service employees in the Department of the Interior, 
including former Peace Corps volunteers, who worked constructively with 
the Micronesian governments to ensure that our funds were properly 
spent and accounted for.
    The General Accounting Office (GAO) conducted oversight in the 
Trust Territory and then in the Freely Associated States for many 
years. As the chief negotiator in 2003, I found their reports very 
useful in framing the Fiscal Procedures Agreement. I understand, the 
GAO has cut back on some of their Micronesian oversight and it's time 
to reenergize them.
    The first step in achieving U.S. interests in the Freely Associated 
States, and in the wider Indo-Pacific is to have a coordination 
mechanism within the executive branch, with consultation, and 
concurrence by the Congress on are our goals and the best methods to 
achieve them. Today we simply do not have such a mechanism in the 
executive branch.
    Within the Department of Interior, we have the Office of 
Territorial Affairs which looks after territories as well as the Freely 
Associated States, and it has done a decent job of fiscal oversight in 
the last 20 years.
    At the State Department when the compacts were first implemented 
there was an Office of Freely Associated State Affairs in the Asia 
Pacific Bureau established to oversee the compacts relationship and 
provide the long-term continuity required for oversight implementation, 
and accountability, etc. Unfortunately, the State Department, after a 
couple of years, reorganized and the office was closed. The FAS 
responsibility was sublimated to a desk officer whose responsibility 
included several other Pacific Island nations and he/she in turn was 
under the umbrella of the Australia, New Zealand, and Pacific Islands 
Office. Also, the State Department career foreign service officers 
return to the U.S. for a couple of years after being overseas, but in 
two years they are gone, and you had a new person on the learning 
curve.
    In the Department of Defense, you have incidental interest in the 
Pacific Islands except for CINCPAC, in Honolulu.
    At the Washington level this begs the question, who is in charge of 
securing our vital interests and countering PRC influence? Right now, I 
simply don't know. It's time to establish, perhaps in the NSC, a 
mechanism to pull together and coordinate all U.S. assets and concerns 
in this area.
    The administration has made progress on the renegotiation of the 
Compacts of Free Association and has signed documents with the FSM, and 
Palau, with RMI still holding out . . . I understand the goal is to 
present the compacts to Congress in this session for your hopefully 
expeditious consideration.
Summary:

    What defense and Security benefits accrue to the United States from 
the Compacts of Free Association?

    Why should the Congress approve the Compacts and how will they 
support our interests in the Indo-Pacific area?

     First, it will continue 40 years of tested relations with 
            the Freely Associated States,

     Second, it will support democratic governments that serve 
            as a role model for others in the Pacific and elsewhere,

     Third, the FAS serve as a bulwark for the defense and 
            security in the North Pacific and protects our vital sea 
            lines to Asia,

     Fourth, we have the right to install defense and security 
            installations, as needed,

     Fifth, the Kwajalein facility is a key element in our 
            space and missile deployment programs,

     Sixth, our capability to deny any third-party access to 
            the Freely Associated States and their EEZ's effectively 
            neutralizes a huge area of the North Pacific.

    The United States is actively engaged in renegotiating the 
compacts, that activity in of itself demonstrates commitment and with 
their conclusion this year and hopeful approval by the Congress, it 
will set a course correction for our relationship not only with the 
Freely Associated States, as we go forward, but also with the entire 
region.
    Again, I thank the chair and ranking member for the opportunity to 
appear before you today and I look forward to your questions. Thank 
you.

                                 ______
                                 

 Questions Submitted for the Record to Albert V. Short, Colonel, U.S. 
     Army (Ret.); former Chief Negotiator for 2003 Compact of Free 
                              Association

            Questions Submitted by Representative Westerman
    Question 1. We are seeing the PRC become increasingly effective in 
conducting its influence operations in the FAS.

    Is this a result of low U.S. engagement in the region, increasing 
efforts and resources by the PRC for its influence operations, or 
conditions in the FAS?

    Answer. Congressman Westerman, your question correctly addresses 
three areas which collectively contribute to the increasing People's 
Republic of China (PRC) influence in the Pacific Islands, with specific 
reference to the Freely Associated States (FAS), the Republic of Palau, 
the Federated States of Micronesia, and the Republic of the Marshall 
Islands. Also, we cannot ignore the PRC threat to the U.S. territories 
of Guam, the Northern Marianas, and even American Samoa.
    Your first question: Is this the result of low U.S. engagement in 
the region? The short answer is YES!
    Historically, we have left many Pacific Island engagement decisions 
to Australia and New Zealand. There is nothing wrong with that 
approach, they are valuable long-term partners in the Asia Pacific, 
however we should not neglect the area and simply feel that somebody 
else is taking care of our problems.
    U.S. focus on this area has been less than optimum for years. What 
we need is a long-term strategy that addresses our strategic 
objectives, considering the threating PRC activities, and in the 
context of the PRC's worldwide ``belt and roads initiative''.
    As I noted in my prepared remarks, we need centralized strategic 
planning and control at the national level here in Washington, and then 
effective long-term implementation on a regional basis. Today, that is 
simply lacking. We tend to be transactional by responding to situations 
that arise. Rarely are we up front on situations or activities. We are 
playing catch up.
    Thus, the first step in achieving U.S. interests in the FAS, and in 
the wider Indo-Pacific is an effective coordination mechanism within 
the Executive Branch, with consultation with the Congress, on our 
strategic goals and the best methods to achieve them. Today, we simply 
do not have such a mechanism in the Executive Branch.
    At the Washington level this begs the question, ``who is in charge 
of securing our vital interests and countering the PRC influence?'' 
Right now, it is simply not clear. It's time to establish, perhaps in 
the National Security Council (NSC), a mechanism to pull together and 
coordinate all U. S. assets and concerns.
    We do not have a strategic view that we implement with actions and 
reactions over a long period of time. Thus, we have given the PRC a 
great field advantage in conducting their influence activities in the 
FAS and throughout the Pacific Islands.
    Your second question concerns the significant PRC's influence 
operations in the Freely Associated States and the inroads they have 
made. First, the PRC activity in the FAS is a subset of their broader 
objectives in the indo-Pacific for regional dominance. There is no 
question, the PRC is actively seeking regional dominance in the Pacific 
Islands, as they have established in the South China Sea.
    The PRC is in the game both short term and long term. The recent 
tour-de-force by the PRC Foreign Minister throughout the Pacific 
Islands clearly highlighted this high-level PRC focus, but it is the 
day-to-day activities targeted to subvert the Pacific Islands that are 
the real threat.
    While the media emphasizes the PRC's large scale infrastructure 
projects, what is missed is the low level political and economic 
activity such as buying into local businesses, influence operations in 
media that support PRC political objectives, social activities such as 
friendship organizations, and scholarships for study in China. All this 
results in a host of multifaceted economic, social, political, 
informational, psychological warfare operations all focused on the goal 
and that goal is clearly regional dominance. Regional dominance means 
elimination of United States and our allies influence in the area.
    Look at the activities of the PRC that go back 20 or 30 years in 
the South China Sea where they are claiming total dominance.
    We need to take the gloves off with the PRC. As I pointed out in my 
remarks at the hearing, the PRC does not play by the rules . . . their 
rules are any means to the end and that end is regional domination.
    Why is this vast ocean area of interest to the PRC? There are two 
main lines of communication, both air and surface, in Asia, one is 
through the Straits of Malacca north through the South China Sea, and 
the other is across the Pacific through the Pacific Islands. If one 
controls both lines of communication, it effectively cuts off the so-
called frontline states, Korea, Taiwan, Japan, Philippines, and others.
    You don't have to be a military strategist to realize that should 
the PRC be successful in dominating the Pacific Islands and their lines 
of communication, it will effectively be a flank attack on our partners 
in Japan, Korea, Taiwan, Philippines, and southward.
    Your last point concerns the conditions within the FAS which have 
facilitated PRC encroachment.
    The PRC approach is multifaceted and multiyear, it is economic 
penetration and political (especially anti-Taiwan), it is social 
activities, it is influence warfare, the entire gamut of national power 
and influence operations directed at the governments and people of the 
FAS.

    As I noted in my prepared remarks, the FAS and by extension all the 
Pacific Island nations are vulnerable because:

     They are remote, have a very small land mass, and are 
            geographically isolated in the central Pacific,

     They have a very thin population, about 200,000,

     They lack natural resources (except fish),

     They have poor infrastructure and generally fragile 
            governments because of the small population and weak 
            economy.

    While the Freely Associated States have made significant progress 
in the last 40 years, with the noted shortcomings, they still will 
require U.S. assistance. This includes programmatic support especially 
in infrastructure, education, and health. The compacts as renegotiated 
will continue grant assistance for another 20 years again with emphasis 
on infrastructure, health, and education.
    The Compacts of Free Association provide a framework for a 
relationship, but that is the formal side. To be effective the 
relationship must be much deeper than a piece of paper and a few 
signatures. Over 40 years, we have built an effective relationship with 
the Micronesian States, but it can always be better. As we seek to 
support our long-term interests, people to people relationships, built 
over time and built on common bonds are key.
    In these small nations, person-to-person communication is perhaps 
more vital then when dealing with NATO or Japan or some other world 
power.
    The Peace Corps is a classic example of relationship building. 
During the Trusteeship, we had more Peace Corps volunteers in 
Micronesia than anywhere else in the world. However, that program was 
ended, perhaps for all the wrong reasons. It is now time to reestablish 
the Peace Corps in Micronesia and build grassroots relationships, as we 
did in the 60s and 70s.
    We have U.S. embassies in all the Micronesian capitals and capable 
foreign service personnel and local nationals who solve low-level and 
sometimes high-level issues that come between any two nations.
    CINCPAC, in Hawaii, has been a key element in building effective 
relations with the Micronesian States. On one hand it facilitates 
Micronesian recruitment for the U.S. Armed Forces where they serve in 
large numbers. It also has frequent meetings and exchanges in Honolulu 
and in the FAS on security and defense issues.
    Thank you for the opportunity to address these issues which should 
be key factors when the Congress of the United States, and this 
Committee, considers passage of the Compacts of Free Association which 
have recently been submitted by the Administration. Expeditious action 
on the Compacts by this Committee and others is essential, and will 
send a positive message of continued U.S. interest and commitment to 
democratic government in the FAS and the broader Pacific Islands.

                                 ______
                                 

    Mrs. Radewagen. The Chair now recognizes Mr. Lum for 5 
minutes.

     STATEMENT OF THOMAS LUM, SPECIALIST IN ASIAN AFFAIRS, 
         CONGRESSIONAL RESEARCH SERVICE, WASHINGTON, DC

    Dr. Lum. Task Force Chair Radewagen and co-Chair Sablan, 
thank you for inviting the Congressional Research Service to 
testify at today's hearing.
    My name is Thomas Lum. I am a specialist in Asian affairs. 
As requested, I will be discussing the Compacts of Free 
Association and China's engagement with the Freely Associated 
States.
    Since the end of World War II, the United States has 
maintained a dominant presence in the Micronesian subregion of 
the Southwest Pacific, where the Freely Associated States, as 
well as Guam and the Commonwealth of the Northern Mariana 
Islands, are located. The United States signed bilateral 
Compacts of Free Association with the Marshall Islands and 
Micronesia in 1982, and with Palau in 1986. These were approved 
by Congress in 1985 and 1986, respectively.
    Through these Compacts, the Freely Associated States 
receive economic assistance and security guarantees in exchange 
for allowing the United States to operate military facilities 
on their soil and to make decisions regarding mutual security. 
Under the Compacts, the United States is obligated to defend 
the Compact states against attack or threat of attack; the 
United States has the prerogative to reject the strategic use 
of or military access to the Compact states by third countries; 
the United States may establish military facilities in the 
Compact states; citizens of the Compact states have the right 
to reside and work in the United States and its territories, as 
roughly 100,000 lawful non-immigrants do; citizens of the 
Compact states are eligible to volunteer for service in the 
U.S. armed forces, where over 1,000 currently serve.
    The U.S. Department of Defense operates the Ronald Reagan 
Ballistic Missile Defense Test Site on Kwajalein Atoll in the 
Marshall Islands. DoD is building a military radar system in 
Palau. And in 2021, U.S. and Micronesian officials agreed to 
establish a permanent U.S. military presence in Micronesia, 
although the details of that plan are not yet clear.
    Economic assistance pursuant to Title II of the Compacts is 
set to expire at the end of Fiscal Year 2023 for the Marshall 
Islands and Micronesia, and Fiscal Year 2024 for Palau. Compact 
provisions related to defense, security, migration, and other 
areas are to continue unchanged.
    In May 2023, the United States signed final agreements with 
Micronesia and Palau extending economic assistance for another 
20 years, or through 2043. The United States and the Marshall 
Islands signed a memorandum of understanding in January 2023, 
but are still working on reaching a final agreement. Both 
Houses of Congress would need to approve the agreements by 
passing implementing legislation.
    In the previous renewal in 2010, the United States and 
Palau reached an accord on extending Compact assistance for the 
period 2010 through 2024. That agreement was not approved and 
fully funded by Congress until Fiscal Year 2018. The 2023 
Compact agreements, including the Marshall Islands' MOU, would 
provide approximately $6.5 billion in grants and trust fund 
contributions and $634 million to continue U.S. postal services 
over 20 years.
    According to press reports, the next phase of Compact 
assistance is to include greater support for climate change, 
adaptation, health care, and education. Annual Compact 
assistance for all three countries, including grants and trust 
funds, would grow from roughly $200 million currently to $325 
million.
    Nuclear legacy issues stemming from U.S. nuclear weapons 
testing over the Marshall Islands during the 1940s and 1950s 
remain a sticking point in Compact negotiations with the 
Marshall Islands. Marshall Islands leaders and peoples of the 
four most affected atolls have claimed that U.S. compensation, 
environmental cleanup, and restoration efforts, as well as 
health programs, have been inadequate. The January 2023 U.S.-
Marshall Islands preliminary agreement on extending Compact 
assistance reportedly includes a $700 million trust fund 
intended for various purposes, including for addressing nuclear 
legacy issues. Marshall Islanders also have expressed concerns 
about possible leakage from Runit Dome, a radioactive waste 
site on Enewetak Atoll.
    The special Compact relationships between the United States 
and the Freely Associated States and China's lack of diplomatic 
relations with the Marshall Islands and Palau, which recognize 
Taiwan, have limited China's engagement. The PRC government 
imposes extra fees on Marshall Islands'-flagged vessels 
entering Chinese ports, and in 2017 banned PRC tourists from 
visiting Palau, which some analysts view as forms of PRC 
pressure to switch diplomatic relations from Taiwan to China.
    During the past two decades, China has become a major 
provider of development assistance in the Pacific Islands 
Region. Since 2009, China has provided Micronesia roughly $220 
million in assistance, particularly for infrastructure 
development. In 2022, the PRC government proposed a regional, 
diplomatic, economic, and security pact with 10 Pacific island 
countries. China shelved the proposal after some Pacific Island 
countries, including strongly Micronesia, opposed it.
    This concludes my brief remarks. Thank you for the 
opportunity to testify, and I look forward to your questions.

    [The prepared statement of Dr. Lum follows:]
    Prepared Statement of Thomas Lum, Specialist in Asian Affairs, 
                     Congressional Research Service
    Indo-Pacific Task Force Chair Radewagen and Co-Chair Sablan, thank 
you for inviting the Congressional Research Service to testify at 
today's hearing. My name is Thomas Lum. I am a Specialist in Asian 
Affairs. As requested, I will be discussing the Compacts of Free 
Association and U.S. relations with the Freely Associated States.
History

    The Republic of the Marshall Islands (RMI), Federated States of 
Micronesia (FSM), and Republic of Palau, known collectively as the 
Freely Associated States (FAS), cover a maritime area larger than the 
continental United States, govern over 1,000 islands and atolls, and 
have a combined population of approximately 200,000. The Freely 
Associated States are sovereign, United Nations-member states that 
through bilateral Compacts of Free Association with the United States 
receive U.S. economic assistance and security guarantees and grant the 
United States the prerogatives to operate military bases on their soil 
and make decisions that affect U.S. and FAS security.
    In 1947, the Marshall Islands, Micronesia, the Northern Mariana 
Islands, and Palau, which had been under Japanese control during World 
War II, became part of the U.S.-administered United Nations Trust 
Territory of the Pacific Islands.\1\ The Northern Mariana Islands chose 
commonwealth status in 1975.\2\ In 1978, the Marshall Islands, 
Micronesia, and Palau rejected the option of U.S. territorial or 
commonwealth status and instead chose the status of free association 
with the United States.
---------------------------------------------------------------------------
    \1\ U.S. military forces defeated the Japanese Imperial Army in the 
Mariana Islands and Palau in 1944. In the Battle of Peleliu in northern 
Palau, nearly 1,800 American soldiers were killed and 8,000 were 
wounded.
    \2\ Guam, occupied by the United States after the Spanish American 
War ended in 1898, became an unincorporated territory in 1950.
---------------------------------------------------------------------------
    The governments of the United States and the Marshall Islands and 
Micronesia signed Compacts of Free Association in 1982. The RMI and FSM 
Compacts were approved by plebiscites in the Marshall Islands and 
Micronesia and by both houses of the U.S. Congress in 1985,\3\ becoming 
effective in 1986. Also in 1986, the United States and Palau signed a 
50-year Compact of Free Association, which was approved by the both 
houses of Congress that year, but not ratified in Palau until 1993 
(entering into force in 1994).\4\
---------------------------------------------------------------------------
    \3\ P.L. 99-239, Compact of Free Association Act of 1985. With the 
exception of the economic provisions pursuant to Title II, the Compacts 
with the Marshall Islands and Palau do not have explicit term limits.
    \4\ P.L. 99-658, Palau Compact of Free Association Act and P.L. 
101-219, Palau Compact of Free Association Implementation Act.

    The U.S. government perceived the Compacts as helping to advance 
economic development and self-sufficiency among the FAS and to support 
the national security interests of the United States and the FAS in 
light of Cold War geopolitical concerns related to the Soviet Union. 
Although the goals of democratic self-government and mutual security 
largely have been achieved, economic development and self-sufficiency 
have remained elusive, particularly in the Marshall Islands and 
Micronesia.\5\ In addition to economic assistance, key provisions of 
the Compacts include the following:
---------------------------------------------------------------------------
    \5\ For further information on the Compacts of Free Association, 
see CRS In Focus IF12194, The Compacts of Free Association and CRS 
Report R46573, The Freely Associated States and Issues for Congress.

     The United States is obligated to defend the FAS against 
            attack or threat of attack. The United States may block FAS 
            government policies that it deems inconsistent with its 
            duty to defend the FAS (also known as the ``defense 
---------------------------------------------------------------------------
            veto'').

     The United States has the prerogative to reject the 
            strategic use of, or military access to, the FAS by third 
            countries (the ``right of strategic denial'').

     The United States may establish military facilities in the 
            FAS. The U.S. military operates the Ronald Reagan Ballistic 
            Missile Defense Test Site (RTS) at U.S. Army Garrison-
            Kwajalein Atoll in the RMI.

     FAS citizens have the right to reside and work in the 
            United States and its territories as lawful non-
            immigrants.\6\
---------------------------------------------------------------------------
    \6\ FAS citizens are allowed to lawfully reside in the United 
States, but they are not considered Lawful Permanent Residents or U.S. 
citizens.

     FAS citizens are eligible to volunteer for service in the 
---------------------------------------------------------------------------
            U.S. armed forces.

     The FAS are eligible for some U.S. federal programs and 
            services, both on a mandatory and discretionary basis.

       Figure 1. Pacific Islands and Southwest Pacific Subregions

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


     Source: CRS. Boundaries from U.S. Department of State.

    Since the end of World War II, the United States has held a 
dominant economic and security presence in the Micronesian subregion of 
the Southwest Pacific (see Figure 1), where the FAS as well as Guam and 
the Commonwealth of the Northern Mariana Islands are located. Located 
roughly 2,500 miles southwest of Hawaii, the FAS play a role in 
supporting the U.S. security presence in the Pacific Islands region at 
a time of increasing strategic competition between the United States 
and its allies, on one hand, and the People's Republic of China (PRC or 
China), on the other. Some security and foreign policy experts refer to 
the Micronesian subregion as forming the southern part of the so-called 
second island chain in the Pacific, which has strategic importance for 
both the United States and China. The first island chain includes 
southern Japan, Taiwan, and the Philippines.
US-FAS Ties

    Roughly 100,000 FAS citizens live in the United States, including 
children under age 18 who were born in the United States and hold dual 
citizenship. The FAS do not have their own militaries; over 1,000 FAS 
citizens currently serve in the U.S. Armed Forces. On a per capita 
basis, FAS citizens serve in the U.S. military at a higher rate than 
many U.S. states' citizens.\7\ Eighteen FAS citizens lost their lives 
serving in the U.S. military, mostly in the Iraq and Afghanistan 
wars.\8\ The FAS have supported the United States in the United 
Nations, where the RMI and FSM have among the highest rates of 
agreement with U.S. positions or votes and consensus resolutions.\9\
---------------------------------------------------------------------------
    \7\ Department of State, ``U.S. Relations with the Federated States 
of Micronesia,'' October 19, 2021.
    \8\ Sandra Oudkirk, Deputy Assistant Secretary for Australia, New 
Zealand, and Pacific Islands, Department of State, Statement before the 
Senate Committee on Energy and Natural Resources, ``Hearing on U.S. 
Interests in the Freely Associated States,'' July 23, 2019.
    \9\ Department of State, ``Voting Practices in the United Nations 
2021,'' March 31, 2022.
---------------------------------------------------------------------------
    The U.S. Department of Defense (DOD) operates the Ronald Reagan 
Ballistic Missile Defense Test Site (RTS) at U.S. Army Garrison-
Kwajalein Atoll in the Marshall Islands. RTS supports missile and 
missile defense testing, space launch, and space surveillance 
activities. The amended Compact of 2003 extended U.S. base rights on 
Kwajalein Atoll through 2066, with the U.S. option to continue the 
arrangement for an additional 20 years.\10\ DOD is building a Tactical 
Mobile-Over-the Horizon Radar (TACMOR) system in Palau. In July 2021, 
U.S. and FSM officials agreed to cooperate on building up a more 
frequent and permanent U.S. military presence in Micronesia.\11\
---------------------------------------------------------------------------
    \10\ Compact of Free Association Military Use and Operating Rights 
Agreement between the United States of America and the Marshall 
Islands, April 30, 2003, Article X.
    \11\ The National Government of the Federated States of Micronesia, 
``FSM-U.S. High-Level Defense & Security Talks Conclude; Actions Taken, 
Commitments Made, Essential to FSM & Indo-Pacific Security,'' press 
release, July 27, 2021.
---------------------------------------------------------------------------
    The Marshall Islands and Palau are among four Pacific Island 
countries that have diplomatic relations with Taiwan but not the 
PRC.\12\ In May 2022, China proposed a sweeping diplomatic, economic, 
and security pact between the PRC and ten Pacific Island countries with 
which it has diplomatic relations.\13\ Some Pacific Island countries, 
including Micronesia, opposed the agreement, causing China to shelve 
the proposal.
---------------------------------------------------------------------------
    \12\ Of 14 countries worldwide that recognize Taiwan 
diplomatically, four are in the Pacific (RMI, Nauru, Palau, and 
Tuvalu). China does not recognize countries that have diplomatic 
relations with Taiwan, which it considers to be a part of the PRC.
    \13\ Laura Zhou, ``China Responds to Pacific Island Rejection with 
Paper on `Mutual Respect and Common Development','' South China Morning 
Post, May 31, 2022; ``China Wants 10 Small Pacific Nations to Sign on 
to `Game-Changing' Security Agreement,'' Associated Press, May 25, 
2022.
---------------------------------------------------------------------------
Renewing Economic Provisions of the Compacts
    Economic assistance pursuant to Title II of the Compacts of Free 
Association is set to expire at the end of Fiscal Year (FY) 2023 for 
the Marshall Islands and Micronesia, and at the end of FY2024 for 
Palau. Compact provisions related to defense, security, migration, and 
other areas are to continue unchanged. The Department of the Interior 
(DOI) funds and administers this assistance, also referred to as grant 
assistance, through mandatory or permanent appropriations.\14\ On May 
22 and May 23, 2023, the United States signed agreements with Palau and 
Micronesia, respectively, on extending the economic assistance 
provisions of the Compacts of Free Association for another 20 
years.\15\ The President is to submit the agreements as draft 
legislation to both houses of Congress, and Congress is to approve the 
agreements through passing implementing legislation. A final U.S. 
agreement with the Marshall Islands on extending Compact economic 
assistance has not yet been reached.\16\
---------------------------------------------------------------------------
    \14\ See Department of the Interior, ``Compact Grants Assistance,'' 
at https://www.doi.gov/oia/compact-grant-assistance.
    \15\ Department of State, ``Secretary Blinken Witnesses the Signing 
of the U.S.-Palau 2023 Agreement Following the Compact of Free 
Association Section 432 Review,'' media note, May 22, 2023; Department 
of State, ``Signing of the U.S.-FSM Compact of Free Association-Related 
Agreements,'' media note, May 23, 2023.
    \16\ In January and February 2023, the United States signed 
memoranda of understanding with all three Compact countries on the 
basic levels and types of Compact assistance for the next 20 years.
---------------------------------------------------------------------------
    Compact economic assistance funded through the Department of the 
Interior amounts to roughly 75% of all U.S. assistance to the Pacific 
Islands region.\17\ Outside of DOI Compact economic assistance, the 
Department of State recently has pledged new aid funding and 
programming for the Pacific Islands region overall. In 2019, the State 
Department launched a new Pacific Islands regional foreign assistance 
program. In 2019 and 2020, the Trump Administration committed a total 
of $300 million in new funding as part of its ``Pacific Pledge.'' \18\ 
In September 2022, the Biden Administration announced $210 million in 
``additional expanded programs'' and $60 million annually (for a 
duration of 10 years) to support sustainable fisheries in the Pacific 
Islands region.\19\
---------------------------------------------------------------------------
    \17\ According to data from USAID (ForeignAssistance.gov), Fiscal 
Years 2019-2022 (obligated funds in current dollars).
    \18\ State Department, ``U.S. Engagement in the Pacific Islands: 
2020 Pacific Pledge,'' fact sheet, October 1, 2020, at https://2017-
2021.state.gov/u-s-engagement-in-the-pacific-islands-2020-pacific-
pledge/index.html; State Department, ``U.S. Engagement in the Pacific 
Islands: U.N. General Assembly Update,'' fact sheet, October 3, 2019, 
at https://2017-2021.state.gov/u-s-engagement-in-the-pacific-islands-
un-general-assembly-update/index.html.
    \19\ The White House, ``Fact Sheet: Roadmap for a 21st Century 
U.S.-Pacific Island Partnership,'' September 29, 2022, at https://
www.whitehouse.gov/briefing-room/statements-releases/2022/09/29/fact-
sheet-roadmap-for-a-21st-century-u-s-pacific-island-partnership/; 
Department of State, FY2024 Congressional Budget Justification, p. 199.
---------------------------------------------------------------------------
    Pursuant to the Compacts, the United States provided DOI grant 
assistance worth approximately $661 million to the Marshall Islands and 
$1.54 billion to Micronesia during the first Compact economic 
assistance term (1987-2003). Following the completion of negotiations 
in 2003,\20\ Congress approved agreements amending the Compacts and 
extending assistance for another 20 years.\21\ Two new features of the 
assistance were trust funds established with the aim of providing 
sustainable sources of revenue after 2023 and oversight committees with 
members from the U.S. and FAS governments. During the second economic 
assistance term (2004-2023), U.S. grant assistance and trust fund 
contributions to the Marshall Islands totaled $722 million and $276 
million, respectively. Micronesia received $1.6 billion in grant 
assistance and $517 million in trust fund contributions during the same 
period.\22\ According to the Government Accountability Office, total 
Compact-related assistance during the second term totaled $3.6 billion 
for the two countries, targeting six sectors: education, health, the 
environment, public sector capacity building, private sector 
development, and infrastructure.
---------------------------------------------------------------------------
    \20\ The economic provisions of the Compacts with the Marshall 
Island and Micronesia expired in 2001. Economic assistance was extended 
by 2 years (2002-2003) while bilateral negotiations to amend the 
Compacts and continue economic assistance took place.
    \21\ The Compact of Free Association Amendments Act of 2003 (P.L. 
108-188).
    \22\ These amounts do not include nuclear test-related funding and 
Kwajalein payments to the Marshall Islands, federal program assistance, 
Compact Impact funding, and other assistance using discretionary funds.
---------------------------------------------------------------------------
    During Palau's first Compact economic assistance term (1995-2009), 
Compact assistance included grants, road construction, and the 
establishment of a trust fund worth $574 million.\23\ In 2010, the 
United States and Palau concluded the U.S.-Palau Compact Review 
Agreement, to extend economic assistance for another 15 years (2010-
2024), worth $229 million.\24\ Compact assistance under the Review 
Agreement includes support for education, health, and the 
administration of justice; infrastructure projects and maintenance; 
debt reduction; and trust fund contributions. The 2010 agreement was 
not fully funded by Congress until FY2018, largely due to budgetary 
constraints, raising concerns among the Compact states about U.S. 
commitment to the FAS.\25\
---------------------------------------------------------------------------
    \23\ In addition, Palau received Compact federal services worth $25 
million and discretionary federal program assistance amounting to $267 
million. Statement of David Gootnick, Director, International Affairs 
and Trade, Government Accountability Office, ``Compact of Free 
Association: Proposed U.S. Assistance to Palau for Fiscal Years 2016 to 
2024,'' Testimony before the House Subcommittee on Indian, Insular, and 
Alaska Native Affairs, Committee on Natural Resources, July 6, 2016.
    \24\ Department of the Interior, ``Budget Justifications and 
Performance Information, Fiscal Year 2024, Office of Insular Affairs;'' 
Agreement between the Government of the United States of America and 
the Government of the Republic of Palau Following the Compact of Free 
Association Section 432 Review, September 3, 2010 at https://
www.state.gov/18-919-2/.
    \25\ Elke Larsen, ``Prioritizing Palau: Why the Compact Budget 
Matters,'' Center for Strategic and International Studies, October 10, 
2013; Comments by Senator Lisa Murkowski, Chair, Senate Energy and 
Natural Resources, Hearing on U.S. Interests in the Freely Associated 
States, July 23, 2019. The National Defense Authorization Act for 
FY2018 (P.L. 115-91, Section 1259C) approved the U.S.-Palau Compact 
Review Agreement and authorized remaining funding under the agreement. 
The Consolidated Appropriations Act, FY2018 (P.L. 115-141, Division G, 
Title I, Section 114) appropriated outstanding economic assistance 
pursuant to the agreement.
---------------------------------------------------------------------------
    The final Palau and Micronesia Compact agreements and the 
preliminary agreement with the Marshall Islands provide for a total of 
approximately $7.1 billion in Compact economic assistance for the 2024-
2043 period, including $6.5 billion in grants and trust fund 
contributions and $634 million to continue U.S. Postal Service services 
in the FAS.\26\ According to press reports, the next phase of Compact 
assistance is to include greater support for climate change adaptation, 
health care, and education. The preliminary agreement with the Marshall 
Islands reportedly includes a $700 million trust fund intended for 
various purposes, including for addressing nuclear legacy issues (see 
below) and for Kwajalein atoll.\27\ Under the pending agreements, total 
annual Compact assistance for the FAS would grow from roughly $200 
million annually to $325 million (not including Postal Service funding 
during 2024-2043).
---------------------------------------------------------------------------
    \26\ See Department of State, FY2024 Congressional Budget 
Justification, p. 100.
    \27\ Anita Hofschneider, ``Marshall Islands Could Receive Billions 
Under Renegotiated Treaty,'' Civilbeat.org, January 22, 2023; Matthew 
Lee, ``US Nears New Cooperation Deals with Two Pacific Island 
Nations,'' Saipan Tribune, January 16, 2023.
---------------------------------------------------------------------------
China's Relations with the FAS

    Although the PRC's influence in the Pacific Islands region is 
growing, its engagement among the FAS compared to its relations in the 
rest of the region has been limited, due to the U.S. political, 
economic, and security presence in the Compact states and to the PRC's 
lack of diplomatic relations with the Marshall Islands and Palau. 
China's engagement is greater in Micronesia, with which it has 
diplomatic relations, as well as a ``comprehensive strategic 
partnership.'' \28\ China has provided roughly $220 million in 
assistance to Micronesia, particularly infrastructure development, 
since 2009, according to the Lowy Institute.\29\ Despite close ties, in 
March 2023, outgoing FSM President David Panuelo wrote a letter to FSM 
national and state leaders detailing PRC efforts at economic coercion, 
bribery, espionage, surveillance, and harassment in Micronesia, 
including PRC diplomats applying pressure on him personally.\30\
---------------------------------------------------------------------------
    \28\ Cao Desheng, ``President Hails Ties with Micronesia in 
Greetings,'' China Daily, May 21, 2019.
    \29\ Data compiled by the Lowy Institute, an independent, 
nonpartisan international policy think tank located in Sydney, 
Australia. The Pacific Aid map and data are accessible at PACIFIC AID 
MAP / MAP (lowyinstitute.org). Data for 2021 and 2022 are incomplete.
    \30\ The letter, dated March 9, 2023, is accessible at https://
www.documentcloud.org/documents/22037013-letter-from-h-e-david-w-
panuelo-to-pacific-island-leaders-may-20-2022-signed.
---------------------------------------------------------------------------
    China is one of the principal trading partners of the Marshall 
Islands, based largely on the RMI's import of Chinese transport boats. 
The PRC government imposes extra fees on Marshall Islands-flagged 
vessels entering PRC ports, which some analysts view as a form of PRC 
pressure on the RMI to switch diplomatic relations from Taiwan to the 
PRC.\31\ In late 2017, Beijing banned PRC visitors to Palau, which had 
grown in number to account for over half of all foreign tourists in 
Palau. Some observers point to this ban as evidence that China was 
attempting to pressure Palau into diplomatically recognizing the PRC 
rather than Taiwan.\32\
---------------------------------------------------------------------------
    \31\ United States Institute of Peace, ``China's Influence on the 
Freely Associated States of the Northern Pacific,'' 2022.
    \32\ Stephen Dziedzic, ``Beijing Intensifies Lobbying of Pacific 
Nations to Recognize Taiwan as Part of One China,'' Australian 
Broadcasting Corporation, February 13, 2019; Lauren McMah, ``Island 
Paradise in Peril After Incurring Wrath of China,'' News.com.au, August 
21, 2018.
---------------------------------------------------------------------------
Nuclear Legacy Issues

    Nuclear legacy issues remain a sticking point in U.S.-Marshall 
Islands negotiations to renew Compact economic provisions. From 1946 to 
1958, the United States conducted 67 atmospheric atomic and 
thermonuclear weapons tests over the Marshall Islands atolls of Bikini 
and Enewetak.\33\ In 1954, ``Castle Bravo,'' the second test of a 
hydrogen bomb, was detonated over Bikini atoll. The U.S. military 
evacuated 312 Marshallese from Bikini and Enewetak prior to the 
test.\34\ Reported to be 1,000 times more powerful than the atomic 
weapon that was dropped on Hiroshima, Japan in 1945, Bravo resulted in 
radioactive fallout upon the populated atolls of Rongelap and Utrik. 
Reportedly, 253 residents of these atolls were evacuated within days of 
the blast, although not all before radioactive ash had begun 
falling.\35\
---------------------------------------------------------------------------
    \33\ Embassy of the United States in the Marshall Islands, ``The 
Legacy of U.S. Nuclear Testing and Radiation Exposure in the Marshall 
Islands,'' at https://mh.usembassy.gov/the-legacy-of-u-s-nuclear-
testing-and-radiation-exposure-in-the-marshall-islands/.
    \34\ Bev Keever, ``Enewetak Atoll, 50 Years Ago This Week,'' 
Honolulu Weekly, October 30, 2002.
    \35\ The U.S. government states that the U.S. military evacuated 
residents of Rongelap and Utrik within 52 hours of Castle Bravo, while 
other reports state that not all residents were evacuated until 48-72 
hours after the explosion. Embassy of the United States in the Marshall 
Islands, ``The Legacy of U.S. Nuclear Testing and Radiation Exposure in 
the Marshall Islands''; Dan Zak, ``A Ground Zero Forgotten,'' 
Washington Post, November 27, 2015; Giff Johnson, ``U.S. Seriously 
Underestimated Marshall Islands Fallout Doses, Risk,'' Marianas 
Variety, August 9, 2020.
---------------------------------------------------------------------------
    The nuclear testing resulted in hardships and health problems for 
many Marshall Islanders of the four most affected RMI atolls of Bikini, 
Enewetak, Rongelap, and Utrik. The people of Rongelap, in particular, 
have experienced elevated level of cancers, thyroid disorders, and 
birth deformities.\36\ Following U.S. government radiological cleanup 
efforts, the people of Utrik returned in 1955 and Enewetak people 
returned in 1980. The people of Rongelap returned in 1957 and were re-
evacuated in 1985 after new studies revealed unsafe levels of 
radiation. The U.S. government declared Bikini safe for habitation 
beginning in 1968, although returnees were re-evacuated in 1978 after 
``alarming'' radiation levels were detected in their bodies, and the 
atoll has not been permanently resettled.\37\
---------------------------------------------------------------------------
    \36\ Susanne Rust ``How the U.S. Betrayed the Marshall Islands, 
Kindling the Next Nuclear Disaster,'' Los Angeles Times, November 10, 
2019.
    \37\ Jon Letman, ``Nuclear Justice for the Marshall Islands''; RMI 
Embassy, Nuclear Testing on the Marshall Islands: A Chronology of 
Events.
---------------------------------------------------------------------------
Runit Dome

    Located on Enewetak atoll, Runit Dome is a concrete roof that U.S. 
military personnel built over a nuclear crater, which is filled with 
over 100,000 cubic yards of radioactive soil from U.S. nuclear 
testing.\38\ Due to rising sea levels, water reportedly has entered the 
dome, which has led some local observers to fear that radioactive water 
could seep out.\39\ In June 2020, the Department of Energy (DOE) 
released a report on Runit Dome pursuant to the National Defense 
Authorization Act, FY2020 (P.L. 116-92, Sec. 364). The report concluded 
that the dome itself was not in immediate danger of collapse or failure 
and that there was no data to suggest that there was any flow of 
contaminated groundwater from beneath the structure that had a 
``measurable adverse effect on the surrounding environment'' or that 
would likely cause any adverse effect for up to 20 years.\40\ The 
National Defense Authorization Act, FY2022 (P.L. 117-81, Sec. 3140) 
mandated a study on the impacts of climate change on Runit Dome.
---------------------------------------------------------------------------
    \38\ Susanne Rust ``How the U.S. Betrayed the Marshall Islands, 
Kindling the Next Nuclear Disaster,'' Los Angeles Times, November 10, 
2019.
    \39\ Kyle Mizokami, ``Congress Demands Investigation into the 
U.S.'s Nuclear Coffin,'' Popular Mechanics, December 27, 2019.
    \40\ Department of Energy, ``Report on the Status of Runit Dome in 
the Marshall Islands: Report to Congress,'' June 2020, at https://
www.energy.gov/sites/prod/files/2020/06/f76/DOE-Runit-Dome-Report-to-
Congress.pdf.
---------------------------------------------------------------------------
Nuclear Compensation

    The RMI government and peoples of the four most affected atolls 
have long argued that U.S. compensation and assistance to Marshall 
Islanders for personal injuries or adverse effects on health, the loss 
of land, and property damages has been inadequate. Under the Compact of 
Free Association, Section 177, the United States ``accept[ed] 
responsibility for compensation owing to the citizens of the Marshall 
Islands . . . for loss or damage to property and person . . . resulting 
from the nuclear testing program . . .'' \41\ The Compact established a 
$150 million Nuclear Claims Fund to provide compensation for nuclear 
contamination-related injuries and damages, and a Nuclear Claims 
Tribunal (NCT) to adjudicate claims and grant awards from the Fund. The 
Fund was intended to generate, through returns on investments, a 
perpetual source of revenue to be distributed among the 177 Health 
Program, trust funds for the four most affected atolls, and the NCT. 
Section 177 constituted a ``full and final settlement'' of related 
claims, thereby ending nuclear compensation lawsuits by Marshall 
Islanders against the U.S. government that were pending in U.S. courts. 
\42\ In 2004, the U.S. government released a report evaluating a 
Marshall Islands petition for greater compensation pursuant to Article 
IX of the 177 Agreement (the Changed Circumstances Clause),\43\ 
concluding that there was no legal basis for considering additional 
compensation payments.\44\
---------------------------------------------------------------------------
    \41\ See P.L. 99-239, Title I, Article VII, Sec. 177 and the 
Agreement between the Government of the United States and the 
Government of the Marshall Islands for the Implementation of Section 
177, at Section 177 Agreement (doi.gov).
    \42\ Ibid.
    \43\ Article IX states: ``If loss or damage to property and person 
of the citizens of the Marshall Islands, resulting from the Nuclear 
Testing Program, arises or is discovered after the effective date of 
this Agreement, and such injuries were not and could not reasonably 
have been identified as of the effective date of this Agreement, and if 
such injuries render the provisions of this Agreement manifestly 
inadequate, the Government of the Marshall Islands may request that the 
Government of the United States provide for such injuries by submitting 
such a request to the Congress of the United States for its 
consideration.
    \44\ U.S. Department of State, Report Evaluating the Request of the 
Government of the Republic of the Marshall Islands Presented to the 
Congress of the United States of America, November 2004.
---------------------------------------------------------------------------
    According to U.S. government sources, between 1958 and 2004, the 
United States provided $531 million to the Marshall Islands for nuclear 
test damages, environmental cleanup and restoration, resettlement, and 
health and medical programs; \45\ this compensation grew to roughly 
$600 million by 2019.\46\ The U.S. government has provided compensation 
pursuant to the Compact of Free Association, through congressional ex 
gratia payments,\47\ and through health sector grants during the second 
Compact assistance term (2004-2023).\48\ According to the Marshall 
Islands government, the depletion of the Nuclear Claims Fund (in 2009) 
left $23 million in personal injury awards and $2.2 billion in property 
damages awards unpaid.\49\
---------------------------------------------------------------------------
    \45\ Department of State, ``U.S. Medical and Environmental 
Assistance to the Marshall Islands,'' fact sheet, January 4, 2005, at 
U.S. Medical and Environmental Assistance to the Marshall Islands 
(state.gov); Department of State, Report Evaluating the Request of the 
Government of the Republic of the Marshall Islands Presented to the 
Congress of the United States of America.
    \46\ Susanne Rust, ``How the U.S. Betrayed the Marshall Islands, 
Kindling the Next Nuclear Disaster''; Embassy of the United States, 
Majuro, Marshall Islands, ``The Legacy of U.S. Nuclear Testing and 
Radiation Exposure in the Marshall Islands.''
    \47\ Congressional ex gratia payments are not compelled by legal 
right or formal agreement.
    \48\ For information about DOE programs for medical surveillance 
and care, environmental monitoring and characterization, and dose 
assessment for the peoples of the nuclear affected atolls, see 
Department of Energy, International Health Studies and Activities, at 
https://www.energy.gov/ehss/international-health-studies-and-
activities.
    \49\ Marshall Islands National Nuclear Commission, ``Nuclear 
Justice for the Marshall Islands--A Strategy for Coordinated Action, 
FY2020-FY2023,'' 2019, at https://rmi-data.sprep.org/system/files/
RMI%20NNC%20Strategy%202019.pdf.
---------------------------------------------------------------------------
Conclusion

    To conclude, under the Compacts of Free Association, the Republic 
of the Marshall Islands, Federated States of Micronesia, and Republic 
of Palau serve as key diplomatic and security partners of the United 
States in the Pacific. In an era of growing strategic competition 
between the United States and China in the Pacific Islands region, the 
U.S. government has pledged greater assistance and attention to Pacific 
Island countries and the Freely Associated States. Renewing the 
economic provisions of the Compacts reflect U.S. commitment to the 
region and aim to respond to ongoing issues in U.S.-FAS relations.

                                 ______
                                 

  Questions Submitted for the Record to Dr. Thomas Lum, Specialist in 
             Asian Affairs, Congressional Research Service

            Questions Submitted by Representative Westerman
    Question 1. The U.S. economic assistance to the Republic of Palau 
under the current compact agreement is unique in that assistance was 
extended through a U.S.-Palau Compact Review Agreement (CRA) in 2010, 
rather than through an amended Compact of Free Association (COFA). When 
looking at the CRA, we see provisions refer to the original COFA with 
Palau. This has made the Palau's compact agreements more complex than 
the compact agreements with the other [Freely Associated States (FAS)] 
countries, as Palau's compact provisions are laid out across multiple 
documents. Meanwhile, the 2003 agreements with the Federated States of 
Micronesia and the Republic of the Marshall Islands agreements do not 
require such reference as economic assistance was extended through 
amended COFAs with each country.

    Do you have any recommendations on how the U.S. and Palau could 
resolve this issue?
    Answer. The unique process by which the U.S. economic or grant 
assistance provisions (Title Two) of the COFA with Palau are extended 
does not appear to have delayed past or recent negotiations of CRAs 
with Palau, although the congressional budget process delayed the 
allocation of funds for Palau following the 2010 CRA. The U.S.-Palau 
Compact of Free Association (Palau Compact of Free Association Act, 
P.L. 99-658, Section 432) states in part:

        Upon the fifteenth and thirtieth and fortieth anniversaries of 
        the effective date of this Compact, the Government of the 
        United States and the Government of Palau shall formally review 
        the terms of this Compact and its related agreements and shall 
        consider the overall nature and development of their 
        relationship. In these formal reviews, the governments shall 
        consider the operating requirements of the Government of Palau 
        and its progress in meeting the development objectives set 
        forth in the plan referred to in Section 231(a). The 
        governments commit themselves to take specific measures in 
        relation to the findings of conclusions resulting from the 
        review.

    Section 231(a) of the Palau Compact of Free Association Act states:

        The annual expenditure by the Government of Palau of the grant 
        amounts specified in Article I of this Title shall be in 
        accordance with an official national development plan 
        promulgated by the Government of Palau and concurred in by the 
        Government of the United States prior to the effective date of 
        this Compact. This plan may be amended from time to time by the 
        Government of Palau.

    A CRS review of news reports, expert analysis, congressional 
testimony, and U.S. government statements does not find evidence to 
suggest the review process or any related conditions pursuant to the 
Palau Compact hindered negotiations to renew economic assistance 
provisions of the Compact prior to the 2010 CRA. Compared to the other 
two Compact states, the Marshall Islands and Micronesia, Palau had 
``proved more responsible in how it handle[d] its funding.'' \1\
---------------------------------------------------------------------------
    \1\ Elke Larsen, ``Prioritizing Palau: Why the Compact Budget 
Matters,'' Center for Strategic and International Studies,'' October 
10, 2013.

---------------------------------------------------------------------------
    The Government Accountability Office (GAO) reported in 2008:

        Despite limited capacity to address persistent internal control 
        weaknesses, Palau made progress in providing financial 
        accountability and met most of the compact's and related 
        agreements' accountability requirements; however, [the Office 
        of Insular Affairs] provided limited monitoring of Palau's 
        accountability for compact assistance.\2\
---------------------------------------------------------------------------
    \2\ Government Accountability Office, Compact of Free Association: 
Palau's Use of and Accountability for U.S. Assistance and Prospects for 
Self-Sufficiency,'' June 2008, p. 4.

    The GAO report suggested, furthermore, that the review process was 
not rigorous. The report stated that Palau provided annual reports to 
the U.S. government but that there was ``no documentation regarding . . 
. whether the U.S. government agreed or disagreed that Palau used 
compact funds as set forth in its economic development plan.'' Economic 
consultations were ``informal'' and ``did not provide any 
documentation.'' \3\ Some analysts call for greater U.S. oversight of 
Compact assistance, particularly in the Marshall Islands and 
Micronesia, which might suggest a need to strengthen Palau's oversight 
mechanisms and apply them to the other COFA states.\4\
---------------------------------------------------------------------------
    \3\ Ibid., p. 31.
    \4\ Emil Friberg, Testimony before the House Natural Resources 
Committee on Indian and Insular Affairs--``Preserving U.S. Interests in 
the Indo-Pacific: Examining How U.S. Engagement Counters Chinese 
Influence in the Region,'' May 16, 2023; Michael Walsh, ``Congress 
Should Strengthen Oversight on Pacific Islands Affairs,'' The Hill, 
March 28, 2023; David Gootnick, Government Accountability Office, 
Testimony before the Committee on Energy and Natural Resources, U.S. 
Senate, April 5, 2016.
---------------------------------------------------------------------------
    To the degree that Palau may have fallen short on benchmarks 
related to its national development plan, the U.S. government offered 
additional, targeted assistance to help Palau meet its economic goals 
during the second Compact assistance period (2010-2024). According to 
2011 testimony by Anthony Babauta, then-Assistant Secretary of the 
Interior for Insular Affairs, the Compact Section 432 review focused in 
part on four areas for further Compact assistance: (1) the Compact 
trust fund; (2) implementation of fiscal reforms; (3) foreign 
investment and private sector growth; and (4) the continuation of U.S. 
economic assistance.\5\
---------------------------------------------------------------------------
    \5\ Hearing before the Committee on Energy and Natural Resources, 
U.S. Senate, ``To Review S. 343, a Bill to Amend Title 1 of P.L. 99-658 
Regarding the Compact of Free Association between the Government of the 
United States of America and the Government of Palau . . .,'' June 16, 
2011.
---------------------------------------------------------------------------
    In 2010, the United States and Palau concluded the U.S.-Palau 
Compact Review Agreement, to extend economic assistance for another 15 
years, worth $229 million.\6\ The 2010 agreement was not fully funded 
by Congress until FY2018, largely due to budgetary constraints. The 
Budget Control Act of 2011 (P.L. 112-25) required new mandatory 
spending to be offset by spending cuts elsewhere; negotiations over 
this process delayed funding for Palau.\7\
---------------------------------------------------------------------------
    \6\ Department of the Interior, ``Budget Justifications and 
Performance Information, Fiscal Year 2024, Office of Insular Affairs;'' 
Agreement between the Government of the United States of America and 
the Government of the Republic of Palau Following the Compact of Free 
Association Section 432 Review, September 3, 2010 at https://
www.state.gov/18-919-2/.
    \7\ Elke Larsen, ``Prioritizing Palau: Why the Compact Budget 
Matters,'' Center for Strategic and International Studies, October 10, 
2013; David Walter, ``Sequestration in Paradise,'' Wall Street Journal, 
February 28, 2013.
---------------------------------------------------------------------------
    As talks to renew economic provisions of the Compact with Palau for 
the 2025-2044 period progressed in 2022 and 2023, the U.S. and Palau 
governments discussed Palau's economic development, but any issues 
related to Palau's meeting Compact objectives or to its national 
development plan did not appear to impede negotiations or thwart 
increased funding levels.\8\ The Palau Economic Advisory Group (EAG) 
was formed in 2022 pursuant to the 2010 CRA.\9\ Its first report noted, 
among other observations, that the financial situation of the economy 
and government of Palau was ``dire,'' due in part to the collapse of 
tourism. The report did not place economic conditions on Palau for 
renewing the Compact, but rather made policy recommendations to carry 
out during and after completion of negotiations.\10\ During the 2022-
2023 U.S.-Palau Compact negotiations, Palau President Surangel Whipps 
negotiated an increase in total grant assistance to $889 million, more 
than twice the amount the U.S. government had proposed at the start of 
bilateral discussions in 2020. President Whipps reportedly had found 
the initial offer ``unacceptable.'' \11\
---------------------------------------------------------------------------
    \8\ Heritage Foundation, ``Pacific Islands Roundtable,'' April 26, 
2023.
    \9\ The EAG is composed of five members. The U.S. and Palau 
governments each appoint two members, and the fifth is selected by the 
United States and nominated by Palau.
    \10\ First Annual Report of the Palau Economic Advisory Group, 
April 2023. See also Department of State, ``Completion of the Palau 
Bilateral Economic Consultation Meetings,'' media note, June 23, 2023 
and Department of State, ``Secretary Blinken Witnesses the Signing of 
the U.S.-Palau 2023 Agreement Following the Compact of Free Association 
Section 432 Review,'' media note, May 22, 2023.
    \11\ Leilani Reklai, ``Palau and US Formally Sign Compact Review 
Agreement,'' Island Times, May 23, 2023; Ongerung Kambes Kesolei 
,``Looking at Palau's Approach to the Compact Negotiation,'' Pacific 
Island Times, February 7, 2023; Leilani Reklai, ``US-Palau Compact 
Review MOU Promises Double Financial Assistance, Island Times, January 
13, 2023.

    Question 2. In 2003, the U.S. State Department changed the security 
and defense provisions of the RMI and the FSM compact agreements. These 
include creating linkages between access to COFA trust funds and 
---------------------------------------------------------------------------
compliance with U.S. strategic denial rights.

    Do you think the State Department's linkage of economic assistance 
and defense and security rights have created uncertainty in the FAS 
about the permanence of COFA and that this gave the PRC an opening to 
exert influence in the RMI and the FSM?

    Answer. Several factors suggest the Republic of the Marshall 
Islands (RMI) and the Federated States of Micronesia (FSM) prefer to 
work with the United States on issues related to the Compacts and are 
wary of the influence of the People's Republic of China (PRC or China). 
The Compact of Free Association Amendments Act of 1985 (P.L. 108-188, 
Section 354), and the Trust Fund Agreements between the United States 
and the RMI and FSM contain provisions that allow the United States to 
withdraw its contributions from the Compact trust funds if the RMI or 
FSM government takes any action that the U.S. government determines to 
be incompatible with the U.S. responsibility for security and defense 
matters related to the Compact states.\12\
---------------------------------------------------------------------------
    \12\ See, for example, ``Agreement Between the Government of the 
United States of America and the Government of the Federated States of 
Micronesia Implementing Section 216 and Section 217 of the Compact, as 
Amended, Regarding a Trust Fund,'' at Trust Fund Agreement--Joint 
Committee on Compact Review and Planning (JCRP) (gov.fm).
---------------------------------------------------------------------------
    The RMI and FSM governments do not appear to have explicitly 
challenged these Compact provisions, have supported their security and 
defense relationships with the United States, and, according to at 
least one report, have not seriously considered withdrawing from the 
Compacts.\13\ China's growing influence in the region, rather than 
providing an incentive to embrace China, reportedly has given the RMI 
and FSM more leverage in negotiations with the United States to extend 
Compact economic assistance. And while some RMI and FSM citizens have 
expressed distrust of U.S. military engagement, news reports suggest 
that local sentiment generally has favored the United States over 
China.\14\
---------------------------------------------------------------------------
    \13\ ``America's Pacific Island Allies: The Freely Associated 
States and Chinese Influence,'' RAND, 2019.
    \14\ Peter McKenzie, ``Marshall Islands, Feeling Neglected by the 
U.S., Enjoys New Leverage,'' Washington Post, January 27, 2023; Ashley 
Westerman, ``The US is Building a Military Base in the Middle of the 
Pacific Ocean. Micronesian Residents Have Questions,'' The World, 
August 24, 2021.
---------------------------------------------------------------------------
    Although the PRC's influence in the Pacific Islands region is 
growing, its engagement among the FAS compared to its relations in the 
rest of the region has been limited, due to the U.S. political, 
economic, and security presence among the COFA states and to the PRC's 
lack of diplomatic relations with the Marshall Islands and Palau.\15\ 
China's engagement is greater in Micronesia, with which it has 
diplomatic relations, as well as a ``comprehensive strategic 
partnership.'' \16\ Nonetheless, in May 2022, when China proposed a 
sweeping diplomatic, economic, and security pact between the PRC and 
ten Pacific Island countries (PICs) with which it has diplomatic 
relations, then FSM President David Panuelo and some other PICs opposed 
the agreement, causing China to shelve it.\17\
---------------------------------------------------------------------------
    \15\ Of 14 countries worldwide that recognize Taiwan 
diplomatically, four are in the Pacific (Marshall Islands, Nauru, 
Palau, and Tuvalu). China does not recognize countries that have 
diplomatic relations with Taiwan, which it considers to be a part of 
the PRC. The Marshall Islands and Palau governments have pledged 
continued commitment to Taiwan. ``Marshall Islands says `Strongly 
Committed' to Taiwan Ties,'' Reuters, March 22, 2022; ``Palau Says 
Committed to Supporting Taiwan Despite ``Mounting Aggressions','' 
Reuters, October 6, 2022.
    \16\ Cao Desheng, ``President Hails Ties with Micronesia in 
Greetings,'' China Daily, May 21, 2019.
    \17\ Kirsty Needham, ``China Seeks Pacific Islands Policing, 
Security Cooperation--Document,'' Reuters, May 25, 2022.
---------------------------------------------------------------------------
    On May 22 and May 23, 2023, the United States signed agreements 
with Palau and Micronesia, respectively, on extending the economic 
assistance provisions of the Compacts of Free Association for another 
20 years.\18\ A final U.S. agreement with the Marshall Islands has not 
yet been reached.\19\ Marshall Islands resistance to signing an 
agreement with the United States stems largely from dissatisfaction 
with the way the U.S. government has provided compensation for the 
effects of past nuclear testing over the country.\20\ According to U.S. 
government sources, between 1958 and 2019, the United States provided 
$600 million to the Marshall Islands for nuclear test damages, 
environmental cleanup and restoration, resettlement, and health and 
medical programs.\21\ The RMI government and local communities long 
have sought greater compensation from the U.S. government, but so far 
have not turned to China for assistance related to U.S. nuclear legacy 
issues.
---------------------------------------------------------------------------
    \18\ Department of State, ``Secretary Blinken Witnesses the Signing 
of the U.S.-Palau 2023 Agreement Following the Compact of Free 
Association Section 432 Review,'' media note, May 22, 2023; Department 
of State, ``Signing of the U.S.-FSM Compact of Free Association-Related 
Agreements,'' media note, May 23, 2023.
    \19\ In January and February 2023, the United States signed 
memoranda of understanding with all three Compact countries on the 
basic levels and types of Compact assistance for the next 20 years.
    \20\ ``Marshall Islands Compact Held Up by Nuclear Legacy,'' RNZ, 
June 27, 2023.
    \21\ Susanne Rust, ``How the U.S. Betrayed the Marshall Islands, 
Kindling the Next Nuclear Disaster,'' Los Angeles Times, November 10, 
2019; Embassy of the United States, Majuro, Marshall Islands, ``The 
Legacy of U.S. Nuclear Testing and Radiation Exposure in the Marshall 
Islands.''

    While the RMI and FSM governments remain committed to the Compacts, 
according to some observers, one area of possible concern is political 
fragmentation, particularly in Micronesia. Some residents of two FSM 
states, Chuuk and Yap, have supported separating from the federation, 
citing economic and other reasons. Political fragmentation could 
possibly lead to new political entities outside of the Compacts' 
authorities, stronger local relations with China, and/or greater 
vulnerability to PRC influence, including corruption.\22\
---------------------------------------------------------------------------
    \22\ United States Institute of Peace, ``China's Influence on the 
Freely Associated States of the Northern Pacific,'' September 2022; 
Jonathan Barrett, ``Chuuk Independence Vote Postponed as China-U.S. 
Pacific Contest Builds,'' Reuters, February 26, 2020; ``Falan: Yap Is 
Increasingly Finding Itself at the Mercy of China,'' Pacific Island 
Times, July 17, 2022; China Meets Its Limits in Micronesia, East Asia 
Forum, April 8, 2020.

    Question 3. In the March 17, 2023, CRS report, ``The Compacts of 
Free Association,'' it is stated that ``More than 94,000 FAS citizens 
live in the United States, including children under the age of 18 who 
were born in the United States and hold dual citizenship.'' Given the 
importance of clarifying issues unique to the Compacts and related 
statutes, we would note that on May 5, 2023, the Department of the 
Interior (DOI), Office of Insular and International Affairs (OIA), 
issued a press release also reporting the FAS resident population in 
U.S. at 94,000.
    In this respect, the DOI/OIA press release cited GAO Report 20-491, 
dated June 15, 2020, as the source for OIA's assertion that ``. . . 
more than 94,000 Compact Migrants . . .'' from the FSM, the RMI, and 
Palau ``. . . live and work in . . .'' the U.S. and its territories. 
The OIA statement added that among the 94,000 ``Compact Migrants'' an 
``. . . estimated 43% are U.S. citizens.''
    The estimate of 43% U.S. citizenship rate among what GAO and OIA 
refer to as ``Compact Migrants'' is confirmed at Appendix VI, p. 67 of 
the GAO report. The GAO report cited by OIA also states that, ``From 
2013 to 2018 an estimated 50 percent of compact migrants lived on the 
U.S. mainland.''
    While the U.S. does not treat acquisition of a citizenship of other 
nations under the laws thereof as relinquishment or grounds for loss of 
U.S. nationality, in general the U.S. does not create dual citizenship 
by operation of U.S. law. The suggestion that by conflation of COFA 
Section 141 non-immigrant visa waiver residence and the Section 104(e) 
definition of qualified nonimmigrant combine to recognize or establish 
a form of dual nationality is problematical.
    Children of FAS parents born in a state acquire U.S. nationality 
and citizenship under Section 1 of the 14th Amendment, and children of 
FAS parents born in a territory acquire birthright nationality and/or 
citizenship under 8 U.S.C. 1401-1408. Thus, unless there is a statute 
mandating that a permissibly defined class of U.S. citizens with FAS 
heritage shall be treated as nonimmigrants, interpretation of COFA 
Sections 141-143 as a dual nationality scheme in combination with 
Section 104(e) of the COFA Act of 2003 is unavailing.
    Each of the three FAS constitutions requires FAS citizens who 
acquire a second citizenship to make an election between FAS 
citizenship and citizenship of any other nation, including the United 
States. The FSM and RMI bar to dual citizenship seems to apply to 
children born outside the FSM and RMI, since both those constitutional 
prohibitions require election at age 18.

    3a) Do you think it would be more consistent to conclude that the 
number of FAS citizens in the U.S. under the COFA visa waiver 
provisions, as well as those counted for purposes of Compact impact 
assessment, should be reduced by the percentage of that 94,000 figure 
that represents U.S. citizens, regardless of age?

    Answer. FAS citizens have the right to reside and work in the 
United States and its territories as lawful non-immigrants. According 
to the Department of the Interior, Office of Insular Affairs, more than 
94,000 Compact migrants from the RMI, FSM, and Palau are estimated to 
live and work in the United States and its territories. Among FAS 
migrants living in U.S. states in 2013-2017, an estimated 43% were U.S. 
citizens, including naturalized citizens and minor-age children of FAS 
migrants who were born in the United States and hold dual 
citizenship.\23\ The proportion of FAS migrants in U.S. states plus its 
Pacific territories who are U.S. citizens is likely to be roughly the 
same. In terms of assessing the impact or costs to U.S. states and 
territories where FAS migrants live, some FAS people may be both 
counted as FAS migrants and hold U.S. citizenship. Although FAS 
migrants generally are ineligible for most federal program benefits due 
to restriction on non-U.S. citizens under the Personal Responsibility 
and Work Opportunity Act of 1996 (P.L. 104-193), some people counted as 
FAS migrants for purposes of assessing costs may be eligible for 
federal programs due to their U.S. citizenship status.\24\
---------------------------------------------------------------------------
    \23\ The total number of FAS migrants in U.S. states, the District 
of Columbia, and Puerto Rico was 72,965 according to this estimate. 
Department of the Interior, ``U.S. Department of the Interior Supports 
Solution for Compact Impact,'' May 5, 2023; Government Accountability 
Office, Report to the Chairman of the Committee on Energy and Natural 
Resources, U.S. Senate, ``Compacts of Free Association: Populations in 
U.S. Areas Have Grown, with Varying Reported Effects,'' June 2020, p. 
18.
    \24\ For an example of how U.S. impacted areas assess costs of FAS 
migration, see State of Hawaii Department of Business, Economic 
Development & Tourism, ``COFA Migrants in Hawaii,'' February 2020.
---------------------------------------------------------------------------
    The Compact of Free Association Act of 1985 requires the President 
to report annually to Congress on the impact of the Compact on U.S. 
territories and commonwealths in the Pacific and on the State of 
Hawaii, and to cover the costs ``resulting from any increased demands 
placed upon education and social services'' by migrants from the 
FAS.\25\ The Compact Amendments Act of 2003 mandated $30 million in 
Compact Impact funds be allocated annually for 20 years (2004-
2023).\26\ The apportionment of these funds among the impacted U.S. 
Pacific areas is based upon Census enumerations done roughly every five 
years.\27\ Since 2012, Congress has annually appropriated additional 
discretionary Compact Impact funds, including $6 million for 
FY2023.\28\
---------------------------------------------------------------------------
    \25\ P.L. 99-239, Section 104(e).
    \26\ P.L. 108-188, Section 104(e).
    \27\ United States Census Bureau, Final Report, ``2018 Estimates of 
Compact of Free Association (COFA) Migrants, April 16, 2019.
    \28\ Department of the Interior, Congressional Budget 
Justifications, Fiscal Year 2024, Office of Insular Affairs.

    3b) Do you agree that FAS law determines FAS nationality and 
citizenship, and U.S. law determines U.S. nationality and citizenship, 
so U.S. laws including the Compacts do not create a formal or legally 
defined dual nationality or citizenship for FAS citizens in the U.S. or 
---------------------------------------------------------------------------
U.S. citizens in the FAS?

    Answer. The Immigration and Nationality Act (INA),\29\ the basis of 
U.S. immigration law, does not contain provisions on dual citizenship. 
Under the Citizenship Clause of the Fourteenth Amendment to the 
Constitution and INA Section 301(a) (8 U.S.C. Sec. 1401(a)), persons 
born within the United States, on federally recognized tribal lands, 
and in designated territories (currently, Puerto Rico, the U.S. Virgin 
Islands, Guam, and the Commonwealth of the Northern Mariana Islands) 
generally are U.S. citizens at birth, regardless of the citizenship or 
immigration status of their parents.\30\
---------------------------------------------------------------------------
    \29\ The INA is codified in Title 8 of the U.S. Code (8 U.S.C. 
Sec. 1101 et seq.)
    \30\ For more information, see CRS Legal Sidebar LSB10214, The 
Citizenship Clause and ``Birthright Citizenship'': A Brief Legal 
Overview and CRS Report R47223, U.S. Citizenship for Children Born 
Abroad: In Brief.
---------------------------------------------------------------------------
    Individuals who are not U.S. citizens at birth may naturalize 
pursuant to requirements specified in the INA.\31\ Generally, an 
individual must first be a lawful permanent resident (LPR) in order to 
be eligible to naturalize. Citizens of the Republic of Palau, the 
Federated States of Micronesia, and the Republic of the Marshall 
Islands admitted to the United States under the Compacts are not LPRs; 
however, they may become LPRs if they are otherwise eligible under the 
INA.\32\
---------------------------------------------------------------------------
    \31\ Generally, in order to naturalize, a foreign national must be 
a lawful permanent resident (LPR), meet certain U.S. residence and 
physical presence requirements, demonstrate knowledge of U.S. history 
and civics and English language ability, have good moral character, and 
show attachment to the U.S. Constitution by taking the Oath of 
Allegiance in a public ceremony. See INA Sec. Sec. 316, 319 (8 U.S.C. 
Sec. Sec. 1427, 1430). Individuals must be at least 18 to naturalize; 
children derive citizenship through their parents. The INA contains 
special provisions for the naturalization of members of the U.S. Armed 
Forces at INA Sec. 328 and Sec. 329 (8 U.S.C. Sec. Sec. 1439, 1440). 
For more information, see CRS In Focus IF12322, Naturalization: Policy 
Overview and Selected Trends.
    \32\ See U.S. Citizenship and Immigration Services, ``Status of 
Citizens of the Freely Associated States of the Federated States of 
Micronesia and the Republic of the Marshall Islands: Fact Sheet,'' 
https://www.uscis.gov/sites/default/files/document/fact-sheets/
FactSheetVerifyFASCitizens.pdf, September 2020, and ``Status of 
Citizens of the Republic of Palau: Fact Sheet,'' https://www.uscis.gov/
sites/default/files/document/fact-sheets/FactSheet-
Status_of_Citizens_of_Palau.pdf, October 2019.

    An individual who naturalizes in the United States may retain the 
citizenship of another country if that country permits it. The United 
States has no authority to prohibit another country from continuing to 
treat an individual as its citizen. See, for example, this guidance 
---------------------------------------------------------------------------
from the Department of State:

        Each country has its own nationality laws based on its own 
        policy. Persons may have dual nationality by automatic 
        operation of different laws rather than by choice. For example, 
        a child born in a foreign country to U.S. national parents may 
        be both a U.S. national and a national of the country of birth. 
        Or, an individual having one nationality at birth may 
        naturalize at a later date in another country and become a dual 
        national. U.S. law does not mention dual nationality or require 
        a person to choose one nationality or another.\33\
---------------------------------------------------------------------------
    \33\ U.S. Department of State, Bureau of Consular Affairs, ``Dual 
Nationality,'' https://travel.state.gov/content/travel/en/legal/travel-
legal-considerations/Advice-about-Possible-Loss-of-US-Nationality-Dual-
Nationality/Dual-Nationality.html.
---------------------------------------------------------------------------
    A native-born or naturalized U.S. citizen may lose their 
citizenship by committing certain expatriating acts if those acts are 
committed voluntarily and with the intention of relinquishing U.S. 
citizenship.\34\ These include voluntary naturalization in a foreign 
country after age 18, making a formal declaration of allegiance to a 
foreign country after age 18, serving in the armed forces of a foreign 
country engaged in hostilities against the United States, and serving 
in the armed forces of a foreign country as an officer. An individual 
may also voluntarily renounce their U.S. citizenship before a U.S. 
diplomatic or consular officer abroad.
---------------------------------------------------------------------------
    \34\ INA Sec. 349; 8 U.S.C. Sec. 1481.

---------------------------------------------------------------------------
                                 ______
                                 

    Mrs. Radewagen. I thank the witness for their testimony. 
The Chair now recognizes Ms. Paskal for 5 minutes.

     STATEMENT OF CLEO PASKAL, NON-RESIDENT SENIOR FELLOW, 
     FOUNDATION FOR DEFENSE OF DEMOCRACIES, WASHINGTON, DC

    Ms. Paskal. Chair Radewagen, co-Chair Sablan, distinguished 
members of this Task Force, thank you for the honor of being 
invited to testify.
    The creation of this bipartisan Task Force is timely, 
innovative, important, and really heartening.
    [Slide.]
    Ms. Paskal. I have a map. The Pacific Islands of America 
and the U.S. Freely Associated States are essential for 
America, especially its Pacific strategy. They form a corridor 
of freedom, including freedom of deployment, as we have heard, 
from Hawaii to treaty partners Philippines and Japan. 
Everything that is U.S. is dark blue, and what is lighter blue 
is the FAS. FAS covers about as much of the Pacific as the 
continental United States. Very important.
    As a result, they are at the receiving end of a long-
running, well-funded, focused, and multi-faceted attack from 
the PRC. Beijing's goal is to undermine their relationship with 
the United States, weaken their states' institutions, and 
ultimately to create a condition in which, as one senior 
official told Admiral Keating well over a decade ago, ``You, 
the United States, take Hawaii east and we, China, take Hawaii 
west.'' I will explain how the PRC is trying to make that 
happen. I will also explain the urgent need for combined block-
and-build strategy in which malign influence is blocked, while 
at the same time domestic security is built.
    One has to assume that any major project designed to build 
FAS economic or political independence, especially ones that 
will make them less reliant on China, will be targeted for 
delay or destruction by PRC agents through a range of gray zone 
activities. The biggest targets are the COFAs themselves. They 
build U.S. relationship with the FAS and they block through 
strategic denial. China wants them gone.
    One of the ways that we saw that try to happen recently 
involved two Chinese-origin individuals who tried to bring down 
the Government of the Marshall Islands. PRC-origin Cary Yan and 
Gina Zhou obtained Marshall Islands citizenship and bribed 
senior Marshallese officials in an attempt to set up a semi-
autonomous zone within the RMI, one that would have its own 
legal regime, including immigration. They came within one vote 
of the Marshall Islands Parliament of getting it done. They 
were arrested in Thailand and, in September 2022, were 
extradited to the United States to face charges.
    It sounds like a good outcome, but just wait.
    The combined maximum penalties for the charges they faced 
are 50 years. The United States gave them a plea deal. Yan got 
42 months, Zhou got 31 months. Pretty light, considering they 
tried to take over a country, one that is a key component of 
America's defense architecture and one of Taiwan's few official 
friends.
    Zhou's sentence was so light that by the time the case was 
closed, she had finished serving her time, and the United 
States deported her back to the Marshall Islands, where she is 
now walking free, able to re-establish her linkages with the 
local elite. I wonder how much she likes the COFAs.
    Coincidentally, the Marshall Islands has yet to sign.
    The United States can run whatever projects it likes in the 
Marshalls, but if it doesn't block this sort of attack on the 
core elements of democracy, it will be very hard to ensure 
anything positive can be built.
    These sort of nation-level attacks are common in the FAS. 
China deliberately, as mentioned, built up Palau's tourism 
sector. In 2008, Chinese were less than 1 percent of all 
tourism; 7 years later it was 54 percent. Then, in 2017, China 
pulled the plug on tourism in Palau, making it clear that, 
unless Palau switched from Taiwan to China, the tourists 
wouldn't come back. It devastated the Palauan economy.
    The PRC also uses Chinese organized crime. In 2019 and 
2022, Palau and law enforcement deported hundreds, hundreds of 
mostly Chinese citizens working in illegal online gambling 
operations. The entire population of Palau is about 18,000. 
Palauan authorities believe it was just one of many interlinked 
plans tied to influence operations by the Chinese Communist 
Party.
    Unless that malign influence is blocked, no matter how good 
the idea is, it will be hard to build. At the same time, 
blocking PRC malign influence alone won't work. The region is 
still hurting from COVID. And if there is no building, just 
blocking social disruptions caused by increasing desperation 
could become destabilizing and open up new pathways for PRC 
operations that are extremely difficult to block.
    Under the Compacts the United States has, as mentioned, an 
obligation to defend the Marshall Islands and the Federated 
States of Micronesia and Palau from attacks or threats. China 
is managing to stay below the triggering threshold of the tools 
of the Compact that could help the FAS block and build because 
of Washington's self-imposed limits on defining what a threat 
or attack looks like. This needs to change.
    As a start, there needs to be a cost for taking Chinese 
money. Currently, there is rarely a downside to accepting that 
brown envelope after the banquet. A few high-profile cases 
could hearten honest officials, and make others recalculate 
their cost benefit analysis of selling out their country and, 
by extension, the United States of America.
    That also means don't be shy about ensuring transparency 
and accountability in the Compact funding spending. The people 
of the FAS need to know their money is being spent for their 
benefit. This can be reinforced by other initiatives. 
Currently, Senator Joni Ernst and others, as well as 
Representative Waltz and Connolly are finalizing the CONVENE 
Act. The bill is designed to support the FAS in the 
establishment of their own national security councils, as well 
as other locally-owned blocking-and-building tools. It would 
help the Compacts in blocking the PRC political warfare in the 
region, while just as actively helping the FAS build their 
economies, thus creating the foundation for a true, enduring, 
resilient, free Indo-Pacific.
    This is why this Task Force is so important and, frankly, 
inspiring. It is also why someone in China is likely watching 
this right now, trying to figure out how to make it 
ineffective. Anything good needs to be protected. That includes 
the COFAs. We need to build, but we also need to block across 
the entire gray zone. Thank you.

    [The prepared statement of Ms. Paskal follows:]
    Prepared Statement of Cleo Paskal, Non-Resident Senior Fellow, 
                 Foundation for Defense of Democracies

Introduction

    Chair Radewagen, Co-Chair Sablan, and distinguished members of this 
task force, thank you for the privilege and honor of being invited to 
testify today. The creation of this bipartisan Indo-Pacific Task Force, 
under the auspices of the Committee on Natural Resources, is 
innovative, timely, and important--and heartening.
    By its very composition, this task force shows how much the United 
States is not just a Pacific country but a Pacific Islands country, 
with its chair from American Samoa, its co-chair from the Commonwealth 
of Northern Mariana Islands (CNMI), and distinguished members from Guam 
and Hawaii. There is an enormous depth of knowledge in this room. That 
combined with the truly bipartisan nature of the task force gives hope 
that real solutions can be found for some of the critical threats 
facing region.
    The threats are real--and urgent. The Pacific Islands of America 
(PIA) and U.S. Freely Associated States (FAS) are at the receiving end 
of a long running, well-funded, focused, and multifaceted attack by the 
People's Republic of China (PRC). Beijing's goal is to undermine these 
entities' relationships with the United States, weaken their state 
institutions, and ultimately to create the conditions in which, as one 
senior Chinese official told Admiral Timothy Keating: ``You take Hawaii 
east. We'll take Hawaii west.'' \1\
---------------------------------------------------------------------------
    \1\ Donna Miles, ``China Requires Close Eye as It Expands 
Influence, Capability,'' American Forces Press Service, March 12, 2008. 
(https://www.dvidshub.net/news/17315/china-requires-close-eye-expands-
influence-capability)
---------------------------------------------------------------------------
    This testimony will describe some of the ways in which China is 
trying to accomplish that goal, with examples from each of the FAS. It 
will also describe how, in each of the FAS, what the United States, in 
partnership with the people of the PIA and FAS, can do to fight back, 
including adopting a ``Block and Build'' strategy in which malign 
influence is blocked while concurrently domestic security (including 
economic security) is built.
Block and Build

    Fundamentally what's needed is a ``Block and Build'' approach in 
which vulnerable entities, with the support of allies if needed, block 
malign Chinese influence while simultaneously building domestic 
security (including economic security).
    Given the advanced state of PRC influence operations in the region 
(described in more detail below), one has to assume that any major 
project designed to give the FAS economic or political independence 
(build), especially ones that will make them less reliant on China, 
will be targeted by PRC agents and slowed down through a range of grey 
zone tactics, from bureaucratic stalling to unfair competition, from 
information warfare to lawfare. Unless that targeting is blocked, it 
will be very hard to build.
    At the same time, blocking PRC malign influence alone won't work. 
The region is still hurting from Covid-linked economic collapse and, if 
there is no building, just blocking, social disruptions caused by 
increasing desperation could become destabilizing and open up new 
pathways for the PRC that are extremely difficult to block.
    The title of this hearing asks ``How the Compacts of Free 
Association Support U.S. Interests and Counter the PRC's Influence.'' 
They do it in part by giving the United States the tools necessary to 
Block and Build in the FAS.
    As Chair Radewagen put it at the launch of this task force, the 
Compacts are: ``One of most important tools that the United States has 
in supporting democracy and good governance while denying China the 
ability to project strategic power throughout the vast Pacific 
region.'' \2\
---------------------------------------------------------------------------
    \2\ House Committee on Natural Resources GOP, ``Indo-Pacific Task 
Force Announcement,'' YouTube, June 7, 2023. (https://www.youtube.com/
watch?v=XxTa3eLxgfg)
---------------------------------------------------------------------------
    That tool, however, is underutilized in some cases and even mis-
utilized at times. With financial and service renewal sections of the 
Compact coming to Congress soon, this task force couldn't be timelier. 
The stakes are high. If a block and build strategy that dovetails with 
the Compacts isn't adopted, there is a real risk that not only will the 
long-standing familial relationship with the people of the FAS be 
betrayed, but the United States' Pacific military strategy could 
collapse.
Geographic Importance of the Region (Map at End)

    As others in this hearing will describe in more detail, the core 
American Pacific military strategy for decades has been to reinforce 
the First Island Chain off the coast of Asia (the string of islands 
broadly running north-south from Japan, through Taiwan, Philippines, 
and on past Malaysia). This is reinforced by another broadly north-
south chain just to the east, the Second Island Chain (definitions 
vary, but it roughly runs from Japan, onward to the Commonwealth of 
Northern Marianas, Guam, the Federated States of Micronesia, Palau, 
Indonesia, Papua New Guinea, and then Australia).
    The Pacific Islands of America and the U.S. Freely Associated 
States have made the island chain strategy to be possible.
    The Pacific Islands of America include the unincorporated United 
States insular areas (also known as territories) of American Samoa, 
Baker Island, Guam, Howland Island, Jarvis Island, Johnston Atoll, 
Kingman Reef, Midway Atoll, the Commonwealth of the Northern Mariana 
Islands (CNMI), and Wake Island. Palmyra Atoll, which includes about 50 
small islands a thousand miles or so south of Honolulu, is America's 
only incorporated insular territory.\3\ The Exclusive Economic Zones 
(EEZ) of the PIA combine to cover over 750,000 square miles, or roughly 
the surface area of Turkey.\4\
---------------------------------------------------------------------------
    \3\ ``Definitions of Insular Area Political Organizations,'' U.S. 
Department of the Interior, Office of Insular Affairs, accessed 12 June 
2023. (https://www.doi.gov/oia/islands/politicatypes)
    \4\ Alexander B. Gray and Douglas W. Domenech, ``U.S. Territories: 
The Frontlines of Global Competition With China,'' RealClearDefense, 
March 11, 2021. (https://www.realcleardefense.com/articles/2021/03/11/
us_territories_the_frontlines_of_global_competition_with_china_767683.ht
ml)
---------------------------------------------------------------------------
    The United States also has Compacts of Free Association (COFAs) 
with three independent countries: the Republic of Palau, the Republic 
of the Marshall Islands (RMI), and the Federated States of Micronesia 
(FSM)--together known as the Freely Associated States (FAS).
    Combined, their EEZs cover a vast area of the Pacific comparable in 
size to the continental United States.
    Through the COFAs, the three FAS have voluntarily granted the 
United States uniquely extensive defense and security access in their 
sovereign territories. In the words of the Compacts: ``The Government 
of the United States has full authority and responsibility for security 
and defense matters in or relating to the Marshall Islands and the 
Federated States of Micronesia [and Palau].'' \5\
---------------------------------------------------------------------------
    \5\ Compact of Free Association Act of 1985, Pub. L. 99-239, 99 
Stat. 1770, codified as amended at 48 USC Sec. 1681. (https://
www.Congress.gov/99/statute/STATUTE-99/STATUTE-99-Pg1770.pdf); Trust 
Territory of the Pacific Islands, Pub. L. 99-658, 100 Stat. 3672, 
codified as amended at 48 USC Sec. 1681. (https://www.Congress.gov/99/
statute/STATUTE-100/STATUTE-100-Pg3672.pdf)
---------------------------------------------------------------------------
    This includes control over key aspects of strategic decision-
making, such as the prerogative for the United States to set up and 
operate U.S. military bases in the countries \6\ and a veto over other 
countries' military access to the region.\7\
---------------------------------------------------------------------------
    \6\ Thomas Lum, ``The Compacts of Free Association,'' Congressional 
Research Service, August 15, 2022. (https://crsreports.Congress.gov/
product/pdf/IF/IF12194/1)
    \7\ In broad terms, apart from defense and security provisions, the 
COFAs also give citizens of the FAS the right to work in the United 
States and to serve in the U.S. military and they provide financial 
support and services (such as the postal service) to the government and 
people of the FAS. The financial and service provisions are 
renegotiated every 20 years and are currently up for renewal, expiring 
in FSM/RMI in 2023 and Palau in 2024.
---------------------------------------------------------------------------
    Combined, the PIA and the FAS extend the defensive perimeter of the 
United States to the waters of America's treaty allies, the Philippines 
and Japan, and through them to Taiwan. This `corridor of freedom' 
(including freedom of movement) underpins American strategic planning 
in the Pacific and makes the island chain defenses possible.
    It is one of the many reasons Ranking Member Raul M. Grijalva's 
comment at the launch of this Task Force about ``how grateful we are 
for the role these insular areas have played for this country'' \8\ was 
so apt.
---------------------------------------------------------------------------
    \8\ House Committee on Natural Resources GOP, ``Indo-Pacific Task 
Force Announcement,'' YouTube, June 7, 2023. (https://www.youtube.com/
watch?v=XxTa3eLxgfg)
---------------------------------------------------------------------------
Targeting the FAS

    No other countries on the planet have such a deep defense 
relationship with the United States as do the FAS. The privileges and 
access granted to the United States by the FAS are unique. However, 
they are rarely discussed or examined and seem to have just become a 
`given' in American strategic planning.
    At the same time, those ties are a direct threat to China's 
ambitions, including its desire to push the United States back to 
Hawaii. And Beijing has been doing something about it. Others at this 
hearing will be covering the military aspects of China's attempts to 
infiltrate, coopt, and control the land, sea, and airspace of the FAS. 
While China is in the process of setting up those kinetic warfare 
capabilities in the region, it is also already well advanced on the 
political warfare front, which is what this testimony will focus on.
    China has put enormous effort into understanding the social, 
political, and economic dynamics of the Pacific islands. In any country 
with which China has diplomatic relations, Beijing has a large embassy 
with staffers who speak the local language and have seemingly limitless 
funds to spend on influence and entertainment. In countries like the 
Marshall Islands and Palau, which recognize Taiwan, Beijing maintains 
unofficial operating nodes. The one in Marshall is considered locally 
as an unofficial embassy.
    Since 2012, at least six Oceania-specific research centers have 
been set up in China, including Liaocheng University's Research Centre 
on Pacific Island Countries, which has a full-time staff of close to 40 
researchers.\9\
---------------------------------------------------------------------------
    \9\ Denghua Zhang, ``Growing Academic Interest in the Pacific--
Pacific Research Centres in China,'' Australian National University 
Department of Pacific Affairs, February 2020. (http://
dpa.bellschool.anu.edu.au/sites/default/files/publications/attachments/
2020-02/dpa_in_brief_2020_ 2_zhang_final.pdf)
---------------------------------------------------------------------------
    This official research is augmented by inputs from Chinese 
businesses in the region that are, as per China's 2017 National 
Intelligence Law, legally obligated to support the government's 
intelligence operations.\10\
---------------------------------------------------------------------------
    \10\ National Intelligence Law of the People's Republic, (Adopted 
at the 28th meeting of the Standing Committee of the 12th National 
People's Congress on June 27, 2017), (China). (https://cs.brown.edu/
courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf)
---------------------------------------------------------------------------
    They are also supplemented by Chinese organized crime. This 
deployment (or at the very least sufferance) of criminal elements to 
advance CCP objectives is something that is becoming more prevalent or 
at least more visible, and it was overt during the crackdown in Hong 
Kong.\11\
---------------------------------------------------------------------------
    \11\ Gerry Shih, ``China's backers and `triad' gangs have a history 
of common foes. Hong Kong protesters fear they are next.'' The 
Washington Post, July 23, 2019. (https://www.washingtonpost.com/world/
asia_pacific/chinas-backers-and-triad-gangs-have-history-of-common-
foes-hong-kong-protesters-fear-they-are-next/2019/07/23/41445b88-ac68-
11e9-9411-a608f 9d0c2d3_story.html)

    According to the Organized Crime and Corruption Reporting Project's 
December 2022 report on the Chinese Communist Party and triads in 
---------------------------------------------------------------------------
Palau:

        ``In 2019 and 2020, Palauan law enforcement detained and 
        deported hundreds of mostly Chinese citizens working in illegal 
        online gambling operations based in the country. The operations 
        are just the latest in a string of questionable ventures by 
        ethnic Chinese business people in the country, including U.S.-
        sanctioned senior triad figure Wan Kuok Koi, also known as 
        `Broken Tooth'. Palauan authorities believe the plans are 
        interlinked, and tied to influence efforts by the Chinese 
        Communist Party (CCP). The Chinese push into Palau has been 
        facilitated by long-time Chinese expatriates in the country, as 
        well as members of the local elite. Among these prominent 
        locals have been two former presidents''.\12\
---------------------------------------------------------------------------
    \12\ Bernadette Carreon, Aubrey Belford, and Martin Young, 
``Pacific Gambit: Inside the Chinese Communist Party and Triad Push 
into Palau,'' Organized Crime and Corruption Reporting Project, 
December 12, 2022. (https://www.occrp.org/en/investigations/pacific-
gambit-inside-the-chinese-communist-party-and-triad-push-into-palau)

    Across the region, the PRC strategy seems to entail the use of 
unrestricted warfare tactics, including bribery and blackmail, to 
undermine sovereignty and increase PRC influence. This can be described 
as entropic warfare, as China actively seeks to destabilize and weaken 
target countries to make them easier to dominate and control.\13\ The 
definition of entropy is: ``a process of degradation or running down or 
a trend to disorder.'' Entropic warfare paralyzes a target country's 
(political, legal, economic, social [and ultimately, if they have one, 
military]) ability to respond or defend itself, allowing Beijing to win 
without fighting.
---------------------------------------------------------------------------
    \13\ Cleo Paskal, ``China Winning Entropic Warfare in Pacific 
Islands,'' Sunday Guardian (India), June 4, 2022. (https://
www.sundayguardianlive.com/news/china-winning-entropic-warfare-pacific-
islands)
---------------------------------------------------------------------------
Federated States of Micronesia (Missed Opportunity to Block and Build)

    This is what then President of FSM David Panuelo was describing in 
his March 9, 2023, letter,\14\ in which he writes not only how PRC 
bribery affect national security but that the PRC is actually working 
to create the conditions to break up the country itself by supporting 
separatist movements:
---------------------------------------------------------------------------
    \14\ Cleo Paskal, LinkedIn, March 10, 2023. (https://
www.linkedin.com/posts/cleopaskal_panuelo-letter-on-switch-to-taiwan-
prc-activity-7039672476045340672-8RmJ)

        ``Senior officials and elected officials across the whole of 
        our National and State Governments receive offers of gifts as a 
        means to curry favor. The practical impact of this is that some 
        senior officials and elected officials take actions that are 
        contrary to the FSM's national interest, but are consistent 
        with the PRC's national interests . . . So, what does it really 
        look like when so [many] of our Government's senior officials 
        and elected officials choose to advance their own personal 
        interest in lieu of the national interest? After all, it is not 
        a coincidence that the common thread behind the Chuuk State 
        secession movement, the Pohnpei Political Status Commission 
        and, to a lesser extent, Yap independence movement, include 
---------------------------------------------------------------------------
        money from the PRC and whispers of PRC support.''

    In his letter, Panuelo outlined what would be required for the FSM 
to recognize Taiwan, in effect offering the United States a rare 
opportunity to transform the region and support Block and Build. Doing 
so would have, over time, blocked the sort of PRC-instigated economic 
and social disruptions (entropic warfare) he described and would give 
FSM the space to build its economy and society in a resilient and 
sustainable manner.
    It also would have led to all three FAS recognizing Taiwan, 
reinforcing each other politically, and creating opportunities for 
cooperation that increase strategic depth, such as illegal fisheries 
patrols throughout FAS waters that include Taiwanese representatives.
    Additionally, it would have been a major psychological boost to 
those trying to fight PRC influence--a counter to the PRC's 
inevitability narrative, which tries to inculcate the idea that 
resistance is futile.
    Yet Washington failed to seize this critical opportunity. As part 
of putting together a future strategy, it is important to understand 
why neither the State Department nor any other arm of the federal 
government actively followed up on Panuelo's offer.
Marshall Islands--The Department of Justice Inadvertently Undermines 
        Block and Build

    A recent case involving two Chinese-origin individuals who tried to 
bring down the government of the Marshall Islands--and what the 
Department of Justice (DoJ) did about it--is just as worthy of inquiry.
    The Republic of the Marshall Islands recognizes Taiwan and is home 
to an important U.S. military base at Kwajalein. RMI will hold 
elections in November 2023, and, unlike Palau and FSM, it has yet to 
sign in the current round of Compact negotiations.
    The Marshallese sacrificed dearly, including through 67 nuclear 
tests conducted by the United States,\15\ to contribute to America's 
defense. But, as we've seen, the PRC's preferred battlefield today is 
political--with the goal of obviating the need for kinetic warfare 
(i.e., to win without fighting)--or to ease the way for a kinetic win 
if required.
---------------------------------------------------------------------------
    \15\ Hart Rapaport and Ivana Nikolic Hughes, ``The U.S. Must Take 
Responsibility for Nuclear Fallout in the Marshall Islands,'' 
Scientific American, April 4, 2022. (https://
www.scientificamerican.com/article/the-u-s-must-take-responsibility-
for-nuclear-fallout-in-the-marshall-islands)
---------------------------------------------------------------------------
    As seen in FSM, the United States' focus on kinetic defense has not 
been matched by a concern for defense against China's political 
warfare. In fact, in some cases, the United States takes misguided and 
short-sighted actions that only make things easier for the PRC.
    An example is the case of PRC-origin Cary Yan and Gina Zhou. Yan 
and Zhou obtained Marshall Islands passports and then set about trying 
to undermine the sovereignty and integrity of the Marshall Islands. The 
incident details below comes from Department of Justice documents.
    By December 2016, Yan and Zhou were meeting with RMI officials in 
both New York City and the RMI itself, proposing the development of a 
semi-autonomous region within the RMI.
    Around April 2018, an NGO controlled by Yan and Zhou hosted a 
conference in Hong Kong attended by, among others, members of the RMI 
legislature. The NGO paid for the travel, accommodations, and 
entertainment of the RMI officials. There, the NGO, with the support of 
the legislators, publicly launched an initiative to establish the so-
called Rongelap Atoll Special Administrative Region (the ``RASAR'').
    RASAR was to be created by legislation (the ``RASAR Bill'') that, 
if enacted by the RMI legislature, would significantly change the laws 
on the Rongelap Atoll, including relaxing immigration regulations.
    U.S. Immigration and Customs Enforcement described RASAR as: ``a 
multi-year scheme that included establishing a nongovernmental 
organization and allegedly bribing officials in the Republic of the 
Marshall Islands with the intention of establishing a semi-autonomous 
region, akin to Hong Kong, in the U.S.-defended Marshall Islands.''
    According to the DoJ's sentencing submission, Yan: ``played a long 
game. He acquired a[n] unaffiliated NGO, in order to position himself 
to bribe numerous RMI officials. When those initial bribes failed to 
accomplish Yan's goal of establishing the RASAR, he sought to boot the 
RMI's then-President from office. And although that attempt failed, 
when there was a change in administrations, Yan worked with the 
officials he had bribed to try again. It was only the combination of 
the pandemic and the charges in this case that ultimately foiled Yan's 
efforts.'' \16\
---------------------------------------------------------------------------
    \16\ ``Yan Sentenced To 3.5 Years For Marshall Islands Bribery 
Scheme,'' FCPA Professor, accessed June 11, 2023. (https://
fcpaprofessor.com/yan-sentenced-3-5-years-marshall-islands-bribery-
scheme)
---------------------------------------------------------------------------
    On November 16, 2020, Yan and Zhou were arrested in Thailand. On 
September 2, 2022, they were extradited to the United States and 
arrived in New York and charged with conspiring to violate the Foreign 
Corrupt Practices Act (FCPA), violating the FCPA, conspiring to commit 
money laundering, and committing money laundering.
    At the unsealing of the indictment against Yan and Zhou, Assistant 
Attorney General Kenneth A. Polite, Jr. said: ``Yan and Zhou allegedly 
engaged in a multi-year scheme to bribe elected officials in the 
Marshall Islands and to corrupt the legislative process.'' \17\
---------------------------------------------------------------------------
    \17\ United States Attorney's Office Southern District of New York, 
Press Release, ``U.S. Attorney Announces Extradition Of Two Defendants 
Charged With Bribing High-Level Officials Of The Republic Of The 
Marshall Islands,'' September 2, 2022. (https://www.justice.gov/usao-
sdny/pr/us-attorney-announces-extradition-two-defendants-charged-
bribing-high-level-officials)
---------------------------------------------------------------------------
    U.S. Attorney Damian Williams added: ``Yan and Zhou's bribes 
blatantly flouted the sovereignty of the Republic of the Marshall 
Islands and its legislature.'' \18\
---------------------------------------------------------------------------
    \18\ Ibid.
---------------------------------------------------------------------------
    The maximum penalties for these charges are five years in prison 
for conspiring to violate the FCPA; five years in prison for each 
violation of the FCPA; 20 years in prison for conspiring to commit 
money laundering; and 20 years in prison for committing money 
laundering.
    Yan and Zhou each pled guilty to one count of conspiracy to violate 
the anti-bribery provisions of the Foreign Corrupt Practice Act, with 
Yan getting 42 months \19\ and Zhou 31 months.\20\
---------------------------------------------------------------------------
    \19\ United States Attorney's Office Southern District of New York, 
Press Release, ``Defendant Sentenced To 42 Months In Prison For 
Conspiring To Bribe High-Level Officials Of The Republic Of The 
Marshall Islands,'' May 16, 2023. (https://www.justice.gov/usao-sdny/
pr/defendant-sentenced-42-months-prison-conspiring-bribe-high-level-
officials-republic)
    \20\ Department of Justice, Press Release, ``Former Head of Non-
Governmental Organization Sentenced for Bribing Officials of Republic 
of Marshall Islands,'' May 16, 2023. (https://www.justice.gov/opa/pr/
former-head-non-governmental-organization-sentenced-bribing-officials-
republic-marshall)
---------------------------------------------------------------------------
    This might seem like a win for `blocking,' yet due to the pleas, 
and consideration for time served, their actual sentences were light 
considering they tried to take over a country--one that is a key 
component of America's defense architecture and one of Taiwan's few 
official friends.
    DOJ also surrendered the opportunity to take the case to trial, 
which could have served as a powerful deterrent to future political 
warfare and would have made public the names of the Marshallese who 
were bribed.
    As in the case of Panuelo's Taiwan offer being made and then 
ignored, Washington turned what could have been a major `blocking' win 
into a loss that was worse than if there had been no opportunity at 
all.
    Nor, according to RMI officials, have case details been passed to 
RMI authorities so Yan and Zhou, and the officials they bribed, can be 
prosecuted in Marshall Islands. This potentially leaves some of those 
corrupt officials free to run in the upcoming November 2023 elections.
    More concerning, Zhou's sentence was so light that she had finished 
serving her time soon after the case was closed, and the United States 
deported her back to the Marshall Islands.
    She is currently there, walking free, able to re-establish her 
linkages with local elites, and showing by her mere presence that there 
is little downside to taking or giving Chinese bribes. She is expected 
to be joined soon by her co-conspirator who is also likely to be 
deported back to the Marshalls by the United States once he has served 
his time. He may even get there in time to vote in the elections.
    This isn't an unusual occurrence. Across the FAS, there are 
Chinese-deemed `undesirables' that the FAS government can't themselves 
deport. In some cases, the PRC refuses to admit the undesirables are 
PRC citizens (because keeping them in country aids PRC entropic 
warfare). In other cases, the FAS simply doesn't have the money or 
political weight to deport them. And so they stay, undermining the 
countries from within. Sometimes, as in this case, because of the 
United States Department of Justice.
Palau--A President's Ideas on How to Block and Build

    There are leaders across the FAS who, though beleaguered, are still 
fighting to block malign influence and build their countries. One is 
President Surangel Whipps, Jr. of Palau. Palau recognizes Taiwan and 
was the target of an elaborate political warfare operation by China to 
try to change that.
    Beijing first worked to build up Palau's dependence on Chinese 
tourism. In 2008, there were 634 Chinese tourists in Palau, less than 1 
percent of all tourists. By 2015, it was more than 91,000, or around 
54%.\21\ Then, in 2017, China pulled the plug, making it clear that, 
unless Palau switched from Taiwan to China, the tourists wouldn't come 
back. This devastated the economy and left empty and crumbling Chinese-
leased real estate and developments across the country--a formidable 
display of entropic warfare.
---------------------------------------------------------------------------
    \21\ Kate Lyons, ``'Palau against China!': the tiny island standing 
up to a giant,'' The Guardian (UK), September 7, 2018. (https://
www.theguardian.com/global-development/2018/sep/08/palau-against-china-
the-tiny-island-defying-the-worlds-biggest-country)
---------------------------------------------------------------------------
    Palau, however stood firm. But it was not easy, especially after 
Covid added a second hit. President Whipps, in preparation for this 
hearing, was kind enough to give concrete examples of what he thinks 
his country needs to block and build economically.

    He said: \22\
---------------------------------------------------------------------------
    \22\ Interview with President Surengel Whipps, Jr., June 8, 2023.

        Our biggest challenges are trying to build a diversified, 
        resilient economy, combat[ing] climate change, and combat[ing] 
---------------------------------------------------------------------------
        the influence of [the] Chinese in Palau.

        Our economy was devastated by Covid. Tourism isn't back. We are 
        at 30 percent of pre-Covid numbers. Palau's GDP fell, so we 
        were accessible for [GDP-level linked] DFC [U.S. International 
        Development Finance Corporation]. But why were we even taken 
        off DFC? We shouldn't need measures like that to keep us out.

        One of our main challenges is direct investment. The largest 
        direct investor in Palau is still China. It's a challenge to 
        try to not open up direct flights from China back to Palau. I'm 
        going to Japan next week to talk about direct flights, but they 
        might not be back until next year. Right now, there are two 
        flights a week from Taiwan, they are full. They can't increase.

        I've just been to Korea trying to get Koreans to start direct 
        flights because Korea is about five hours away. Korean tourists 
        are among the top tourists going to Guam. One airline was 
        interested in Palau but they said the runway wasn't quite long 
        enough for the large aircraft. It means a 30 percent penalty in 
        cost--it'll cost 30 percent more than flying to Guam. That 
        makes Palau less interesting.

        Meanwhile, for several years, the U.S. government said our 
        runway wasn't quite long enough for F-35s.

        We proposed a solution to the United States, and to Australia, 
        Taiwan, Japan, Korea--help us extend the runway to 3,000m from 
        2,100m. It would help in deterrence. We believe peace comes 
        through strength, but a strong a resilient economy also 
        provides deterrence.

        That's the sort of area where there is a synergy, where we can 
        do what's good for defense and for the economy. It's an 
        opportunity where maybe we can encourage investment from others 
        in the region, other investment instead of China. We really 
        need to work with others in the region to encourage investment. 
        We need partnerships. This year finally for [the] first time 
        Japanese investment in tourism will surpass everyone else--
        there is a new Japanese hotel being built. We want to see U.S. 
        investment here--a U.S. hotel. We are really trying to bring 
        others here.

        We have pressure to open up direct flights to Macau and Hong 
        Kong from Cambodian carriers. Japan is slow, Korea is slow, 
        Taiwan is slow--China is saying `give us more flights.' It's 
        hard to say we won't accept them because hotels are empty, 
        boats are empty.

    Another concern is that, if not handled by others, environmental 
crises could be opportunities for China to act. We've seen the PRC use 
humanitarian assistance and disaster relief as a reason to deploy and 
embed, as seen in Tonga following the devastating volcano eruption. 
According to Whipps:

        FEMA accessibility is really important to Palau. It's Russian 
        roulette out here. Look at what just happened to Guam. Those 
        systems move up to Guam, down to Yap, down to Palau.

        If something happens, it [is] a matter of who's closest to our 
        door. Who's fastest to respond? When that disaster happens, who 
        will jump out to say `here we are to help you?' The last 
        typhoon, we got more assistance from the Federated States of 
        Micronesia than the United States.

    One way to block and build on this front is to support the 
development of local capacity to handle crises and also to be better 
coordinated with the United States. Palau has tried to lead the way on 
this by setting up a National Security Coordinator office, but in spite 
of it proving its worth over and over again to the United States, it 
gets little support.

    Similarly, there is an enormous untapped resource in the FAS--the 
large number of FAS citizens who are American military veterans. 
Properly organized, perhaps as a variation on reserves but answerable 
to the FAS governments, they could be invaluable in crises and serve as 
bridges to U.S. responders. According to Whipps:

        There has been some traction on addressing the needs of 
        veterans, but they really need it to be enacted. Why [do] 
        veterans . . . in Philippines and Canada receive more benefits 
        than . . . ones in the FAS?

        We want them to retire back in the islands--wouldn't it be 
        wonderful if they return to Palau and receive full benefits in 
        Palau? Then they can be comfortable while contributing to the 
        economy and security of Palau.

        It [is] an economically small thing for the U.S. but huge when 
        it comes to improving the lives and security in Palau. 
        Something like 5 percent of graduating high school students 
        join the U.S. military. We are happy to let them come and 
        recruit, but when they are done, please take care of them. 
        Please don't forget them.

        That means being able to see a local doctor here and get the 
        care they need. There are rules that make it difficult, like to 
        get counselling online you need to be on U.S. soil. Also, many 
        have to pay for [their] own tickets to get to Guam for 
        assessment. The United [Airlines] flight to Guam is, per mile, 
        among [the] most expensive in world. In the last years, two 
        veterans have taken their lives in Palau.
Conclusion and recommendations

    Under the Compacts, the United States has an ``obligation to defend 
the Marshall Islands and the Federated States of Micronesia [and Palau] 
and their peoples from attack or threats.'' \23\

    \23\ Compact of Free Association Act of 1985, Pub. L. 99-239, 99 
Stat. 1770, codified as amended at 48 USC Sec. 1681. (https://
www.Congress.gov/99/statute/STATUTE-99/STATUTE-99-Pg1770.pdf)

    China is managing to stay below the `triggering' threshold of the 
tools in the Compact that could help the FAS block and build because of 
Washington's self-imposed limits on defining what a threat or attack 
looks like--which, at this stage, given what is being ignored, seems to 
involve something as overt as a World War Two-style amphibious storming 
---------------------------------------------------------------------------
of the beaches. This needs to change.

    At its most basic, this means that rather than sending Chinese who 
have been found guilty of trying to ``corrupt the legislative process'' 
of the Marshall Islands back to the Marshalls (and then not sharing 
case information with the relevant authorities in Marshall so they can 
at least prosecute the cases themselves), the United States could help 
set up special investigative units to uncover and prosecute corruption 
in the FAS.

    Currently, given the degree of involvement of Chinese organized 
crime and the tight knit nature of FAS societies, there is concern 
about going after the big fish. The 2019 murder of an American lawyer 
who was Acting Attorney General of FSM created fear across the 
region.\24\

    \24\ Bernadette Carreon and Lauren Aratani, ``Murder in Yap: sleepy 
Pacific island rocked by shooting of American lawyer,'' The Guardian 
(UK), November 20, 2019. (https://www.theguardian.com/world/2019/nov/
21/in-yap-sleepy-pacific-island-rocked-by-shooting-of-american-lawyer)

    If welcomed by the FAS, it might make sense for the U.S. military 
to assist on some of the investigations. The Department of Defense has 
the largest American presence on the ground in the FAS and knows and 
---------------------------------------------------------------------------
possibly values the region the best.

    The most fundamental aspect of blocking is that there needs to be a 
cost for taking Chinese money. Currently, there rarely is a downside to 
accepting that brown envelope after the banquet. At the very least, 
Magnitsky Act charges or something similar could be explored. Just a 
few high-profile cases could hearten honest officials and make others 
recalculate their cost/benefit analysis of selling out their country--
and by extension, U.S. security. (That can also mean not being shy 
about ensuring transparency and accountability in the Compact funding 
spending. The people of the FAS need to know their money is being spent 
for their benefit.)

    Similarly, given the dual-use nature of the Chinese fishing fleet, 
illegal fishing in the FAS should be seen as a national security issue 
for the United States. The U.S. military should be defending FAS EEZs 
aggressively. But that blocking is not enough. Simultaneously, there 
should be efforts to help the FAS build their fisheries in a way that, 
as President Whipps said in reference to tourism, is diversified and 
resilient. That is the only way to truly keep out the malign influence.

    When the pieces combine, the overall goal would be to create a 
Micronesian Zone of Security, Prosperity, and Freedom that would knit 
the PIA and FAS (and maybe eventually Nauru and Kiribati) together, 
letting the countries and territories reinforce each other socially and 
economically, supported by the exceptional tools made available by the 
Compacts.

    Doing that means actively blocking PRC political warfare in the 
region while, just as actively, helping the PIA and FAS build their 
economies, thus creating the foundation for an enduring and resilient 
free and open Indo-Pacific.

    In that context, it's worth understanding what happens if the 
financial and services components of the Compacts aren't passed. 
According to the U.S. Integrated Country Strategy for the FSM:

        The future of many of the 50 plus USG components operating in 
        the FSM also appears uncertain. Absent action from Congress, 
        several will end their operations in 2024, including [the 
        Federal Aviation Administration], [the Federal Deposit 
        Insurance Corporation], the Post Office, and the hybrid COFA 
        disaster response mechanism that is funded by [Federal 
        Emergency Management Agency] and implemented by [the U.S. 
        Agency for International Development]. The presence in the FSM 
        of the remaining 45 plus agencies after 2023 is also in 
        question . . . Absent other countervailing factors, the 
        reduction in US foreign assistance portends likely greater 
        economic and political instability in the FSM after 2023.\25\
---------------------------------------------------------------------------
    \25\ U.S. Department of State, ``Integrated Country Strategy: 
Federated States of Micronesia,'' August 16, 2018. (Archived version 
available at: https://www.state.gov/wp-content/uploads/2019/01/
Micronesia.pdf)

    As Whipps said: ``It's very important that the Compact agreement on 
economic assistance be passed this year. Last time, we started in 2010, 
but it wasn't signed until 2018. That sends a bad signal to Palau and 
the Pacific about U.S. commitments. Economic stability provides 
security for all of us.''
    This is why this task force is so important and, frankly, 
inspiring. What's needed to block and build is a broad and deep 
understanding of the Compact, region and issues, and a willingness to 
find innovative, effective solutions. Combined, the fourteen members of 
this task force have what it takes. Thank you for stepping up to the 
challenge. It is one of the most important of the century.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 

Questions Submitted for the Record to Cleo Paskal, Non-Resident Senior 
             Fellow, Foundation for Defense of Democracies

            Questions Submitted by Representative Westerman
    Question 1. The U.S. agencies that take part in COFA negotiation 
and implementation--such as the Department of the Interior, Department 
of State, and Department of Defense--have a significant impact on U.S. 
relation with the FAS. The decision to authorize and appropriate 
funding for the agreement to a certain agency can send signals to the 
other party on how the U.S. views the relationship, as each agency 
represents a certain level of American policy. For example, programs 
administered by the Department of Defense often carry defense 
connotations. It is vital to be aware of the signals we send to our 
partners in the region when designating the implementing agency, and 
how those partners feel about those signals. As such, we must 
understand how various agencies are perceived by the FAS when framing 
our future discussions on COFA renewal.

    1a) How have FAS perceptions of the U.S. been shaped by the various 
agencies that have been responsible for managing relations with the FAS 
governments?

    Answer. A range of factors go into shaping FAS perceptions of the 
United States, including the American military's behavior in the post-
War period, personal experiences of visits to the United States, the 
experience of friends and relatives based in the United States, the 
experience of FAS citizens who served in the United States' military, 
etc.
    That said, direct experience with different agencies can have a 
deep effect on perceptions of the United States government, and on how 
those in the FAS involved think Washington views the FAS.
    Broadly, apart from the Department of Defense (DoD), there is often 
the impression that, regardless of the agency, the United States 
government doesn't prioritize its relationship with the FAS. In some 
cases, the Department of the Interior is perceived to be, to put it 
politely, inefficient or ineffective. State hasn't ensured that 
Ambassadors were in post during much of the critical Compact 
negotiations window. There have been years of missed agreed payments. 
Some promised projects have taken years to materialize.
    In the case of DoD, some of the otherwise sound relations are 
affected by the use of contractors who behave poorly, the de facto 
abandonment of veterans and the lack of community engagement, 
especially around project that affect daily lives.
    Additionally, even in this latest phase when the United States says 
it is prioritizing the Pacific Islands, State and the NSC seem to be 
according more importance to the Pacific Island Forum (PIF) and 
countries such as Solomon Islands than to the FAS--countries that have 
put their lives in the hands of the United States, and two of which 
still recognize Taiwan.
    The first visit of a sitting President to a Pacific Island Country 
was to be to Papua New Guinea, had it not been canceled. And Washington 
has appointed a permanent Envoy to the PIF but there is no permanent 
office or officer just dedicated to the FAS--three countries not just 
in a unique and deep relationship with the United States, but also of 
critical strategic value to the United States' Pacific defense 
architecture.
    Also, there is a widespread perception that there is little 
coordinated strategy across agencies or institutional knowledge, 
resulting in mixed messages, casual slights, wasted time, and wasted 
resources.
    Some in the FAS would like to see more presence by specific U.S. 
government agencies/departments. In all three FAS, there are some who 
would like to tackle corruption, and PRC-linked bribery and organized 
crime. They are keen for more engagement by the FBI, DEA, Treasury and 
others who might be able to assist.
    Getting to the root of it, others would like U.S. help with 
stimulating economic growth to benefit their people and ensure PRC 
economic overtures are less effective. They would like to see Commerce 
get more involved. Across the board, there is a desire for more help 
not just with illegal fisheries but with the development of their own 
fisheries sectors.
    However, based on past experience, the widely held assumption is 
that, once the Compacts renewals are done, the FAS will be forgotten by 
Washington again (except perhaps by DoD).

    1b) How do the FAS perceive the Department of the State versus the 
Department of the Interior?

    Answer. In many quarters, sincere and dedicated efforts of DOI 
staff aside, the perception in the FAS is that the United States 
government doesn't consider the Department of the Interior as one of 
its `important' Departments, and so working through DOI lowers the 
importance, access and influence of the FAS.
    Additionally, the perception is that being handled by DOI is a 
historical remnant of an earlier time, when they were not sovereign 
nations. They are no longer `Interior'. As such, the general sense is 
that State is a more appropriate Department, especially given State 
seems to be taking the lead in the Compact negotiations.
    That said, by far the largest American permanent presence in the 
FAS is DoD. DoD also has the most understanding of the importance of 
the region, the most invested in the region (literally) and its 
interest won't wane once the Compacts are renewed (assuming they are).
    Additionally, DoD has the ability to do many of the things the FAS 
needs (help with illegal fisheries, environmental disasters, 
infrastructure, sorting out issues with veterans, etc., and DoD can 
even assist with education, health care, social services, etc., as it 
does on bases), and with the large number of FAS citizens serving in 
the U.S. military, it is a more `familiar' Department. DoD is also 
considered one of most `important' Departments and so well placed to 
keep awareness of FAS concerns high on the priority list.

                                 ______
                                 

    Mrs. Radewagen. I thank the witness for their testimony. 
The Chair now recognizes Mr. Newsham for his 5 minutes.

STATEMENT OF GRANT NEWSHAM, COLONEL, U.S. MARINE CORPS (RET.), 
                        HONOLULU, HAWAII

    Mr. Newsham. Chair Radewagen, co-Chair Sablan, and 
distinguished members, thank you very much for inviting me to 
testify today. I will focus on the role and importance of the 
Compacts of Free Association to U.S. defense and security 
interests and countering Chinese influence.
    The COFAs underpin the entire United States defense posture 
and strategy in the Western Pacific and East Asia. How so? U.S. 
Pacific defenses and forces are concentrated on the western 
edge of the Pacific, along the so-called first island chain. 
Geography and U.S. and partner forces hem in the Chinese 
military. However, this defense scheme requires what 
strategists call a secure rear area. The COFA states are the 
rear area, and U.S. forces must be able to operate freely 
there.
    The Chinese perspective also shows COFA's value. Chinese 
strategists look outward from the Chinese mainland, and they 
too see the first island chain, and they want to breach it. 
However, as the Chinese look farther east they see another 
island chain. And right in the middle of it is the Federated 
States of Micronesia, bookended by Palau and the Marshall 
Islands. The PRC intends to break these chains and to dominate 
the region.
    China is building a world-class military, but there is a 
problem. Controlling the South China Sea matters little if the 
PLA is bottled up inside the first island chain. Thus, China is 
trying to leapfrog the first island chain. If the PRC 
establishes a foothold or political dominance in the COFA 
states, it can break down America's first island chain defense 
from behind. The existing U.S. regional strategy will be in 
tatters.
    Imagine fighting a war in Europe and having to fight your 
way across the Atlantic. That will be the Pacific. And even if 
there is no shooting war, the Freely Associated States that are 
under Chinese domination may resist a U.S. military presence, 
regardless of any Compact language. In any event, the U.S. 
military will need to devote scarce resources to cover this 
threat. These are resources that cannot be used to assist 
Taiwan, Japan, and South Korea.
    The terms of the Compacts of Free Association do give the 
United States the legal right to keep foreign militaries out of 
the COFA states. Yet, the COFA agreements can be terminated. Or 
suppose a COFA government simply tells the Americans that it 
will do what it wants with whoever it wants. What is the United 
States going to do, send in the Marines?
    China is using political and economic tools to undermine 
the U.S. presence in the Freely Associated States, and Chinese 
survey ships have recently scouted underseas cables in 
Federated States of Micronesia and in Palau against Guam and 
CNMI. We have seen cyber attacks, spy balloons, underwater 
listening devices to track U.S. submarines, and Guam killer 
missiles. Yet, despite this central Pacific strategic military 
location, the U.S. military only has four permanent bases in 
the region. Only one is in the COFA states, that is on 
Kwajalein. The other three are on Guam. Such a limited, 
permanent presence seems inexplicable. These are essential for 
conducting operations, logistics repair and maintenance, 
intelligence collection, and missile defense, among other 
things. Having too few bases and operating locations is putting 
a lot of eggs in one basket, and vulnerable to the PLA's 
strategic rocket force.
    The U.S. Air Force and Navy understand the problem. The FAS 
provide plenty of places to spread out and stay alive and to 
hit back effectively on multiple vectors. Palau, in fact, asked 
the U.S. military to establish a base in the country in 2020, 
but the Americans have not taken up the offer.
    U.S. forces do a lot of routine, large-scale exercises and 
training in Guam and CNMI. However, most U.S. military focus is 
on the western edge of the Pacific, not in the middle of it. 
U.S. military activities elsewhere in the Freely Associated 
States include regular, but smaller-scale activities.
    Now, some things to do.
    First, remember that if you are not there, you are not 
interested. In fact, much U.S. military engagement in the 
Central Pacific seems ephemeral. Key leader engagements and 
other official fly-in visits are of limited value, compared to 
Chinese diplomats, officials, and businessmen integrating, 
ingratiating, and inserting themselves into local societies. 
Indeed, the representative of a Chinese fishing company living 
in a COFA state probably has more real influence than any four-
star U.S. admiral. Why? Because he is there.
    So, we should expand the U.S. military presence and make it 
as permanent as possible. Small units led by junior officers 
work fine. Engineering and medical units should be deployed 
widely, and there is much demand for such services. The U.S. 
State Partnership Program also has promise. Make use of local 
veterans. The extensive network of FAS citizens who are U.S. 
military veterans can be enormously valuable. Have them serve 
as the basis of a local defense force. It just takes some 
imagination.
    And illegal fishing is a problem that is being admired to 
death. What is needed are effective surveillance networks and, 
as importantly, the means to actually enforce the laws.
    Extend the financial parts of the COFAs. Support for the 
Compact states is a necessary maintenance cost. The cost of the 
agreements is a pittance compared to the expense of trying to 
re-establish a U.S. presence or to hold it in the face of local 
opposition.
    Now, without the COFAs and the Freely Associated States on 
our side, everything we are doing or plan to do militarily in 
the Indo-Pacific gets very hard, if not impossible.
    And don't forget, you must have the Pacific's non-COFA 
states on our side, as well.
    And, finally, remember that we can get the military part 
right and still lose. We need to get the economic, commercial, 
diplomatic, and propaganda parts right, as well.
    Thank you very much for having me.

    [The prepared statement of Mr. Newsham follows:]
              Prepared Statement of Col. Grant F. Newsham
    Chair Radewagen, Co-Chair Sablan, and distinguished members of this 
Task Force, thank you for the privilege and honor of inviting me to 
testify today.
    I will be focusing on the role and importance of the Compacts of 
Free Association to U.S. defense and security interests and countering 
Chinese influence.
Broad Outline of Current U.S. Miliary Pacific Strategy

    The Compacts of Free Association (COFAs) with the Republic of 
Palau, the Federated States of Micronesia, and the Republic of Marshall 
Islands underpin the entire United States defense posture and strategy 
in the Western Pacific and East Asia.
    U.S. Pacific defenses are concentrated on the western edge of the 
Pacific--along the so-called `first island chain'. This `chain' runs 
north-south from Japan to Taiwan to the Philippines and on to Malaysia. 
One should also include South Korea and Australia as part of this broad 
defense line. America has major military bases in Japan and South 
Korea, along with expanding military access in northern Australia, and 
has recently obtained access to a number of military sites in the 
Philippines. Taiwan is also an informal ally.
    The thinking behind the strategy is that geography and U.S. forward 
deployed and partner forces can serve to hem-in the Chinese military 
and restrict the ability of the People's Liberation Army (PLA) to 
conduct operations beyond the first island chain.
    This somewhat linear U.S. defense scheme requires a secure `rear 
area'--particularly for operations and logistics in support of the 
forward defenses. The Freely Associated States, along with U.S. 
Territories Guam and the Commonwealth of Northern Mariana Islands 
(CNMI), occupy what is effectively part of a huge east-west corridor 
running from the U.S. West Coast to Hawaii, beyond to Guam and onward 
to the first island chain defense line.

    One analyst has correctly described this as a `power projection 
super-highway.'

    The ability of U.S. forces to operate along this corridor--free of 
enemy interference--is indispensable. The Guam U.S. Asia Security 
Alliance (GUASA) has also described Micronesia--including the Freely 
Associated States and Guam/CNMI as constituting ``a natural `plug' '', 
potentially closing off the South Pacific and the whole of the 
remainder of the Pacific south and east from Asia beyond the 
International Dateline,--to Hawaii and past to the West Coasts of North 
and South America.''
China Understands the Importance of (Undermining) the COFAs

    The military importance of COFA is obvious, if not intuitive, when 
viewed from the American perspective. The Chinese perspective is 
equally instructive as to COFA's value.
    Viewed from a Chinese strategist's perspective, the Central 
Pacific's geography is both an obstacle and an opportunity. The easiest 
way to understand Chinese thinking is to look at the map of the Western 
Pacific with the PRC mainland on the left and the Hawaiian Islands at 
the far right. Then, imagine you are hovering over the Chinese mainland 
and looking eastwards.
    The first thing you see is a chain of islands starting at the 
Russian Kuriles in the north and extending southwards through Japan and 
the Ryukyus (Okinawa) and onwards to Taiwan. Continue on and the 
Philippine archipelago appears, and then the chain ends at the island 
of Borneo before anchoring at the Straits of Malacca.
    The only way for People's Liberation Army Navy ships and submarines 
and PLA Air Force aircraft to penetrate this portion of the first 
island chain is via a number of narrow straits. If the occupants of the 
land on either side of the `gaps' are unfriendly, it is a small matter 
to effectively close off access by employing anti-ship missiles, sea 
mines, submarines, and anti-aircraft weapons.
    This is a major headache for Chinese defense planners. The founder 
of the modern People's Liberation Army Navy, Admiral Liu Huaqing 
referred to the first island chain as a `metal chain' restraining 
Chinese aspirations.
    China does not have any obvious friends anywhere along the first 
island chain, especially now that President Ferdinand Marcos has 
replaced the mercurial President Roderigo Duterte in the Philippines 
and has quickly shifted the country back toward its long-standing 
alliance with the United States.
    Look at the map and it's easy to understand Chinese interest in 
breaching the first island chain--say by threatening Taiwan into 
submission--and using force if necessary.
    However, as the Chinese strategists look beyond the first island 
chain they see another island chain. This one runs from Japan down 
through Iwo Jima and onward to Guam and the Commonwealth of Northern 
Marianas, and them continues southwards through the Federated States of 
Micronesia and on to Indonesia and Papua New Guinea, and then to 
Australia. This is the second island chain.
    There is even a third island chain running from Alaska through 
Hawaii and ending in New Zealand. Although not well remembered these 
days in the West as the World War II generation passes away, for 
decades the names Tarawa, Saipan, Guam, Tinian, Kwajalein and Peleliu 
were widely recognized as synonymous with the bloody fighting the 
Pacific. And are resonant in the minds of military planners in China.

    The PRC fully intends to break these chains.

    China is dead set on building a world class military able to 
project power--spearheaded by the Chinese Navy (PLAN)--that is capable 
of challenging, and eventually displacing, the United States Navy as 
the world's preeminent naval power. The Chinese Navy is well on its 
way. For the last decade the PLAN has been launching five ships for 
every one the American Navy launches and now has far more surface 
combatants than does the US Navy.

    American naval strategist, Paul Giarra stated things grimly but 
correctly:

        Between 2016 and 2020, the Chinese navy has added to its fleet 
        essentially the equivalent of Japan's entire current surface 
        fleet . . . . The Chinese navy is building larger and more 
        formidable surface combatants far faster than anyone else, with 
        at least eight hulls already launched of a brand-new class of 
        large surface warships. It is starting to deploy its new 
        carrier force in ways reflecting [America's] own practice. Its 
        growing amphibious force is a tangible threat to its neighbors. 
        The PLA Navy is on track to have nearly twice as many surface 
        ships as the US Navy before the end of this decade.

    And the PLA Air Force is developing its long-range overwater 
capabilities equally fast.

    But here's the problem for China: in order to employ its new, 
powerful Navy (not to mention its Air Force) it must have secure, safe, 
ready access to the Pacific. Controlling the South China Sea, and even 
the East China Sea matters little if the PLA's enemies can keep it 
bottled up inside the first island chain.

    If you're a Chinese planner, you might reasonably think China can 
with some effort `break' the first island chain--in fact, this is a 
prerequisite. It is also why one shouldn't underestimate how serious 
China is about capturing Taiwan. Do so and the first island chain is 
broken and the PLA has an unsinkable aircraft carrier and launching 
point for operations into the Pacific. The problems that create for the 
U.S. and allies at that point are obvious.

    But, taking a page from the US World War Two playbook, at the same 
time China is trying to leapfrog the first island chain. If it can 
burrow itself into the second island chain it will roil American (and 
Japanese and Australian) defense plans and can potentially break down 
first island chain defense from behind.

    It is a truism that conducting defensive or offensive military 
operations is impossible without a secure `rear area.' If your 
adversary is operating behind you or has a presence and/or proxy 
influence you will have a very hard time. COFA nations are the `rear 
area' of the U.S. Pacific defense strategy.

    Should the PRC establish a military foothold or gain political 
dominance with de facto strategic veto power in the COFA states, it 
will have `leapfrogged' America's island chain defense and ensconced 
itself in the U.S.'s once secure `rear area'.

    Support for U.S. allies such as Japan and South Korea will become 
difficult. Prospects for a successful defense of Taiwan will be much 
reduced.

    China knows this, which is why undermining the relationship between 
the COFA states and the United States is one of Beijing's highest 
strategic priorities.

    Palau, the Federated States of Micronesia, and the Republic of 
Marshall Islands are perfectly situated as footholds from which to 
disrupt China's adversaries. If the PLA is deployed in the FAS life 
gets difficult for U.S. forces as Chinese aircraft and naval ships 
operate from the erstwhile COFA region. And Chinese intelligence and 
surveillance has a better platform from which to cover US activities--
and target them. With surface-to-surface missiles, surface-to-air 
missiles and Maritime Militia operating aggressively, the US military 
will at best be treading carefully, excluded from the area, or taking 
casualties.
    One Marine noted to the author:

        Surface to air and surface to surface missiles turn these 
        island locations into A2AD (anti-access, area denial) zones. 
        These islands become an armed picket fence which receive 
        aircraft for long range patrols and support PLAN operations as 
        well as replenishment of Chinese subs as well as their 
        irregular maritime forces, including dual hulled fishing 
        vessels that cruise at speeds that fish can't keep up with 22-
        25 knots.

    The existing U.S. strategy will be in tatters.

    Imagine fighting a war in Europe and having to fight your way 
across the Atlantic. This will be the case if the Chinese are able to 
set up in the FAS.
    Even if there is not a `shooting war', FAS that are under Chinese 
domination--owing to economic and political influence--may adopt a 
stance of `belligerent neutrality' and resist a U.S. military presence 
in their territories, regardless of any Compact language.
    Meanwhile, Chinese intelligence collection would focus on U.S. 
forces. Our communications would also be vulnerable.
    And this all requires the U.S. military to devote scarce resources 
to cover this threat--a threat that wants to encircle and choke U.S. 
Pacific territories and come up right up against Hawaii. These are 
resources that cannot then be used along the `western defense line'--
say, to assist Taiwan, Japan, or other allies.
    China has studied the Japanese seizure and occupation of Micronesia 
and large parts of Oceania during World War Two--and it does not intend 
to make the same mistakes. Particularly Japan's failure to isolate 
Australia and sever lines of communications and supply routes with the 
United States.
    And while the Japanese saw the Central Pacific as a bastion to keep 
the Americans at bay, China's long-term objectives are to use the area 
as springboard for expanding eastwards. They are already setting up the 
infrastructure on Latin America's west coast.
    Indeed, the PRC sees the COFA nations as a power projection super 
highway--in the other direction.
    However, the terms of the Compact of Free Association between the 
FAS nations and the United States are a problem for the Chinese since 
the treaties effectively prohibit PLA ships and aircraft from operating 
inside COFA state's territorial space.
    Yet China is persistent. And while currently a direct military 
presence is not feasible, the COFA agreements can be terminated. 
Additionally, even if the United States has the sole legal right to 
conduct military operations in the COFA states--and even set up 
military bases if it wants to do so, local popular and political 
support is nonetheless necessary.
    China is using political, economic, and other soft-power tools to 
undermine the U.S. presence in the Freely Associated States--and even 
in the Commonwealth of Northern Marianas, actual American territory, 
and thus weaken the US military defenses and capabilities in the 
Central Pacific.
    Chinese survey ships have been scouting out undersea cables in 
Federated States of Micronesia waters in recent years, and have been 
doing the same in Palau.
    But the PRC has been more aggressive regarding U.S. territories 
Guam and CNMI--where the U.S. military presence is greatest.
    Recently exposed cyber-attacks, suspected to be from the Chinese 
state-sponsored hacker group, Volt Typhoon, was revealed to have 
installed malware on critical US military infrastructure on Guam.
    Spy balloons too have been hovering over Guam.
    But this is nothing new. China has been explicitly threatening, 
with suggestions the U.S. military presence puts Guam citizens at risk. 
For example, Chinese media and defense commentators refer to the PRC's 
DF-26 missile as the `Guam killer'--able to range to U.S. bases on 
Guam. And the Chinese have admitted to installing underwater listening 
devices in the nearby Marianas Trench--posing a potential threat to 
U.S. Navy submarine operations.
    Additionally, North Korea has threatened Guam with its new long-
range missiles. Pyongyang's threats, not particularly worrisome to the 
local population but causing predictable harm to tourism, presumably do 
not displease the PRC--which also played a sizable role in North 
Korea's nuclear weapons and missile programs, as well as providing the 
mobile TEL launcher vehicles that make the North Korean missiles mobile 
and hard to find.
    For the Chinese Communist Party to achieve its aspirations, it 
needs to at the very least, render the FAS `harmless', and ideally be 
able to use them as launch points under its control. No domestic talk 
of `friend to all, enemy to none' and `not wanting to get caught in the 
middle' will change that until there is a different regime in power in 
Beijing. The U.S. didn't come looking for, and doesn't want, this fight 
(which ironically has made the fight more likely). If in doubt, just 
look at the wide range of options the U.S. has in the Pacific American 
Territories and the FAS that haven't been exercised.
Military Installations in the Pacific American Territories and FAS

    Despite the Central Pacific strategic military location, the way it 
is coveted by China and the hard lessons Americans learned in the 1940s 
about the region being in an adversary's possession, the U.S. military 
presence is surprisingly small--consisting of only four permanent 
military facilities--and only one of these is in the COFA states. That 
one is the U.S. Army-administered Ronald Reagan Ballistic Missile Test 
Site at Kwajalein Atoll in the Republic of the Marshall Islands. 
Kwajalein is a one-of-a-kind facility that would be hard to replace for 
any price.
    The other bases are on Guam and include the U.S. Naval Base Guam at 
Apra Harbor, Andersen Air Force Base--famous as the launch point for B-
52 strikes against North Vietnam during the Vietnam War--and the newly 
open U.S. Marine Base, Camp Blaz.
    Such a limited permanent presence seems inexplicable, though in the 
U.S. military's defense, it might be argued that until the mid-2000s or 
even later, there appeared to be no realistic threats to the Central 
Pacific. In fact, the U.S. Department of Defense seriously considered 
shuttering Andersen Air Force Base. However, the PRC's military build-
up and expansion has considerably changed the regional security dynamic 
and gradually changed threat perceptions in Washington, D.C., and 
Honolulu.
    The COFA nations potentially offer basing and access locations for 
U.S. naval and air Forces and ground forces (Palau, in fact, asked the 
US military to establish a base in the country in 2020, but to date the 
Americans not taken up the offer). These are essential for purposes of 
facilitating operations as well as logistics support, repair and 
maintenance activities, intelligence collection, missile defense, etc.
    Another serious risk arising from the U.S. having too few bases and 
operating locations in the Indo-Pacific is that it is putting a lot 
eggs in one basket. All of it vulnerable to the PLA's Strategic Rocket 
Force.
    The vulnerability of U.S. bases (and ships and aircraft) to Chinese 
missiles is a fact of life (and a headache) for American defense 
planners. And it is a driving force behind the U.S. military's move 
toward a more dispersed presence and `distributed operations' concepts 
for the Oceania region.
    The U.S. Air Force is adopting a new strategy called `Agile Combat 
Employment' and is looking for runways and operating locations in as 
many places as possible. Similarly, the U.S. Navy's `Distributed 
Maritime Operations' concept aims for something similar--all to provide 
a more difficult target for Chinese missiles.
    Dispersal--combined with deception and concealment complicates an 
enemy's targeting. Even if the PLA Rocket Force has the `range' to hit 
out to the second island chain and beyond, it still has to locate the 
targets. And even the PRC only has so many missiles.
    The FAS provide plenty of opportunity to `spread out' and stay 
alive, and hit back on multiple vectors. Just being serious about 
setting up in the region and raising the cost to China of an attack 
makes it less likely an attack will happen, and in the meantime, the 
facilities can be used to build local infrastructure, combat illegal 
fishing, assist during humanitarian disasters and more. This is the 
essence of deterrence through strength--in a range of sectors.
Military Exercises in the Pacific American Territories and FAS

    U.S. forces routinely conduct large-scale exercises on and around 
Guam and the CNMI, including with allies and partners. One advantage of 
the area is that there is plenty of open space. That allowed, for 
example, for the 2020 running of the annual COPE NORTH exercises to 
bring together over 100 aircraft and over 2,000 personnel from the U.S. 
Air Force, the Japan Air Self-Defense Force, and the Royal Australian 
Air Force.
    Naval forces regularly train at Guam and the trend is for increased 
activity. In 2017, the French Navy made an appearance (with British 
Marines embarked) for joint training with the U.S. Navy and Marines and 
the Japan Self-Defense Force (JSDF). In July 2020 the Japanese and U.S. 
Navies conducted joint drills with the Royal Australian Navy and Air 
Force, with U.S. Air Force also participating. The 2023, iteration of 
the annual Exercise Sea Dragon saw participation from the Royal 
Canadian Air Force, Indian Navy, Japan Maritime Self-Defense Force, 
Republic of Korea Navy, and the United States Navy.
    The Japanese, in particularly are keen to make more use of Guam and 
surrounding areas as training areas for the JSDF. This is owing to 
difficulties, mostly self-imposed, in making full use of training 
locations in Japan. More permanent facilities in the FAS would make 
more essential training and exercises (both unilateral and 
multilateral) easier in the FAS easier for both U.S. forces and our 
allies (such as the Japanese), as well as bring improved infrastructure 
and funding to the FAS, (which, in a complementary manner provides its 
own form of security for the people of the FAS). The alternatives are 
either to not exercise or to return to the U.S. West Coast or perhaps 
Northern Australia to conduct such training.
Other Military Engagements in the Pacific American Territories and FAS

    U.S. military exercises and activities elsewhere in the FAS include 
regular but generally smaller scale exercises that might be considered 
`engagement' more than serious warfighting training.
    Small detachments are regularly deployed that conduct useful 
engineering and infrastructure development work. In addition to U.S. 
Marine teams, these have included the U.S. Navy removing underwater 
obstacles to improve harbor access and safety for inter-island cargo 
and passenger ships transiting FSM islands. The U.S. Navy's Seabees and 
visiting U.S. Army teams have provided infrastructure improvements, 
such as building new schools. The U.S. Navy's Pacific Pathways exercise 
conducted HA/DR training throughout the Federated States of Micronesia 
(FSM).
What's There to Worry about? We Have a `Contract' Agreement, Don't We?

    While COFA agreements provide legal grounds for keeping the Chinese 
military out of FAS, the risk exists of polarized societies or `PRC-
leaning' governments that permit a civilian but `dual use' PRC 
presence. Suppose, for example, a move to allow Chinese monitoring 
facilities for `civilian space' or `environmental' or `oceanographic' 
monitoring purposes. Each of the FAS is only an election away from 
dropping out of America's defense architecture--leaving a gaping hole 
and betraying generations on both side who sacrificed so much to keep 
it strong,
    The U.S. potentially faces something like this with Kiribati--where 
the government dumped Taiwan for China in 2019 and moves are currently 
afoot to (among other things) allow a Chinese company to refurbish a 
decrepit American World War Two airfield on a remote atoll--for 
`tourism purposes.' A treaty exists giving the U.S. veto rights should 
it be used for military purposes, but enforcing is difficult, and 
anyway, the Chinese said it was for tourism, didn't they?
    Anyway, if they don't agree, what's the U.S. going to do, send the 
Marines to Tarawa again? That's bad optics. To say the least.
Winning Phase Zero

    This is why it is so important to pay attention to what is actually 
going on in country now (something you can only do properly if you are 
there). What goes on in peacetime--so-called `phase zero'--is directly 
related to what happens, or doesn't happen once the shooting starts 
(so-called `phase one'), and also the success or failure of a conflict.
    The discussion of a Pacific conflict with China too often overlooks 
what is known as phase zero--the phase we are in now.
    `Peacetime' military (or dual use) activities shape the 
environment--and ready oneself for a war, or even better, positioning 
one's forces and building capabilities (both one's own and allies') to 
deter an opponent from `trying something.'
    Phase zero military activities include training and exercises, 
intelligence collection, contingency planning, setting up or 
maintaining basing and logistics facilities--that often requires 
diplomacy to ensure partner nation cooperation. Indeed, this is ideally 
done with an eye to building partner capabilities and confidence--and 
creating new partners who see the you as reliable and likely to 
prevail.
    The United States has been conducting phase zero operations 
throughout the Pacific for over six decades. It has, however, tended to 
give relatively little coverage to the COFA nations (and the Southeast 
and South Pacific). Most activities tend to focus on Northeast Asia and 
Southeast Asia, closer to the Asian mainland.
    Meanwhile, if looked at through this lens, it becomes clear China 
has been very actively focused on phase one engagement and 
entrenchment.
    Much of the discussion about China in the Pacific centers on 
warfighting considerations and what might happen in a future war with 
the PRC. However, to date the PLA's overt activities in the region have 
been stayed largely below the `red line', but building the phase one 
groundwork.
    The PLAN Peace Ark hospital ship makes voyages through the region, 
gathering intelligence on the health conditions of key leaders.
    There have been humanitarian assistance missions (as seen with the 
Tongan volcanic eruption) that gave China insight into local emergency 
operations, and gave the excuse to argue for the prepositioning of 
supplies.
    Although nominally for civilian purposes, Chinese hydrographic 
survey ships have mapped huge swathes of Oceania, including in the FAS, 
and including the location of undersea cables. And the huge Chinese 
fishing fleet is reported by some analysts to conduct signals 
intelligence activities (and more) on occasion.
    This is a pattern seen worldwide. Chinese military presence tends 
to come after a lengthy `set-up' period that includes commercial 
inroads, a physical presence of Chinese citizens, diplomacy and 
building political ties--especially with key leaders at all levels. 
Financial inducements--bribes--are often part of the deal. The military 
presence will come along slowly. The PRC's first overseas military base 
in Djibouti (which Beijing swore it was not developing) is a textbook 
example of this process. In Oceania, the Chinese push and prod in many 
places. It is just a question of time before the PLA has a place or two 
to call home.
    We know it is trying. In 2018 Australian newspapers reported that 
the PRC had requested to be allowed to build a military base in 
Vanuatu. Both nations denied this. But fears that the PRC might fund 
the refurbishment of the Fijian military's Black Rock camp in 2018 
caused the Australians and Americans to step in an preempt the Chinese. 
Something similar also happened in 2018 when a `private' Chinese 
company showed interest in the Manus Island port--a strategically 
valuable base during World War II. And in 2019, a Chinese company 
signed a contract to develop a port on Tulagi in the Solomon Islands--
across the water from Guadalcanal. After a local outcry--and serious 
concerns in Washington and Canberra, the contract was canceled, for the 
time being.
    In 2019 Solomon Islands switched recognition from Taiwan and a year 
later the Prime Minister signed a deal with the PRC that can give the 
People's Liberation Army access to Solomon Islands. The same Prime 
Minister also took out a US$66 million loan from China to put Huawei 
towers all over the country--essentially paying China to wire the 
country for the benefit of Chinese intelligence. That's some good work 
for phase one.

                            RECOMMENDATIONS

Be There, In the Right Way, With the Right People

    There is something `ephemeral' about much US military engagement in 
the Central Pacific. A senior officer drops by for a visit or a 
military detachment builds a school and goes home. Key leader 
engagements and other official fly-in visits (in particular) from 
INDOPACOM in Hawaii and the U.S. Mainland are of limited value compared 
to Chinese diplomats, officials, and businessmen (playing the role of 
the `Yankee Traders' of old) ingratiating, and aggressively inserting 
themselves from top to bottom into local societies.

    Besides providing financial benefits locally--Kwajalein in RMI 
being a good example--there is the practical and psychological 
advantage of `being there.' It is even better when the U.S. military 
and `white hull' USCG activities directly benefit the local 
governments--as in the case of radar and ocean surveillance systems 
planned for Palau. While serving a military purpose, these systems 
potentially assist the Palau government to monitor and protect its 
ocean territory and resources.

    We should expand the US military presence and make it as permanent 
as possible, but it needs to be the right people doing the right 
things. What's needed in many cases are small units that integrate 
locally and that learn from and help the communities. Engineering and 
medical units should be in as many places as possible and there is 
considerable demand for such services. It's not about rank, it's about 
who is best able to build and strengthen the FAS--and our relationship 
with them. The right young Captain is better than the wrong Colonel.

    The U.S. Marine Corps might establish a training site (or more than 
one) to develop its Expeditionary Advance Base Operations (EABO) 
scheme. The FAS offers any number of locations, and is in fact the kind 
of terrain and setting the EABO concept has in mind.
Make Use of Local Veterans in the COFA States

    The extensive network of FAS citizens who are U.S. military 
veterans can be enormously valuable in understanding local concerns and 
in getting things done and bolstering defenses. A reserve system (under 
FAS command) should be considered. It is their country, after all. It 
just takes some imagination. One U.S. officer suggested:

        The Freely Associated States have a lot of veterans. We should 
        do a survey. We could harvest retirees to stand up `reserve' 
        centers immediately then back fill with new recruits. Units 
        should be anti-surface and surface-to-air batteries.

        Need to stand up a `Navy' reserve operating PT boats from their 
        home islands that are armed to the teeth.

        No need for expensive housing and bases, have them operate from 
        mobile CoCs and allow the reservists to use the boats for 
        commercial fishing.

        No Chinese fishing fleet will mess with heavily armed patrol 
        fishing boats.

        It contains costs, boosts local economy, and create ownership 
        mentality so they take extra care of the vessel. They won't be 
        tied up pier side waiting for a Pearl Harbor.

        Out fishing will make them harder to target and makes 
        coordinating a first strike a severe pain.
Defend FAS Waters from Illegal Fishing

    Illegal, unreported, unregulated (IUU) fishing is a problem that is 
being admired to death.
    There are any number of workshops being held to advise the COFA 
states of a problem they are well aware of. What they need are both 
effective surveillance networks and, as importantly, the means to 
actually enforce the laws. Without the ability intercept, search, and 
detain it is sort of like watching a shoplifter but not intervening.
    Fisheries are the main asset of the COFA states. Look at it as a 
matter of national defense. One should consider U.S. military support 
to FAS illegal fishing operations as a proper activity relating 
directly to these nations' `national defense' for which the U.S. has 
responsibility under the Compacts of Free Association. USINDOPACOM 
needs to see it as such, especially given the dual use nature of the 
PRC fishing fleet. Indeed, this would be a tangible `push back' against 
Chinese encroachment and influence--or just plain theft of our allies' 
natural resources.
    A few ideas for consideration, and keeping in mind that the U.S. 
Navy is already hard pressed to cover existing requirements in the 
region. The U.S. Coast Guard has only a handful of ships to cover an 
area bigger than the continental United States.
Other ideas:

    --  Develop a scheme, starting with American territories and the 
            FAS, where junior U.S. Navy, Marine, or Coast Guard 
            officers are assigned to implement and carry out an `IUU 
            prevention scheme'--from surveillance through enforcement. 
            Have them work with the local enforcement, and provide them 
            with suitable boats--needn't be `purpose built' government 
            ships, but are ideally locally built--to cover a designated 
            stretch of ocean. This can be supplemented by up what 
            amounts to a local `watchers' network based on local 
            fishing boats and locals ashore--the Canadian Rangers 
            (Reserves) model might be worth examining for relevance. 
            This scheme has the advantage of a permanent presence, 
            ability to draw on considerable resources, and brings 
            locals in as partners--thus building up their capabilities. 
            And it is focused solely on IUU and related maritime 
            security. This will also require an aerial surveillance 
            component.

    --  Work consistently with regionally appropriate local partners. 
            For example, in the FAS, bring in the Japan Coast Guard 
            (JCG) where possible and make this a U.S.-Japanese joint 
            effort. As Palau and Marshall Islands recognize Taiwan, 
            work with Taipei there as well.

    --  Prioritize the redevelopment of an American fishing fleet and 
            processing capability, so there is broader incentive to 
            make sure everyone is playing by the rules, and local 
            economies are more likely to benefit.

Extend the Financial Parts of COFA

    The United States should consider support for the Compact States as 
a necessary `maintenance cost' for U.S. national strategic interests. 
Consider the COFA value from a military perspective. The cost of 
providing ongoing funding and support for the COFA states is a pittance 
compared to the expense and difficulty of trying to reestablish a U.S. 
presence should it be lost--or to hold it in the face of local 
opposition. Indeed, there are other places on earth (and even in the 
USA) that are less critical to long-term U.S. interests and where the 
U.S. spends more money with even fewer chances of success.
Offer Versions of COFAs to Kiribati, Nauru and Tuvalu

    Beijing's prospects received a boost in 2019 when the government of 
Kiribati established formal diplomatic relations with the PRC and 
severed its state-to-state ties with Taiwan. Kiribati is an independent 
nation and without a COFA arrangement with the United States so, in 
theory it could permit PLA access to local ports and airfields. China 
tends to move surprisingly cautiously when capitalizing on military 
access opportunities, but there is some `precedent' in the case of 
Kiribati. In the early 2000s the PRC operated a satellite tracking 
facility--believed to also have military uses--in Kiribati, prior to 
the local government shifting diplomatic recognition to Taiwan. Now, as 
mentioned, it is looking at an airfield. There is strong domestic 
opposition to the switch to China, but with few economic alternatives, 
the case can be hard to make. And the longer China is there, the harder 
it will be to extricate. A timely offer of a COFA might be very well 
received.
    Nauru and Tuvalu, independent countries each with populations of 
around 11,000. Both recognize Taiwan and so are under heavy PRC 
political warfare attack. Offering them modified versions of Compacts 
would show that the United States backs by those willing to take a 
stand for democracy and freedom, whatever the costs. Apart from being 
the right thing to do, it would fundamentally change the political 
warfare narrative about Taiwan--giving hope to many.
Final Note

    Sometimes one just doesn't know how good they've got it. Remove the 
FAS from `our side' and everything we are doing in the Indo-Pacific 
gets very hard--if not impossible. And the FAS are just one piece of 
puzzle. Without the FAS states on-side it's hard to `defend forward' or 
operate from a forward position along the first island chain. But 
you've also got to have the `non-COFA' states secure as well.
    You can get the military part just right, and still lose. American 
engagement needs to cover economic, commercial, diplomatic, propaganda, 
and social aspects in a coordinated way and with same effort. The COFAs 
give us the tools to do that, if we want to. Doing it right could mean 
ensuring phase zero goes so well, it stays at phase zero.

                                 ______
                                 

  Questions Submitted for the Record to Grant Newsham, Colonel, U.S. 
                          Marine Corps. (Ret.)

            Questions Submitted by Representative Westerman

    Question 1. How has the People's Republic of China (PRC) been able 
to increase its influence in the FAS (Freely Associated States) even 
though the U.S. and FAS had COFA agreements since 1986?

    Answer. Ultimately, the United States took the FAS for granted--
apparently assuming that since it `had a contract' there was nothing to 
worry about. Washington also assumed that all would be well since it 
was providing considerable aid to the FAS--direct financial payments as 
well as support for education, health care, infrastructure development, 
and even postal services and weather forecasting services, as well as 
offering the right of FAS citizens to reside in the United States and 
providing `military protection'.
    The PRC took advantage of American complacency and patiently and 
diligently went about establishing and expanding its influence in the 
FAS. The Chinese applied a recognizable `sequence'--starting with a 
commercial presence that included Chinese nationals on the ground and 
operating businesses--and down to the corner shop level. Chinese 
economic inroads also included Chinese involvement, and indeed, 
outright control of key industries--particularly local fishing 
industries--that also are the main economic resources for the FAS 
nations.
    This commercial presence created political influence--directly with 
local officials and other citizens who saw the Chinese presence as a 
valuable thing in an economy with limited prospects. It was also 
personally valuable for many local officials and politicians. In Palau 
the Chinese successfully `weaponized' the tourism industry to both 
influence with local officials and others. And this approach has also 
been used in the Federated States of Micronesia (FSM) via the offer of 
massive investments by Chinese resort companies.
    All in all, the Chinese were (and are) seen by many in the FAS as 
an economic lifeline. And while the local intention may be to have 
Chinese money in addition to American support via the COFA's, the 
effect--and the PRC's intentions--are to eventually displace the United 
States in the Central Pacific.
    Note that FSM recognized the PRC since 1989 (while the Marshall 
Islands (RMI) and Palau still recognize Taiwan.) China reportedly pays 
the costs of FSM Embassy in Beijing, and hosts visits to China by FSM 
officials and other influentials, that include emoluments and 
`envelopes of cash.' Chinese under the table payments to officials and 
politicians in the other FAS nations are well known. The PRC's aim is 
to have RMI and Palau switch recognition, and that objective is 
reportedly within sight.
    As noted, bribery and under the table payments are part and parcel 
of Chinese activities in each FAS nation. There is next to no downside 
risk to taking Chinese money owing to scant prospects of such 
activities being revealed.
    The PRC also reportedly promotes secession movements in FSM--in 
Chuuk state. And the recent Rongelap scheme in RMI--looking to set up a 
nation within a nation--was carried out by Chinese nationals (with RMI 
citizenship) after successfully subverting RMI officials.
    China's diplomatic mission in FSM is well-staffed and aggressively 
pushing Chinese interests--at American expense. The PRC has made highly 
publicized contributions to the FSM `trust fund', built infrastructure 
such as roads and government buildings, and it has donated ships and 
aircraft (to address the long-standing need for better transportation 
between in the country).
    Beijing also has a `quasi-diplomatic' presence in Palau and RMI--
and is looking to shift recognition to PRC from Taiwan. And to also 
shift local attitudes away from the USA and toward PRC.
    The U.S. has been too slow to recognize what has been happening--
even though Chinese influence efforts have been reported--even via U.S. 
diplomatic channels. The Americans had (and still have) no political 
warfare scheme of their own--so the Chinese have effectively operated 
unchallenged.
    The U.S. has been unsuccessful in drawing commercial interests into 
the FAS in any meaningful way. This, in my opinion, is owing to a lack 
of know-how and imagination in U.S. diplomatic and official circles. It 
is exacerbated by a failure to work together with partners--such as the 
Japanese, Taiwanese, South Koreans, and Indians on commercial and other 
broader approaches to bolstering the U.S. and other free-nations' 
presence and interests in the region.
    One notes as well that the U.S. government has too-often stumbled 
on simple matters that include giving FAS leaders and Ambassadors 
proper respect. As one example, FAS Ambassadors in Washington are 
typically relegated to meeting with `desk officers' rather than State 
Department officials of proper rank. Meanwhile, the PRC rolls out the 
red carpet for Pacific Island leaders when they visit China.
    Chinese influence efforts (aka political warfare) are a phenomenon 
throughout the Pacific--and not only in FAS nations.

    For further details and background I recommend reading the 
following for concise, detailed looks at how the PRC has undercut U.S. 
influence in the Central Pacific;

  1.  Winning Without Fighting/A case study of Chinese political 
            influence operations in US Territories and the Freely 
            Associated States in the Western Pacific. (Page: 17-25) 
            https://csbaonline.org/uploads/documents/Winning_ 
            Without_Fighting_Annex_Final2.pdf

  2.  This piece by Cleo Paskal in The Diplomat introduces the letters 
            written by then-FSM president, David Panuelo that highlight 
            Chinese subversion and influence efforts in the FSM and 
            beyond. The letters are linked in the text. https://
            thediplomat.com/2023/03/micronesias-president-writes-
            bombshell-letter-on-chinas-political-warfare/

  3.  This China Unscripted episode is particularly informative about 
            Chinese subversion in the FAS. https://www.youtube.com/
            watch?v=WCJ8DS6EDEU
    Question 2. How would renewing the COFA help counter Chinese 
influence if it hasn't kept the PRC from increasing its influence?

    Answer. Were it not for the COFA--and the fundamental loyalty and 
affinity to the United States on the part of the residents in the FAS 
nations--the Chinese would already have control over the FAS nations 
and the Central Pacific.
    The problem isn't the COFAs. It is the lack of additional proper 
attention and effort by the United States--to include the State 
Department and the Department of Defense in particular. The Trump 
Administration was the first administration to actually devote time and 
effort to the FAS (and the rest of the Pacific Islands), but it did not 
have enough time to fully implement their `campaign plan.'
    The FAS do notice when the United States hems and haws over 
renewing the COFAs and appropriating necessary funding. This gives the 
impression--rightly or wrongly--that the FAS nations are not considered 
all that important. Impressions and psychology matter a lot.
    The COFA's are best viewed as maintenance fee and a foundation for 
the U.S. presence in the Central Pacific--and the right to exclude 
foreign militaries from the FAS territories. But it is essential to 
ensure that requirements beyond the COFA payments and other current 
assistance are met.
    As described in Question #1, developing and implementing a joint 
scheme for the FAS with our partners in Japan, South Korea, Taiwan, 
India, and perhaps Australia would make our efforts in the FAS far more 
effective than just the U.S. acting alone. It can also help address the 
need for commercial development that is lagging--and that is dominated 
by Chinese interests.
    Beyond the `treaty' aspect of the COFA relationship, the U.S. needs 
to ensure proper respect and appreciation for the FAS nations is 
demonstrated and articulated.
    As mentioned earlier, the expansion of Chinese influence is not the 
fault of the COFA agreements. The bigger problem is that the U.S. 
thought the COFA treaties alone were enough to ensure our presence and 
interests were guaranteed. We needed to do more. As one data point, 
U.S. embassies in the FAS are generally tiny and somewhat sleepy 
operations--and service in the FAS is not highly sought by American 
foreign service officers.
    The Chinese have been operating without any real American pushback 
for decades. In other words, the American have been remiss and have 
allowed Chinese influence to expand and take hold almost by default. As 
noted, it's amazing they haven't got the entire place locked up by now. 
Read then-president Panuelo's letters and you'll shiver at how close 
they have gotten to their objective.
    The majority of FAS citizens want nothing to do with the PRC. But 
they want, indeed they need, the Americans to `step up' and demonstrate 
their reputed commitment to the region.
    The USG needs to realize what is at stake and quickly develop and 
implement a proper campaign plan to bolster our presence and position 
and to take on Chinese influence efforts--to include the PRC's highly 
effective use of under the table financial and other corrupt methods of 
establishing Beijing's influence. This needs to be exposed--and U.S. 
intelligence and law enforcement resources need to be deployed at 
proper scale.
    Finally, the amounts of money needed to renew the COFA deals is a 
pittance. It's roughly $300 million a year for seven years. That is 
literally a day's worth of Medicaid and Medicare fraud. The costs of 
having to properly defend or having to occupy the FAS to forestall 
Chinese influence? Maybe start at $100 billion--yes, $100 billion. And 
that is not considering the costs of having to actually fight.
    Just to get started on the calculation, we will need at least 20 
new U.S. Navy ships. That's close to $40 billion alone. Add in 
additional aircraft to cover the FAS region (an area the size of the 
USA), facilities to handle and operate the new hardware, and additional 
personnel to man the ships and aircraft (if you can find them) . . . 
and we're getting close to $50 billion just in one-time, up-front 
costs.
    And having to become an occupying power in a region where we were 
once welcomed and liked has a `cost' of its own. That cost alone may be 
hard to precisely quantify, but it if Beijing were to put a price on 
the political warfare `win' for the CCP it would make $300 million seem 
like peanuts.
    If a fight is required to keep the Central Pacific in American 
hands, the costs will be astronomical--as we saw in Afghanistan and 
Iraq.

                                 ______
                                 

    Mrs. Radewagen. I thank the witness for their testimony.
    The Chair will now recognize Members for 5 minutes for 
questions. I will start by recognizing myself. This question is 
for all witnesses.
    It is very clear how the non-expiring security provisions 
of COFA support U.S. interests and protects us from our 
adversaries. However, it is not as clear as to how the economic 
provisions play a role in this.
    Furthermore, China has attempted to undermine the United 
States by offering more money and cheap infrastructure. How 
exactly does U.S. economic assistance to FAS under the COFA 
support U.S. interests and counters PRC influence?
    And what keeps the FAS from accepting Chinese economic 
assistance?
    Mr. Short?
    Mr. Short. The economic assistance that we provide under 
the Compacts of Free Association is primarily focused on 
development. That is, education, health, and infrastructure, 
and other related activities. There are also U.S. Federal 
programs that provide assistance to these governments.
    The PRC's activities generally revolve around large 
infrastructure projects, high-visibility projects, and they 
have had a checkered track record on these projects. For 
example, the buildings in the Federated States of Micronesia 
that literally fell down had to be rebuilt.
    But this does present a challenge, because we cannot 
respond directly, one for one, in a bidding war with the PRC. I 
think the underlying relationship that we have, this people-to-
people, government-to-government relationship, this is a tie 
that binds. It is a 40-year relationship. And, let's face it, 
Compacts of Free Association, in the various iterations, have 
worked very well. Free association has been a direct benefit to 
the United States, as we have pointed out, in the security area 
and others. It has also been a direct benefit in developing 
self-government and democracy in these islands.
    The challenge going forward is that the PRC doesn't play by 
the rules, and we have to be doubly aware of the threat 
economically, politically, and otherwise that they pose to 
small islands. Let's face it, the small island governments are 
remote, they are fragile. They have very limited natural 
resources, with the exception of fish. So, they are vulnerable.
    A good example is Palau, where the Chinese PRC built up 
tourism from the PRC to Palau. Then, when Palau didn't kowtow 
to the PRC on the Taiwan issue, they invented a health issue 
and tourism stopped. Well, it crashed the Palau tourism 
economy. This is a good example of how the PRC uses, basically, 
a multi-faceted approach to gain their objectives. That is 
political, economic, social, you name it. It is all in the 
basket. Thank you.
    Mrs. Radewagen. Yes. Dr. Lum?
    Dr. Lum. Yes, the Freely Associated States, Micronesia in 
particular, will accept foreign assistance, whether it is from 
Australia, Japan, China.
    Ideologically, they are much more aligned with the United 
States, culturally.
    There are various areas where we are not competing head to 
head with China, but health care, education. China has started 
to provide climate-related assistance in the region, but that 
is one area that we could build goodwill.
    Palau is doing a little bit better economically, but there 
are areas, such as tourism and fishing, that we should bolster. 
And, of course, through the Compact assistance. Thank you.
    Mrs. Radewagen. Yes. Ms. Paskal?
    Ms. Paskal. Chair Radewagen, the question of why Palau 
didn't flip after all that pressure was put on is incredibly 
important. They understand the threat that they are facing, and 
they don't want to be pulled into that Chinese orbit. They are 
very overt about it.
    The problem is that China is not democratic. All it needs 
to do is capture an elite of a dozen or so, like it did in the 
Solomons, to flip the country. So, understanding how brave they 
are and the risk that they are taking by not flipping to China 
in the case of Palau, even though that pressure was put on, 
shows the incredible determination, sophistication, and courage 
of the people of the FAS. But it also shows how vulnerable it 
is if they pull a Solomons and find the right dozen people to 
buy off, and then all of this falls apart. Forget strategic 
denial, forget being able to base.
    Mrs. Radewagen. Thank you, Ms. Paskal. I am out of time, so 
the Chair now recognizes Mr. Case for 5 minutes.
    Mr. Case. Thank you, Madam Chair, and thank you for the 
accommodation, and thank you to our great witnesses. I think 
you have painted the picture very well.
    I think, Mr. Short, yesterday we had a very good discussion 
among the Ambassadors from the various countries of the 
Pacific, including the Freely Associated States, through our 
Pacific Islands Caucus, in conjunction with Australia and New 
Zealand. And one of the issues we have is we view this very 
much in a defense-related perspective because we have the 
geopolitical challenge of China and we recognize it. We have 
identified China as our top geopolitical challenge.
    We, whether we are at Natural Resources or Appropriations 
or Armed Services, need to consider these areas of the Pacific 
in a defense perspective, and yet the Pacific Islands don't 
want us to just look at this as a defense-related issue for the 
United States. They have their needs. They have their concerns. 
They deal with climate change on an existential basis. They 
deal with economic disadvantage. They deal with social safety 
nets.
    I think my question is, and I am trying to sort this 
through, how do we talk about both of these concerns and areas 
in a way that is relevant to them, responds to their concerns, 
but is realistic about the world that we are living in, and 
about the fact that the Pacific Islands is part of this 
geopolitical challenge?
    Mr. Short. You have hit on a very important point. On one 
hand, you have the sovereign state, the Micronesian state. On 
the other hand, you have the U.S. Government and the 
Administration providing financial and other supports. So, 
there is almost a built-in conflict.
    On one hand, the Micronesians rightfully can say, ``We are 
sovereign, we are administering our own internal affairs, our 
own foreign affairs. You are responsible for our security and 
defense. We are members of the United Nations, send us a 
check.'' And that is what was done in the first Compact. 
Unfortunately, it didn't work out too well. The emphasis that 
we hoped would take place on education, health, infrastructure, 
economic development didn't take place.
    When I renegotiated the Compacts in 2003, I instituted an 
agreement called the Fiscal Procedures Agreement, which held 
the Micronesian states to the same level of accountability that 
we, the Federal Government, holds state and local governments. 
And we felt that was a fair balance between, on one hand, the 
sovereign responsibilities and prerogatives of the Freely 
Associated States, but on the other hand this is appropriated 
funds, and there has to be accountability.
    The mechanism I feel, looking at it from the outside, has 
worked reasonably well. It has been administered by the Office 
of Territorial Affairs in the Department of the Interior. And I 
feel that an agreement is a piece of paper, but it is the 
relationships that we build with the staffs here and with the 
governments there that has made it effective. And we have tried 
to emphasize education, health, and infrastructure. Is it 
perfect? No, but it is sure a lot better than what we did 
before, and I think it sets parameters for future engagement.
    Mr. Case. Great, thank you.
    And Mr. Newsham, I can't ignore you since you are my 
constituent. Welcome. I am really happy to have you on the 
panel. But what other countries are our partners in the Freely 
Associated States, in particular?
    Of course, the United States, special relationship going 
back to the trust territories. But countries like Japan, Korea, 
Australia, these are partners in the Freely Associated States, 
from a strategic perspective to an economic assistance 
perspective and beyond. And what may we be missing here that we 
need to focus on?
    Mr. Newsham. Thank you, sir. Well, I think we are not 
taking full advantage of our partners.
    The Japanese have a very strong interest in the region in 
particular, and they know how to operate in this place, and 
they have financial resources, they have people on the ground. 
And they do their thing, and we sort of cooperate a bit. But 
what is needed is a fully coordinated strategy between the 
United States and the Japanese. Bring the South Koreans in it, 
get the Taiwanese in it as we can, and look at it from that 
perspective, not each side doing whatever it feels like. And 
that has been a fundamental failing.
    And one other point I just want to bring up, sir, is you 
correctly identified this tension between the economic and the 
security, and it is almost regarded by many people as if they 
are two different things. The idea is, well, we have a 
contract, they have to let us in, they have to allow us to keep 
people out. Well, not necessarily. Security rights are 
dependent on us ensuring the economic well-being of the Compact 
states, and that is often not recognized. There is actually 
language in the Compacts that addresses this clearly.
    Mr. Case. OK, thank you so much. My time is up, as well, 
but I appreciate that final point. Aloha.
    Mrs. Radewagen. The Chair now recognizes Mr. Tiffany for 5 
minutes.
    Mr. Tiffany. Thank you, Madam Chair.
    Ms. Paskal, you highlighted in your testimony the former 
FSM President's letter. And how has this situation evolved 
since the release of that letter?
    Ms. Paskal. Thank you. So, when that letter was leaked, 
because it was actually designed to go just to internal 
leadership in the country, he had already effectively lost re-
election.
    This was the third of three letters. So, some will say 
that, well, he did it because he lost the election. But while 
he was in power he wrote two others, one to Prime Minister 
Sogavare of Solomon Islands about how concerned he was about 
the security deal signed with China, and one when Wang Yi went 
through the region to try to sign deals with others. I would 
suspect that that would have made him a very serious target for 
Chinese political warfare to ensure that he wasn't re-elected.
    He, in that letter, put the most incredible blocking offer 
on the table, which was to de-recognize China and recognize 
Taiwan. He was in power during the transition period for a few 
months. And if the United States would have backed that 
proposal, it would have completely changed the strategic 
dynamic of the middle of the Pacific. You would have had the 
three Freely Associated States all recognizing Taiwan. It would 
have been incredibly operationally important. You could have 
had the Taiwanese navy running through it, as well.
    That didn't happen, he is out of power. And now, 
undoubtedly, the Chinese are going to try to make his life as 
miserable as possible so that nobody else tries that again.
    Mr. Tiffany. So, why did that fail? Why did they fail? Why 
did we in America fail?
    Ms. Paskal. I would ask the State Department.
    Mr. Tiffany. What year was that?
    Ms. Paskal. The letter came out March 9, 2023. He was in 
power until, I think, May 11, 2023. So, that was the window 
that you had. And he was willing to take the hit to recognize 
Taiwan.
    The Taiwanese can't move without the U.S. approval. 
Taiwanese were interested. They had negotiated. And in the 
letter, he detailed the amounts of money he had talked to the 
Taiwanese about, what they would need in order to pull away 
from China, because China would have pulled all their money 
out. So, in order for the economy not to crash, they needed a 
very minimal amount, like $50 million over 3 years, something 
like that.
    Mr. Tiffany. And the opportunity has now passed?
    Ms. Paskal. Yes, that opportunity has passed. But when 
China loses a country, when a country goes to Taiwan, the 
Chinese stay in the country and fight to get it to flip back. 
When a country flips to China, we don't fight. We have kind of 
given up on Solomons or Kiribati, but there is opposition in 
both Solomons and Kiribati who wants to go back to Taiwan.
    Mr. Tiffany. Mr. Newsham, is that what you were driving at? 
I just jotted a note. I just said, ``Are you saying we are not 
showing up'', when I was listening to your testimony, is that 
what you are talking about?
    Mr. Newsham. Well, that is certainly part of it, sir, is 
that we don't have enough of a presence. I would cite that the 
embassies that we have in the region, and not where we should. 
It is not as if diplomats are lining up to get those 
assignments. There are not enough of them. We are not on the 
ground, as we need to be. And that is one of the issues I am 
getting at, that an offer like this comes along, and well, we 
almost don't have the players on the field to deal with it.
    Mr. Tiffany. Was it you, Mr. Newsham, that said the Chinese 
do not play by the rules, the Chinese Communist Government does 
not play by the rules? Did you say that?
    Mr. Newsham. I don't think I said it, but I would have said 
it.
    Mr. Tiffany. Yes, OK. So, how do you react when, as a 
country that believes in the rule of law, how do we operate, 
then, when we are up against an adversary that does not want to 
play by the rules? What do you recommend? Showing up?
    Mr. Newsham. Well, that is a good thing to do, for 
starters.
    And keep in mind that, in the COFA states and throughout 
the Pacific, the Americans are actually very well liked. People 
want us to be there. But you do have to have diplomats on the 
ground. You have to have a military presence. You have to have 
a commercial presence, as well. And that is where people like 
the Japanese, the Taiwanese, the Indians can be very useful.
    But all of this has to be combined in a systematic 
political warfare campaign, and we have forgotten how to do 
political warfare some time in the 1980s. And what the Chinese 
are doing is political warfare. Much of it is greased by these 
under-the-table payments, and it is very effective because it 
doesn't get exposed.
    We should pay some intelligence attention to the region and 
expose this stuff, give the honest people in these states the 
ammunition to go after what the Chinese are doing. Let them do 
it, but give them the resources. But we have to have some sort 
of a campaign plan to do this. But as it is, it is sort of a 
very, very modest, sparse, haphazard approach to things too 
often.
    Mr. Tiffany. Madam Chair, unfortunately, my time is up.
    But if you would be willing to share with my office, I just 
find it very intriguing when you talk about we forgot how to do 
political warfare in the 1980s. If you would care to send a 
summary document on what you are referencing to my office, I 
would really appreciate it, because I could be asking a whole 
lot more questions.
    But I yield back.
    Mrs. Radewagen. The Chair now recognizes Mr. Gallego for 5 
minutes.
    Mr. Gallego. Thank you, Chair Radewagen and co-Chair 
Sablan. And thank you to our witnesses for your insight today.
    As a member of both the Natural Resources Committee and the 
Armed Services Committees, I am glad that we are having this 
important conversation about the crossroads between national 
security, our natural resources, and relationships in the Indo-
Pacific Region. And I did take a CODEL with a couple of Members 
here as past Chairman of Intel Special Operations, in 
particular, to talk some of our friends out there. And what I 
am hearing from you is what I heard from the President of 
Palau, the Prime Minister of Papua New Guinea, and a couple 
other allies and friends.
    Mr. Newsham, please elaborate on your idea that the United 
States should consider support for the COFA states as a 
necessary maintenance of cost for U.S. national strategic 
interests.
    Mr. Newsham. Yes, sir. One way to look at this is to 
consider what would it cost us to secure that region if one or 
more states told America, ``Look, you haven't done what you 
said you would. The Chinese are offering us a ton of money. We 
renounce the treaties.''
    What you would have to do is you would have to get a much 
bigger navy. You would have to have a lot more ships to cover 
this. You would have to, literally, send in the Marines. You 
would have America as an occupying force in this region, like 
we did in the Caribbean in the 1920s. And that costs a ton of 
money. The amounts that are being talked about in the COFA 
negotiations, goodness, we were spending $45 billion a year on 
Afghanistan.
    Mr. Gallego. What is the amount that they are asking, that 
they are talking about in COFA?
    Mr. Newsham. About $7.1 billion over some period of time.
    Mr. Gallego. Right. As someone that served on the Armed 
Services Committee, that is just a rounding error, which is 
amazingly sad.
    Can you also elaborate on your statement that the ability 
of U.S. forces to operate between the corridor from Hawaii to 
Guam free of enemy interference is indispensable? I think you 
kind of already talked a little bit about it.
    Mr. Newsham. Yes, sir. As a worst case, if you had the 
People's Liberation Army set up in those islands, it would 
effectively be an A2/AD area, anti-access area denial zone, 
that you would, at best, tread carefully. At worst, you would 
steer clear of it.
    And it is hard for us to imagine, because we have taken 
this access for granted. But you could even have it done by the 
Chinese very efficiently with their maritime militia doing it.
    So, you literally would fight your way through the region.
    Mr. Gallego. Right. And the goal of China is to make sure 
that they keep enough distance from us being able to get as 
close to them as possible, so that we can effectively use our 
air superiority to potentially protect Taiwan or suppress their 
abilities to cross the Straits of China. So, the further we 
have to fly, the harder it is for us to be able to coordinate, 
refuel, and essentially assert any type of control over the 
shipping lanes. Is that correct?
    Mr. Newsham. That is exactly it, sir.
    Mr. Gallego. And I think it was Ms. Paskal, or maybe it was 
Mr. Short or Dr. Lum, we talked about the State Department in 
terms of diplomats. And this is actually something that I heard 
also in Papua New Guinea, where they, No. 1, they said, 
``Please stop using the Australians as your proxies and treat 
us as you would treat any other country.'' And also that China 
is opening up embassies on individual island nations, and we 
are not.
    So, (1) have you seen any shifts, we will go with Dr. Lum 
first, then Ms. Paskal, if you can answer that. Have you seen a 
shift? Are we actually starting to open up embassies?
    And (2) how can we make this an attractive posting for 
diplomats? I mean, this is extremely important. This is going 
to be essentially what many, I think, diplomats had to deal 
with in terms of Eastern Europe during the Cold War. What can 
we do to attract that very young but capable diplomat to go 
take that post in Palau, for example?
    Dr. Lum, do you want to start?
    Dr. Lum. Oh, sure. So, the State Department has recently 
opened two more embassies in the region, which are in the 
Solomon Islands and Tonga.
    Mr. Gallego. Great.
    Dr. Lum. Then it plans to open two more in Vanuatu and 
Kiribati. So, that covers most of the countries, but not all of 
them. I would say, compared to China, I think we are finally 
about on the same level. China also appointed a Special Envoy 
to the Pacific Islands Forum, and then we are in that process.
    Mr. Gallego. That is great. So, there is movement there. 
OK.
    Dr. Lum. In terms of your second question, I have heard 
anecdotally it is a hardship post type of situation, but that 
is something to think about, in terms of making the position 
more attractive.
    Mr. Gallego. Yes.
    Ms. Paskal?
    Ms. Paskal. Yes, you have opened two new embassies. Neither 
of them have consular services, and they are very small 
staffed. The one in Tonga was opened when both the King and the 
Prime Minister were out of the country, which was a bit of a 
diplomatic faux pas, and quite confusing.
    This Task Force helps people want to be posted there. The 
attention to the area is incredibly important.
    The other thing about this Task Force, which goes to 
Representative Case's question, is the FAS and the American 
Pacific Island countries are different than the other Pacific 
Island countries. They shouldn't be thought of in the same 
sense. The FAS know their defense and security relationship. 
They are active Chinese targets. So, thinking of them as 
disaggregated is what is very important about this Task Force. 
You don't have to deal with all the Pacific Islands. In fact, 
you are not supposed to. You can just deal with the FAS and the 
territories, and put that together.
    The other thing about zoning is that China is also trying 
to get to Latin America, where they are building up a lot of 
facilities, which you know. They need to go through the Pacific 
Islands for that. So, it is not going to just stay up in the 
FAS, it is going all the way through, which is why American 
Samoa is such an important component that really needs more 
attention.
    Mrs. Radewagen. Yes.
    Mr. Gallego. Thank you.
    Thank you, Madam Chair.
    Mrs. Radewagen. The Chair now recognizes Mr. Moylan for 5 
minutes.
    Mr. Moylan. Thank you, Madam Chair.
    Colonel Newsham, alongside other members of the Pacific 
Island Caucus, I requested an increase in appropriations in 
support of diplomacy in the Pacific. These requests included 
increased appropriations for State Department staffing in the 
Pacific, USAID's Pacific America Fund, natural disaster relief, 
and humanitarian assistance. Colonel, can you speak to the 
importance of increasing America's diplomatic and humanitarian 
presence in the Pacific?
    Mr. Newsham. Yes, sir. If we are not there, we have almost 
no ability to shape the region, shape events, shape what people 
think.
    And as I noted, people want us there. It is not like us 
trying to turn Afghanistan into a liberal democracy. We are 
wanted in the Pacific, and you have to be there.
    The humanitarian assistance/disaster relief part of this, 
this is a very good opportunity for us. One, it serves a 
practical need, it addresses real problems. There are disasters 
that happen all the time. But it also allows you to set up the 
infrastructure that we need that is useful from a security 
standpoint. It allows you to bring in your allies and get them 
working.
    But also, you can really bring in the locals. And I 
mentioned sort of a local defense force. Getting the islanders 
directly involved in their own defense, there are a lot of 
veterans that you can use as the basis for this.
    But these are two very good opportunities, and you have to 
make it attractive to the people that will do it. And they are 
human beings, and if you make it clear that, ``If you go out to 
the Pacific, this is the hot area, this is where your career is 
going to take off.'' But as it is now, everyone wants to go to 
Vienna, but not so much the Pacific. That has to change, and it 
should change.
    Mr. Moylan. Thank you, Colonel.
    Colonel Short, the continuation of COFA agreements is 
important to the U.S. strategy and strategic interests. This 
also means there will be continued migration to the United 
States. Colonel, do you anticipate an increase in COFA migrants 
coming into the country, and what impact does COFA migration 
have on the United States?
    Mr. Short. I think your concern is the United States 
increasing military presence in the area?
    Mr. Moylan. Actually, no, Colonel. We are talking about the 
COFA agreement will allow COFA migrants to come to the United 
States. Your input on this, how does it come into the country, 
and what impact COFA migration has on the United States.
    Mr. Short. Oh, migration. OK. Going back to the whole issue 
of migration of Micronesian citizens to the United States, in 
the initial Compact we provided for visa-free entry of 
Micronesian citizens to the United States, and they can work 
and stay as long as they want. It is not a path to citizenship. 
And this was really made under the assumption that population 
increases were so great in the islands, and the land mass 
wasn't expanding, that there was simply going to be an over-
population situation.
    That immigration facility was continued in the second 
Compact, and I assume it is going to be continued in the third. 
And it has resulted in impact specifically on the U.S. 
territories, but also on Hawaii and in the United States.
    When I renegotiated the Compacts, we made provisions for 
what was called impact on the U.S. territories, including Guam, 
Northern Marianas, American Samoa, and Hawaii, not the 
continental United States. Those funds were increased by the 
Congress, and they are administered through the Department of 
the Interior to basically ameliorate the impact of this 
migration. It has been most pronounced, for example, in Hawaii 
and Guam.
    I am not sure exactly how it is going to be addressed in 
the Compact that you will be receiving shortly, but it is 
something to look at and assess, the effectiveness of the 
program over the last 20 years, and how it should be fine-tuned 
or continued.
    Mr. Moylan. Thank you very much.
    Madam Chair, I am pretty much out of time, but I appreciate 
it. Thank you to the panel.
    Mrs. Radewagen. The Chair now recognizes Mr. Grijalva for 5 
minutes.
    Mr. Grijalva. Thank you, Madam Chair.
    Ms. Paskal, the COFA agreements, approving the renewal of 
those Compacts with FASs in a timely manner, it is not a 
question in terms of the urgency that we have before us in that 
underlying discussion on those agreements, that both deal with 
military security, economic security, underlining those 
discussions, at least with representatives from Freely 
Associated States, has been the issue of respect. Can you speak 
to that in terms of how that is an underlining issue?
    Ms. Paskal. That is a very serious issue. And I think the 
nuclear issue kind of encapsulates it, where the United States 
conducted 67 nuclear tests in the Marshall Islands, and the 
Marshallese were well aware of the sacrifice that they were 
making for American security, but also global security.
    And the way that this renewal has been framed, where this 
kind of $700 million of undivided money that is not really 
dedicated to nuclear, there is no apology, is, I think, 
perceived as a lack of respect for what they have had to go 
through. Also, frankly, a lack of gratitude for what they have 
sacrificed.
    Whereas, if you flipped it on its head, and acknowledged 
it, and dealt with it up front, it is a bonding relationship of 
mutual sacrifice for the sake of freedom and liberty that could 
then be built upon in the current context to figure out how we 
are going to work together again.
    Mr. Grijalva. Yes, which speaks to the issue of a timely 
agreement.
    Dr. Lum, the Pacific Islands have identified climate change 
as an urgent concern for their security and their overall 
development. How may a failure to deal and mitigate climate 
change impacts on the Pacific impact the U.S. relationship with 
these islands, going forward?
    Dr. Lum. How does addressing climate change impact our 
relationship with----
    Mr. Grijalva. Or not. Or the failure to address that 
mitigation, the failure to work with the very important issues 
of loss of land, loss of climate. The change.
    Dr. Lum. The Freely Associated States are among the low-
lying island and atoll countries in the region, and they are 
directly threatened by rising sea levels.
    Regionally, the Pacific Islands Forum came out with the Boe 
Declaration, they consider climate change as a type of security 
threat. So, they see climate change, along with the traditional 
security threats that we have been discussing today, as a very 
big issue.
    Mr. Grijalva. As does the military, our military sees that 
in that region, as well.
    Dr. Lum. And it also involves this notion of respect that 
we have just been discussing. So, listening to the Pacific 
Island countries about climate change, even if it is just 
listening, along with the other issues, I think that does go a 
long way.
    Mr. Grijalva. Thank you.
    And Mr. Newsham, how do the provisions of economic support 
and climate change mitigation to the FAS and other Pacific 
Islands serve the specific security interests that the United 
States has in the region, and needs to secure even further in 
the region?
    Mr. Newsham. It is as I noted earlier, sir, they are 
directly related. You can't distinguish the two, in my opinion. 
The economic well-being of the Freely Associated States, it 
creates the political conditions which allow the security parts 
of the Compact to exist.
    This relationship that the Freely Associated States has 
with the United States is unprecedented. I think it is the only 
three countries on Earth that have given up their sovereignty 
and control of a part of their government to the United States. 
And that is a huge sort of act of trust. And there is an 
obligation, I think, which it creates. And I would say this is 
not just to defend, but it is also the economic well-being.
    And yes, it is a challenge, given the nature of the Freely 
Associated States, but it is not insurmountable. There are 
plenty of things that can be done.
    And once again, working with our partners, the Japanese, 
the Indians, Taiwanese, there are lots of opportunity there 
that provides an alternative to these blank checks that the 
Chinese are offering.
    Mr. Grijalva. Thank you, Madam Chair. I yield back.
    Mrs. Radewagen. The Chair now recognizes Chairwoman Hageman 
for 5 minutes.
    Ms. Hageman. Thank you and thank you to the witnesses for 
being here.
    Colonel Newsham, in your testimony you pay a lot of 
attention to the strategic positioning of the FAS, and you 
reference how the island nations make up the rear of our 
deterrence posture in the first island chain, and how they make 
up the power projection superhighway.
    The PRC has developed A2/AD capabilities on the other side 
of the first island chain to protect its homeland. If the 
United States lost exclusive military rights among the FAS, and 
China gained a military foothold, what would the deployment of 
its A2/AD capabilities mean for freedom of movement and 
projection of our own military forces?
    Mr. Newsham. Once again, ma'am, the map tells you a lot. 
These Freely Associated States, they are an area as big as the 
United States. And with the Chinese ensconced there with long-
range precision weapons, it would create a huge zone that you 
would have to either go around or deal with. You might have to 
fight your way through, once again.
    And as was mentioned earlier, it is important to note also 
that the Chinese see this as a springboard to the East, and 
they are setting up the dual-use, potentially military 
infrastructure in Latin America. They have brought successive 
administrations, regimes onto their side. And one day the PLA 
will be operating in Latin America and off the U.S. West Coast. 
They are going east, actually, at the same time.
    But it is hard to overstate just what problems this would 
cause.
    Ms. Hageman. Well, it sounds like we would have serious 
economic and trade impacts for the United States, because this 
is such an important region for the world.
    Is it safe to say that this breakdown in the second island 
chain would do enough damage to our forward-deployed deterrence 
that the PRC would be on a path to achieving regional dominance 
to serve as a base for global power projection?
    Mr. Newsham. Yes.
    Ms. Hageman. OK. Dr. Lum, Taiwan is a significant piece of 
the first island chain, and China is looking for openings and 
opportunities to break through that first island chain. We have 
rightfully discussed here how military action is not the only 
mechanism in which this can be achieved, but through other 
tactics like political warfare, as you mentioned just a moment 
ago, Colonel, economic influence, trade war tactics, espionage, 
and more.
    Palau and the Marshall Islands give diplomatic recognition 
to Taiwan. Micronesia rejected a PRC-proposed pact with 10 
Pacific Island nations, which caused the PRC to shelve that 
particular plan.
    We have strong allies in the Freely Associated States, and 
this Congress must recognize the mutual benefit in this 
agreement. Yet, as you testified, the PRC's influence in the 
region is most likely growing.
    Dr. Lum, in your written testimony, you included a map of 
the Pacific Islands and the Southwest Pacific subregions. We 
can see that in the Micronesia subregion are all three of the 
Freely Associated States, as well as some of our territories. 
And in this subregion and the Melanesia subregion, which 
borders it, is Kiribati and the Solomon Islands. Can you detail 
for us some recent developments with these two island nations 
when it pertains to growing Chinese influence?
    Dr. Lum. Are you referring to Kiribati?
    Ms. Hageman. Yes.
    Dr. Lum. What was the other country?
    Ms. Hageman. Solomon Islands.
    Dr. Lum. Solomon, OK. And Ms. Paskal could also talk about 
the Solomon Islands.
    For Kiribati, I would say, and then maybe I will defer to 
Ms. Paskal. For Kiribati, it is an interesting case. There is 
an airfield that China is helping to build or upgrade. Kiribati 
is also an interesting case because it has switched back and 
forth, recognized China, and there was a sort of military 
installation back in the early 2000s, and it went to Taiwan, 
and then switched back to China. So, it shows how easy it could 
be for some countries to go back and forth without a lot of 
consequences.
    Ms. Hageman. Instability and volatility, it sounds like.
    Dr. Lum. Yes.
    Ms. Hageman. Ms. Paskal, if you could, speak on the Solomon 
Islands.
    Ms. Paskal. Yes, sure. In both cases what you see China do 
when it goes into a country is they have a term called the 
Three Warfares. So, they go after these, the institutions that 
enable democracy to happen. They go after the media, and you 
can see them doing that in places like the Solomons, where 
there are articles coming out about how somebody who still 
supports Taiwan actually met up with the Americans in Taiwan to 
put together a hit squad to kill the prime minister.
    It is completely fallacious, but they are setting up a case 
for the second thing, which is lawfare, which is to put their 
political opponents in power. And in Kiribati, what you saw, 
one of the first things they did when they switched, was they 
went after the independent judiciary. So, now they have the 
attorney general being chief justice, I think.
    And then the third is psychological warfare, which is they 
instill fear in the population to make sure that they don't try 
to counter. So, you are seeing a fundamental transformation in 
both Solomons and Kiribati of the nature of the society from a 
free, democratic, open society to increasingly authoritarian 
and, effectively, a metastasization of the CCP system, a Hong 
Kongization of those islands very, very quickly. They started 
in 2019, and they have gotten very far, very fast.
    Ms. Hageman. OK, that is extremely helpful information. I 
am out of time, but I appreciate you explaining those points. 
Thank you.
    Mrs. Radewagen. The Chair now recognizes Ms. Stansbury for 
5 minutes.
    Ms. Stansbury. Good morning, everyone, and thank you, Madam 
Chair. Thank you to our Ranking Member, as well.
    I am truly honored to be able to serve on this bipartisan 
Committee with my colleagues, and I want to thank all of our 
witnesses for being here today. I think the role of this 
Committee in highlighting how essential our continued 
engagement with the Freely Associated States is obviously not 
only important for our national security and economic interests 
in the Pacific, but also global security, and that is why we 
are here.
    The Freely Associated States and their citizens have, as we 
have discussed, played a crucial role in the strategic 
interests of the United States and its allies for the last 30 
years. But they are also our friends and our colleagues, and we 
are grateful, of course, for our association.
    As we have heard this morning, China has made a concerted 
effort to undermine the U.S.' long-standing economic and 
security relationships with these entities, and it is 
imperative that we renew our Compacts with the Freely 
Associated States and continue to hold the line with respect to 
Chinese aggression in the Pacific.
    For those who are watching at home, I want to take a moment 
to talk about why I am serving on this very important Committee 
and alongside my sister from New Mexico. Some may be asking why 
two Members from New Mexico are interested in the South Pacific 
and the Compacts of Free Association. And that is in part 
because many of our constituents back home play a vital role in 
national security, from the airmen and women who serve at 
Kirtland Air Force Base in my district to the scientists at our 
national labs who help to support these missions and our proud 
service members across New Mexico, of which we have many, 
including my own partner, who is a proud veteran and Marine who 
served in the Pacific. So, these issues are very important not 
only to our strategic interests as a country, but also to the 
people of New Mexico and our continued commitments in the area, 
as well as the safety of our service members.
    And I want to thank you, Colonel, for your service and for 
being here with us today.
    I think that a lot has been covered already this morning 
with regards to some of the aggressions and activities that are 
happening. But Dr. Lum, I wonder if we could sort of zoom out 
the discussion a little bit and help contextualize what exactly 
is going on in the Pacific. I know that my colleague, Mr. 
Gallego, touched a bit on this in his questions, but what is 
the end goal of the Chinese Government?
    Why are we seeing this expanded influence in the Pacific, 
and why is it a threat to U.S. interests and to the safety of 
the Freely Associated States?
    Dr. Lum. Thank you. I can give some responses and then 
maybe defer to my fellow panelists.
    One, China always hopes to gain support in the United 
Nations on votes. So, that is one area. It doesn't have to even 
cover the security arena, it is just support in global 
organizations. When it gives money to a country, whether it is 
in the Pacific or Latin America, it often receives support in 
the United Nations or other global organizations.
    In the security area, of course, we were talking in the 
first and second island chains and being able to, in a Taiwan 
contingency, achieve its military goals.
    China also has economic interests, like mining in Papua New 
Guinea. China needs a place to put its excess capacity when its 
own companies in China don't have anything left to build. So, 
it sends those abroad.
    So, those are some of the goals that China is attempting to 
achieve in the Pacific Islands.
    Ms. Stansbury. Thank you, Doctor. That is extremely 
helpful.
    And Colonel Newsham, I will put the question to you with a 
follow-up question, given your background and experience with 
the Marines and serving in our armed services. What do you feel 
like are the most significant things that Congress can do to 
help support our military presence in the area, and 
strategically to help support the Freely Associated States?
    Mr. Newsham. I think in the immediate term, ma'am, in the 
Freely Associated States, as I said, small units, engineering 
units, medical detachments, put in there for some extended 
period of time, and you keep replacing them. This permanent 
presence, show that you are there and that you are interested.
    And also, as I said, create something along the lines of a 
local defense force, so that you are not just there doing all 
the work, but have the locals brought into this, as well. That 
would be something I really would stress. And there are a lot 
of good, young officers who want to be in these places using 
their initiative away from the headquarters. And a lot of good 
things happen once you are there and you leave things up to the 
young captains, and that is something that should be done, 
wouldn't cost much in terms of money or manpower.
    Ms. Stansbury. And I think your comments also point to one 
of the benefits of our Compacts, which is the opportunity for 
those residents of our Freely Associated States to serve in the 
U.S. military, as well. So, I appreciate that.
    I realize I am out of time. I have many, many questions. 
But Madam Chair, I really appreciate the opportunity to serve 
on this Committee and for your leadership. Thank you.
    Mrs. Radewagen. The Chair now recognizes Mr. Wittman for 5 
minutes.
    Mr. Wittman. Well, thank you, Madam Chairwoman. I 
appreciate our witnesses for joining us today.
    I wanted to sort of summarize what many of you have spoken 
about, and what our Members here have asked questions about. We 
know the dichotomy between United States policy with the Freely 
Associated States, as well as the Chinese policy. The Chinese 
policy is about a totalitarian regime that is transactional and 
exploitive. They are looking at gaining an advantage out of 
whatever relationships they want to develop with the Freely 
Associated States. The United States has always been more of a 
mindset of being a partner, you know, how can we share in those 
things, how can we both mutually benefit from those 
relationships?
    The challenge with that is many times the outcome of that 
is longer-term than it is shorter-term. And the Chinese are 
very good about exploiting the shorter-term aspects of that.
    Give me your perspectives, and I will ask each of you, 
Colonel Newsham, beginning with you, give me your perspectives 
as you look at the things that the United States needs to do in 
the region. Give me your list of priorities, things we should 
do in priority in the short term, and things we should do that 
are more long-term in their prospects.
    Mr. Newsham. A couple of things, sir, is first I would 
recognize that the Chinese are at war with us. They have been 
very clear about that, and there is no deal to be cut with 
them. So, it requires a changed mindset. And recall that for 
many years you couldn't, in the U.S. military, even say China 
was an adversary. That changed around 2017. So, you have to 
change the mindset.
    But also, I said that permanent presence in the region, and 
that will get you an awful long way, and I really do stress 
that. Helping out with the illegal fishing, this is the main 
asset many of these countries have and we are good at 
workshops, but we are not very good at actually helping these 
people see where the bad guys are, giving them the resources to 
enforce it, and getting in with them.
    And the last thing that I would do, and we have really 
reduced our chances of success if we don't, is to go after the 
Chinese corruption, $80 billion a year on intelligence. You 
think we would put a little bit into the Pacific.
    Mr. Wittman. Yes, sir. Very good.
    Ms. Paskal?
    Mr. Short. Sir? Just to add a bit more.
    Mr. Wittman. Go ahead, yes.
    Mr. Short. I think you are right on. The United States 
tends to look at things, if you will, single-dimensional. It is 
a transaction. The PRC, on the other hand, is basically multi-
functional. They have the concept of struggle. We think of 
things almost in pigeonholes and boxes. We have peace, we have 
war, we have this, we have that.
    To the Chinese, it is a continuum of discrete but 
integrated actions, all focused on the goal. And we have to 
understand the goals, understand what actions are being taken, 
and hopefully get out of the reactive mode and get in the 
proactive mode. It is very difficult, and this really is a 
cultural underpinning, if you will.
    We tend to think of things black and white, left and right, 
peace, war, we have a problem, we solve the problem. We don't 
look at long-term impacts.
    We simply have to get into that ball game if we are going 
to be successful. Otherwise, as alluded to earlier, what we 
have seen in the South China Sea with nefarious Chinese 
activities could very well in the future be happening in the 
Micronesian economic zone and the other Pacific islands, as 
well. And if you look at it in military terms, what is that? It 
is a flanking attack. They jump over the main line states and 
attack the rear, and are successful.
    The threat is clear and present. It has been growing for 
years, and we have to recognize and respond to it.
    Mr. Wittman. Very good, thank you.
    Ms. Paskal?
    Ms. Paskal. Short term, go after the dirty money. But there 
are very specific things we can do. The Attorney General of the 
Republic of Marshall Islands has asked for the information to 
prosecute those two Chinese who tried to take over his country. 
FBI hasn't given it to them yet.
    You could also start with putting FBI detachments in some 
of these countries to help with the investigations on some of 
these things. As mentioned, there is a lot of intel that isn't 
being shared.
    Direct flights, cheaper flights, easier to get in and out 
of the region would be incredibly important.
    Sorting out the issue with the veterans, the people who 
served in the U.S. military who go back home and then who are 
left with no support. Our visual, emotional display to their 
families and communities about whether the United States cares 
or not about the relationship.
    Longer term, maybe look at COFAs for Nauru, Tuvalu, and 
Kiribati once we have shown that the relationship with the 
existing COFA states is something that is beneficial to them. 
Thank you.
    Mr. Wittman. Thank you.
    Dr. Lum, I am out of time, but if you could, just shortly, 
give us your perspective.
    Dr. Lum. I can think of three points.
    One is visits, diplomacy, inviting Pacific Island leaders 
here, going out there. President Biden had to cancel a trip to 
Papua New Guinea. That was a big disappointment.
    Two is providing incentives for U.S. companies to go out 
there. For China it is a state-private mix, but we are a 
private enterprise, so it is difficult for us.
    And third is more coordination perhaps between DoD, State, 
and Interior, particularly on the Compact countries.
    Mr. Wittman. Thanks.
    Madam Chairman, I yield back.
    Mrs. Radewagen. The Chair now recognizes Ms. Porter for 5 
minutes.
    Ms. Porter. Mr. Short, you negotiated the previous COFA 
agreement. What country is the largest threat right now to 
finalizing a COFA agreement with all three Compact states?
    Mr. Short. Please repeat the question.
    Ms. Porter. Mr. Short, you negotiated the previous COFA 
agreement. What country is the largest threat right now to 
finalizing a COFA agreement with all three Compact states?
    Mr. Short. Yes, I renegotiated what became the 2004 
agreement, but only with the FSM and the Marshalls. Palau was 
on a separate track.
    Ms. Porter. Right, I want to ask you about the Marshall 
Islands.
    Mr. Short. The Administration correctly this time is 
putting all three together into one negotiated package.
    Now, you recognize we say Compacts or Compact. There are 
three separate agreements. While they have many factors in 
common, there are three separate established relationships with 
the U.S. Government.
    Ms. Porter. Mr. Short, reclaiming my time, I understand how 
the Compacts work, and that there are three of them.
    I read your 2003 testimony before this Committee in which 
you talked about the importance of securing our Department of 
Defense sites at the Kwajalein Atoll in the Marshall Islands. 
What would happen to those defense sites if the Marshall 
Islands decided not to sign a Compact with the United States, 
and instead side with China?
    Mr. Short. OK, the specific defense rights are embodied in 
something called military use and operating rights agreements. 
These are sub-agreements under the umbrella of the Compact. If 
the Compact is not renewed or expires for whatever reason, 
those agreements could be terminated. It would be a matter of 
negotiation between the United States and the FAS.
    I would note that the lease for Kwajalein was renegotiated 
for a period of 50 years in the 2003-2004 renewal.
    Separate from that, of course, is our right of strategic 
denial, which I alluded to in my presentation. That gives us 
the right to preclude any hostile or any third party that we 
determine is hostile to our interests from operating there. 
That has never been used and, hopefully, never will be. But 
with the PRC's activities, it is possible in the future that we 
may have to invoke that.
    And in developing that denial provision, it is very 
general. It doesn't say, if you, the FAS, do A, B, C, or D, we 
will respond to A, B, C, or D. And purposefully, it was left 
vague in the negotiations, but this was in the 1980s. The FAS 
would come to us and say----
    Ms. Porter. Mr. Short, I am going to have to reclaim my 
time. Let me turn to Dr. Lum.
    Would you say that securing a Compact agreement with the 
Marshall Islands is essential to our national security?
    Mr. Short. I am not familiar, no.
    Ms. Porter. I am talking to Dr. Yum.
    Mr. Short. Oh, excuse me.
    Ms. Porter. Dr. Lum, Dr. Lum.
    Would you say that securing an agreement with the Marshall 
Islands is essential to our national security?
    Dr. Lum. Yes, that would be essential to our national 
security.
    Ms. Porter. Thank you. If we are going to get to an 
agreement with the Marshall Islands, and we are going to get it 
across the finish line, and we have not yet secured their 
agreement, then the United States is going to need to address 
the issues that are standing in the way of the finalization of 
that, the progress of that agreement.
    Madam Chairwoman, I would like permission to enter into the 
record this article from the Los Angeles Times.
    Mrs. Radewagen. Without objection.
    Ms. Porter. This 2021 LA Times article said, ``For months, 
U.S. refusal to accept responsibility for a leaking dome of 
radioactive waste in the Marshall Islands has complicated 
negotiations with the Marshallese Government on an 
international Compact viewed as critical for blunting Chinese 
influence in the Central Pacific.'' Dr. Lum, what has the 
United States done since this article to address the leaking of 
radioactive waste at Runit Dome?
    Dr. Lum. I can only point to a 2020 report that the 
Department of Energy released stating that the dome was secure 
for 20 years. But in actual activity, I could try to find the 
answers.
    Ms. Porter. I mean, the DoE is running simulations instead 
of actually going there and doing the testing, and they are not 
up to date on the groundwater monitoring that they are supposed 
to do.
    If the United States cannot address the radioactive waste 
disposal in the Marshall Islands today, then you think we could 
at least acknowledge the harms of nuclear testing in the past. 
And I have had two hearings on this when I was Chair of the 
Oversight and Investigations Subcommittee. I think, if you feel 
wronged by someone, that it helps to rebuild trust to 
acknowledge that they harmed you. And I think the United States 
taking greater responsibility for its nuclear testing program 
might help us get to a COFA agreement with the Marshall 
Islands.
    I am reintroducing my legislation to formally apologize for 
the nuclear legacy of the United States in the Marshall 
Islands, and I would hope that all members of this Task Force 
would consider signing on and recognizing this is a real 
barrier to getting to the agreement with the Marshall Islands.
    I yield back.
    Mrs. Radewagen. The Chair now recognizes co-Chairman Sablan 
for his 5 minutes.
    Mr. Sablan. Thank you very much.
    I am actually pleased with this first hearing for various 
reasons, but here is one thing.
    [Slide.]
    Mr. Sablan. I borrowed your slide, if I may, and just to 
show the area involved with the Freely Associated States and 
parallel with the United States' territory of Guam, the 
Northern Marianas, and American Samoa, there with Australia.
    But Mr. Newsham, if you can, how much do you think it would 
cost the United States to secure this large swath of ocean 
without a Compact from all three island nations, Palau, 
Federated States of Micronesia, and the Marshall Islands?
    Mr. Newsham. Sir, I actually did a sort of calculation in 
my head----
    Mr. Sablan. Yes, OK, go ahead.
    Mr. Newsham. OK, thank you.
    Mr. Sablan. And happy 284th birthday of the Army. I assume 
you are in the Army?
    Mr. Newsham. No, I am not able to read and write, so----
    [Laughter.]
    Mr. Sablan. All right.
    Mr. Newsham. No, sir. I was with the Marines.
    Mr. Sablan. OK. I joined the Army because you wouldn't take 
me, but go ahead. Thank you. I am celebrating.
    Mr. Newsham. Yes, sir. Actually, I tried to figure this 
out, just my rough estimate, and this is just for starters and 
is probably very low, you are going to need a lot more Navy 
ships.
    So, say you need 20 more ships, and that is considering 
that you could have 7 on station at any time. Say each ship 
costs $200 million, you are getting a real bargain price. Well, 
you are already well up into the billions now, and that is just 
for your initial cost. So, it is a huge cost to cover this 
terrain, and it will be an ongoing recurring cost. You are 
going to have to put people in there. That is going to cost you 
money. And it is resources that don't go somewhere else. So, 
you would be up, goodness, $100 billion. I will just throw that 
out.
    Mr. Sablan. Yes, so it would be billions, right? All the 
way from, oh, my goodness, so much in Asia all the way to 
Hawaii, for example, we are close to in the Marshall Islands, 
right?
    Mr. Newsham. I really don't think $100 billion is that far-
fetched, depending on how you figure it.
    Mr. Sablan. All right. So, let me then ask. You mentioned 
there could be some presence on the ground, the Peace Corps. I 
am telling you, I benefited from the Peace Corps volunteers, 
and I was away from home also. The Peace Corps volunteers had 
an impact on the people of Micronesia.
    And the one thing that is very hard for people to 
understand this, I think, is that in Micronesia, we are liked, 
people like the United States. To many Micronesians, the United 
States is family. They have allies, other allies, but the 
United States is family.
    Coming to decide to come to negotiate with the United 
States was a somber and serious thought choice, thoughtful 
process. And then here we are going into agreement. Hopefully, 
we will have the remaining island state. But all of this is 
that we would give up this much and, in return, our people will 
get this. So, all of these were done with the best intentions 
possible for the best of the two partners here, the United 
States and the island nations.
    And I am trying to figure out how to bring to the attention 
of many of my colleagues here the seriousness that this 
deserves, if only to show the respect we have for the people of 
these island nations and its leaders, the respect, because 
respect says, yes, please respect, but know the seriousness, 
the respect in conversations.
    And I have heard people talk, too. And if you watch a 
Pacific Islander talk to another Pacific Islander, for the most 
part, it is different. The tone is different. But we are 
welcome, we are welcome in Micronesia.
    And I am very happy that the Ambassador, Envoy Yun, was 
able to do this. I am wishing him good luck on the next 
agreement. But we need to push this through.
    Madam Chair, thank you for doing this also, and I have no 
further questions. Thank you.
    Mrs. Radewagen. I thank the witnesses for their valuable 
testimony, and the Members for their questions.
    The members of the Committee may have some additional 
questions for the witnesses, and we will ask you to respond to 
these in writing. Under Committee Rule 3, members of the 
Committee must submit questions to the Committee Clerk by 5 
p.m. on Tuesday, June 20, 2023. The hearing record will be held 
open for 10 business days for these responses.
    If there is no further business, without objection, the 
Committee stands adjourned.

    [Whereupon, at 11:47 a.m., the Task Force was adjourned.]

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