US, Micronesia Sign Pact to Deepen Ties Amid China’s Growing Influence

David Panuelo of Federated States of Micronesia speaks during the Pacific Parliamentary and Political Leaders Forum at Parliament in Wellington, New Zealand, on April 18, 2013. Hagen Hopkins/Getty Images

The United States and Micronesia signed a memorandum of understanding (MOU) on Feb. 10 reaffirming their close ties, a pact considered crucial to the U.S. efforts to counter Beijing’s growing influence in the Pacific.

The State Department noted that the MOU reflected a “shared understanding reached on levels and types of future U.S. assistance to be requested for the Federated States of Micronesia.”

“The memorandum of understanding was signed as part of the ongoing Compact of Free Association negotiations and confirms our shared vision for a strong and enduring partnership that will continue to benefit both nations and the entire Pacific region,” the department stated.

The United States is bound with the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau through the Compact of Free Association; these countries are called the Freely Associated States (FAS).

The agreement allows these states access to U.S. domestic economic programs and allows the United States to operate defense bases in these nations. The citizens of FAS are also allowed to serve in the U.S. Armed Forces.

Micronesian President David Panuelo had said on Feb. 3 that his negotiating team would sign a memorandum with the U.S. government “for the extension of the economic provisions for another 20 years.”

“So our relationship has three main pillars under the compact, which is political, economic, and defense, or security,” Panuelo told reporters during his visit to Japan, KUAM News reported.

Panuelo met with Japanese Prime Minister Fumio Kishida in Tokyo on Feb. 2 and issued a joint statement (pdf) reaffirming their broad cooperation. Both leaders expressed opposition to any unilateral attempts to change the status quo by force that could undermine regional stability.

On Jan. 13, Panuelo said Micronesia had received economic and social benefits under the agreement with the United States. He anticipated a rise in U.S. military drills near Micronesia’s territory in the coming years amid “the geopolitical atmosphere in the Pacific.”

“Of paramount importance is that our nation’s citizenry be informed in advance when U.S. fighter jets fly over the State of Yap, for example, or when the U.S. practice firing anti-aircraft missiles from the ground,” Panuelo said in his national address.

“These exercises will be increasing in frequency over the next several years, and while they are ultimately in our national interest and in the interest of our Nation’s security—of which the U.S. is our indisputable guardian—it is important that our citizens know about them well in advance so that our people do not see these activities and then immediately fear the worst.”

The move occurs as China has been increasing its diplomatic efforts in the region.

Beijing has signed multiple agreements with some Pacific Island nations, such as Samoa and the Solomon Islands, but it failed to have the region’s nations sign a sweeping security and economic deal in May 2022 because of a lack of consensus among Pacific Island leaders.

US Must Strengthen Ties

The United States Institute of Peace (USIP), a federally funded think tank, released a report in September 2022 urging the United States to elevate engagement with the three FAS nations amid its increasing power rivalry with China.

“The United States has historically assigned only limited diplomatic resources to the FAS and even less to other Pacific Island nations,” reads the report, which was released on Sept. 20, 2022.

“By contrast, China has consular staff for and frequent working and senior-level engagement with every Pacific Island nation with which it has diplomatic relations.”

The Compact of Free Association provisions will expire in 2023 for the Marshall Islands and Micronesia and in 2024 for Palau. Although the island nations still enjoy close ties to Washington, critics warn that a failure to finalize economic aid could spur them to look to China for funding or increased trade and tourism.

USIP stated that China perceives Washington’s “limited” engagement as a strategic void in the Pacific Island region and has been open about its intentions to fill it.

As the competition between the United States and the Chinese regime gains pace in the Pacific region, the FAS presents a unique opportunity for the United States, whose military is expanding its force posture, according to the report.

“U.S. defense rights in the FAS present unique opportunities for new facilities and dual-use ports and airfields development. Strong U.S.–FAS connections mean that a deterioration in FAS economic or security conditions would have spillover effects into U.S. states and territories,” it reads.

Venus Upadhayaya and Reuters contributed to this report.