Former President of Federated States of Micronesia David W. Panuelo Warns Country Could See Democratic Backsliding

Then president of the Federated States of Micronesia (FSM), David W. Panuelo, issued a warning to national and state leadership in his country on March 9, 2023, regarding what he described as the People’s Republic of China’s (PRC’s) political warfare and malign influence targeting the FSM and the region. He warned that the Blue Pacific Continent, as a result of malign influence, could see itself at the forefront of a potential future conflict between the United States and the PRC over the latter’s intentions to eventually take Taiwan.

At the time of writing the letter, Panuelo knew he was unlikely to be reelected President. On May 11, the FSM engaged in a peaceful transition of power and Panuelo was replaced by the current President, Wesley W. Simina.

Enough time has passed since Panuelo’s March letter for some of his warnings to either have been proven accurate or erroneous. Panuelo agreed to a Q&A to take stock. Below is a transcript of our discussion on August 24,2023, with minor edits for clarity.

CLARK: Mr. Panuelo — your March letter described a series of concerns. Let’s take some of them in turn. First, you described a proposed Memorandum of Understanding (MOU) with the PRC on ‘Deepening the Blue Economy,’ which you were concerned could lead to the FSM losing sovereignty over its ocean territory and oceanic resources and potentially see the development of PRC ports and fiber optic cables in the FSM.

PANUELO: While I am unaware if the FSM has already signed the ‘Deepening the Blue Economy’ MOU or not, I am mindful that it remained a priority of the PRC and equally mindful that the new President, Wesley W. Simina, explicitly instructed the FSM Department of Foreign Affairs to engage in, I quote, ‘economic diplomacy.’ Thus, I would continue to be worried about the FSM entering this kind of agreement, particularly if it did so without the awareness of allies with whom it has a security relationship, such as the United States. I am mindful that the chair of our Congressional Committee on Resources & Development is very much in support of deep-sea mining; has openly opined that the Chinese are better suitors for our development than the Americans; and that his daughter-in-law is the head of the Western & Central Pacific Fisheries Commission.

CLARK: Any developments in relation to your concern about the use of PRC self-declared ‘research vessels’ engaging in alleged military or dual use activity?

PANUELO: Regarding the use of research vessels—I am aware of a Chinese research vessel entering the FSM on or around May 30, 2023. That vessel, the Haiyang Dizhi Liuhao, had previously entered Palau’s ocean territory without Palau’s consent and was tracking its undersea cables. I had issued a moratorium on PRC research vessels because of the work they were engaging in that was more consistent with the PRC’s national security laws than with mutually beneficial science.

I don’t know what the vessel was doing in the FSM and no one in the FSM government will talk to me about it. I am aware that the current interim director of the FSM’s National Oceanic Resource Management Authority (NORMA) had previous engagements with China that some considered compromising for our security and that his wife has a political and security-adjacent position at the United States Embassy.

CLARK: In your letter, you mention a diplomatic official of the PRC, Wu Wei, who was previously the deputy director of the Department of External Security Affairs at the PRC’s Ministry of Foreign Affairs. You rejected him as ambassador to the FSM out of concern for the role he might play in the FSM but said you thought he might be appointed after you left office. Any updates?

PANUELO: On Wu Wei — yes, I received his curriculum vitae in probably December of 2022, and I was worried that the Department of External Security Affairs is one of China’s Foreign Affairs entities with strong relationships with China’s Ministry of State Security (MSS) — that’s their CIA equivalent — and their Ministry of Public Security (MPS) — which is their FBI equivalent. All three work on United Front Work issues, such as secret police stations in Canada, New York, London, and Tokyo.

I rejected Wu Wei as ambassador of China to the FSM, but on, I think, June 27, 2023, Wu Wei presented his credentials to President Simina. I am mindful that Ambassador Wu was first received in Pohnpei State by a man who is more commonly known as the vice speaker of the Pohnpei Legislature but who was present there in his capacity as a representative of the Micronesia-China Friendship Association, and I am equally mindful that those friendship associations are one of the means of United Front Work activity taking effect.

CLARK: You had suggested in your March letter that FSM Government officials were known to you to have sent sensitive information to the Chinese, and/or to seek bribes and deals with them. Not in the letter itself but something you mentioned to me when I was your staff — it could be actual red envelopes with cash, but it could also be furniture, fancy meals, paid travel to China, financial support for an organization, etc.

PANUELO: Yes — yes that’s correct. I didn’t remove every political appointee … whom I know had such connections to China, which is a regret of mine. We’re a small country, you know that, and relationships are everything. But I did remove some of the officials, and I am aware that some of the officials who[m] I removed from office have already returned to their former positions.

I’m not willing to go into detail on specific personalities. What I am willing to say is that I hope that those officials, were they to ever read my words, [would] recognize that their ultimate duty is to our country and its people. It’s not wrong to like China or to like Chinese culture — I happen to quite like it, even today — and it’s not wrong to want to be a ‘friend to all and enemy to none.’ In fact, I think that’s noble, and I think that’s right.

But too many people in the FSM Government believe that our country’s mode of operation ought to be to play the Chinese and the Americans against each other for our own economic benefit and development, and that thought process firstly undermines that our relationship with the Americans is unique and genuinely profound and special — it is NOT the same as our relationship with China, which is based on technical and economic cooperation — and it secondly undermines our own security.

You’ve read about the United States placing air assets in Yap State? The Chinese have read about that, too, and they know exactly who in the FSM government would give them information on what types of assets. All I can do now is appeal to their conscience and their sense of patriotism, and sense of duty to their fellow Micronesians, to not betray our country in service to China.

CLARK: Is the increased U.S. Armed Forces presence in Yap part of your concern about direct flights from China to the FSM?

PANUELO: Sure, of course it is — and I’ll expand on that. Remember that the goal is to use U.S. immigration to help the FSM figure out who is or isn’t entering our country; that means having stops in Guam or Hawaii when you come to the FSM, as it adds an added layer of protection. It’s like the immigration equivalent of wearing a mask during COVID — it just makes you a bit safer. If you have direct flights from China to the FSM, that means you’re at more of a risk of getting persons who work for the MPS or the MSS, or you’re at more of a risk of getting persons ostensibly working for China AID who are actually prisoners serving their sentence through labor.

CLARK: Is the FSM looking at direct flights from China to the FSM now?

PANUELO: Yes — yes it is. Discussion on an air service agreement was one of the first outcomes of the meeting between Ambassador Wu and President Simina. The ambassador also offered two million dollars to the FSM Trust Fund — that’s different from the compact trust fund we have with the United States — though I should note for transparency that I asked for, and received, the same thing when I was president.

CLARK: Do you think all of China’s activities in the FSM are with the aim to ultimately introduce a new version of China’s proposed Common Development Vision?

PANUELO: Yes, I do think that. What do we know about the China-PICS Foreign Ministers Meetings? We know that in the first one, in October 2021, that the FSM rejected an outcomes document, seeking more time to understand the content; but it went forward anyway.

We know that in May 2022, the PRC sought to implement the Common Development Vision, which would essentially contradict our compact with the United States, and make the FSM a strategic ally of China — which, I have to note, is at least part of the reason they call their relationship with us a Comprehensive Strategic Partnership, while I always pushed that we call it a Great Friendship.

It tracks that China has wanted, and still wants, to eventually get to the point where the Pacific either loses enough of its unity that force projection can win over international law — just like we’re seeing with the Chinese intrusions in the Philippines over what they call ‘disputed’ seas — or that the Pacific will simply choose China and Chinese money over principles like democracy, whether it’s practiced at home or in Taiwan.

I’m hearing that the third China-PICS Foreign Ministers Meeting is supposed to be held in Beijing, and I suspect that’s very much on purpose. Unless a Pacific Island country chooses to transparently report what transpires, which would undoubtedly harm that country’s relationship with China, it’ll only be China’s word on what transpired. That avoids the problem they had in May of 2022, and that could result in a new Common Development Vision taking place.

CLARK: Do you know when that third China-PICS Foreign Ministers Meeting is supposed to take place?

PANUELO: No, I don’t. I understand that it’s supposed to be held later this year, 2023. I also understand that the Pacific Islands Forum Secretariat believes that the third China-PICS Foreign Ministers Meeting could be a means of bringing in all PIF members, including those who have relations with Taiwan, who are our neighbors in Palau, the Marshall Islands, Nauru, and Tuvalu.

You see plenty of political warfare from China in Palau and the Marshall Islands to boot, from triad activity in Palau reported on by the Organized Crime & Corruption Reporting Project to the two Chinese citizens, Cary Yan and Gina Zhou, who attempted to setup a semi-autonomous region in the Marshall Islands, as reported on by the Marshall Islands Journal and the BBC.

CLARK: Does the FSM have any reporting of such illicit Chinese activity?

PANUELO: No — that’s one of the reasons I wrote my March letter. Our country likes to practice purposeful opacity — intentional darkness, tiahk en rotorot, a tradition of darkness.

In the 1990s, we made Sherry O’Sullivan persona non grata for her newspaper, FSM News, because she wrote about how public officials acted in a public capacity. Journalist Joyce McClure had to flee from Yap State in part because the Chinese had infected her computer and phone — and you know as well as I do how many in our government were saying that she was probably CIA, which was code for ‘bad person who does bad things like report on how the Government spends public money.’ The Kaselehlie Press by Bill Jaynes is our only newspaper, and despite his best intentions and efforts, Bill can’t get too close to any issue that could disrupt social cohesion. That’s why the front page focuses on sports and other pleasant things.

You and I weren’t successful in getting Congress to pass the Freedom of Information Act, after all; you didn’t even get a chance to attend a public hearing on it. Neither did I. So, it had to be me, when I was president, to speak loudly and boldly about the threats facing our country.

CLARK: Are you worried that the FSM’s policy of ‘intentional darkness’ is going to backfire and result in something like democratic backsliding?

PANUELO: I worry that it already has.

CLARK: Why?

PANUELO: The congressional election in March of 2023 in the State of Pohnpei saw a total of 12,643 voters casting a ballot for the senator at-large seat. [However] this past July of 2023, during the 4th FSM Constitutional Convention’s referenda, there were [only] approximately 4,000-some voters casting a ballot. President Simina and Vice President Palik formally obtained power on May 11. Why did so few people vote in July? I suspect it’s because they didn’t understand what they would be voting for because we are usually a society that embraces the ballot box as a means of showing what we think and feel.

CLARK: In many places, including the U.S., special elections often have low turnout as well. I imagine it’s possible to look at the July special election, recognize that there wasn’t a senatorial vote for Pohnpei, and conclude that low turnout would be expected. In the State of Kosrae, for example, wasn’t it one of the highest voting turnouts of all time — and there was a senatorial vote there, correct?

PANUELO: Why yes, it was — but let’s talk about that. Kosrae State voted for Yoslyn G. Sigrah to become its at-large senator, to replace the seat that Vice President Aren B. Palik won in March and vacated in May when he became the vice president. Yoslyn’s victory was certified by the national election director. The entire purpose of holding a joint inauguration ceremony in July, when the transition of power happened in May, was to ensure that people like Senator Yoslyn Sigrah would be able to attend in their official capacity. But that’s not what happened. Neither Yoslyn Sigrah nor Fabian Nimea — that’s Kosrae State and Chuuk State respectively — neither of them [was] allowed to take their seats.

CLARK: What happened, then?

PANUELO: Well, objectively what happened is that Yoslyn didn’t take her seat, and Fabian didn’t take his seat, and thus they are not yet formal senators of the FSM Congress. Those are the facts, and now I’ll tell you my opinion. In my view, if Yoslyn and Fabian aren’t granted their seats during the Regular Session in September — when the United States will also be voting to confirm the extension of provisions for our Compact of Free Association — then the FSM will be, as you asked about, looking at democratic backsliding. I think it’s unconscionable that a duly elected senator, who was certified as the victor, was denied the ability to sit. If that continues, we [will] have a crisis.

CLARK: Do you know why Yoslyn wasn’t allowed to sit?

PANUELO: Do I ‘know,’ as in, with citations of documentation from public-facing sources? No. But I am informed by current and former officials in the government that [key decision-makers] thought it would be unfair of Yoslyn to take her seat, given that the special election for the Constitutional Convention in Chuuk was not certified. And, if true — and I suspect it is since Yoslyn holds politically oppositional views to much of the FSM Congress, including the Executive Branch — then that strikes me as a red flag.

CLARK: Do you think China has played any role in the FSM Government not sitting a duly elected senator?

PANUELO: I don’t know that. What I do know is that the livestream of the joint inauguration ceremony clearly showed that Yoslyn wasn’t sitting, and I was told by family of hers who visited that she was crying in the rain.

I also know that I witnessed the Chinese envoy being given preferred treatment over the Japanese envoy, such as by being recognized first. That matters more than an external observer might think. The Japanese envoy, Keiji Furuya, visited for my own inauguration, and he is both the chair of the Japan-Pacific Islands Friendship League as well as the Japan-FSM Friendship League. The day before the joint inauguration ceremony, Special Envoy Furuya thanked me for my work in improving FSM-Japan relations, and [said] that he remembered going ahead of China in the ceremonies.

I was embarrassed for the FSM that we treated Japan — with whom we share a Kizuna, or special bond, 20 percent of our population has Japanese blood, you know — as if they were behind China in diplomatic importance. But to your question, no, no, I don’t know if China has any role in Yoslyn not taking her seat. I do worry about Chinese influence in FSM security, however.

CLARK: Why do you worry about Chinese influence in the FSM’s security — other than what you mentioned before about Yap State receiving U.S. assets and the Chinese tracking that?

PANUELO: Well, during my administration, I formed two organizations that were intended to protect and defend the FSM. One of those organizations is the Cybersecurity & Intelligence Bureau. The head of that organization left the FSM Government, though to my knowledge the bureau still exists as a legal entity and enjoys some form of continuing budget and public service personnel, though its focus is on crime.

The other organization was the Information & Intelligence Service, which I formed to serve as the FSM’s weapon against, among other things, Chinese political warfare. That organization was my most essential asset in protecting the FSM, whether it be from the COVID-19 pandemic, achieving the Suva Agreement, halting malign Chinese activity, and even organizing interventions, where appropriate, in our negotiations on the Compact of Free Association.

Killing that organization was one of the first actions of the new administration. It does not legally exist anymore, and the people who lead it have all felt forced to leave the FSM. That is worrisome because the people who take bribes, and the people who send sensitive information to China, are very much still there — we just don’t have anyone whose scope of work includes to protect the country from external malign influence. I would suspect that neither the current administration nor the Chinese would want that capacity to exist, either.

Speaking more on the Information & Intelligence Service — through the compact, we have a legal mechanism to defer our national security and defense to the United States. Intelligence sharing and knowledge is essential for any head of state and head of government to make decisions. One doesn’t have to like China, or America for that matter, to appreciate the importance of an organization that is dedicated to the FSM and its people and its security. The destruction of that organization and its resources, its assets, and its personnel, is perhaps the single most worrying act of self-imposed harm that I have seen.

Another thing to be aware of is that FSM Government officials can have a tendency to represent themselves inappropriately. I can remember a U.S. defense attache providing information to FSM officials on a proposed National Security Council for the FSM; but some of the persons the defense attache were speaking to were not who I had authorized to speak to the defense attache about those matters on, and I never received any briefings on what that proposed organ might look like. It is thus plausible to me that you could see some persons within the FSM operating as if they are an authority or designated point of contact for a given organization when they are not, because that’s happened before.

CLARK: Do you have any parting words of advice for the FSM, and the FSM’s friends and allies?

PANUELO: Be mindful that darkness in reporting to the public on information that they ought to be aware of and digest is a decision that one makes — it’s not simply a capacity issue or a funding issue, and when it is those latter issues it’s because darkness is a choice itself. Be mindful that I speak out, either when I was president or now as a former president, because it’s safer for me to be the one doing so because we treat journalists so poorly, and because relationships are so essential to our national unity that we don’t dare disturb the peace even if doing so prevents a fire.

The logical conclusion of the policy of ‘friend to all and enemy to none’ is that you say what makes your friends feel happy, and you do things for them that benefit them. It’s a noble ideal, yes, but it lacks nuance and appreciation for realpolitik and pragmatism. So, that means our allies must watch what we do as much as watch what we say. Just because you’re an Australian prime minister, for example, and you’re having a bilateral meeting with the FSM, doesn’t mean you’re not being secretly recorded by some FSM officials who may decide to send that information outside the country.

Ultimately, I pray to God that I’m wrong about China seeking to eventually invade Taiwan, such as around 2027, as it would have catastrophic impacts on the world and, most importantly to me, my beloved Micronesia.

It’s worth repeating that Micronesians join the U.S. Armed Forces at a higher rate per capita than any U.S. State. It’s worth repeating that about 10 percent of the U.S. Territory of Guam’s population are FSM citizens — which means that if a war breaks out then it’s ultimately our own citizens who will feel the impacts. A third of our FSM citizens abroad live in the U.S. State of Hawaii, which is home to U.S. Indo-Pacific Command.

Our Compact of Free Association categorically guarantees our security relationship with the United States — meaning not only does the United States protect the FSM, but the FSM is also obligated to protect itself to the degree that it can, including from malign influence. Abandoning our responsibilities to that relationship could be very damaging.

I recognize that this interview is going to result in significant criticism, both of my administration, and of me now as a private citizen. But I still know in my heart that it’s my duty to serve my country and its principles in the way that I can, and I believe that speaking truth — to power, to citizens, to the world itself — is what I can do to contribute, in whatever way I can, to fulfilling the FSM’s stated foreign policy of extending peace, friendship, cooperation, and love in our common humanity to the world.

But the pragmatic, realpolitik answer to your question is this: if you are an ally of the FSM — then you have to be prepared that the FSM will be an ally to your face, but it might not be the case when you look the other way.

David Panuelo was President of the Federated States of Micronesia from 2019 to 2023.

Richard Clark is an FDD visiting adjunct fellow. He served as special assistant/press secretary to the president at the government of the Federated States of Micronesia (FSM) from 2018 to 2023, for two different presidents. Under President Panuelo, he worked to initiate both FSM’s Cybersecurity & Intelligence Bureau (CSIB) as well as its Information and Intelligence Service (IIS). He is consulting on Cleo Paskal’s FDD project on national security infrastructure in the U.S. Freely Associated States.