Stopgap measure includes extension of COFA provisions for FSM, RMI, Palau

On Oct. 1, U.S. government financial support and federal services expired in the Federated States of Micronesia and the Marshall Islands, two of the three U.S. freely associated states.

The third is Palau, which has an agreement that runs through 2024, but was planning to renew this year along with the other two.

The deadline to renew coincided with an internal political fight in the U.S. that has meant that the U.S. budget that would have contained money and authorities to continue those services has not been approved.

Instead, the U.S. is operating on a 45-day continuing resolution that includes partial support. Additionally, negotiations with the Marshall Islands are ongoing.

These renewals are for the next 20-year period and are supposed to provide certainty to the governments of the FAS.

This period of confusion, combined with the uneven ways the FAS are treated in the continuing resolution, has not provided that and has given fodder to those, including pro-PRC elements, who wish to say the U.S. is an unreliable partner.

The major takeaway from the continuing resolution is that the two countries that recognize Taiwan and host the most important current and potential U.S. military facilities, the Marshall Islands and Palau, fared the worst in the continuing resolution.

They are also both heading into elections in the next year or so – with the Marshall Islands holding its elections a few days after the continuing resolution expires. FSM, which recognizes China, fared the best.

The situation is dynamic and complex, and the negotiations are mostly not public.

On best available information this is where things stand, country-by-country, at the moment.

Federated States of Micronesia

Current agreements expire: Sept. 30, 2023.

MoU on topline amount agreed: Yes.

Administration has concluded a full package of agreements to implement compact: Yes

Agreement approved by Congress: No.

Federal programs and services included in the continuing resolution: Yes.

Funding included in CR: Yes, at 2023 levels for 45 days (length of the continuing resolution) and trust fund contributions (FSM’s trust fund is already the biggest of the FAS of around $1 billion, plus another $400 million separate fund).

Recognizes China.

Major U.S. military infrastructure: No major U.S. defense facilities or installations in FSM. Some activity in Yap.

Election: March 7, 2023.

Republic of Marshall Islands

Current agreements expire: Sept. 30, 2023.

MoU on topline amount agreed: Yes (sort of).

Administration has concluded a full package of agreements to implement compact: No

Agreement approved by Congress: No.

Federal programs and services included in the continuing resolution: Yes.

Funding included in the continuing resolution: No (distribution from the Marshall Islands Trust Fund has been authorized, which is likely how it will have to cover costs until an agreement is reached).

Recognizes Taiwan.

Major U.S. military infrastructure: Ronald Reagan Ballistic Missile Defense Test Site, Kwajalein Atoll; important for strategic space command; Army missile development.

Election: Nov. 20, 2023.

Palau

Current agreements expire: Sept. 30, 2024.

MoU on topline amount agreed: Yes.

Administration concluded the full package of agreements to implement Compact: No.

Some federal services and programs agreements are outstanding, but they don’t expire until 2024.

Agreement approved by Congress: No.

Federal programs and services included in the continuing resolution: No (don’t expire until 2024).

Funding included in the continuing resolution: No. Palau is still on the previous payment schedule, which gives much less than it would have received under new agreement.

Recognizes Taiwan.

Major U.S. military infrastructure: Forward located; over-the-horizon radar installation scheduled; upgrading airfields, etc.

Election: November 2024

While current agreements under the compact are set to expire next year,

the plan was to renew this year along with the other two so all three were on the same 20-year cycle and, more important, to give Palau the money it needed to handle the serious debt that occurred as a result of China’s political warfare affecting the tourism sector, then the effects of Covid.

Palau will still likely get the funding retroactively from Oct. 1 once everything is agreed, but Palau wasn’t included in the continuing resolution package.

Palau has around a $38 million operating budget, what’s available now will be around $2 million.

This is a blow to U.S. credibility, especially as there were complications with Palau’s funding from 2010 to 2018. It is reported a Chinese economic delegation is due to come to Palau soon.

Cleo Paskal is a non-resident senior fellow for the Indo-Pacific at the Foundation for Defense of Democracies. Follow her on X @CleoPaskal. FDD is a nonpartisan research institute focusing on national security and foreign policy.