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U.S. Relations with the Freely Associated States

Testimony of Aurelia E. Brazeal, Deputy Assistant Secretary of State for East Asian and Pacific Affairs, before the Subcommittee for Asia and the Pacific of the House Committee on International Relations, and the Subcommittee on Native Americans and Insular Affairs of the House Committee on Resources, Washington, DC, September 25, 1996.

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Mr. Chairman, Members of the Committee, I very much appreciate the opportunity to appear before you today and speak about the relationship between the United States and the Freely Associated States (FAS): the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), and the Republic of Palau.

In my testimony, I will concentrate on the diplomatic issues, deferring to my colleague from Interior to discuss the funding provided by that Department's Office of Insular Affairs and implementation of federal services.

From Trust Territories to Freely Associated States

Mr. Chairman, as you are aware, these states, now independent countries, were formerly a part of the Trust Territory of Pacific Islands (TTPI), which the U.S. administered after 1947 under a United Nations Strategic Mandate. In the 1970s, the United States entered into discussions with representatives of the various island peoples on their future political status, with somewhat different outcomes for different island groupings which were part of the Trust Territory.

The people of the Northern Mariana Islands opted for a close association with the United States that would make them U.S. citizens. In February 1975, they concluded a Covenant to establish the Commonwealth of the Northern Mariana Islands in Political Union with the United States.

The FSM, RMI and Palau, on the other hand, chose to become independent nations in free association with the United States.

On October 1, 1982, the U.S. and the FSM reached an agreement on a Compact to establish a relationship of free association to last for 15 years from the date of its entry into force. In June of 1983, a similar agreement was reached with the Republic of the Marshall Islands. The Compact with these two States was approved by Congress and enacted into law as P.L.99-239 on January 14, 1986. After discussions with the United Nations and pursuant to agreement with the affected States, the Compact with the Republic of the Marshall Islands became effective October 21, 1986, and with the Federated States of Micronesia on November 3, 1986. The Republic of Palau opted for a longer 50-year Compact, which went into effect only on October 1, 1994.

Under the terms of the Compacts, each of the new Freely Associated States became self-governing and responsible for its own foreign affairs. After Compact implementation, with the approval of Congress, diplomatic relations were upgraded to conform to the Geneva Convention on Diplomatic Relations. All three countries have since been recognized and have exchanged diplomatic representatives with other nations besides the United States, and all three have become members of the United Nations and the South Pacific Forum (even though they lie north of the Equator).

Upon the termination of the Trust Territory relationship, the United States had to alter the way we as a nation dealt with these new States. Dealings with the FAS ceased to be an internal matter and became a subject of international affairs. The Secretary of State is responsible for our relations with the Freely Associated States, as he is with any foreign government. Under Executive Order 12569 of October 16, 1986, regarding implementation of the Compacts, the Secretary has the responsibility to ensure that the authorities and obligations of the United States under the Compact are carried out as they relate to government-to-government relations with the FAS.

A Unique Relationship

At the same time, our relationships with the Freely Associated States are unlike our relationships with other foreign governments. The governments and citizens of the FAS receive direct services of U.S. federal domestic programs. These three governments receive U.S. Government funding at a per capita rate greater than any other foreign government. This unique relationship requires close coordination among U.S. agencies.

Public Law 99-239 and Executive Order 12569 gave the Secretary of Interior the responsibility for coordinating and monitoring federal programs provided to the FAS, and for related economic development planning. The Secretary of Interior is also responsible for seeking appropriations for and providing to the FAS funding pursuant to the Compacts. The Kwajalein Missile Range is an asset of the Department of Defense. The Department of Energy takes the lead in implementation of the Compact provisions regarding health of the exposed populations of Rongelap and Utirik Atolls, and the environmental monitoring of the people and islands of the four atolls most affected by the U.S. nuclear testing programs. The Departments of Health and Human Services, Education, Commerce, and many others provide services to the FAS under the Compact. The Interagency Working Group on the Freely Associated States, chaired by the Department of State, is charged with "guidance and oversight with respect to the establishment and implementation of policy" concerning the Compacts and U.S. relations with the FAS.

I will not try to outline all the provisions of the Compacts with Palau, the FSM and RMI, but in brief, the United States agreed to provide development funding to each of the FAS for a period of 15 years, and undertook full authority and responsibility for the security and defense of each of the island states in return for foreclosure of third-country access to the FAS for military purposes.

The Compacts also provide for FAS citizens to have a unique form of access to the United States: the right to enter the United States to work and establish residence as nonimmigrant habitual residents. However, limitation of habitual residence is authorized by the Compact. In addition, FAS governments are eligible to participate in over forty domestic Federal programs.

We are now approaching the 10th anniversary of the 15-year Compact with the FSM and RMI. The Compact for the Marshall Islands will expire on October 21, 2001, and for the FSM on November 3, 2001. Under the terms of the Compact, negotiations to consider any post-Compact arrangements will open two years before expiry of the current Compact, that is, in late 1999. If those negotiations are ongoing at the expiry date, there are provisions for an automatic extension, including funding, for an additional two years.

In the case of the Republic of the Marshall Islands, there are other important provisions. We entered into a lease arrangement to maintain our missile testing facilities at Kwajalein Atoll, where we test our missiles, track foreign missiles, and support our space programs. There is a provision in the RMI Compact for automatic renewal of rights to Kwajalein for an additional 15 years. Under the Compact, we must advise the RMI in 1999 whether we will exercise that option.

Recently, the U.S. has negotiated with the RMI for an alternative launch site for theater missile testing on Aur Atoll. These tests are planned for the first quarter of 1997. We have also received prompt cooperation from the RMI in a survey of additional alternative launch sites which may be needed.

One of the most persistently visible and contentious issues in the U.S.-RMI relationship concerns the U.S. Government's nuclear weapons tests conducted in the RMI between 1946 and 1958. Under Section 177 of the Compact, the United States accepted responsibility for compensation for damages from the testing programs. In the Agreement for Implementation of Section 177, the U.S. Government agreed to provide $150 million to create a trust fund, targeted to produce at least $18 million in annual income to be disbursed in specified amounts over fifteen years to persons displaced from the four affected RMI atolls -- Bikini, Enewetak, Rongelap, and Utirik -- and to the RMI Government for health care for the population of the four RMI atolls and to fund a Nuclear Claims Tribunal. In the Agreement, the U.S. Government also reaffirmed its commitment to provide funds for resettlement of Bikini "at a time which cannot now be determined." Just last week, on September 19, the Secretary of the Interior signed an agreement committing approximately $45 million to bring about a final resettlement of the people of Rongelap.

While the Implementation Agreement constituted "the full settlement of all claims, past, present and future" related to the nuclear testing, it provides that the RMI may submit a request for additional compensation to the U.S. Congress if:

  1. Loss or damage resulting from the nuclear testing program is discovered which could not reasonably have been identified as of the effective date of the Agreement, and
  2. such injuries render the provisions of the Agreement "manifestly inadequate." RMI representatives have said that two additional atolls should be considered affected, and that compensation for all the affected atolls should be increased, but the RMI has not submitted a formal request under the "changed circumstances" provision of the Compact.

U.S. Relations with the FAS

Speaking from the U.S. point of view, our relationship with the Freely Associated States remains excellent. All are democratic governments, chosen in open elections. We share a mutual respect for each other's sovereignty. We have recognized the island nations' statehood, and have appointed Ambassadors to all three countries. Each FAS has built national government structures to run its country and to carry out international relations. In international fora such as the United Nations, we cooperate closely and receive strong support for U.S. positions on important votes.

Mr. Chairman, while there remain five years to the Compacts for the FSM and RMI, it is appropriate to consider where we stand and to see where our governments hope to be five years from now. It is clear to all of us here in this room, as well as governmental leaders in the Pacific, that the world of 1996 is much different from the world of 1976 when Compact negotiations began, or from 1986 when they entered into force.

Our ties with these islands were forged in World War II. The Compacts were negotiated during the Cold War. Now our nations are dealing with the new threats that have replaced the Cold War, from nuclear proliferation to money laundering to environmental degradation.

Mr. Chairman, as we look to the last five years of the Compacts, we do so with a different world view from that the negotiators held twenty years ago. How shall we approach, then, the 1999 deadline?

Certainly, we will be working with more than a decade of experience behind us. We have the benefit of lessons already learned, and can work out new approaches that reflect the new realities of today's world.

New Approaches

For one thing, we have come to believe that trade and investment, not foreign aid or government subsidies, are the most reliable engines of economic growth and prosperity in today's world. If there are to be any post-Compact arrangements, and if the FAS are to take their place in the world of the coming century, we must work with their governments to create a positive investment and business climate for private enterprise, rooted in sound business practices and the rule of law.

Even now, under the present Compact, we are working in this direction. The U.S. Government is supporting, in cooperation with the Asian Development Bank (ADB), Policy Advisory Teams in the FSM and RMI, advising those governments on steps to free up the economy, downsize the national government, and privatize many governmental functions. At the same time, we are working with the FAS and other Pacific island states through our Joint Commercial Commission (JCC) Working Group on Trade and Investment, focusing on practical measures to stimulate the private sector, such as improving access to the Internet. Rationalization of the aviation sector is another area where we believe cooperative efforts can pay off.

We are also working with the FAS and other island nations to address global issues, among them international crime, the environment, and fisheries. We welcome the active participation of each FAS in the South Pacific Regional Environmental Program and other regional programs.

To protect our democracies and enable all of our economies to flourish, all nations must establish strong national systems and work together bilaterally and multilaterally to combat crime. The FAS nations, like all nations, should be concerned by trends in transnational crime. We must all be vigilant against money laundering and other financial crimes, especially as traditional international banking/financial centers begin to focus on eradication of such crimes and criminals look for alternative opportunities. We applaud the decision of the Government of Palau to repeal its offshore banking law, which could have been a source of fraud and abuse.

In the Pacific, the environment is an integral part of our relationship, since there are few countries on Earth better able that the FAS to appreciate the close linkage between environment and prosperity. Concern about global warming has understandable interest for island states that would be devastated by a rise of only a few inches in the sea level. In July 1996, at the second meeting of parties to the Framework Convention on Climate Change, the United States called for binding targets and timetables for greenhouse gas emissions reductions. Negotiations will begin in December to set the level of those targets. The FAS and other island nations will play an important role among developing countries as we seek to negotiate targets that are realistic and measures that allow for maximum national flexibility.

Protection of the marine environment is vital to countries whose principal natural resource is the fisheries in their exclusive economic zones. The multilateral fisheries agreement between the United States and South Pacific island governments, including the FAS, works well for our mutual benefit. Our mutual efforts contributed to the adoption of the UN Agreement on Highly Migratory Fish Stocks and Straddling Fish Stocks, a treaty which promotes the long-term sustainable use of highly migratory species, such as tuna, by balancing the interests of coastal states and states whose vessels fish on the high seas. The United States deposited its instrument of ratification on August 22. We encourage the FAS to do the same.

Issues to Consider

These are just some of the new or re-emphasized issues that we will have to focus on in the post-Compact era. In preparing for that time, we as a government must determine where we want to go. Well before 1999, each concerned federal agency, and the federal agencies together, must evaluate each program to determine whether its activities will be terminated, transferred, privatized or continued. We must question whether the benefits have matched the cost to the people of the United States and to the people of the Freely Associated States.

As we consider our relationship into the next century, we will have to look carefully at our security interests and our defense arrangements with the FAS. At this point, we believe these arrangements have contributed measurably to the security of the United States and of the Freely Associated States. Similarly, the provisions for foreclosure of military access by third countries have served us well. But as we approach the end of the Compact period, we will need to review the entire range of security provisions in light of new global conditions and stringent fiscal realities.

As the State Department and other agencies begin working on the issues that we will want to consider by the time negotiations begin on post-2001 arrangements, we will keep interested members of Congress informed. We cannot know at this point which direction our relationship will take after 2001, but we are prepared to lay the groundwork within the U.S. Government now and to approach the 1999 negotiations with an open mind, bearing in mind the financial realities that are almost certain to apply at that time, and the necessity to work closely with the Congress.

Thank you, Mr. Chairman.

[end of document]

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