Anxious about US funding delay, Pacific Island nations warn about China

By David Brunnstrom

WASHINGTON (Reuters) - Leaders of strategic U.S.-allied Pacific Island nations have become increasingly anxious about the U.S. congressional budget impasse that has delayed approval of vital new funding packages and warned that China is actively seeking to shift their allegiances, including over Taiwan.

The Federated States of Micronesia (FSM), the Marshall Islands (RMI) and Palau agreed to new 20-year funding programs with the United States last year under which Washington provides economic assistance, while gaining exclusive military access to strategic swaths of the Pacific that China covets.

But despite bipartisan support for the new programs, known as Compacts of Free Association, or COFAs, the funding has yet to be approved by Congress months later, even though the additional amount currently needed is a relatively small $2.3 billion.

Republican James Risch, ranking member on the Senate Foreign Relations Committee, led a 24-senator bipartisan group in sponsoring an amendment to include COFA funding in a contentious supplemental budget, but it was not included in a bill agreed upon by the Senate and sent to the House.

Congressional aides say they are still working to find other ways of approving the funding, including by possibly adding it to emergency spending bills in March, but say there is no guarantee of success, despite the urgency.

The supplemental budget has been held up in Congress by Republican insistence that any package of international military and humanitarian assistance must also include measures to address security at the U.S. border with Mexico.

In the meantime, the presidents of the three COFA states have written repeatedly to congressional leaders stressing the need to approve the legislation, according to copies of the letter seen by Reuters.

In a joint letter to Senate leaders, dated Feb. 6, they said the legislation was needed to "strengthen our associations and enable them to endure."

It warned that the delay had "generated uncertainty among our peoples" and "resulted in undesirable opportunities for economic exploitation by competitive political actors in the Pacific."

"We ... cannot overstate the importance to all of our nations of final approval by the U.S. Congress," they wrote.

A Feb. 9 letter from Palau's president, Surangel Whipps, was explicit in warning that delay played into the hands of China and politicians in Palau who wanted to accept Chinese economic inducements to shift the island nation's diplomatic recognition of Taiwan to Beijing.

Letters dated Feb. 12 and 13 from Marshall Islands President Hilda Heine carried similar warnings.

Copies of the letters from the individual leaders were made available to Reuters, but their recipients were not disclosed.

"There have been 'carrot and stick' efforts from the PRC to shift our alliances - including discontinuing support for Taiwan," Heine wrote, referring to the People's Republic of China. "Further delay ... threatens to undermine confidence in the U.S. and to encourage some to agree to PRC enticements."

The letters stressed the strategic importance of the COFA states, noting that they cover an expanse of the Pacific larger than the 48 contiguous United States and that Palau has hosted U.S. missiles and early warning radars and the Marshall Islands the main U.S. Intercontinental Ballistic Missile testing range.

The Biden administration has repeatedly urged Congress to approve the COFA funding and stressed that China is waiting to take advantage.

"We reiterate our call on Congress to pass Compacts-related legislation as soon as possible," a State Department spokesperson said when asked about the delays.

(Reporting by David Brunnstrom in Washington; Additional reporting by Michael Martina in Washington; Editing by Matthew Lewis)