SPEAKERS CONTENTS INSERTS
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51–943 l
1998
COMPACTS OF FREE ASSOCIATION WITH THE MARSHALL ISLANDS, FEDERATED STATES OF MICRONESIA, AND PALAU
JOINT OVERSIGHT HEARING
before the
COMMITTEE ON RESOURCES
and
SUBCOMMITTEE ON ASIA AND THE PACIFIC
of the
COMMITTEE ON INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
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SECOND SESSION
OCTOBER 1, 1998, WASHINGTON, DC
Serial No. 105–117
Printed for the use of the Committee on Resources and Subcommittee on Asia and the Pacific, Committee on International Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
or
Committee address: http://www.house.gov/resources
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana
JAMES V. HANSEN, Utah
JIM SAXTON, New Jersey
ELTON GALLEGLY, California
JOHN J. DUNCAN, Jr., Tennessee
JOEL HEFLEY, Colorado
JOHN T. DOOLITTLE, California
WAYNE T. GILCHREST, Maryland
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KEN CALVERT, California
RICHARD W. POMBO, California
BARBARA CUBIN, Wyoming
HELEN CHENOWETH, Idaho
LINDA SMITH, Washington
GEORGE P. RADANOVICH, California
WALTER B. JONES, Jr., North Carolina
WILLIAM M. (MAC) THORNBERRY, Texas
JOHN SHADEGG, Arizona
JOHN E. ENSIGN, Nevada
ROBERT F. SMITH, Oregon
CHRIS CANNON, Utah
KEVIN BRADY, Texas
JOHN PETERSON, Pennsylvania
RICK HILL, Montana
BOB SCHAFFER, Colorado
JIM GIBBONS, Nevada
MICHAEL D. CRAPO, Idaho
GEORGE MILLER, California
EDWARD J. MARKEY, Massachusetts
NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
PETER A. DeFAZIO, Oregon
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ENI F.H. FALEOMAVAEGA, American Samoa
NEIL ABERCROMBIE, Hawaii
SOLOMON P. ORTIZ, Texas
OWEN B. PICKETT, Virginia
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, California
CARLOS A. ROMERO-BARCELÓ, Puerto Rico
MAURICE D. HINCHEY, New York
ROBERT A. UNDERWOOD, Guam
SAM FARR, California
PATRICK J. KENNEDY, Rhode Island
ADAM SMITH, Washington
WILLIAM D. DELAHUNT, Massachusetts
CHRIS JOHN, Louisiana
DONNA CHRISTIAN-GREEN, Virgin Islands
RON KIND, Wisconsin
LLOYD DOGGETT, Texas
LLOYD A. JONES, Chief of Staff
ELIZABETH MEGGINSON, Chief Counsel
CHRISTINE KENNEDY, Chief Clerk/Administrator
T.E. MANASE MANSUR, Republican Professional Staff
JOHN LAWRENCE, Democratic Staff Director
MARIE FABRIZIO-HOWARD, Democratic Professional Staff
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COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM GOODLING, Pennsylvania
JAMES A. LEACH, Iowa
HENRY J. HYDE, Illinois
DOUG BEREUTER, Nebraska
CHRISTOPHER SMITH, New Jersey
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
CASS BALLENGER, North Carolina
DANA ROHRABACHER, California
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
PETER T. KING, New York
JAY KIM, California
STEVEN J. CHABOT, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York
TOM CAMPBELL, California
JON FOX, Pennsylvania
LINDSEY O. GRAHAM, South Carolina
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JOHN McHUGH, New York
ROY BLUNT, Missouri
KEVIN BRADY, Texas
RICHARD BURR, North Carolina
LEE HAMILTON, Indiana
SAM GEJDENSON, Connecticut
TOM LANTOS, California
HOWARD BERMAN, California
GARY ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. McKINNEY, Georgia
ALCEE L. HASTINGS, Florida
PAT DANNER, Missouri
EARL HILLIARD, Alabama
BRAD SHERMAN, California
ROBERT WEXLER, Florida
STEVE ROTHMAN, New Jersey
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
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LOIS CAPPS, California
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff
Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAMES A. LEACH, Iowa
DANA ROHRABACHER, California
PETER T. KING, New York
JAY KIM, California
MATT SALMON, Arizona
JON FOX, Pennsylvania
JOHN M. McHUGH, New York
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
HOWARD L. BERMAN, California
ENI F.H. FALEOMAVAEGA, American Samoa
ROBERT E. ANDREWS, New Jersey
SHERROD BROWN, Ohio
MATTHEW G. MARTINEZ, California
ALCEE L. HASTINGS, Florida
ROBERT WEXLER, Florida
LOIS CAPPS, California
MIKE ENNIS, Subcommittee Staff Director
RICHARD KESSLER, Democratic Professional Staff Member
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DAN MARTZ, Counsel
ALICIA O'DONNELL, Staff Associate
C O N T E N T S
Hearing held October 1, 1998
Statement of Members:
Bereuter, Hon. Doug, a Representative in Congress from the State of Nebraska
Christian-Green, Hon. Donna M., a Delegate in Congress from the Virgin Islands, prepared statement of
Duncan, Hon. John J., Jr., a Representative in Congress from the State of Tennessee
Prepared statement of
Faleomavaega, Hon. Eni F.H., a Delegate in Congress from American Samoa
Miller, Hon. George, a Representative in Congress from the State of California, prepared statement of
Underwood, Hon. Robert A., a Delegate in Congress from Guam
Prepared statement of
Statement of Witnesses:
Campbell, Kurt M., Deputy Assistant Secretary of Defense for Asian and Pacific Affairs
Prepared statement of
Kyota, Hersey, Palau Ambassador to the United States
Prepared statement of
Muller, Phillip, Minister of Foreign Affairs and Trade, Republic of the Marshall Islands; Tony DeBrum, Republic of the Marshall Islands, Ambassador to the United States
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Prepared statement of
Roth, Stanley, Assistant Secretary for East Asian and Pacific Affairs, U.S. Department of State
Prepared statement of
Stayman, Allen P., Director, Office of Insular Affairs, U.S. Department of the Interior
Additional material submitted by
Takesy, Hon. Asterio R., Executive Director, Joint Committee on Compact Economic Negotiations, Federated States of Micronesia, accompanied by Jesse Marehalau, Federated States of Micronesia, Ambassador to the United States
Prepared statement of
Additional material supplied:
Briefing Paper—Compacts of Free Association
de Brum, Banny, Ambassador, Embassy of the Republic of The Marshall Islands, prepared statement of
DeBrum, Oscar, Chairman, Nuclear Claims Tribunal, prepared statement of
Nitijela of The Marshall Islands, Resolution
JOINT OVERSIGHT HEARING ON: COMPACTS OF FREE ASSOCIATION WITH THE MARSHALL ISLANDS, FEDERATED STATES OF MICRONESIA, AND PALAU
THURSDAY, OCTOBER 1, 1998
House of Representatives, Committee on Resources, and Subcommittee on Asia and the Pacific, Committee on International Relations, Washington, DC.
The Committees met, pursuant to notice, at 2 p.m., in room 1324, Longworth House Office Building, Hon. John J. Duncan, Jr. [acting chairman of the Committee on Resources] presiding.
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Mr. DUNCAN. [presiding] The joint hearing will now come to order.
The Committee on Resources and the International Relations Subcommittee on Asia and the Pacific is meeting today to hear testimony on the Compacts of Free Association with the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.
Under rule 4(g) of the Committee rules, any oral opening statements at hearings are limited to the chairman and the Ranking Minority Member. This will allow us to hear from our witnesses sooner and help members keep to their schedules. Therefore, if other members have statements, they can be included in the hearing record under unanimous consent. After my opening statement, I will recognize Chairman Bereuter for any statement he may have. I will then recognize the Ranking Minority Member of the Committee as well as the Subcommittee on Asia and the Pacific for any statement.
STATEMENT OF HON. JOHN J. DUNCAN, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE
Mr. DUNCAN. Let me, first of all, commend Chairman Bereuter of the International Relations Subcommittee on Asia and the Pacific, and Chairman Don Young of the Committee on Resources for their continuing mutual oversight efforts which began during the last Congress with a similar joint hearing on the Compacts of Free Association with the Republic of the Marshall Islands, the Federated States of Micronesia,and the Republic of Palau. Our current free association relationship with these three separate sovereign republics is unprecedented in U.S. history, and warrants the continued review by the Congress.
In 1984, President Ronald Reagan proposed a new status for the trust territories of the Pacific through negotiated Compacts of Free Association. Congress then conducted over 30 hearings and the Reagan Administration responded to various concerns through implementation agreements which were ultimately required in the legislation approving the new status for the islands. The Congress approved free association relationships with these areas with the enactment of Public Laws 99–239, 99–658, and 101–219 in 1985, 1986, and 1989. As separate sovereign nations, these areas have their own nationality and citizenship, are members of the United Nations, and have full diplomatic relations based on the Vienna Convention on Diplomatic Relations.
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Certain economic provisions of the compact with the Marshall Islands and the FSM are set to lapse at the end of 15 years. By law, the administration is to begin negotiations on those provisions next year. The 15-year lease of the U.S. missile testing facility at Kwajalein in the Marshall Islands is also up for renewal at the same time.
While not a perfect arrangement, the Compact of Free Association has served the United States interests well by providing the framework for transition from the United Nations trusteeship to separate national sovereignty for the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. The freely associated states have had their share of successes and failures as part of the growing pains of separate sovereigns. However, in many respects there has been better fiscal accountability by the free associated state governments under the compact than there was under the trusteeship bureaucracy. This seems to be underscored by the lack of Federal oversight of grants and programmatic assistance in the freely associated states. In 1989, Congress directed the Secretary of the Interior to station at least one person in the U.S. offices in the Marshalls, the FSM, and Palau. Apparently it is only recently that just one individual has been stationed in the islands for all three of the freely associated states.
This oversight hearing provides a chance for the Congress to evaluate the progress of the compacts toward realizing President Reagan's goal of an internationally recognized separate sovereign free association relationship based on decades of close friendship between the people of the former trust territory of the Pacific Islands. We have an opportunity today to meet with members of the Committees on Resources and International Relations to jointly review the policy embodied in the compact and subsidiary agreements.
I think we can be proud of the Compacts of Free Association, which contributed to a significant United States leadership initiative that moved relations with the concerned islands out from the shadows of cold war international politics and recognized the special bonds that had formed between our government and the peoples of the trust territory. Our experience since enactment of the compact vindicates the policy of President Reagan that self-government, based on the choices made by the people of the islands, would represent improvement and progress in our relations with the peoples of the former trust territory.
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I again wish to thank Chairman Bereuter of the Subcommittee on Asia and the Pacific and his staff for their cooperation with this hearing. I also want to acknowledge the support and interest of Full Committee Chairmen Benjamin Gilman and Don Young regarding U.S. freely associated state matters, who have introduced House concurrent resolution 92, emphasizing U.S. interests in Micronesia. I look forward to joint efforts between our respective committees to ensure that the United States interest is protected as the U.S. consults with the free associated state governments regarding compact provisions. The views of the witnesses today from the administration and the three freely associated states will help the Congress in understanding the progress to date with the existing relationship, and provide a basis for review.
[The prepared statement of Mr. Duncan follows:]
STATEMENT OF HON. JOHN J. DUNCAN, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE
Let me begin by commending the Chairman Bereuter of the International Relations Subcommittee on Asia and the Pacific and Chairman Don Young on the Committee on Resources for continuing mutual oversight efforts, which began last Congress with a similar joint hearing on the Compacts of Free Association with the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. These Micronesian islands were part of the United Nation's Trust Territory of the Pacific Islands which the United States administered after World War II as a strategic trusteeship. Our current free association relationship with these three separate sovereign republics is unprecedented in U.S. history and warrants the continuing review by the Congress.
In 1984, President Ronald Reagan proposed a new status for the trust territories of the Pacific through negotiated Compacts of Free Association. Many questions were raised about the new status concept of full self-government as a separate sovereign in free association. Congress conducted over 30 hearings and the Reagan Administration responded to various concerns through implementation agreements which were ultimately required in the legislation approving the new status for the islands.
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The Congress approved free association relationships with these areas with the enactment of Public Laws 99-239, 99-658, and 101-219 in 1985, 1986 and 1989. As separate sovereign nations, these areas have their own nationality and citizenship, are members of the United Nations, and have full diplomatic relations based on the Vienna Convention on Diplomatic Relations. All three maintain embassies in Washington, DC, and similarly, the U.S. has embassies in the three freely associated states with either resident ambassadors, or in the case of Palau, a chargé, the with ambassador being accredited out of Manila, Philippines.
The U.S. and these islands each have entered into agreements through their respective Compacts, to provide certain rights of obligations to the other party. Most significantly, the U.S. has exclusive military rights and a legal defense veto over third party use of any of the land, ocean, or airspace of the islands (this oceanic exclusive economic zone comprises an area larger than the continental U.S.), as well as access and use of certain specified land, harbor, an airport facilities in various parts of the freely associated states, and the islands have free transit into the U.S. to work, study, or reside. The FAS also use U.S. currency and are synchronized with the U.S. postal system rates. The Compacts also provide for economic and programmatic assistance for the FAS are varying rates.
Compacts for the Marshall Islands and the Federated States of Micronesia began on respectively on October 24 and November 3, 1986 while Palau's Compact did not start until October 1, 1994. Certain economic provisions of the Compact with the Marshall Islands and the FSM are set to lapse at the end of 15 years and by law, the Administration is to begin negotiations on those provisions in 1999. The 15 year lease of the U.S. missile-testing facility at Kwajalein in the Marshall Islands is also up for renewal at the same time.
While not a perfect arrangement, the Compact of Free Association has served the United States interest well by providing the framework for transition from the United Nations trusteeship to separate national sovereignty for the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. I also believe it is fair to say that these new associated republics are doing a better job managing internal and external affairs than the Department of Interior was able to do as the trusteeship relationship became increasingly anachronistic in the 1970's and 1980's.
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The freely associated states have had their share of successes and failures as part of the growing pains of separate sovereigns. However, in many respects there has been better fiscal accountability by the free associated state governments under the Compact than there was under the U.S. trusteeship bureaucracy. This seems to be underscored by the lack of Federal oversight of grants and programmatic assistance in the freely associated states. In 1989, Congress directed the Secretary of the Interior to station at least one person in the U.S. offices in the Marshalls, the FSM, and Palau. Apparently, it is only recently that just one individual has been stationed in the islands for all three of the freely associated states.
There is considerable interest in determining the progress of the islands toward economic self-sufficiency, one of the primary underlying objectives of the Compact. The U.S. has a vested interest in seeing the islands achieve economic self-sufficiency and adequate employment opportunities as the citizens of the freely associated states have the right to freely enter, reside, study, or work in the U.S. More people will leave the islands and live in the U.S. if the quality of life does not improve.
This oversight hearing provides a chance for the Congress to evaluate the progress of the Compacts toward realizing President Reagan's goal of an internationally recognized separate sovereign free association relationship based on decades of close friendship between the people of the former Trust Territory of the Pacific Islands. We have an opportunity today to with Members of the Committee's on Resources and the International Relations to jointly review the policy embodied in the Compact and subsidiary agreements which was intended by Congress to:
1. Preserve unique strategic partnerships with the Marshall Islands, Palau and the Federated States of Micronesia;
2. Establish relations under bilateral treaties and with full self-government for the islands based on U.S. fulfillment of its commitment to respect self-determination, rather than continuing non-self governing status under the United Nations trusteeship; and
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3. Advance economic self-sufficiency through Federal grants, programmatic assistance, infrastructure development like the Babeldaob circumferential road, tax, trade, postal, telecommunications, and other areas of mutual cooperation; and
4. Complete trusteeship responsibilities including the long-term effects of the nuclear testing program in the Marshall Islands, prior service benefits, and infrastructure defects.
I think we can be proud of Compacts of Free Association, which contributed to a significant United States leadership initiative that moved relations with the concerned islands out from the shadows of Cold War international politics and recognized the special bonds that had formed between our government and the peoples of the trust territory. Our experience since enactment of the Compact vindicates the policy of President Reagan that self-government based on the choices made by the people of the islands would represent improvement and progress in our relations with the peoples of the former trust territory.
I want to thank Chairman Bereuter of the Subcommittee on Asia and the Pacific for his cooperation with this hearing. I also want to acknowledge the support of Full Committee Chairmen Benjamin Gilman and Don Young regarding freely associated state matters, who have jointly introduced House concurrent Resolution 92, emphasizing U.S. interests in Micronesia. I look forward to joint efforts between our respective committees to ensure that the United States interest is protected as the U.S. consults with the free associated state governments regarding the expiration in 2001 of those Compact provisions which were limited to fifteen years. The views of the witnesses today from the Administration and the three freely associated states will help the Congress in understanding the progress to date with the existing relationship and provide a basis for the future.
Mr. DUNCAN. I now will recognize the Ranking Minority Member, my good friend Mr. Faleomavaega, for any statement that he wishes to make at this point.
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STATEMENT OF HON. ENI F.H. FALEOMAVAEGA, A DELEGATE IN CONGRESS FROM AMERICAN SAMOA
Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. I commend you for calling this joint oversight hearing between the Resources Committee and the Committee on International Relations Subcommittee on Asia and the Pacific. I am a member of both committees and it is indeed a pleasure to participate in today's hearing focusing on a very timely subject in the Pacific, the Compacts of Free Association with the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.
Mr. Chairman, I welcome to the distinguished panel of the administration witnesses to testify before our committees today. In particular, I would thank Assistant Secretary of State for East Asian and Pacific Affairs, Secretary Stanley Roth, for appearing before us. When Secretary Roth was with the House Foreign Affairs Committee, for years we worked closely on policy issues crucial to the Pacific region, resulting in the issuance of a committee report entitled Problems in Paradise. I know from personal experience, Mr. Chairman, that few individuals in Washington possess the knowledge, the skills and the depth of experience as Secretary Roth has in the affairs of the Pacific. As a matter of fact, Mr. Chairman, as far as to my knowledge, I believe Secretary Roth is probably the only Assistant Secretary of East Asian and Pacific Affairs who has ever had any understanding or real sense of appreciation and sensitivity to the problems of the Pacific region. I want to personally welcome Mr. Roth here in our committees.
I would also note and extend a very warm welcome to the second panel, the distinguished diplomats who have appeared to testify on behalf of the governments of the Marshalls, the Federated States of Micronesia, and Palau. I also welcome my good friend, Al Stayman, the director of the Office of Insular Affairs in the Department of the Interior.
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Mr. Chairman, as part of the trust territory of the Pacific Islands, the islands in Micronesia were placed under the trusteeship of the United States after World War II. Under the United Nations trust agreement, it was the obligation of the United States to promote the development of the inhabitants of the trust territory toward self government or independence, as may be appropriate to the particular circumstances of the trust territory and its people and the freely expressed wishes of the people's concern.
Mr. Chairman, accepting the trusteeship was not an altruistic gesture on the part of the United States. Let's be quite plain about this. We were careful to use the region for military purposes and continue to do to this day. Nevertheless, substantial progress has been achieved in developing the island groups toward greater self governance. Today there is no longer a trust territory of the Pacific Islands.
The early 1980's brought compact agreements among the United States and the different island groups of the trust territory. In 1994, with the approval of Palau's Compact of Free Association, trusteeship came to an end.
Mr. Chairman, I want to especially note the tremendous contributions and keen foresight of the late Congressman Phil Burton, who participated during the negotiations process which culminated in our government's approval of the Compacts of Free Association with the FSM, the Marshalls and Palau. In fact, Mr. Chairman, to my personal knowledge, many of the social and educational programs that were provided for the three nations were due largely to Congressman Burton's strong belief that these programs were critical to the social and economic advancements of these nations.
Mr. Chairman, as we near the end of the initial compact term in the year 2001 with the Republic of the Marshall Islands and the Federated States of Micronesia, it is an appropriate time to assess the state of affairs with these governments. Before we begin with our witnesses, I have a few observations.
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I note first that the initial negotiations in the compacts, such as with the Marshall Islands, took over a decade and a half. Because of the complexity of the issues covered by these agreements, the time necessary for their negotiations, I strongly recommend, Mr. Chairman, that renegotiation of the contract begin as soon as possible rather than delaying matters until late next year.
In particular, Mr. Chairman, the administration should immediately enter into compact renegotiations, discussions with the Marshall Islands. This is warranted because of the unique nuclear legacy that exists between our nations, and the continuing security contributions to the United States that the Marshall Islands makes through Kwajalein Atoll. One of the greatest challenges confronting the Marshall Islands government is the need to address the lingering medical and environmental problems resulting from radioactive explosions caused by the U.S. nuclear testing program.
The legacy of our 67 nuclear weapons detonations has resulted in a nightmare of health problems for the Marshallese people. Including elevated rates of thyroid cancer, cervical cancer mortality rates 60 times the U.S. rate, breast cancer mortality rates five times greater than in the United States, and reproductive complications involving high rates of miscarriage and deformed babies that are stillborn.
Mr. Chairman, the same is also true for environmental contamination problems in the Marshalls. Temporary storage facilities are leaching radionuclides into the marine ecosystem around Enewetok and Bikini. Portions of at least four atolls remain off limits to human beings. Mr. Chairman, addressing the nuclear legacy left by the United States has exhausted the limited resources allocated to the Marshallese people and profoundly affect the ability of the Marshall Islands to achieve a greater sense of self sufficiency as envisioned in the compact.
Despite decades of U.S. Government involvement, Mr. Chairman, the Marshall Islands are no closer to caring for its radiation problems today than it was when the U.S. testing program began. We must never forget that the sacrifices of the Marshallese people significantly contributed to America's nuclear deterrence program, facilitating our victory in the cold war.
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Mr. Chairman, even in the post cold war era, however, the Marshall Islands continues to be of strategic value to the United States, and will be for the next several decades because of the U.S. arms ballistic missile and anti-ballistic missile testing facilities at Kwajalein Atoll. Given the increasing danger posed by international terrorism and rogue nations such as North Korea, Libya, Iran and Iraq, it is good that both the administration and Congress have committed to accelerate national missile defense research and development programs. Kwajalein Atoll is one of only two U.S. strategic missile defense test sites authorized under the Anti-Ballistic Missile Treaty. Moreover, as a buffer between Hawaii and Asia, Kwajalein Atoll acts as a U.S. intermediary to potential political, economic, and military adversaries such as China and the Pacific region. Kwajalein Atoll also serves U.S. interests by providing a NASA tracking center and satellite launching sites.
Mr. Chairman, in calling for early compact renegotiations, I would further recommend that the discussions take place in the Pacific at the East-West Center in Hawaii. Since its formation in 1960 by an Act of Congress, the East-West Center has distinguished itself as the region's most respected institution for furthering U.S. relations with the nations of the Asia Pacific region. It is my understanding that the center would welcome the opportunity to host these important compact discussions. It provides an ideal forum, conveniently located for all parties concerned.
Concluding, Mr. Chairman, it is important that the compact renegotiations occur in an atmosphere of good faith, free of negativism and disrespect. I find it very disturbing, Mr. Chairman, that some representatives of the U.S. Government may not share this point of view and have gone out of their way to show lack of respect for our compact partners, even to the point of interfering with domestic political affairs such as in the Marshall Islands. Such behavior, if true, Mr. Chairman, is highly unprofessional and beneath the dignity of our relations with these nations, and they should be stopped.
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Thank you, Mr. Chairman, for holding this hearing to provide members of both committees the opportunity to determine the status of the commonwealths of the freely associated states. America has never walked away from her allies in their times of need. As we enter this important period for compact negotiations, I am confident that our Nation will do what is right and fair for our friends throughout the island nations of Micronesia. I thank you, Mr. Chairman.
Mr. DUNCAN. Well, thank you. I mentioned in my opening statement and thanked a couple of times Chairman Bereuter because this is, as I mentioned, a joint hearing between our Committee and the subcommittee that he chairs, the International Relations Subcommittee on Asia and the Pacific. I would like to call on my good friend and one of the most respected members of this body, Chairman Bereuter, for any statement he wishes to make at this time.
Mr. BEREUTER. I thank you very much, Chairman Duncan. Thank you for your kind words.
Mr. FALEOMAVAEGA. Will the chairman yield? I would also like to ask unanimous consent if the statement of the gentleman from California, Mr. Miller, be made part of the record.
Mr. DUNCAN. We'll make that part of the record.
[The prepared statement of Mr. Miller follows:]
STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman. I'm pleased this hearing is being held today in order for us to look at how well the compacts of free association with the Republic of the Marshall Islands, Federated States of Micronesia, and Palau are working. I want to thank you for bending to the will of the Democratic members and permitting representatives of the Pacific nations to join us here today and testify as to their experiences with compact implementation. I understand the concern for time limitation and the desire to focus on the administration, however, since these compacts are bilateral agreements, it makes sense to have all parties present.
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This afternoon we will hear from the agencies responsible as to the various provisions of the compacts to determine if the intended goals are being met and promises kept on all sides. This hearing will help us prepare for negotiations next year with the Federated States of Micronesia and the Republic of the Marshall Islands on the economic provisions. The stated goal of Title II is ''to assist the FAS in their efforts to advance the economic self-sufficiency of their peoples.'' This is a tall order and one that requires hard work, sacrifice, and flexibility by all the nations.
We have a very unique and close relationship with the freely associated states and their people. I believe we have a special responsibility to nurture and assist these developing governments in an area of the world where the U.S. has, at times, had a checkered history. Recently, the House passed a bill dealing with higher education which would have ended eligibility to certain education programs for FAS students attending college in the U.S. This language was put in by the Majority party on the Education and Workforce Committee because of their view that as foreign nations the FAS shouldn't have access to U.S. programs. I disagree with this notion and firmly believe that assisting FAS students in gaining access to U.S. universities will only enhance the likelihood of the mutually agreed goals of the compacts. As I believe all here are aware, we were able to have that language removed from the final product but it is a stark reminder of what we will be facing when renegotiations begin next fall.
I want to thank all of the witnesses for being here this afternoon—those that traveled a few blocks and those who traveled many time zones.
STATEMENT OF HON. DOUG BEREUTER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA
Mr. BEREUTER. I just have a few words I would like to say preliminarily. First of all, one, I appreciate the opportunity to hold this joint hearing with the Resources Committee, Mr. Chairman. I think it is appropriate now that we examine the state of affairs with the Freely Associated States and peripherally I would say with the Northern Marianas, that opted for a commonwealth status.
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When I was a junior Member of Congress, I served in this Committee room on the Interior Committee and on what was called the Insular Affairs Subcommittee. I have visited several parts of all four of our former trust territories in the Pacific, and followed with considerable attention what has happened in those areas since that time. I think as we examine these issues today, we ought to look at how well the objectives we attempted to achieve in negotiating the compacts with three of the four Pacific trust territories are working out. The assistance of course for the Marshalls and Micronesia, the Federated States of Micronesia, will last until 2001. Assistance to Palau, because of a later start will continue to 2009.
The annual grant funding for the Federated States of Micronesia started out in 1986 at $60 million. Although that figure has declined somewhat since 1991, other program funding has added approximately $50 million a year. The Republic of the Marshall Islands will over the 15-year length of the compact receive approximately a very generous $900 million. For its part, Palau is scheduled to receive $517 million through the compact from 1995 through 2009.
What will happen when the compact with the Marshalls and the FSM expire in 2001 I think will depend greatly on actions taken now in the next few years by both the United States and the Freely Associated States. I would think that our hearing today might attempt to draw attention to issues that will ensure that when 2001 arrives, we will be well prepared, and therefore, to look at this hearing at the purposes of the compacts themselves. We hope to learn if the early hopes in the U.S. and the Freely Associated States have been realized. We are interested in learning what issues we and our friends in the Freely Associated States need to address before the compacts expire.
For example, what programs do the compacts fund, and how are these programs administered? To what extent have payments under the compact promoted economic development, especially self-sufficiency? Also, what additional obligations arise from the compact? I know, for example, that the obligations to provide Pell Grants and other educational assistance to the Pacific Islands' students have come under close scrutiny in recent months. What other obligations are there, and what is the cost to the American taxpayer?
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The gentleman from American Samoa mentioned the issue of nuclear waste. I must say I was very disturbed to learn in a visit to Taiwan that negotiations at some stage of sophistication were underway, at least exploration for Taiwan to ship its nuclear waste to one of the Freely Associated States, something that I thought was a very disturbing development, inconsistent with all of the suffering that the people in that region had been through.
I would also say very candidly that when I was in the Marshall Islands and in the Federated States of Micronesia and Palau and the Northern Marianas, at least in one or more of those locations, I saw endemic corruption that was very troublesome. I would hope that that corruption has been reduced, and hopefully eliminated. Certainly it was diverting a significant amount of the resources that ought to have gone to the people of the region from them. I think, candidly, we need to look at whether or not those corruption problems are healed or reduced. That is not a blanket condemnation because I saw great variation between and among the various Pacific trust territories at that time. I hope since they have taken on a responsibility for their own self governance, except for foreign policy and national security, that those problems have declined or been eliminated.
Mr. Chairman, I look forward to the testimony of our distinguished witnesses and the subsequent panel. I thank you.
Mr. DUNCAN. Thank you very much, Chairman Bereuter. Now I would like to call on for an opening statement my good friend Robert Underwood, who is the Congressman from Guam.
STATEMENT OF HON. ROBERT A. UNDERWOOD, A DELEGATE IN CONGRESS FROM GUAM
Mr. UNDERWOOD. Thank you, Mr. Chairman. I too want to extend my congratulations to the chairman of the Subcommittee, Mr. Bereuter, and Chairman Young for holding this hearing. I also want to extend my own words of welcome to the first panel, especially Stanley Roth, who has been so instrumental in making the compacts go, as many of us who are familiar with these events fully recognize.
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I have a statement that I would like entered into the record.
Mr. DUNCAN. Yes.
Mr. UNDERWOOD. Just to say a couple of comments. I just want to state that certainly of all the areas that are represented in the U.S. House, I think the place I represent is most directly affected by the nature of the compacts as well as the implementation of the compacts. I want to state for the record that the people of Guam certainly endorse the idea of continuing whatever kind of assistance can be given to the Freely Associated States in order to advance their economies, because not only is it good in the fulfillment of an obligation to the peoples of the former trust territories, but it also helps our own economic development on Guam as well. We are all tied together by various connections, cultural, historical, and of course geographical. We all maintain ties that far exceed and go beyond and sometimes have to go around existing ties that exist between the United States and these freely associated governments as separate entities.
The compacts are certainly interesting and provide for a different kind of set of international relations. Although these states are fully sovereign, I prefer to think of them as ongoing partnerships and very close partnerships between the United States and the Freely Associated States. We do have our share of problems of implementation of the compacts, which have had some negative effects on Guam, and certainly I am very happy for the opportunity to state some of those in my prepared remarks, as well as the process that we're entering into in order to state them to members of the administration, so that as they prepare for the negotiations with the Freely Associated States, that these concerns might be raised in one way or another.
The problems associated with the migration of large numbers of people to Guam have been stated repeatedly over and over, including an obligation by the Federal Government to help the government of Guam recover from some of those costs, financially as well as making sure that we have a full understanding of the meaning of the term habitual resident. I also want to stress my concern about the implementation of programs that are designed to help the Freely Associated States grow economically, but at some point in time as well, that they might have some not very happy circumstances in Guam, happy fallout on Guam.
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One of the issues that the people on Guam continually raise is the issue of tuna transshipment and how in some of the compact states they require the tuna to be transshipped out of their own areas rather than being transshipped through Guam. Of course that has some negative effect on us.
I remain fully confident that we can work many of these problems out. I certainly hope that we will. I also look forward to hearing the comments about the continuing strategic value of these areas as we move from what was formerly the only strategic trusteeship under the U.N. system to the concept of strategic denial and to what we have today, which remains rather unclear to me. Thank you.
[The prepared statement of Mr. Underwood follows:]
STATEMENT OF HON. ROBERT A. UNDERWOOD, A DELEGATE IN CONGRESS FROM THE TERRITORY OF GUAM
Chairman Young and Chairman Bereuter:
I thank you and, the members of the Resources Committee and the International Relations Subcommittee on Asia and the Pacific for inviting the panels we have before us today. It is very prudent to begin a dialogue on the Compacts of Free Association in anticipation of renegotiations, and to discuss developments between American-FAS relations since the Compacts were originally agreed to in 1986.
More often than not, I find myself educating my colleagues and other Congressional staff not only about the FAS, but also about Guam's unique history and our unique relationship with the FAS. As former trust territories and currently as nations in free association, the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau are involved in a mutually-beneficial relationship with the United States in areas such as defense, the economy and education. And as the closest American territory to the FAS, Guam is affected by this special relationship. I would like to take this opportunity to discuss some of Guam's concerns regarding the upcoming Compact renegotiations.
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Like any dynamic relationship, Guam and the FAS agree on many aspects, but we also have issues of contention. As some of my colleagues may know, the FAS are great transhipment centers for fish products, most notably tuna. Guam also has the infrastructure and means for becoming such a center. However, due to restrictive regulations requiring fishing fleets who fish in FSM waters to transship only through the FSM, Guam's potential in this industry has been effectively stifled. I understand that it is within international law for the FSM to promulgate such restrictions, however, I see the renegotiation of the Compacts as an avenue for revisiting this issue.
The current economic crisis which began in Asia has already caused numerous lay-offs and business shut-downs on Guam. Our economy relies heavily on Asian tourists and without economic diversification, such as one which tuna transshipment can provide, the people of Guam will continue to suffer the whims of an economy dependent on a single industry.
Another issue I would like to raise is FAS migration into Guam. The Compacts allowed for the free migration of FAS citizens to the United States and its territories for the purpose of education and employment.
Because of Guam's proximity to the FAS, we have experienced a surge of FAS migration in recent years and house a great number of ''habitual residents,'' the technical classification for these FAS citizens. Despite the Federal Government's limited reimbursement, Guam's social and welfare services are strained beyond capacity. Recently, the Immigration and Naturalization Service (INS) issued preliminary regulations governing and defining the classification of habitual residents. I believe the renegotiation of the Compacts will also be an advantageous platform to discuss FAS migration. While the original intent of the Compacts was to provide a manner by which FAS citizens could seek higher education and employment through migration, I believe Guam's experiences as a result of this regulation deserves greater inspection. I know that the people of Guam are very willing to work with the Administration and the FAS on this issue.
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Guam's strategic location at the ''spear head'' in the Western Pacific, permits a dynamic responsibility as well as opportunity. During the Cold War, the United States was the guarantor of peace and stability within the region. This assertion is no less true today, except that the international security environment is more complex and perhaps more urgent. The U.S. military has a responsibility to protect and defend our interests in the Western Central Pacific, the gateway to Asia. But at the same time, we must be cognizant that entire civilizations reside in these strategic waters and we must respect and acknowledge their historical sacrifices and commitment to advance U.S. security.
With this in mind, I express Guam's support that the U.S. take into consideration the economic disadvantages that characterize the Pacific Islands. We have been a cornerstone for U.S. defense, and will continue to be, but there are concrete economic necessities which need Federal assistance, not as a handout but as hand up. I am hopeful that in the upcoming renegotiations, consideration of extending all necessary and appropriate Federal programs to stimulate and advance the economies of the FAS will be thought through carefully and judiciously.
Again, I thank the Chairmen for convening this hearing, and I thank the panelists for taking the time to educate us further on the impact of the Compacts since their inception. I hope my colleagues will use this opportunity to educate themselves on the importance of our special relations with the FAS, I know I will.
The Compacts are not perfect agreements, and there will be room for improvement. I am confident that we can look at the renegotiation of the Compacts not as the end of a few programs, but as the beginning of improved agreements which will carry our relationship to a higher level as we enter the new millennium.
Mr. FALEOMAVAEGA. Will the chairman yield?
Mr. DUNCAN. Thank you very much. Yes.
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Mr. FALEOMAVAEGA. Mr. Chairman, I ask the Chair's indulgence in a unanimous request. The poor people have been sitting there for 100 hours. I would like to ask if it is possible that they can sit over here since we have a lot of space for members to come, if it's all right with the chairman.
Mr. DUNCAN. It's fine with me.
Mr. FALEOMAVAEGA. You can all come sit in the dais here, if you like or you can stand there. You can come right over here and sit down.
Mr. DUNCAN. All right, I would like to go ahead and introduce the first panel. The first panel consists of the Honorable Stanley Roth, who is Assistant Secretary for East Asian and Pacific Affairs of the U.S. State Department, the Honorable Kurt M. Campbell, Deputy Assistant Secretary of Defense for Asian and Pacific Affairs, and Mr. Allen P. Stayman, Director, Office of Insular Affairs of the U.S. Department of the Interior.
Let me remind the witnesses that under our Committee rules, they must limit their opening oral statements to 5 minutes. We generally proceed in the order the witnesses are listed on the call of the hearing. That means that Mr. Roth, you would go first, followed by Mr. Campbell, and then Mr. Stayman.
Mr. Roth, you may begin your statement.
STATEMENT OF STANLEY ROTH, ASSISTANT SECRETARY FOR EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. ROTH. Thank you very much, Mr. Chairman. Let me also begin by commending the two committees for undertaking this hearing. It is so easy, with all the other big issues on the plate in the Asia Pacific region and with all the issues you have on the Interior Committee to put this one aside, particularly when we have not yet started the renegotiations. Taking the trouble to do this in advance speaks well for both committees.
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Let me also thank Congressman Faleomavaega and Congressman Underwood for their particularly warm welcomes. I wish all my hearings began that way. I will be brief, not only because of the 5 minute rule, but because many of the points I had intended to make were already made in the opening statements by the members of the two committees. What I tried to do in my statement was to lay out the broad framework, for the Compact renegotiation: where we started, where we are, where we are going. Many of the specific details and particularly the programmatic details are the responsibility of the Interior Department, which provides the Compact funding. So I suspect that most of the questions will go in that direction.
Let me start off with the big picture. First, where we started from has already been very well covered in the introductory remarks. We started off from a dual perspective. One, what were our legal and moral obligations under the trusteeship? One of our obligations was to provide for the self-determination of the peoples in the trust territory. That was a major issue in the 1980's. It's easy to forget now in the post cold war period that this was not then an obscure issue, but in fact was a major issue. In the United Nations it had a high ideological profile. It was in a sense an anachronism from the Second World War. It was a big deal for us to fulfil our obligations, not only for the peoples of Micronesia, but for our international standing as well.
The second issue which has been mentioned briefly and will be discussed more by Dr. Campbell, is defense. In the cold war period again, there were huge defense issues at stake. We have forgotten some of those. Of course there was the one that Congressman Underwood mentioned: strategic denial. This means taking a vast stretch of the Pacific and maintaining the U.S. military control and ensuring that we could deny access to the ships of other countries. This was not a theoretical issue in the last decade. As you'll recall, the Russian navy was starting to make significant inroads in the Pacific, including in the South Pacific, in the 1980's. So there was very real concern at the time we were doing the Compact negotiation about Russian agreements with Island countries under the guise of fishing agreements, which could have given the Soviet Union direct access to the territorial waters of some of these countries. So obtaining strategic denial in Miconesian waters was a major plus for us.
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Second, during the cold war, continued access to military bases in the Philippines was a major worry. As a contingency, we wanted to have a place to pull back to. That was one of the considerations with respect to the Palau Compact which has now dropped off the strategic map but was huge back in the 1980's.
Third, another consideration that's been mentioned that still applies is the vital strategic significance of Kwajalein. So you had all these defense interests, combined with our legal and moral interests from the trusteeship.
How has it all worked? Where are we now? I think the answer would have to be in some senses it's worked fabulously well. I think in terms of fulfilling our legal and moral obligations under the Compact, we have done a good job. The entities are now all fully up and running as independent states. They are well accredited internationally. There is great stability. In that sense, I think we have accomplished a lot of what we set out to do.
I think on the security side, the world has changed a lot more. I think that in fact with the cold war over and with Philippine bases no longer an issue, for one thing, that issue has dropped off. The question of strategic denial has changed a bit, but I would argue, and I think my Defense colleague will argue even more strongly, has not vanished. While there is no navy comparable to the Russian navy today in the Pacific, I would not want to stake my career that there will never be one. The ability to have strategic denial for such a large region has to be important as we think about the future and into the next century. So strategic denial, if not as urgent as during the cold war, is still a very real interest.
Of course Kwajalein does remain as important as ever because of the various missile programs that we have underway and the scarcity of facilities to test missiles. So we do have strategic interests.
Now how well have we done on our economic goals? I think here the picture is mixed. Frankly, as someone who had worked intensively on the Compact at the time, I would have hoped we would be further along today in self-sufficiency for all the entities of Micronesia. The truth is we're not there yet. We can do a lot of fingerpointing and point out mistakes that have been made, whether it's by the Freely Associated States themselves or whether it's by us, and ''us'' I think would include both the executive branch and the Congress. But the reality is that there has been some progress. I recently returned to Pohnpei in the Federated States of Micronesia after almost 10 years absence, and I certainly saw significant signs of economic development. So we've made some progress, but they are not ready to go it alone.
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The painful truth is, if the Congress and the Administration were to cutoff funding today or when we renegotiate, then in fact I think we would have a very hard time in these entities. There would be great depravation for the people in these entities, and that there would be a question as to whether we were being consistent with our historical relationship, indeed, our special relationship with these entities. So I think this is a factor that we do have to continue to look at.
There has been a great emphasis recently on reform, working with the Asain Development Bank. Since the light is on, I won't go into detail. In my statement, I've addressed our concerns about how some of the funds have been utilized. We have real concerns, but we are trying to address them. We think they can be addressed and we think there can be more progress.
In terms of where we go from here, first let me commend you, Mr. Chairman, for stating the issue accurately. A lot of people talk about renegotiating the Compact. That is not accurate. The Compact stands. There are certain provisions of the Compact which do have to be renegotiated after 15 years and the negotiations have to start after 13 years. Those are the provisions we're talking about today. We're not talking about a fundamental renegotiation of the Compact. We are in the late stages of trying to select a high level negotiator to undertake this effort for the U.S. Government, but I don't have a name for you today.
Finally, in my statement I close, Mr. Chairman, with some of the questions we're going to have to look at. We are going to have to work with both of your committees because the issues involve congressional actions. There are the questions concerning what type of funding we provide. How much, and under what terms? Do we continue to provide funds with the full faith and credit of the U.S. Government? Does it require annual appropriations? Do we continue to provide all Federal programs, some Federal programs, or no Federal programs, and, if so, on a reimbursable or non-reimbursable basis. For what duration do we provide funds? There are many questions. Frankly, we are not ready to answer them quite yet.
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I think the first thing we have to do is get a negotiator and formulate our internal U.S. position. That has to be done in close cooperation with the Congress. I fully share the sentiment expressed by one of your colleagues, that we don't want this negotiation to last 15 years. If we don't start right now with close consultations with the Congress, we are going to repeat the mistakes of the past and have a long negotiation.
But you have my commitment today that we will work closely with the Congress to try to come up with an original package that is acceptable and doesn't have to be legislatively renegotiated over many painful years. Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Roth may be found at end of hearing.]
Mr. DUNCAN. Thank you, Mr. Roth.
Mr. Campbell?
STATEMENT OF KURT M. CAMPBELL, DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR ASIAN AND PACIFIC AFFAIRS
Mr. CAMPBELL. Thank you very much, Mr. Chairman. Also in the interests of time, I would ask that my full statement be presented on the record.
I also would like to associate myself with the comments of Mr. Faleomavaega and Mr. Underwood concerning Stanley Roth. It is well recognized in the U.S. Government his leadership role he has played throughout the Pacific, and particularly on these issues. I think his framework that he has just presented gives us an outstanding way to proceed.
If I may, Mr. Chairman, let me just make four quick points. First, Mr. Chairman, I like very much the way you began your statement about talking about these islands, critical to our history and to our future. And to our present, how they are emerging from the shadow of the cold war. I think some of the things that we have to remind ourselves, that although that in fact is the case, that just because the cold war is over does not mean our security and our strategic interests go away. They simply changed. That is why it is so important for us as we go forward to be able to define, redefine our interests as we go forward.
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The second issue, to Mr. Underwood's point, and again, also relating to Stanley Roth's questions about the security issues. I would prefer and I think you'll see in our report that we'll be producing early next year on what we think are the enduring security interests that we believe apply to the Freely Associated States, that rather than thinking about this strictly in a negative sense in terms of strategic denial, frankly we are beginning to think about our presence in Asia, particularly in the current context, in the positive sense. That U.S. presence currently in Asia, a region that is experiencing tremendous uncertainty, is the big C, is the big constant in the region, amongst a tremendous number of variables.
If I can, and I apologize to other friends who have heard this story before, I must give you a European analogy which I think has some relevance for the Asian Pacific region. In the 1980's, Secretary General of NATO, Lord Carrington, a fine British statesman, was sitting in a room listening to some senior British, German, Italian NATO partners criticizing the United States, saying you know, right, they are here in Europe. Of course they play an important role, but they are difficult to work with, they don't coordinate very well sometimes. Sometimes they can be clumsy. It's just very difficult. After listening for about 20 minutes, Lord Carrington said, ''Ah, alas, they are the only Americans we have.'' That role is remarkably consistent in Asia today.
As we look around the region and we see tremendous uncertainty on the economic front, with the rise and fall of great nations, instability of the kind that we have already talked about on the Korean Peninsula, then one of the most important things to keep in mind is the U.S. presence. This constant will be critical, not just for this century, not just in the post cold war world, but in the next century as well.
I would be happy, Mr. Underwood, to elaborate on those themes as we go forward.
Then just to my friend Mr. Faleomavaega, on the whole question of Kwajalein, I like very much the way he amplified on the question of the important role the islands will play as we go forward in terms of theater missile defense testing. I think as you know, the recent missile test in North Korea has sent shock waves through the region. I think those shock waves are well understood in Washington. As we go forward, you are right to say that there are only two sites in the United States that really can be used both legally and operationally for the testing of complex theater missile defense systems. But in practice, there's really only one that is critical. I think you'll see us referring to this specifically as we go forward.
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The last point I just want to underscore is that we will be working very closely in partnership with Stanley Roth, my friend and colleague, as we appoint a senior negotiator that will represent our government in these negotiations. We also believe that it is in the best interests of the United States and the Freely Associated States that we begin these discussions prudently and we conclude them as rapidly as possible. We think that is the best way for both of our peoples to proceed.
Again, let me just conclude by suggesting that the security interests of the United States still apply, and they will continue to apply into the future as we go forward.
Thank you very much.
[The prepared statement of Mr. Campbell may be found at end of hearing.]
Mr. DUNCAN. Thank you, Mr. Campbell.
Mr. Stayman?
STATEMENT OF ALLEN P. STAYMAN, DIRECTOR, OFFICE OF INSULAR AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR
Mr. STAYMAN. Thank you, Mr. Chairman. I ask that my full statement be entered into the record. I will summarize.
Mr. DUNCAN. It will be so entered.
Mr. STAYMAN. On title II of the compact for which the Department of the Interior is responsible, is composed of three elements, financial assistance, program assistance, and tax and trade investment incentives. With respect to the financial assistance, the U.S. will provide nearly $3 billion over the 15-year life of the compacts. This financial assistance, which is mostly guaranteed, is provided with maximum flexibility to the Freely Associated States. Tables displaying the estimates of the value of the 15 years for this assistance is attached as an addendum.
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With respect to the program assistance, under section 221, the United States agreed to provide the Freely Associated States with services of the Weather Service, FEMA, the Postal Service, FAA. These services are also listed in the chart at the back. But in addition, section 224 of the compact provided that additional U.S. program assistance could be extended from time to time by Congress. This provision has been used extensively to establish over a dozen additional programs.
It is important to note that the compacts as originally negotiated anticipated that all domestic programs would be budgeted under section 221 and through the Department of the Interior. When Congress extended these additional programs, however, it did not direct that the additional programs be budgeted and administered through this unified approach, and would instead be administered by each separate agency. This has eased program administration, but it has at the same time made it difficult to track such programs.
The third element in title II, the tax and trade investment incentives, were designed to stimulate private sector development and complement the financial and program assistance. However, the tax-writing committees of the Congress eliminated this third and perhaps most important element of the compacts' economic development strategy. This fundamental policy change de-emphasized the private sector's role in economic development and undoubtedly weakened the potential of the policy.
A second point to be made in assessing title II of the compact is that the Freely Associated States did not have extensive economic planning experience. In 1993, the incoming administration responded to these problems with two initiatives. First, we began the annual bilateral economic consultations which were called for in the subsidiary agreements of the compact, but for the first 7 years had never been held. Second, we contracted with the Asian Development Bank to provide economic planning expertise to the FAS. These new elements in the economic development policy have been successful in enhancing FAS economic planning capabilities and decisionmaking.
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Chairman Young in his letter of invitation stated his desire to focus on several specific issues. Let me briefly address those which I have not already touched on. First, exclusive economic zone enforcement. Under the compact, the United States provides funding for enforcement of laws regulating the exclusive economic zones. These enforcement funds are used to operate and maintain patrol boats that were donated to the FAS by the government of Australia. This combination of the United States and Australian aid has significantly enhanced the ability of the FAS to regulate fisheries.
Two, the migration of FAS citizens. Guam, the Northern Mariana Islands and Hawaii have all expressed concern about the numbers of FAS citizens in their jurisdictions and the burdens they have placed on the governments. Moreover, they believe they should be reimbursed, pursuant to the compact authorization. Guam, the destination of the majority of these migrants, is currently receiving $4.6 million annually to help compensate for this impact. Additionally, the Immigration and Naturalization Service is developing regulations that would limit habitual residents of FAS citizens in United States territories. This should significantly reduce the burden of compact migration as well.
A third issue, the resettlement of certain Marshall Island atoll communities. The peoples of the four nuclear-affected atolls in the Marshall Islands are in very different circumstances. The peoples of Enewetak and Utrik have mostly returned to their islands. The people of Rongelap, who signed a resettlement agreement in 1996, are now able to return to Rongelap Island. Their restored airfield is now in use, and public facilities and homes are currently under construction.
A delegation representing the people of Bikini visited Secretary Babbitt this April seeking a guarantee from the U.S. Government that their atoll is safe for resettlement. The secretary responded that the department supported the September 1996 International Atomic Energy Agency Advisory Group Report on Radiological Conditions at Bikini. The IAEA found that Bikini Island was ready for permanent habitation as long as certain remedial measures were fully implemented, especially the application of fertilizer to the soil and the use of imported food. Should such remedial steps be implemented, radiation doses for people living on Bikini Island would be acceptable according to international standards, and their health would be protected against radiation exposure.
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Four, construction of the Babeldaob Road in the Republic of Palau. The NEPA process is nearly complete and the final design of this road is complete. The Army Corps of Engineers has solicited price bids, and the price proposals are due on October 10, that is in just 10 days. We expect the bids will be very competitive due to the state of Asian Pacific economies. If there is a clearly superior bid, it may be possible to award the construction contract as soon as December.
Finally, compact renegotiation plans. This past July the Inter Agency Group on Freely Associated State Affairs began a process of outlining the IAG's renegotiation objectives. Interior is aware that the FSM and Marshall Island governments will continue to need some level of assistance after the years 2001 or 2003. The administration looks forward to continuing discussions with the Congress as the United States position for these negotiations is developed.
Thank you. I would be pleased to answer any questions.
[The material mentioned follows:]
INSERT OFFSET FOLIOS 1 TO 5 HERE
Mr. DUNCAN. Thank you very much, Mr. Stayman. First, I would like to just mention that we are honored to have in the audience our U.S. Ambassador to the Marshall Islands, Ambassador Joan Plaisted. Ambassador, we are certainly pleased to have you with us.
I would like to yield for questions at this time to Chairman Bereuter.
Mr. BEREUTER. Thank you, Chairman Duncan. I think I ought to focus on the security end of foreign policy issues since those are particularly within the jurisdiction, in part at least, of the International Relations Committee. Secretary Roth, welcome, glad to see you in this venue. What level of involvement has there been in Palau by the U.S. Ambassador to the Philippines?
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Mr. ROTH. He travels there. He takes it seriously as part of his beat. When he comes back on home leave, for example, he talks to me about Palau. I think he is very conscious that it is part of his jurisdiction and job.
In the meantime of course, we keep a permanent presence on Palau itself. We have a chargé there and several other employees. So it is not as if we have abandoned Palau when Tom Hubbard, our current Ambassador to the Philippines, is not there.
Mr. BEREUTER. We have a U.S. Ambassador to the Marshall Islands that's accredited to Kiribati. How is that working out, Mr. Secretary?
Mr. ROTH. Let me start with the big picture and then get to the narrow picture. The big picture is that in a different world with more budgetary resources, I would prefer to have many more Ambassadors throughout the South Pacific. One of my own priorities has been to try to reopen a post that was closed several years ago, which was in the Solomon Islands. I think by definition it's not ideal when you have countries represented out of other countries. At the same time, given the enormous constraints on the State Department budget, given the new expenditures that we are going to have to have on security, it would be utterly unrealistic of me to suggest that we're going to be able any time soon to open a lot of posts in what are, in the final analysis, very small island countries in the Pacific region. So we are going to have to live with this situation for a while and deal with it as best we can.
Given that, I think the situation has worked reasonably well. Obviously if you ask the people of Kiribati, would they prefer to have a full-time resident Ambassador, I am sure they would say yes. But in the meantime, we are not getting deluged with complaints about the current situation.
Mr. BEREUTER. Secretary Campbell, in the Compact with Palau, we have reserved the right to establish military bases there, I think in large part it reflected the fact we were pulling out of Subic Bay and Clark Air Force Base at the time. Has there been any discussions about that? Is there any likelihood in the near future that we will attempt to exercise that option?
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Mr. CAMPBELL. Mr. Chairman, the assessment of our CINCPAC, Admiral Prueher, and most of our senior military command, and that's backed up by the civilian Department of Defense, is that we have all the permanent military facilities in Asia that we currently require, and that we are primarily placing our emphasis on increasing access, increasing training with a host of countries and places in the Asian Pacific region. I think that is where we stand today.
Mr. BEREUTER. Thank you. Mr. Stayman and Secretary Roth, has the administration spoken out or does it have a policy with respect to the prospect that the Marshall Islands would propose as a part of its economic development to store nuclear waste on one of its atolls?
Mr. ROTH. Yes. This frankly is going right back to the negotiation on the Compact legislation itself more than 10 years ago. At that time there was concern that countries under financial pressure might seek financial arrangements to store garbage or nuclear waste or other toxic materials, thereby endangering their own environment. I think it's been the very clear intent of Congress, and it's supported by various Administrations since then, not to see this happen. We believe it was a mistake. We have opposed efforts by Taiwan to have nuclear waste disposal programs with North Korea. We have opposed that in the South Pacific as well.
Mr. BEREUTER. We may have to speak on that issue once more. Mr. Stayman, do you have anything to say on that subject?
Mr. STAYMAN. I don't really have anything to add except reiterate the strong opposition of the administration to such proposals.
Mr. BEREUTER. Mr. Stayman, thank you. I'm on my yellow light here, so I'll try to crowd in one more question. Since Palau, the Rock Islands have such a unique ecological system, truly unique in the world in some respects with flora and fauna, what if anything has Palau done to try to assure that its ecological system is protected? What role is there for the United States, if any, in the way of technical assistance that has been requested?
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Mr. STAYMAN. To begin with, under the Compact itself Palau must agree to have essentially mirror environmental standards as the United States. We think that we are providing technical assistance, not just to the government, but to NGO's to develop their capability to establish such laws and regulations and enforce them.
With respect to the road in particular, that is probably going to be the single largest construction project that the U.S. has ever conducted in Micronesia. It's 150 millon——
Mr. BEREUTER. But the road doesn't affect the so-called Rock Island area directly, does it?
Mr. STAYMAN. It will affect reefs off Babeldaob, you're right, but not the Rock Islands. What they are doing in the Rock Islands is establishing marine reserves along models similar to that in the United States. They have I believe one in the Rock Islands. There is one at the north end in Kayangel, and under the road for the purpose of conservation areas. We expect them to establish two more. So at this point we are confident that they are very committed to protection of their unique environment.
Let me just add that they are very sensitive to the role that the Rock Islands and their reefs and their natural environment play in economic development. I don't think they are going to kill the goose that's going to lay the golden egg.
Mr. BEREUTER. Mr. Chairman, if you could just indulge me for one quick followup.
Have they requested World Heritage designation?
Mr. STAYMAN. I am not aware at this time.
Mr. BEREUTER. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you.
Mr. Faleomavaega?
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Mr. FALEOMAVAEGA. Thank you, Mr. Chairman.
Secretary Roth, you had mentioned earlier that the thing good about the renegotiations process is that only certain provisions of the Compact are subject to renegotiations, so we're not starting from scratch again. I had recently discussed the matter of renegotiation with President Nena of the FSM. They are willing to abide by the current dating, which will not start until sometime next year.
However, in my recent meetings with President Kabua of the Marshall Islands, they are very concerned, Mr. Secretary. They feel that because of the sensitivities and problems unlike the FSM or Palau, they feel that it's really necessary that the negotiations with the Marshalls should commence at the earliest possible date. What is your position on that?
Mr. ROTH. I was a little bit surprised to hear that in your opening remarks because there is a provision of the Compact that takes into account the needs of the Marshalls. I'm referring to the ''changed circumstances'' provision, which we understand is being looked at very carefully. In other words, while the nuclear settlement provisions were supposed to be a final settlement, there was included in the legislation itself very specifically a safety net clause which said that if there are ''changed circumstances,'' that a report can be submitted to the Administration and will be considered. So there is a means even in advance of Compact renegotiations to deal with issues relating to the nuclear ones. So one way or another, I think we can address the Marshallese concerns. I think we have an obligation to address the nuclear concerns. It is in law, but I think also we feel it as a matter of policy.
In terms of starting earlier, frankly by the time we get the negotiator appointed and get our own internal coordination amongst all the interested agencies of the U.S. Government, and I hope have some intensive consultations with the Hill, it is not going to be very much earlier than the 1999 date that is set in the legislation itself. If we can do a little bit better, we'll try to do so. But I am particularly concerned that we start off from a realistic base, which means that I think we have to do a very good job in consultations with the Congress, particularly these two committees on the House side before we sit down to engage in negotiations so we don't end up with a 15 year fiasco.
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Mr. FALEOMAVAEGA. I think the concern that I raised on the question of renegotiation is the fact that it's not one shoe that fits all. The problems dealing with FSM is certainly not the same as the Marshalls. The fact that our nuclear presence in the Marshalls is a lot more apparent than we are with the FSM or Palau, for that matter, it seems that some of these issues are a lot more poignant and really needs to be addressed as soon as possible, in my humble opinion.
Mr. Stayman, you mentioned that Congress had eliminated the tax and trade investment provision in development of the compacts. Can you explain to the Committee why this was done? Is it because of our fear that we don't want to allow these countries to negotiate with foreign countries that may not be in our national interest?
Mr. STAYMAN. I am hesitant to speak for the congressional tax writing committees this many years later, but as you know, I was working for the Senate at the time. My understanding was that generally the Treasury Department did not favor the use of these kinds of tax and trade provisions, which were essentially the same provisions available to the U.S. territories. As you know, since that time the Congress has gone forward and eliminated these programs for all U.S. territories.
So my understanding was that their very fundamental policy tendency was toward eliminating these special provisions in the tax and trade codes. They have gone ahead and eliminated such things as the possession's tax credit.
Mr. FALEOMAVAEGA. I am not an economist, but you know, on the one hand we're saying that these islanders be more self-sufficient economically. On the other hand, we cut the left hand by trying to promote trade investments and have some kind of an internal tax structure so that they can be more self-sufficient. This doesn't make any sense to me at all.
Mr. STAYMAN. In hindsight, I think most people would recognize that a de-emphasis on private sector incentives and an increasing of public sector subsidies is not going to help develop the private sector and get economic self sufficiency in any renegotiation. This is an area we hoped to work much more closely with Congress. This is one of the examples which Mr. Roth talked about that had their been better communication, this might not have happened, so that we can have a more appropriate balance between the private sector and the public sector.
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Mr. FALEOMAVAEGA. Mr. Chairman, may I ask one more question?
Have you had a fellow by the name of Alex Copson come visit your office, Mr. Stayman? I want to see his face. This guy is going around selling the idea of a nuclear storage waste facility in any of the islands in the Pacific, a multi-billion dollar proposal with some Russian outfit and some admiral being involved in this issue. Then the next thing I hear now, there's a Taiwan outfit with Babcock and Wilcox. Is this an American company? They want to propose also a nuclear storage. I think the last time I heard, Mr. Copson was at Wake Island that he wanted to do this.
What is the latest development on this nuclear storage thing?
Mr. STAYMAN. We have heard a variety of proposals. I have not met Mr. Copson personally, but I have met others who are interested in some of these proposals. They have been made with respect to several islands. But generally our response is always the same. We are against it.
Mr. FALEOMAVAEGA. It's all right to store nuclear waste in these islands—it's not all right, but it is OK to transport nuclear waste between points, like the French and the Japanese are doing now. Is that considered a real guaranteed safe for a process? Mr. Campbell, maybe I could ask you. You are the defense expert here.
Mr. CAMPBELL. I'm sorry. I didn't really understand the question.
Mr. FALEOMAVAEGA. It's not OK to store nuclear waste material basically as a matter of policy. I support that. But it is perfectly OK to transport nuclear waste on surface transportation, like what is happening now between Japan and France?
Mr. CAMPBELL. Let me try to answer just the security dimension. I'll let my friend from Interior answer the first part of that. Let me just say that when there are transfers by ship by their nuclear fuel for reactors or nuclear waste issues, this is one of the issues that the United States tracks and looks at very carefully. We do have security concerns associated with the movement of nuclear materials on the high seas. Yes, indeed.
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Mr. FALEOMAVAEGA. No thought or danger that these ships are subject to any storms, that one day that they are going to end up just like we said in one to a million chances that the Valdez situation would not have ever happened, what had happened?
Mr. CAMPBELL. Again, if you asking do you think that the United States views these from a variety of perspectives with some concern, but from the perspective of a potential terrorist attack or some kind of major storm, I think the answer to that question is yes. These are not interactions that the U.S. Government is itself involved in. We have been in communication—I don't know of the communications with France, I do know of the communications with Japan. We consult with them and we have in the past on safety issues associated with this.
Mr. FALEOMAVAEGA. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you.
Mr. Underwood?
Mr. UNDERWOOD. Thank you, Mr. Chairman. I would, spinning off of that statement on the environment made by Mr. Stayman that Palau tries to follow exactly the same or approximately the same environmental regulations that the U.S., I would like to note with some envy that they can catch and eat sea turtles and fruit ants. People in Guam can't.
[Laughter.]
I am particularly interested in the issue of strategic denial. One of the reasons that I raise that issue is because I want to know what is the emerging consensus on what is the new situation regarding the strategic environment in which Micronesia plays in not only the Asia Pacific situation, but even worldwide.
I know, Dr. Campbell, you mentioned that the United States, the constant is the big C in the area and that it adds a certain level of stability. You also mentioned that the United States desires to maintain a presence in the area. Could you describe and perhaps Secretary Roth would like to participate in this as well, what if any activities engaged in by the Freely Associated States would contribute to the erosion of the strategic situation or eroded in any way?
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Mr. CAMPBELL. Let me begin and answer, and then ask Stanley to continue, Assistant Secretary Roth to continue if I can. On the first point about the concept of strategic denial, you will note that when the United States talks about the Asian Pacific region, by and large we try to talk about it as not a region in which sort of great power politics are afoot. We do not see a situation in Asia that is in any way relevant to the cold war world in which we were involved in a global strategic standoff or competition with the Soviet Union.
Our relations with major powers is complex. We believe that the best way both to engage major powers and to hedge against the possibility that things do not go in directions that are potentially in U.S. interests, is to maintain a presence. So our presence in the Asian Pacific region both acts as an ability to shape the environment with which we desire to live, and also it is a hedge in case things go badly.
When you ask about what steps that could be undertaken that could potentially undercut peace and stability in the region, again, I would turn that to the positive. Our goal by our presence in the region, our goal with our close association with the Freely Associated States is to shape an environment which prevents the emergence of threats or challenges to peace and stability in the Asian and Pacific region. We think that is the enduring rationale for U.S. strategic involvement, not only in the Pacific, but in the Asia and Pacific as a whole.
Mr. UNDERWOOD. But is there any kind of specific activity engaged in by the Freely Associated States which you are monitoring very carefully which may erode or may undercut some of this like fishing agreements or I don't know, maybe the nuclear waste storage or other issues aside from the environmental dimensions? That's what I am getting at.
Mr. CAMPBELL. Let me just say that we track a variety of developments in the region. We look at migration patterns. We look at fishing. We look at some of the things that Assistant Secretary Roth has talked about in terms of. We have heard about sort of groups traveling through the night with nuclear proposals in their suitcases. We try to track all of that. Again, I think the United States has fairly strong views on all of these issues.
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Mr. ROTH. Let me just add that I think it is worth getting the perspective right. Strategic denial isn't something done to the Freely Associated States. It is not per se something we are doing to restrict their behavior. It is, in a sense, a benefit, since, as you know, under the Compact we are completely responsible for their defense and are obligated to defend them as if they were part of the U.S. So anything we do in terms of denying military access to other countries to this region, presumably it's for the same benefit of the Freely Associated States as it is to us. I am not aware that there has been a single instance where we have ever had to tell one of the Freely Associated States no, you can't do something because it will be bad for the strategic interests of the U.S. I don't believe we have exercised strategic denial.
Mr. CAMPBELL. That is perfectly said, what Assistant Secretary Roth has said. I know of no incident in which we have had to say no, those activities are contrary to the interests of the United States.
Mr. UNDERWOOD. Though in each and every instance in your experience, they have fully complied with the intent and purposes of the Compact in that regard?
Mr. ROTH. Yes.
Mr. CAMPBELL. I would agree with that.
Mr. UNDERWOOD. If I could just ask one brief question on EEZ because Mr. Stayman raised it. The United States has the obligation and takes on the obligation to help enforce the exclusive economic zone. The irony for the people of Guam is that our country, of which Guam is a part, is enforcing this EEZ, particularly with regard to fishing agreements. Then the benefits, the potential benefits of some of those fishing agreements, i.e. transshipment through Guam, are being denied by one of the FAS states.
I am just wondering, is that going to be taken into consideration somewhere in the thinking about how we continue to implement these Compacts?
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Mr. STAYMAN. Yes. I think that first off, they have these resources but we don't have direct U.S. program involvement in that surveillance. You know, in Guam you have the Coast Guard would provide that. What has happened here is we're simply giving them money to essentially run Australian boats. Nevertheless, your point about the impact of transshipment highlights the dilemma we have, that both Micronesia and Guam are looking to fisheries for development. It is in the interests of the FAS and FSM in particular to get as much of those benefits within their borders as they can. That in fact is the policy of the United States under our fisheries laws, to force as many operations within our borders as possible and maximize the economic benefit.
I would suggest that the way to start resolving this problem so that there is a balance between the interests of Guam and the interests of FAS in extracting the maximum amount of economic benefit is through a regional dialogue. Fisheries in the Pacific have generally been addressed most effectively through some kind of regional dialogue. As you may know, let's see in November, we expect to have many members of the Micronesian Chief Executives and the Pacific Basin Development Council gathered in Guam. I think this is the kind of issue that's going to be at the top of their agenda, is how do we take the Micronesian region and keep folks from competing over a very important resource like fisheries and try to strike a balance where the strengths of Guam will complement the strengths of the FSM and the RMI.
Mr. UNDERWOOD. I'm glad to hear then, I am glad to hear that there's appreciation of that in the administration because obviously much of the enforcement of the EEZ activities that the United States engages in actually come directly out of Guam. It seems a great irony to the people of Guam that our own government is not in a sense working against the interests of Guam, but perhaps not as mindful as they could be.
Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you, Mr. Underwood.
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I did spend about a week in the Northern Mariana Islands a little over a year and a half ago, but I really am the new kid on the block here as far as these issues in the Pacific go. I was just asking Mr. Mantz here, I know we have programs with the State Department, the Interior Department, the Defense Department, and other agencies, and I was wondering what the total expenditures were from the Federal Government. But he says that he has just provided me with information that this Fiscal Year, we are spending $40,533,000 in the Marshall Islands, $78.9 million in the Federated States of Micronesia, and $21,221,000 in Palau. Do your all's figures agree with that? Is that basically accurate?
Mr. STAYMAN. Yes. Those are the numbers I believe off the addendum in my testimony. Those reflect the funds provided under the compacts. There may be other amounts, but not that significant, particularly you know—let me just go back. For the Freely Associated States, that fairly represents everything we are providing under the compacts. Again, there may be some small stuff not caught up in that. Let me just give an example which has recently been very important, that's Pell Grants. Pell Grants were extended outside of the compact. They obviously have a substantial value. But that is a payment made to individuals so that does not track here. If for example, someone happened to be a veteran, payments to individuals would not be reflected.
Mr. DUNCAN. So payments to individuals are not in those figures?
Mr. STAYMAN. Right.
Mr. DUNCAN. And yet I understand from the staff that your department projects an increase in these outlays at the end of the 15 year compact period. I also understand that as far back as 1947, we said it was a goal of the United States or we were committed to self sufficiency. Yet they tell me that particularly in the Marshall Islands, that per capita income is $1,600, factoring in compact payments, but only $200 to $600 without it. Is self-sufficiency a realistic goal? Are some of these people in areas becoming more dependent? Why the increase that you project?
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Mr. STAYMAN. First, that issue, the increase in the last 2 years is a consequence of a provision of the compact itself which provides a separate formula for funding in what are essentially the two contingency years. We had a formula which covered the 15 year term. Then there is a 2-year contingency period if the negotiations should not be concluded. The formula for funding in those 2 years is tied to the average for the preceding 15 years, which was in fact a declining amount. So simply the provisions of the compact provide for a step-up in the last 2 years. That was the way it was negotiated.
Your more fundamental point about self sufficiency I think is an important one. I for one believe that complete self sufficiency is not a realistic goal. We have to recognize that these are small resource poor countries in very remote regions of the earth. There will either always be a need for some kind of outside subsidy, that doesn't necessarily mean a U.S. subsidy, and there will probably be a continuing pattern as we see throughout the region, of out-migration. There is simply not enough land or enough jobs to provide the opportunity for all of the people.
Having said that, one of the goals that I would like to establish in renegotiation is to the extent we can use U.S. money as efficiently as possible and achieve the maximum level of self sufficiency, we should do that. But we have to be cognizant of the fact that by emerging as independent nations, the Freely Associated States can now tap into other sources of funding and programmatic assistance. They have not been as aggressive as they could be in doing that. I mentioned briefly in my statement developing the linkages with ADB. I think it's important to recognize that the U.S. isn't the only provider of assistance.
Mr. DUNCAN. Let me ask you very quickly about a couple of other things. In some of the materials provided to me I saw that the requirement for essential air service has ended and that the flights to the Marshall Islands have been reduced to two a week. I know that most of the people in these areas are heavily dependent on air travel. Is that going to be a problem or is there work being done to try to get more air service to these islands?
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Mr. STAYMAN. Let me say it is not only going to be a problem, it is a problem. The two primary opportunities available for economic development are fisheries and tourism. It is hard to find tourists who are going to go to an area where there are only two flights a week. This is one of the areas of economic development that I think we should look at very carefully as we approach the renegotiations. Because if you believe that you have to maximize the benefits from fisheries and tourism, you really have to resolve this problem. It is already affecting our ability to deliver mail in a timely manner. Again, businesses don't like to be confronted with problems like that. It makes it extremely difficult to get outside investment.
Mr. DUNCAN. Mr. Campbell, let me ask you this about defense. We have been closing bases around the world. You stressed the strategic importance of some of these areas. What are our security obligations to them? You stated how valuable they were to us. What are our security obligations to these islands? Also, do you foresee a point at which we would need to build some type of military base or facility in the Pacific some place and use one of these areas?
Mr. CAMPBELL. Thank you, Mr. Chairman. I think Assistant Secretary Roth stated it very succinctly, and it's in my statement as well. Our security and defense commitment to the Freely Associated States is absolutely unique. It is deeper and more profound than we have made to any other alliance, including NATO. We protect and secure, we take steps to do so in the Freely Associated States as we would defend a piece of U.S. territory, continental U.S. territory. We believe that that is a fundamental commitment that will endure in our relationship as we go forward.
On the question of, as you can imagine, Mr. Chairman, the question of bases in Asia is a very sensitive topic. Chairman Bereuter has had a number of hearings on this. What we tried to do, given the fact that there are often difficulties and sensitivities associated with the creation of major permanent facilities in the Asia and Pacific region, and again, and we also suffer from the tyranny of distance and costs associated with the maintenance of these bases. We put more stake and influence emphasis now on patrols, on deployments, on temporary and short-term deployments than we do on permanent basing of facilities.
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We have major military facilities, permanent major military facilities in Asia now in only two countries, in Japan and South Korea. However, we have increased substantially our training and our deployments throughout the Pacific and the Southeast Asian region over the last 4 or 5 years. I expect that will continue.
So to answer succinctly your question, I believe that our access and our training will continue and perhaps even increase in the immediate future. I can not state here that I foresee a period in the future where we will want permanent military facilities in the FAS. No, I can not.
Mr. ROTH. This is a big change from 15 years ago, when we were contemplating the possibility that we might want to do something. In fact, we were doing actions in several places, leasing land in Tinian negotiations, the whole Compact arrangement with Palau because we were worried about possibly losing access to the Philippines. So this is a major change in the situation.
Mr. DUNCAN. All right. Well, thank you very much, gentlemen. We want to move onto the second panel, but thank you very much for being with us. It's been a great honor and privilege to have you here.
We will call forward at this time panel No. 2. The second panel consists of the Honorable Asterio R. Takesy, executive director, Joint Committee on Compact Economic Negotiations of the Federated States of Micronesia. He is accompanied today by the FSM Ambassador to the United States, the Honorable Jesse Marehalau. The second panelist is the Honorable Phillip Muller, who is minister of Foreign Affairs and Trade, Republic of the Marshall Islands. He is accompanied today by the Marshall Islands minister of finance, Tony DeBrum. Also in the audience is RMI Ambassador to the United States, the Honorable Banny DeBrum. The third panelist will be the Honorable Hersey Kyota, Ambassador of the Republic of Palau, who is also accompanied by other Palau embassy officials in the audience.
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Let me welcome all of the witnesses, and say to you that we are honored to have you here with us today. I will remind all of the witnesses that we do limit the witnesses to 5 minutes, the 5 minute opening statements. I will call on the witnesses as listed in the call of hearing. That means that the first witness will be the Honorable Asterio R. Takesy, who is the executive director of the Joint Committee on Compact Economic Negotiations.
Mr. Takesy?
STATEMENT OF HON. ASTERIO R. TAKESY, EXECUTIVE DIRECTOR, JOINT COMMITTEE ON COMPACT ECONOMIC NEGOTIATIONS, FEDERATED STATES OF MICRONESIA, ACCOMPANIED BY JESSE MAREHALAU, FEDERATED STATES OF MICRONESIA AMBASSADOR TO THE UNITED STATES
Mr. MAREHALAU. Mr. Chairman, my name is Jesse Marehalau, the FSM Ambassador to the United States.
Mr. DUNCAN. Are you going to give the statement?
Mr. MAREHALAU. He will. I am just introducing him, sir.
Mr. DUNCAN. Right. Oh, OK. Thank you very much.
Mr. MAREHALAU. I would like to introduce Mr. Takesy, former secretary of development and resources, former secretary of foreign affairs, and now currently serving as the executive director for the Joint Committee on Compact Economic Renegotiations, who will present our testimony.
Mr. DUNCAN. Well, thank you very much, Mr. Ambassador. Certainly we are pleased to have you here with us today.
Mr. TAKESY. Thank you, Mr. Chairman. First I want to thank you very much for holding this hearing to give us an avenue to relate to you what we have done under the compact. Mr. Chairman, my written statement is just a little over 5 minutes, so to adhere to your rules, I will summarize.
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Mr. DUNCAN. That's fine. Go right ahead, if it runs slightly over.
Mr. TAKESY. Mr. Chairman, first I would like to thank you very much for the assistance that you have given us in the work on the Pell Grants, which are very, very essential to the well-being and for the education of our young people. We thank you very much for that.
Second, I want to bring to you as my president has been here earlier in the week, in the month rather, he was here to express to you, to the government, at the very highest level to underscore the value that we attach to the compact. It is an expression of collective interest, of mutual interests between our two countries. We certainly want to underscore that to you in these hearings.
The FSM views the success of the compact in other ways. The cornerstone of course of our relationship is in the security and defense areas. We have over the 10 years or so, have adhered very strictly and have carried out our responsibilities under the compact. For instance, at the United Nations, we have allied ourselves very closely with the United States in its voting on very critical issues at the United Nations such as on the Middle East, on Israel, and we have elected to abstain from joining organizations or conventions that the United States has viewed as contrary to its interests, and therefore our interests, such as the Nuclear Free Zone of the Pacific, and the Land Mines Treaty Convention.
Our annual meetings between our two countries on military affairs have had a very smooth holding. The presence of the CAT teams in Micronesia are very much appreciated, and a demonstration of the good will between our two countries. The meetings that we have had are of course done either in our country or in Honolulu. We appreciated this because it gives us an avenue to see firsthand the security setup and the world situation that we periodically receive from SINCPAC.
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As you know, Mr. Chairman, there is an elaborate conflict resolution clauses under the compact. They were negotiated over long periods of time and very acrimonious at times. I personally was involved in that and I spent quite a number of weeks here in Washington, DC, in climates that are not very conducive to my thin blood from the Pacific. But not once have we resorted to these articles. The relationship we have carried out. Where we have some differences we were able to resolve them amicably without resorting to any conflict provision.
The defense arrangement under title III, Mr. Chairman, is something that we are very satisfied with and are fully committed to for our own interests as well as for the United States and security of the region. We are very happy to contribute to that. My president in his meeting with Assistant Secretary of Defense, Mr. Kramer, reiterated our offer for prepositioning of military forces in the lagoons of our waters.
I would like to address a point that was raised by my good friend from Guam, Congressman Underwood, on the fisheries issue because it has been a point of some contention between us. The point of the matter is, Mr. Chairman, it is one of the very few resources we have, and we have approached it in as responsible and as economic a manner as we can.
Let me just point out some statistics for this Committee so there is expected. The income that is generated in the territory of Guam as a consequence of the transshipment of fisheries that are generated not only from the FSM but from Marshalls and Palau, is some $240 million. Now, Mr. Chairman, what we receive in my country by way of fee for licensing these vessels, and they are fishing in our waters, not necessarily in Guam's water, is some $20 million. Now what we are doing is instituting arrangements to maximize and to increase the income from these resources. We would like to continue to work with our friends from Guam in seeing how best we can mutually together benefit from these resources.
Mr. Chairman, the important cornerstone of our relationship from our viewpoint is of course economic self-reliance. That is going to be sometime, Mr. Chairman, to come. As has been pointed out by previous speakers, we are a resource-poor country. We have tremendous constraints that must be overcome. We are very far from markets. We are geographically scattered and dispersed. We have great distances to cover, even within our own country. We have 1,800 miles across and most of our territories are under water.
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The funding that we have gotten under the compact admittedly has not been put to the best use as one would expect, including us. But having reviewed what we have and seeing that what we started were not so well-thought-out, we have begun 3 years ago to take a re-look at things and reorient. So we have begun a restructuring and reform. I am happy to report, Mr. Chairman, that that exercise is well along its way. We hope to be able to accomplish that sometime next year.
As a matter of example, the state of Chuuk, as many of you know, was in very deep trouble in terms of deficits. Today it is paying its debt and there is no reason to expect that it can not continue. In fact, they have just appropriated additional funds last week. This money will be used to pay out its foreign debts as well as domestic, so that by June of next year, Chuuk will be in the black.
Mr. Chairman, the assistance that we are receiving in our restructuring is done by an independent group that is funded by the United States, Japan, and the Asian Development Bank. It is being administered by the bank. It is a two-pronged approach. That is to produce an environment for private sector growth, and at the same time, reduce costs and downsize the public sector. As you well know, it is the biggest employer in the country.
Now it is going to take some time for this exercise to produce some positive results, but presently we are encouraged by what has happened. More importantly, there is political will behind it. The people have warmed up to it and there is wide consultation among ourselves as to the wisdom and the suffering that we must undertake in order to produce some positive results.
As an example, we have actually downsized the public sector some 20 percent. We have laid off about 1,200 people from the payroll. We have reduced the wage by some 20 percent. We have also frozen increases, promotions, and we are attempting to privatize or corporatize many of our utilities and other services and activities by the government.
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We are also attempting to improve our tax structure. Next month our Congress will tackle that. We have improved its administration. I am happy to report that there has been some marked increase in the revenue.
Mr. Chairman, the 15 years of funding under the compact is of great value to the FSM. But as I have stated earlier, it is not going to be enough for us to achieve the measure of self reliance that we had anticipated. In fact, there is relevance and reference in the compact itself, acknowledging that fact so that the renegotiations are built in, because we did not and could not envision that in 15 years we would achieve a level of self reliance or economic development that can generate total revenue for needed public services.
Mr. Chairman, let me summarize for you what we are doing to prepare for these negotiations. Last year this month, we organized a Joint Committee on Compact Economic Negotiations, consisting of members from across the nation, at state and national level, from executive and legislative. The chairman of this group is the Honorable Petrus Tun, who is our former vice president, the first vice president. It is served by a full-time secretariat that is headed by me. We are served by an attorney, economists, and other consultants on areas that are of concern in the next—in renegotiations.
Mr. Chairman, I would like to end by stating that some in your country have viewed the funding under the compact as foreign aid. Others have described it as rental for defense purposes. Some have labeled it other ways. But for us, we view this is as this the mutually beneficial relationship. This is the unique cornerstone for us. We view this as a partnership in development for self-reliance and security.
Mr. Chairman, I thank you very much for allowing me to appear before this Committee. We in the FSM welcome this dialogue. We would like to provide this Committee, including the administration, information that they may wish from us. We look forward to the renegotiation.
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[The prepared statement of Mr. Takesy may be found at end of hearing.]
Mr. DUNCAN. Thank you very much, Mr. Takesy.
The next witness as listed in the call of the hearing is the Honorable Phillip Muller.
Mr. Muller?
STATEMENT OF PHILLIP MULLER, MINISTER OF FOREIGN AFFAIRS AND TRADE, REPUBLIC OF THE MARSHALL ISLANDS; TONY DEBRUM, REPUBLIC OF THE MARSHALL ISLANDS AMBASSADOR TO THE UNITED STATES
Mr. MULLER. Thank you, Mr. Chairman. Mr. Chairman, I wish to request that the full text of my statement be made a part of this proceeding.
Mr. DUNCAN. The full statement of all the witnesses will be placed in the record.
Mr. MULLER. Let me begin by stating that my government remains fully committed not only to preserve, but to strengthen our close friendship with the United States. At this time I would like to discuss with the Committee three major points that are of great interest to the Marshall Islands.
First, the value the RMI places on our bilateral relationship. Second, U.S. Government concerns about fiscal management in the Marshall Islands. Third, difficulties the RMI is facing in implementing certain provisions in the compact.
The RMI provides tangible concrete commitments to support the United States military interests. We provide U.S. strategic denial rights over one million square miles of the Central Pacific. We extend this right to the U.S. in perpetuity. We provide land for new launch sites when requested. Our Marshallese citizens serve in every branch of the U.S. armed forces. In exchange, the U.S. provides generous levels of social and economic assistance to the RMI.
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The point I want to stress here is that we can not examine the compact program by program or to dissect it into separate pieces. The compact has to be seen as a whole package of corresponding military, economic and social assistance. I find one particular passage in the Mutual Security Agreement, the subsidiary agreement of the compact, to reflect this principle particularly well. This passage reads as follows: ''The Government of the United States and the Government of the Marshall Islands recognize that sustained economic advancement is a necessary contributing element to the mutual security goals expressed in this agreement.''
I have attached resolution 67 to my written testimony, a resolution that Nitijela passed on February 5, 1998. This resolution serves as another example of the RMI's concrete commitment to its bilateral relationship with the United States. It expresses the importance the RMI government attributes to our strategic partnership. I was extremely pleased to see that these same elements and sentiments were reflected in the joint resolution introduced by the chairman of both committees holding this hearing, as well as our good friend, Congressman Faleomavaega.
We understand that some people in the U.S. Government have concerns about fiscal management in the RMI. We acknowledge that there have been a number of problems with our financial management and budget execution. We would like to put this discussion in context.
During the trusteeship, the Marshall Islands was deemed a secure area by the U.S. administrators. Until 1968, outsiders could not visit the Marshall Islands without first obtaining permission from the U.S. Navy. Until 1973, no foreign investment of any sort was allowed in the Marshall Islands. Most of the compact money we now receive goes to pay debts from loans that were necessary to create as well as to upgrade the economic infrastructure we inherited from the trust territory government.
After devoting our attention to infrastructure, we moved to economic development projects. Some of our efforts have worked, such as our ship registry program, the National Telecommunications Authority, and the Marshalls Energy Company. Still other projects were admittedly over ambitious or as we found out inappropriate for the Marshall Islands. In 12 years time, however, we can not be expected to achieve the economic development that U.S. strategic interests and trusteeship policies intentionally thwarted for decades.
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As for financial management, we had to struggle to improve a system of accounting we inherited from the trusteeship that consisted primarily of pencils and papers. Because we had no system to properly audit expenditures, we could not effectively as