When China, a country of 1.4 billion people, threatened Palau, a Pacific island nation with a population of just 18,000, to switch its diplomatic ties from Taiwan to Beijing or face economic hardship in 2018, Palau did not budge. The island country remained steadfast even when China dispatched fighter jets across the Taiwan Strait after Palau’s president later visited the island. Its national philosophy can be summed up by the words of the editor of one of Palau’s two newspapers: “If we have the power to decide, let’s be the last man standing with Taiwan. [Other] countries will think we don’t just switch; we stay with our friends until the very end”.
As China expands its footprint in the region, it’s not hard to see why island nations such as Palau, with their strategic locations and extensive maritime reach, will be key to securing democracy in the Pacific over the next century. But so far, Washington has failed to fully incorporate these island nations into a coherent Pacific strategy and has even let existing ties atrophy. Although the United States has formed military links in the region through the Quadrilateral Security Dialogue and AUKUS, these great-power alliances are not substitutes for a steadfast diplomatic presence across the region.
The window for Washington to take action is closing. China is seeking greater ties with Pacific island countries and recently inked a not-yet-finalized but potentially comprehensive security pact with the Solomon Islands. Meanwhile, structural shifts are underway within the bloc as major agreements between the island nations, regional powers, and the United States are ending or currently under renegotiation. With this realignment opening a diplomatic beachhead, now is the time for the United States to actively engage the island nations. It must strengthen existing agreements and extend them to neighboring nations to support democratic governments, boost island nations’ economic development and trade, and help them monitor and secure maritime territory in the Western Pacific. If Washington fails to do this, the region may fall under Beijing’s influence.
Pacific island countries are rich in resources, form a natural boundary to Chinese adventurism, and oversee exclusive economic zones (EEZs) about three times the landmass of the United States, giving them extensive reach and legal authority across the Pacific per the United Nations Convention on the Law of the Sea, which China has signed and ratified. But these strengths come with geoeconomic challenges inherent to remote islands and worsened by climate change, which together make the islands uniquely vulnerable to Chinese influence.
In particular, their economic security is fragile. Pacific island countries burn extremely expensive imported diesel and coal for electricity, relying on heavy public expenditure to sustain economic growth. In recent years, Beijing, recognizing this fragility, has swooped in—sometimes with disastrous results. For instance, in Palau, where tourism makes up more than 40 percent of the national GDP, China increased tourism from 634 visitors in 2008 to more than 91,000 just seven years later and financed loans to build supporting infrastructure. It sponsored chartered travel packages to the island, flooding Palau with cash. When Palau reaffirmed its relations with Taiwan, however, China blacklisted the nation, choking its economy.
In 2019, China bought decisions from Kiribati and the Solomon Islands to retract diplomatic recognition of Taiwan. After years of corruption, public outrage at Chinese bribes sparked civil unrest in the Solomon Islands in 2021. The island country invited Australian peacekeepers to stabilize its capital. But this April, the Solomon Islands signed a security agreement with China, calling its existing police support from Australia “inadequate”. The agreement establishes a mechanism for Chinese forces to police the island during an upcoming election—a potentially alarming swing toward authoritarianism.
In May and June, Chinese Foreign Minister Wang Yi traveled to other island countries in the South Pacific, attempting to nail down more security pacts. There are no new deals yet, but if Beijing makes similar inroads in the Micronesian islands, such as Palau, the international order in the Pacific could be in serious trouble.
Aside from diplomacy, China is trying to secure access to markets and materials by extending its reach into the island chains’ EEZs. Beijing seeks to build foreign naval bases (one potentially planned in the Solomon Islands could block strategic supply lines to Australia and isolate U.S. allies in a crisis), extend its fishing fleet (already the world’s largest), and pressure the island nations to form bilateral agreements with Beijing by draining their fish stocks. China offers small fishing economies huge infrastructure projects, but as in Daru, in Papua New Guinea, island states are reluctant to accept these deals because they come at the cost of overexploiting their most valuable resource.
Chinese “dark” fleets, which seem to have their tracking signals disabled, regularly drop drift nets and double as a maritime militia. Facing overwhelming Chinese capability, Pacific island countries lack the resources to monitor and respond to illegal fishing. Fisheries enforcement is asset-intensive and requires expansive territorial reach. In 2020, when a nearly 400-ship Chinese flotilla amassed just outside Ecuador’s EEZ in the Galápagos, pulling up thousands of tons of fish and squid and threatening the balance of species in the marine reserve, Ecuador—a much larger nation than any of the Pacific islands—had to request support from the U.S. Coast Guard.
Amid all this, Pacific island countries are about to undergo foundational changes in their economic and political organization. Last year, the five independent Micronesian island states—the Federated States of Micronesia, Kiribati, the Marshall Islands, Nauru, and Palau—voted to leave the Pacific Islands Forum, the largest regional political and economic body. This reorganization of the bloc into smaller, more independently acting groups presents an opportunity for the United States to invest in closer ties with Micronesia. But it also means that a failure to act could see them drift away from Washington and closer to Beijing.
Of the Pacific’s three regions, Micronesia is diplomatically the closest to the United States and arguably the most strategically located, as it sits at the intersection of two major axes—longitudinally from Japan to Australia and latitudinally across the shortest routes from the U.S. West Coast and Hawaii to the South China Sea.
The Federated States of Micronesia, the Marshall Islands, and Palau currently have Compacts of Free Association (COFA) with Washington, which allow the U.S. military to operate in their borders and veto foreign militaries doing the same. For the Pacific island countries, COFA offers security guarantees; provides much-needed grants for education, health care, and infrastructure; and allows for open migration to the United States. However, vital sections of COFA are expiring in 2023 and 2024. Washington has stalled negotiations largely over disagreements about the legacy of U.S. nuclear testing in the islands. While the U.S. State, Energy, and Interior departments have vowed to renegotiate the compacts eventually, the delay will potentially harm core government functions in Palau and elsewhere, and Washington’s casual response to allies’ vital concerns instead of steadfast assurance invites U.S.-directed resentment in the region.
he Biden administration should complete COFA negotiations quickly and offer the remaining Micronesian countries, Kiribati and Nauru, similar support and opportunities. The administration’s recent appointment of Joseph Yun as the special presidential envoy for compact negotiations is a good first step. The State, Energy, and Interior departments need to address the nuclear and colonial legacies in Micronesia so each island nation and the United States can build on shared concerns going forward. If the administration works with Congress, Washington can offer COFA grants for climate resilience, attracting private sector financing to support local solar, tidal, and wind energy to the group.
In addition to the U.S.-funded undersea communications cable, connecting the Federated States of Micronesia, Kiribati, and Nauru, the U.S. Transportation and Defense departments could improve airfield and port infrastructure on the islands. This will lower transportation costs, improve interoperability, and provide essential training for U.S. military units that desperately need practice building expeditionary infrastructure on remote islands, a core capability needed in a Pacific campaign.
Furthermore, the United States should legally pressure China’s fishing fleet. Defending Pacific islands’ fisheries will protect their economies and make them less susceptible to Chinese pressure. To this end, Congress must effectively prosecute illegal actors in the Pacific by building on the Maritime Security and Fisheries Enforcement Act (which requires a whole-of-government approach to combating threats to maritime security from illegal, unreported, and unregulated fishing). It should also nail down bilateral agreements granting Washington enforcement powers in these countries’ EEZs. The Navy must restore its ability to embark Marines and Coast Guard personnel, improve dual-use satellite communications, and expand its surveillance capability on the islands, the surrounding ocean, and in the sky. This will keep Chinese dark fleets in check and help enforce international maritime law.
This year, U.S. Indo-Pacific coordinator Kurt Campbell said Washington is not doing enough to support its Pacific island allies and could see a “strategic surprise” in the region—meaning a realignment of some of these nations with China. Questions about U.S. reliability undermine the future security and economic prosperity that has benefited so many in the Pacific. The United States can rebuild trust right now with the Pacific island countries and, like Palau, demonstrate that Americans stay with their friends until the very end.
Jim Kolbe is a former U.S. representative from Arizona and chair of the House Subcommittee on Foreign Operations, Export Financing, and Related Programs. Peter Devine is an economist whose research applies game theory to networks of actors. He is a former F/A-18 pilot and economics instructor at the U.S. Naval Academy.