Outgoing president of Micronesia accuses China of bribery, threats and interference


China is engaged in “political warfare” in the Pacific, the outgoing president of the Federated States of Micronesia has alleged in an excoriating letter, accusing Beijing officials of bribing elected officials in Micronesia, and even “direct threats against my personal safety”.

Two months before his term as president expires, David Panuelo’s letter alleged China was preparing for conflict over the island of Taiwan, and that its goal in interfering in the Federated States of Micronesia (FSM) was to render the country neutral in any potential Pacific war.

“China is seeking to ensure that, in the event of a war in our Blue Pacific continent between themselves and Taiwan, that the FSM is, at best, aligned with the PRC [China] instead of the United States, and, at worst, that the FSM chooses to ‘abstain’ altogether.”

The revelations come as Beijing seeks to significantly ramp up its efforts to exert influence in the Indo-Pacific region, creating an increasingly fast-paced tug-of-war battle with the U.S and its ally, Australia.

Last year, Beijing signed a controversial security pact with Solomon Islands, which, along with Kiribati, made a decision to break ties with Taipei in favour of Beijing in 2019.

In response, Australia has launched high-profile visits to Pacific states, while the U.S president, Joe Biden, invited leaders to a U.S-Pacific summit in September, the first event of its kind. Meanwhile, Washington has rushed to reopen embassies in Pacific nations that had been closed for decades.

The FSM is a longstanding ally of the U.S – the countries have a formal “compact of free association” – and the U.S is wholly responsible for the FSM’s defence.

In his letter to the FSM’s congress and state governors, Panuelo also openly suggested switching the country’s diplomatic recognition from Beijing to Taipei, even naming a price to do so: US$50 million.

He said he had met with Taiwan’s foreign minister, Joseph Wu, in February “to solicit from Taiwan what their potential assistance to the FSM could look like if we switched diplomatic relations to supporting them instead of China”.

“I was transparent with foreign minister Wu; we project we need an injection of approximately US$50m to meet our future needs. We can and will receive this, over a three-year period, if and when we establish diplomatic relations with Taiwan.”

He said the FSM would also receive an annual US$15m “assistance package” to be spent at its discretion.

The bulk of Panuelo’s letter, however, was dedicated to castigating China for its current activities in the FSM. He said he believed China was conducting espionage under the guise of “research” in the country’s maritime territory – comparing it to the recent “spy balloon” saga in the US – as well as seeking to control key communications and military infrastructure.

“Simply put, we are witnessing political warfare in our country,” he wrote, saying that included overt activities, such as political alliances, economic measures and public propaganda, and the clandestine, including “bribery, psychological warfare, and blackmail”.

Panuelo claimed he had been surveilled by Chinese officials.

“You can imagine my surprise when I was followed this past July in Fiji during the Pacific Islands Forum by two Chinese men; my further surprise when it was determined that they worked for the Chinese Embassy in Suva; my even further surprise when it was discovered that one of them was a PLA intelligence officer; and my continued surprise when I learned that I had multiple cabinet and staff who had met him before, and in the FSM.

“To be clear: I have had direct threats against my personal safety from PRC officials acting in an official capacity.”

Panuelo said that when the FSM government declined an offer of Chinese Covid vaccines, he and his health and foreign ministers were forced to change their phone numbers after receiving “incessant” calls from the Chinese Ambassador demanding they accept.

Panuelo alleged that Micronesian elected representatives – he did not name them – had been bribed by Chinese government officials, including with smartphones, alcohol and envelopes full of cash.

“One of the reasons that China’s political warfare is successful in so many arenas is that we are bribed to be complicit, and bribed to be silent. That’s a heavy word, but it is an accurate description regardless.

“What else do you call it when an elected official is given an envelope filled with money after a meal at the PRC embassy or after an inauguration? … What else do you call it when a senior official explicitly asks Chinese diplomats for televisions and other ‘gifts’? … What else do you call it when an elected official receives a cheque for a public project that our national treasury has no record of and no means of accounting for?”

Panuelo said the bribery had corroded his country’s democracy already, but that it had potentially catastrophic further ramifications.

“At worst in the short term, it means we sell our country and our sovereignty for temporary personal benefit. At worst in the long term, it means we are, ourselves, active participants in allowing a possible war to occur in our region … where we ourselves will be indirectly responsible for the Micronesian lives lost.”

Asked about Panuelo’s comments, a Chinese foreign ministry spokesperson told a regular press briefing on Friday: “The smears and accusations against China in them do not accord with the facts. China absolutely does not accept them.”

Panuelo has previously written forthright public letters on Pacific geopolitics. In March 2022, he wrote to the prime minister of Solomon Islands, Manasseh Sogavare, detailing his concerns over a China-Solomons security deal. Two months later, he wrote to Pacific island leaders about the potential consequences of Beijing’s proposed regional trade and security agreement, being pushed by the then Chinese foreign minister, Wang Yi, on a multi-state trip across the Pacific islands. The agreement was ultimately rejected by Pacific leaders.

Dr Anna Powles, a senior lecturer in Pacific security studies at Massey University in New Zealand, said Chinese officials would take the threat of the FSM switching diplomatic recognition from Beijing to Taipei “extremely seriously”.

“They will be very concerned about this, they worked very hard to encourage Solomon Islands and Kiribati to switch diplomatic recognition to Beijing in 2019. That diplomatic competition has been the driver of a lot of Chinese engagement in the region.”

Powles said Panuelo had only another two months in office, a narrow timeframe in which to progress a proposal such as switching recognition to Taipei, and that China’s response to his attempt would be closely watched. “It would be very concerning to see if China engaged in any economic hard-power to try to dissuade FSM from switching diplomatic recognition.”

A former Ambassador, the U.S-educated Panuelo has been president of the FSM, an archipelago of more than 600 islands in the western Pacific, since 2019. In this month’s elections he lost his seat in congress, meaning his term as president will end in May.

Panuelo said he feared retribution for speaking out against China: “I am acutely aware that informing you all of this presents risks to my personal safety [and] the safety of my family.” But he said defending the “peace and stability” of the FSM was more important.

The Guardian has approached Taiwan’s foreign minister for comment.