The President of Palau, Surangel Whipps Jr, speaks to The Sunday Guardian on what his Pacific Island Country is facing.

By Cleo Paskal 

The United States has exceptionally close defence and security relationships with three countries—closer than it has with any others. And they aren’t the ones you think.

Through the Compacts of Free Association (COFAs), the Republic of Palau, the Republic of the Marshall Islands (RMI), and the Federated States of Micronesia (FSM)—together known as the Freely Associated States (FAS) have voluntarily granted the United States uniquely extensive defence and security access in their sovereign territories.

In the words of the Compacts: “The Government of the United States has full authority and responsibility for security and defence matters in or relating to the Marshall Islands and the Federated States of Micronesia [and Palau].”

That includes the right to base and to deny entry to the FAS by someone else’s military. This “strategic denial” has happened at least once, in 2019.

Apart from defence and security provisions, the COFAs also give citizens of the FAS the right to work in the United States, to serve in the U.S military and they provide financial support and services (such as the postal service) to the government and people of the FAS.

The FAS extend over an enormous swath of the central Pacific Ocean. Combined, their maritime exclusive economic zones cover an area of the Pacific comparable in size to the continental United States. The relationship with the FAS is what allows the U.S military largely unimpeded deployment from Hawaii to Guam (and through Guam and the Marianas to treaty ally Japan).

Two of the three FAS also recognise Taiwan—by not having Chinese embassies on their soil, that gives them another layer of protection from Chinese influence operations, while standing for a free and open Indo-Pacific in one of the most politically courageously ways possible.

All of this combines to make the FAS three of the biggest targets of Beijing.

China is using a wide range of levers to try to get the two that recognize Taiwan to flip, and to weaken support for the US in all three.

Take what’s happened in Palau, one of the two that recognises Taiwan. Beijing first worked to build up Palau’s dependence on Chinese tourism. In 2008, there were 634 Chinese tourists in Palau, less than one percent of all tourists. By 2015, it was more than 91,000, or around 54 percent.

Then, in 2017, China pulled the plug, making it clear that, unless Palau switched from Taiwan to China, the tourists wouldn’t come back.

This devastated the economy and left empty and crumbling Chinese-leased real estate and developments across the country—a formidable display of entropic warfare.

Palau, however, stood firm. But it was not easy, especially after Covid added a second hit, hitting the service sector hard. Now, the Chinese are inching back in, perhaps in preparation to gain influence before next year’s elections.

Recently, chartered flights from Macau have started up again. And previously empty and decrepit Chinese-leased properties are being fixed up. The President of Palau, Surangel Whipps Jr., agreed to be interviewed for this edition of “Indo-Pacific: Beyond the Headlines”, to describe a bit of what’s going on in Palau now.

Q: What are Palau’s greatest challenges?

A: Our biggest challenges are trying to build a diversified, resilient economy, combat[ing] climate change, and combat[ing] the influence of [the] Chinese in Palau.

Our economy was devastated by Covid. Tourism isn’t back. We are at 30 percent of pre-Covid numbers.

One of our main challenges is direct investment. The largest direct investor in Palau is still China. It’s a challenge to try to not open up direct flights from China back to Palau. We have pressure to open up direct flights to Macau and Hong Kong from Cambodian carriers.

Q: What options are you exploring?

A: We need more direct flights. I’ve met one-on-one with Prime Minister Kishida twice, including last week. Japan might start direct flight towards the end of the year, but that’s a long way away. Right now, there are two flights a week from Taiwan, they are full. They can’t increase.

I’ve also just been to Korea trying to get Koreans to start direct flights because Korea is about five hours away. Korean tourists are among the top tourists going to Guam. One airline was interested in Palau but they said the runway wasn’t quite long enough for the large aircraft. It means a 30% penalty in cost—it’ll cost 30 percent more than flying to Guam. That makes Palau less interesting.

Meanwhile, for several years, the U.S government said our runway wasn’t quite long enough for F-35s.We proposed a solution to the United States, and to Australia, Taiwan, Japan, Korea—help us extend the runway to 3,000m from 2,100m. It would help in deterrence. We believe peace comes through strength, but a strong a resilient economy also provides deterrence.

That’s the sort of area where there is a synergy, where we can do what’s good for defence and for the economy. It’s an opportunity where maybe we can encourage investment from others in the region, other investment instead of China.

We really need to work with others in the region to encourage investment. We need partnerships. This year finally for [the] first time Japanese investment in tourism will surpass everyone else—there is a new Japanese hotel being built. We want to see US investment here—a U.S hotel. We are really trying to bring others here. Japan is slow, Korea is slow, Taiwan is slow—China is saying “give us more flights”. It’s hard to say we won’t accept them because hotels are empty, boats are empty.

Q: Another concern is that, if not handled by others, environmental crises could be opportunities for China to act. We’ve seen the PRC use humanitarian assistance and disaster relief as a reason to deploy and embed. What is the situation in Palau?

A: FEMA accessibility is really important to Palau. It’s Russian roulette out here. Look at what just happened to Guam. Those systems move up to Guam, down to Yap, down to Palau. If something happens, it [is] a matter of who’s closest to our door. Who’s fastest to respond? When that disaster happens, who will jump out to say “here we are to help you”? The last typhoon, we got more assistance from the Federated States of Micronesia than the United States.

Q: People from Palau serve in the U.S military in large numbers. Properly organised, perhaps as a variation on reserves but answerable to the Palau government, could they serve as bridges to U.S responders? How are they treated by the US Veterans Administration?

A: There has been some traction on addressing the needs of veterans, but they really need it to be enacted. Why [do] veterans…in Philippines and Canada receive more benefits than…ones in the FAS?

We want them to retire back in the islands—wouldn’t it be wonderful if they return to Palau and receive full benefits in Palau? Then they can be comfortable while contributing to the economy and security of Palau. It [is] an economically small thing for the U.S but huge when it comes to improving the lives and security in Palau. Something like 5 percent of graduating high school students join the U.S military. We are happy to let them come and recruit, but when they are done, please take care of them. Please don’t forget them.

That means being able to see a local doctor here and get the care they need. There are rules that make it difficult, like to get counselling online you need to be on U.S soil. Also, many have to pay for [their] own tickets to get to Guam for assessment. The United [Airlines] flight to Guam is, per mile, among [the] most expensive in world. In the last years, two veterans have taken their lives in Palau.

Q: How was the FIPIC meeting in Papua New Guinea with Prime Minister Narendra Modi

A: Really good—well organized. Many interesting proposals. India is offering some things that Palau could really use, including support for people with disabilities. We would also like to see some Indian weddings as well.