Indo-Pacific : News & Discussion
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By the end of 2022, Australia had 81 major critical minerals projects in the pipeline, valued at between $30 billion and $42 billion. Its potential is much higher: Canberra estimates that as much as 80% of its territory has not been fully explored for critical minerals.
Discovery and extraction are only part of the process. China currently dominates the processing and refining of critical minerals, meaning that even if the U.S. can source the minerals from an ally like Australia, it still depends on China to prepare them for use. Australia wants to strip China of this leverage as part of its critical minerals strategy, which calls for “moving beyond exporting ores and undertaking more concentration, separation, refining and smelting onshore.”
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Discovery and extraction are only part of the process. China currently dominates the processing and refining of critical minerals, meaning that even if the U.S. can source the minerals from an ally like Australia, it still depends on China to prepare them for use. Australia wants to strip China of this leverage as part of its critical minerals strategy, which calls for “moving beyond exporting ores and undertaking more concentration, separation, refining and smelting onshore.”
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How Australia is loosening China's grip on the world's crucial minerals
Australia is becoming a leader and power player in the Indo-Pacific.
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The battle for the Indian Ocean: How the EU and India can strengthen maritime security
January 21, 2022, Indian Ocean, Indian Ocean, Iran: This photo provided Friday, Jan. 21, 2022, by the Iranian Army, shows a part of a joint naval drill of Iran, Russia, and China in the Indian Ocean.
Summary
- Over the last decade, China has gradually expanded its presence in the Indian Ocean, combining its military modernisation and cooperation with partners with active diplomacy towards the island and coastal states of the region.
- China’s presence and capabilities threaten the freedom and influence of other actors in the area, including India and the EU.
- Europe’s key maritime trade routes to Asia run through the Indian Ocean, making the security of the region and freedom of navigation crucial for European interests.
- Many of the island and coastal states in the Indian Ocean have limited economic resources to exercise effective control at sea and are therefore dependent on extra-regional powers.
- As part of their approach to respond to China’s growing assertiveness in the region, the EU and India should jointly establish a regional maritime capacity building programme for island and coastal states in the Indian Ocean.
China’s strategic use of ports, as well as its growing military presence in the maritime space in general, has increasingly aroused the displeasure of other actors in the Indian Ocean, including India and the European Union. For India, the Indian Ocean is a key strategic and economic theatre, and the centre of its diplomatic, military, and regional engagements. New Delhi considers itself as the regional “net security provider”, a status which is threatened by China’s growing presence in its neighbourhood. For Europe, the Indian Ocean is a primary gateway to the prosperous markets of the Indo-Pacific: Europe exports over 35 per cent of its goods to Asia and four of its top ten trading partners are in the region. As such, Europe is heavily dependent on the security of the sea lines of communication through the Indian Ocean. China’s growing naval presence in the region ultimately provides it with so-called anti-access or area-denial capabilities to prevent or limit the freedom of other actors operating within the area. These would allow Beijing to control the traffic in parts of the Indian Ocean, potentially affecting European sea lines of communication, and constraining India’s ability to operate in the area, therefore limiting its influence and security. In its 2021 “EU Strategy for Cooperation in the Indo-Pacific”, the European Council highlighted the “intense geopolitical competition” in the Indo-Pacific and the potential negative repercussions on “trade and supply chains”. The strategy announced a policy of “partnership and cooperation”, putting engagement with partners in the region at the forefront of its approach. The EU has declared cooperation with India, in particular, as a priority in its engagement with the Indo-Pacific. In this context, this paper proposes that the EU and India jointly establish a regional maritime capacity building programme for the smaller island and coastal states in the Indian Ocean, modelled on the Southeast Asia Cooperation and Training (SEACAT) exercise initiated by the United States.
Such a programme would make it possible to partially meet the needs of some of the smaller countries in the Indian Ocean in terms of maritime security. In doing so, it would bring together regional players around the EU and India and therefore increase, at low cost, Europe’s and India’s visibility and ability to ensure security in the Indo-Pacific. The programme would serve as one element in a multifaced approach to respond effectively to China’s assertiveness in the Indian Ocean.
This paper analyses China’s main axes and modes of penetration in the Indian Ocean, and the political fragmentation of the region and weak capacity of the island and coastal states that facilitate this. It then proposes a joint EU-India Indian Ocean Cooperation and Training (IOCAT) maritime capacity building programme for island and coastal states that would strengthen maritime security in the Indian Ocean.
China’s penetration into the Indian Ocean
After expanding its claims in the South China Sea, Beijing has gradually increased its military presence throughout the Indo-Pacific in order to protect its massive economic investments in the region as part of its Belt and Road Initiative (BRI) and ensure its own energy supply with oil and coal, which is the engine of Chinese growth. The development of this strategy can be traced throughout the ten defence white papers that China has published since 1998, each of which marked a new stage of its ambition to grow as a naval power and of its military positioning overseas.The 1998 white paper states that China “does not station any troops or set up any military bases in any foreign country”. In striking contrast, the most recent white paper, made public in 2019, emphasises the need to safeguard “China’s maritime rights and interests” and “overseas interests”, and openly mentions the existence of a PLAN base in Djibouti. The defence white papers published between these two documents reveal the development of China’s naval warfare capabilities. The defence white paper of 2000, which states that the navy has “weapons such as surface, submarine, naval aviation, coastal defense and marine corps, as well as other specialized units”, provided the first indication that China had acquired the capability for offshore defensive operations. The 2002 defence white paper notes that China not only has nuclear-powered submarines, but also nuclear counterattack capabilities. The next two white papers, published in 2004 and 2006, insist on strengthening naval capabilities in terms of armament and equipment, as well as the “gradual extension of the strategy for offshore defensive operations”. Both emphasise capacity building in integrated maritime operations.
China’s military expansion has gone hand in hand with its economic development. The 2008 defence white paper gave the navy new and unprecedented prominence. Nearly four pages are devoted to the corps, in contrast to the restrained one or two paragraphs in earlier documents. The context of this white paper is important: by 2007, China had overtaken the US as the world’s top exporter. For China and for the West, 2008 was a pivotal year. It saw the organisation of the Beijing Olympics – a political triumph for the Chinese authorities – but Chinese performances were not limited to the stadium. It was also the year of the most consequential financial crisis since 1929, surpassed only in 2020 by the economic consequences of the covid-19 pandemic. Chinese leaders, among others, interpreted the crisis as a sign of a declining West and an opportunity to be seized, but also the beginning of a period of tough competition. The 2008 white paper argued that “struggles for strategic resources, strategic locations, and strategic dominance have intensified”, and further suggested that the PLAN should develop “capabilities to conduct cooperation in distant waters”. It was also in 2008 that China sent a naval contingent on an anti-piracy mission to the Gulf of Aden for the first time.
Subsequent defence white papers all emphasised this need to operate further from China’s own shores in order to protect its interests abroad. The 2010 defence white paper insisted in particular on the development of capabilities for conducting operations in distant waters and the construction of land infrastructure and surface logistics platforms allowing the PLAN to operate far from its domestic bases. The 2013 document coincided with the launch of China’s first aircraft carrier, Liaoning, which marked a new phase for the PLAN. The 2015 white paper reiterated the PLA’s mission “to safeguard the security of overseas Chinese interests” and the need for the PLAN to “gradually shift from defending offshore waters” to combining the defence of offshore waters with “high seas protection”. This clearly showed China’s intention to “seize the strategic initiative in military competition”. Just a few months later, China began an ambitious programme to modernise its armed forces, investing heavily to upgrade military equipment and ships, with a particular focus on commissioning more nuclear submarines and aircraft carriers.
The militarisation of China’s presence in the Indian Ocean
Absent militarily from the Indian Ocean until 2008, China has expanded its military presence significantly in recent years. In addition to building a military base in Djibouti, Beijing has increased its naval presence in the area. It deployed a nuclear submarine to the Indian Ocean for the first time in 2013, a move which was followed by two visits to Sri Lankan ports by a conventional submarine and its support vessel in 2014. After acquiring its first aircraft carrier in 2015, China then commissioned another two, demonstrating that it has systematically chosen the maximalist option to strengthen its naval capabilities.These rapid reaction capabilities help China to support the BRI and more generally to protect its citizens and interests. According to Joshua T White, former senior advisor and director of south Asian affairs in the US National Security Council, the PLAN has five objectives in the Indian Ocean: 1) to conduct non-combat activities focused on protecting Chinese citizens and investments and enhancing China’s soft power; 2) to undertake counterterrorism activities, unilaterally or with partners; 3) to gather intelligence in support of operational requirements and against key adversaries; 4) to support efforts aimed at coercive diplomacy towards the small countries of the region; and 5) to enable effective operations in a conflict environment. Among other things, these capabilities therefore prepare China to be able to deter, mitigate, or end a trade ban.
White also points to China’s deployment of a number of surface assets such as guided-missile cruisers, destroyers, frigates, large amphibious transport docks, an emerging fleet of even larger amphibious assault ships, as well as support and auxiliary ships, while the PLA Air Force develops its long-range air transport fleet.
China’s capabilities raise questions about the nature of the threat to which they are supposed to respond. The fight against piracy, for example, is no longer a major problem in the Gulf of Aden. This did not prevent China from deploying a guided-missile destroyer, Taiyuan, and a frigate, Jingzhou, as well as some 690 navy personnel, to the Gulf of Aden during the covid-19 crisis, officially for the protection of ships and vessels passing through the region. In addition to these actions, Beijing has deployed underwater drones and spy ships to the Indian Ocean region to conduct underwater surveillance and acquire a better understanding of the marine environment in which the PLAN operates.
China’s diplomatic engagement with the small states of the Indian Ocean
The implementation of China’s modernisation programme was concomitant with that of the BRI. Through the BRI, China has extended its influence over countries in the region through investments, for example financing and constructing several commercial and port facilities in countries such as Kenya and Tanzania, but also Pakistan, Sri Lanka, Burma, and Bangladesh. The BRI has generated a series of realignments and transformed the region into a vast space of geopolitical competition. Some smaller states have become increasingly dependent on Beijing for trade and infrastructure and in some cases deeply indebted to China.Beijing has also engaged in active diplomacy towards the small island states of the region. Geographically, four of these island states play a central role in the protection of the open sea lines of communication in the Indian Ocean: Sri Lanka and the Maldives are located on the most direct route between China and the Middle East, while Mauritius and the Seychelles are located on the Asia-Africa maritime routes. They are also therefore located on the key maritime route between Europe and Asia.
Engaging with these four island states also has political value for China in the context of its competition with the US and India. China has been trying for decades to establish facilities near India, which would undoubtedly increase New Delhi’s vulnerability. For example, since 1986 Beijing has attempted to acquire, directly or indirectly, one of the islands of the Maldives archipelago.
China is the only country with an embassy on each of the six islands in the Indian Ocean. Beijing is also a dialogue partner in regional and sub-regional organisations that include the island states: the Indian Ocean Rim Association – of which Sri Lanka, the Maldives, Mauritius, and the Seychelles are all members – and the Indian Ocean Commission, whose member states all border the Mozambique Channel and include Mauritius and the Seychelles. China’s participation in these organisations not only helps it to foster relations with these states, it also provides it with recognition as a legitimate regional actor.
However, China is no longer satisfied with a folding seat within existing regional bodies. It is now attempting to bring together states of the region on its own terms as well. In November 2022, the China International Development Cooperation Agency (CIDCA) – an organisation associated with the Chinese Ministry of Foreign Affairs – held the first meeting of the China-Indian Ocean Region Forum on Development Cooperation, which brought together some 19 states, not including India or any EU states. According to CIDCA, the forum aims to “pool wisdom and resources” and allow China to “strengthen cooperation with countries in the Indian Ocean region to grow the blue economy and advance the implementation of the GDI [Global Development Initiative] in the region” and “constantly expand the converging interests” between China and the countries in the Indian Ocean.
China’s engagement and investment has brought financial benefits for these island states. It has also attracted the attention of other regional players, such as India and the US, which have begun in turn to court the island states. India, for instance, has increased its diplomatic engagement with the countries: President Narendra Modi has visited Sri Lanka, the Maldives, Mauritius, and the Seychelles several times since his first term in 2014. India also granted extensive loans to Mauritius in 2017 and the Maldives in 2018, partly to help them pay off Chinese debt. Major regional powers, such as India and France (which identifies as a resident state in the Indian Ocean), perceive China’s involvement in the island states as a threat, as their presence in the Indian Ocean is regularly challenged by local actors, be it in the Arabian Sea or the south-west Indian Ocean, with the more or less active support of Beijing and Moscow.
China’s cooperation with partners in the Indian Ocean
China’s regional policy also aims to bring together other key powers in the Indian Ocean around its agenda. China is therefore playing on its existing convergences with Pakistan, Russia, and Iran, without necessarily fully sharing their motivations.While China’s partnership with Pakistan is unquestionably its oldest – with both aiming to counter India – Islamabad is no longer Beijing’s only partner in the Indian Ocean. A common opposition to the US has led China and Russia to cooperate there in the naval field. This naval cooperation took off in 2012, when China and Russia conducted their first joint exercise in the Pacific, followed in 2015 by another joint exercise in the Mediterranean Sea, then in 2016 in the South China Sea and in 2017 by another joint naval exercise in the Baltic Sea. It was not until 2019, however, that Beijing and Moscow decided to extend their cooperation to the Indian Ocean, where they conducted two trilateral exercises with South Africa and Iran, in November and December 2019 respectively. Nonetheless, the military significance of these exercises was modest due to their low technical level.
China’s grey zone strategies in the Indian Ocean
China’s presence in the Indian Ocean is not limited to military exercises. China has become a master of using grey zone strategies in the South China Sea as well as in the Indian Ocean. Grey zone strategies refer to the use of ambiguous tactics by a state to achieve its strategic objectives without engaging in overt military conflict. For example, China has used illegal, unreported, and unregulated (IUU) fishing to serve its broader strategic interests. With about 3,000 ships, China has built the world’s largest deep-water fishing fleet which allows it to operate in international waters and to encroach on other countries’ territorial waters. In 2021, the Indian Navy reported 392 incidents of IUU fishing in the northern Indian Ocean. All the coastal states in the Indian Ocean, including the island states as well as supposed partners in the area such as South Africa, Iran, and Pakistan, complain about China’s IUU fishing practices, which have significant economic and ecological consequences for the fisheries-dependent littoral states and their food security.[1] At the same time, fishing vessels are often used to smuggle people, drugs, and weapons and to conduct spy missions and gather intelligence, which is particularly concerning given the widespread presence of China’s fishing fleet.In this context, China is capitalising on the blurring of the distinction that prevailed until the mid-2000s between traditional and non-traditional threats – the former relating to issues of sovereignty between states and the latter to international cooperation centred on the protection of common goods. For example, China built its base in Djibouti in the name of improving logistics for the fight against piracy, which Western powers invited it to participate in. Similarly, the logistical support capabilities that China is gradually acquiring allow it to gain better knowledge of the environment thanks to the increasingly frequent presence of its oceanographic vessels and spy ships.
The weakness of the regional response
With the exception of India and France, the regional actors in the Indian Ocean are often powerless in the face of this situation, despite having strengthened their normative arsenal in recent years. For example, the International Maritime Organization’s Jeddah Amendment to the Djibouti Code of Conduct from 2017 calls on the signatory states to cooperate to tackle IUU fishing, piracy, as well as other crimes at sea such as drug trafficking and human trafficking. However, many of the island and coastal states have limited economic resources and maritime jurisdiction over considerable areas, preventing them from acquiring the ships and more generally the capacities and know-how to exercise effective control at sea. Controlling their territorial waters and exclusive economic zones (EEZs) is therefore an almost impossible challenge for many of them. The African coast of the Indian Ocean has thus become the stake of renewed struggles for influence without the states of the region having the means, military or otherwise, to defend their maritime sovereignty.The African coast of the Indian Ocean remains almost entirely dependent on the outside world for its own maritime security. African naval forces were notably absent from the three naval operations put in place to ensure maritime security off the Horn of Africa: the EU’s EUNAVFOR Atalanta, NATO’s Ocean SHIELD, and the multinational Combined Maritime Task Force (CTF 151). The Seychelles was the only African country to contribute to CTF 151. South Africa, Mozambique, and Tanzania launched the only all-African anti-piracy operation in the Indian Ocean, Operation Copper, in 2011 in the Mozambique Channel, but South Africa has carried out the operation alone despite attempts to pool it. They have since regularly extended it, except for in 2012.
Most states have no option but to conclude bilateral agreements with extra-regional powers such as the US, China, India, the EU, or France (with which even South Africa maintains maritime cooperation despite complex political relations). A series of capacity building programmes of varying scope and ambition exist, often carried out on a bilateral basis with few examples involving large parts of the region. For example, the United Arab Emirates funded the MASE Program to promote maritime security in the eastern and southern Africa and Indian Ocean region, which ran from 2012 to 2020. Its general objective was to strengthen maritime security in the region and to create an environment conducive to economic development. More specifically, it aimed to strengthen the capacity of states and organisations in the region to implement the regional strategy and action plan against piracy and for maritime security. It involved various development initiatives, from vocational training to national and regional capacities in legal matters, intelligence, and regional coordination. Another example is the Critical Maritime Routes in the Indian Ocean (CRIMARIO) programme. Initiated and funded by the EU, it aimed to enhance maritime safety and security in the wider Indian Ocean region by supporting coastal nations to improve maritime situational awareness through information sharing networks and web-based incident management, as well as inter-agency workshops, training, and capacity building. When the CRIMARIO I programme ended in December 2019, the EU extended the project’s geographical reach to interconnect the Indo-Pacific under CRIMARIO II, which runs from 2020 until 2025.
But this dependence of African states in the Indian Ocean on external powers is a problem for the supporting countries, which have to mobilise a large part of their own naval resources, something few of them are willing to do. The EU’s Coordinated Maritime Presences tool, launched in the Gulf of Guinea in 2021, provides a flexible framework in which EU member states voluntarily allocate naval and air assets to priority areas of maritime interest for the EU. The EU’s Indo-Pacific cooperation strategy extended the concept of the Coordinated Maritime Presences to the north-western Indian Ocean at the Paris Interministerial Forum in February 2022, but it is struggling to mobilise a sufficient number of European participants despite the EU and member states repeatedly asserting that they need to preserve their maritime communication channels in the area. There is therefore a need to pool resources, work closely with, and better equip coastal and island states, rather than relying on the capabilities of extra-regional states.
India is the only regional power striving both to secure the area and to develop the capacities of the less endowed coastal and island states. In 2021, for example, it offered loans to Mauritius to purchase defence-related equipment and in 2022 it gifted a $20m floating dock to the Sri Lankan navy. Furthermore, the largest vessels in the two countries’ navies are Indian-built offshore patrol vessels and India has built an airstrip and jetty on the Mauritian island of Agaléga for surveillance purposes. India has also launched a coastal surveillance radar project in the Seychelles and upgraded the jetty and airstrip on Assumption Island for surveillance purposes. The ships and aircraft of its navy regularly carry out joint surveillance, patrols, and hydrographic surveys of the EEZs of Mauritius, the Seychelles, and the Maldives. It also conducts joint patrols with Indonesia and since 2005 has multiplied joint naval exercises with the countries of the Gulf Cooperation Council as well as, since October 2022, with the Mozambican and Tanzanian navies.
Strengthening maritime security in the Indian Ocean
The EU therefore urgently needs to develop its own naval capabilities and strengthen its partnerships in the region, as well as to help the coastal states to acquire the means to protect their territorial waters and EEZs. A maritime capacity building programme for island and coastal states in the Indian Ocean, organised on the scale of the entire region within the framework of the EU’s cooperation with India and modelled on the SEACAT programme, would constitute a useful contribution to these goals. Such a model, envisaged by leading maritime experts in India, would not address the whole problem posed by China’s penetration into the Indian Ocean.[2] However, it would make it possible to limit the space in which China operates today, and partially respond to the coastal states’ difficulties in controlling their territorial waters and EEZs which are significantly larger than their landmass. It would also allow the EU and India to draw the coastal states away from China’s orbit and align them around an EU-India axis.The US Department of Defence initiated the SEACAT exercise in 2002 under the name “Cooperation against terrorism in Southeast Asia”, but it was renamed in 2012 to reflect the emphasis placed on advancing the training of regional navies and coast guards, with a stated objective of interoperability, implicitly reflecting the desire of the countries bordering the South China Sea to counter Chinese hegemonic ambitions in the region. SEACAT was designed to improve cooperation among south-east Asian countries and support them to address crises and illegal activities in the maritime domain using standardised tactics, techniques, and procedures. Participation in the SEACAT exercise has evolved considerably over time. In 2018 only nine countries participated; by 2022, 21 countries were participating. But the countries bordering the Indian Ocean are only marginally represented. Just Bangladesh, India, and France participate in the exercise.
The EU and India – in dialogue with the coastal and island states of the Indian Ocean as well as EU member states – should therefore follow this example to establish an Indian Ocean Cooperation and Training (IOCAT) programme. Once established, the programme could be expanded to include other south Asian and EU member states, including Bangladesh, the Maldives, and Sri Lanka, as well as France and Germany. The concrete scope and agenda would evolve according to the emergence of new needs and the capacities of the participating states. This would allow the programme to provide a framework flexible enough to address the challenges of today and account for the potential challenges of tomorrow.
The establishment of such a programme should not pose any particular technical difficulty. India, France, and Germany all participated in SEACAT 2022, organised in Singapore, and are therefore familiar with the exercise and able to implement it in the Indian Ocean. The programme would also facilitate interoperability between regional partners and the European and Indian navies. Furthermore, the EU’s role would make it possible to involve EU member states – which are still reluctant to participate in Coordinated Maritime Presences due to a lack of ships – more closely in the security of the region at a level compatible with their specific capacities and interests. While the EU claims to be developing its maritime cooperation with India, it has not yet officially defined this cooperation. The implementation of an IOCAT programme would therefore help deepen EU-Indian cooperation in the Indian Ocean.
From theory to practice
The Indian Ocean is an important theatre for European interests. Its maritime trade routes are key to Europe’s major export markets in Asia and, therefore, Europe’s prosperity. However, the Indian Ocean is dominated by other powers, such as India, the US, and, for the last couple of years, China, which is engaging in the region with growing assertiveness. China has accompanied its growing military footprint in the Indian Ocean with the weaponisation of non-lethal activities and the emergence of grey zone tactics, such as IUU fishing, in which traditional economic activities are used for the pursuit of geopolitical ambitions. The capacity of the coastal and island states in the Indian Ocean to protect the sovereignty of their territorial waters and EEZs has thus become closely interlinked with freedom of navigation more broadly in the Indian Ocean.The EU therefore needs to urgently engage in capacity and capability building programmes that will help preserve its own interests while addressing local issues and working with partners in the region, such as India. At a time in which their bilateral relationship is a priority for both actors, it is imperative for the EU to build on this momentum and create tangible results. By initiating an IOCAT programme, the EU and India could move beyond rhetoric to establish a concrete initiative that would unite countries in and beyond the Indian Ocean and increase the visibility and influence of the EU and India in the Indo-Pacific.
How the EU and India can strengthen maritime security
China is becoming increasingly assertive in the Indian Ocean. The EU and India should work together to support the smaller states of the region…
ecfr.eu
(thediplomat 08.02.24)
Months ago, negotiations concluded between the United States and the three U.S. Freely Associated States (FAS) – Palau, the Federated States of Micronesia(FMS) and the Republic of Marshall Islands (RMI) – on the terms of the renewals of key components of the Compacts of Free Association (COFA).
Those components cover primarily financial and service elements of the Compacts for the next 20 years, things like education programs, support for U.S. military veterans from the FAS who have returned home, and the postal service.
Those agreements then went to the U.S. Congress where they have been waiting to be approved. And waiting. And waiting.
On February 6, 2024, the presidents of Palau, RMI and FSM wrote to Senate leadership on the “need for the legislation that would strengthen our associations and enable them to endure.”
The Compacts: Critical to a Free and Open Indo-Pacific
Through the COFAs, the three countries voluntarily grant the United States uniquely extensive defense and security access over a critical corridor that runs roughly between Hawai’i and Guam – and on to Taiwan and U.S. treaty allies the Philippines and Japan. The U.S. is also obligated to protect Palau, the FMS, and the RMI from any attack or threat.
This “Corridor of Freedom” (including freedom of movement) underpins U.S. strategic planning in the Pacific. No other countries on the planet have such deep relationships with the United States – apart from the defense ties, FAS citizens can live and work in the U.S., and the three countries even have U.S. postal codes.
As a result, the Compact states, two of which (Palau and Marshall Islands) also recognize Taiwan, are at the receiving end of a long running, well-funded, focused, and multifaceted attack by China.
Beijing’s goal is to undermine these entities’ relationships with the United States, weaken their state institutions, and ultimately create the conditions in which the U.S. is forced to give up its presence in the western Pacific. As one senior Chinese official told U.S. Admiral Timothy Keating: “You take Hawai’i east. We’ll take Hawai’i west.”
Congress and the Compacts
The financial and services components of the COFAs – for example, those covering postal services and education programs – need to be periodically renewed. We are in that renewal period now.
The terms have been agreed between the United States and the countries, but they need to be passed by the U.S. Congress.
The problem is not that they are considered unimportant or that there are disqualifying issues with the agreements – they have successfully passed out of the dozen relevant committees in both the Senate and the House. It’s that the COFA renewals have reached Congress during one of its most dysfunctional periods in recent memory.
They are sitting, ready and approved, waiting to be introduced so they can be voted upon.
First it was thought they would be included in the National Defense Authorization Act (NDAA). However, Republicans were asking for “offsets,” meaning any dollar for the COFAs needed to be taken from somewhere else in the budget.
While the COFA budget for the three countries over 20 years is $7.1 billion, the offsets required are only around $2.3 billion. If you average that out, it comes to under $40 million per country per year.
That amount couldn’t be found. From the Departments of State, Defense, or Interior – no one offered a politically acceptable solution. So, the COFA renewals didn’t go in the NDAA.
The next idea was that they would be included in the Emergency Supplemental budget request, which would not require an offset. If you’ve been following U.S. politics, you might know that as the politically charged bill covering border security, as well as aid for Israel, Taiwan, and Ukraine. Until as late as last week, drafts also included COFA funding.
When the official draft came out on Sunday, COFA wasn’t in it. Not that it mattered, as it seems likely that the bill, at least in its current form, won’t pass.
So, as of now, that renewal is months late and not in any legislative vehicle.
Technically both the RMI and FSM financial and services agreements with the United States expired with the end of last financial year, on September 30, 2023.
Given Congress hasn’t even managed to pass a budget, they were included in the subsequent Continuing Resolutions (CR), ensuring funding and services would continue at the old rates. That level of funding is far below the new agreements, but at least the banks wouldn’t shut down (yes, that was a concern for the FAS banks that are U.S. insured), the Federal Aviation Administration (FAA) could continue operating in the countries, and there was a level of financial support.
Palau’s Urgent Situation
Palau’s agreement expires on September 30, 2024, and some have used that as a justification for not including it in the CRs. But, as per its existing agreement, Palau’s financial transfer from the U.S. tapered down to a low amount in this, the final year of the previous COFA funding agreement – and that amount was supposed to be dedicated primarily to maintaining infrastructure relevant for the U.S. military.
There was enough concern for Palau’s financial stability that, when the Senate appropriated money for the Pacific Islands, the committee, in its report on the legislation, directed the State Department to use $20 million of that to assuage Palau’s budgetary challenges. That hasn’t happened.
So, Palau is stuck. If the funding isn’t approved, and quickly, Palau may have to make cuts, including to pensions, as well as borrow – leaving it even more vulnerable to internal instability and outside influence.
Already, direct flights from Macau to Palau (which recognizes Taiwan) are landing almost daily, and the amount of money pouring in from China is enormous. There are also increasing criminal cases that may be linked to organized crime, including the recent murder of a Chinese boat operator, for which four other Chinese citizens have been arrested.
The president of Palau is having a hard time funding and getting the tools he needs to combat China-linked and -funded influence operations. He also has to explain to voters – the election is in November – why the United States is a good partner, given that Palau has acted in good faith, signed the COFA renewal agreement, and now is going to have problems even just paying teachers and pensions.
Palau has been here before. From 2010 to 2018, due to similar complications with Congress, its funding was discretionary rather than mandatory, permeating its economy with uncertainty. China took full advantage.
Beijing worked to build up Palau’s dependence on Chinese tourism. In 2008, there were 634 Chinese tourists in Palau, less than 1 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 its diplomatic recognition 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.
Palau stood firm. But it was not easy, especially after COVID-19 added a second hit.
Now, the Chinese tourist flights are coming in again – just in time for the election.
Completely coincidentally, the Palau Senate has issued a resolution againsthosting U.S. Patriot missiles batteries in the country.
Similarly, China may have offered the Federated States of Micronesia $100 million in infrastructure – $20 million for the federal government and $20 for each of the four states. That would mean bringing in more Chinese companies and labor, opaque budgets, and relationship building. And China’s largesse provides more reason for those inclined to publicly question why the United States can’t even pass the exiting agreement.
As the presidents of the FAS wrote in their letter to Senate leaders: “Although we understand the delay in the legislation’s approval, it has generated uncertainty among our peoples. As much they identify with and appreciate the United States, which formerly governed our islands, this has resulted in undesirable opportunities for economic exploitation by competitive political actors active in the Pacific.”
The Real Cost of Failing on the Compacts
In his congressional testimony, Grant Newsham, a retired Marine colonel and a senior fellow at the Center for Security Policy, estimated that should the COFA renewals fail, the cost to the U.S. of paying for the ships, aircraft, missiles, submarines, and troops required to secure the 5.6 million square kilometers covered by the Compact states would be around $100 billion – a year.
This has implications for the whole region. As Representative Amata Coleman Radewagen from American Samoa put it, the Compacts are “[o]ne of [the] most important tools that the United States has in supporting democracy and good governance while denying China the ability to project strategic power throughout the vast Pacific region.”
Some have argued that the defense and security components of the COFAs are unaffected by the current renewal process, as they are in a different part of the agreement.
However, first, note the word “Free” in “Compacts of Free Association.” The Freely Associated States voluntarily entered into the Compacts and can voluntarily withdraw from them – all parts of them (and that is clearly China’s long-term goal for the region).
Second, people in the FAS view “security” very differently. For many, it is the financial and services elements of the COFAs that provide them with security – including the ability to withstand the social, democratic, and political attacks that come with China’s deliberately and hugely destabilizing thrusts into their economies, societies, and countries.
Beijing, adept as it is at political warfare, knows that the way to neuter the FAS from a U.S. defense and security perspective is to enter first via local economics and politics. FAS citizens and leaders know it as well, and are raising the alarm. If, because of U.S. inaction on an already signed agreement, Palau can’t pay its pensions, the United States is going to be less likely to be able to base Patriots in Palau. That’s very reductionist, but still accurate.
Currently, legislatively, the COFA renewals are not even in a position to be voted on. They are nowhere. It is hard to overstate the damage this can cause to U.S. defense architecture in the Pacific and the United States’ reputation across the region – not to mention the lives of the people living in America’s closest defense allies.
The U.S. is obligated to protect the FAS from any attack or threat. While the attack may be coming from China, the threat is coming from U.S. government. /end
US Congress’ COFA Delay Jeopardizes a Key Element of the ’Free and Open Indo-Pacific’
The U.S. government concluded COFA renewal talks with Palau, Micronesia, and the Marshall Islands in 2023. Months later, Congress has yet to approve the funding.
Months ago, negotiations concluded between the United States and the three U.S. Freely Associated States (FAS) – Palau, the Federated States of Micronesia(FMS) and the Republic of Marshall Islands (RMI) – on the terms of the renewals of key components of the Compacts of Free Association (COFA).
Those components cover primarily financial and service elements of the Compacts for the next 20 years, things like education programs, support for U.S. military veterans from the FAS who have returned home, and the postal service.
Those agreements then went to the U.S. Congress where they have been waiting to be approved. And waiting. And waiting.
On February 6, 2024, the presidents of Palau, RMI and FSM wrote to Senate leadership on the “need for the legislation that would strengthen our associations and enable them to endure.”
The Compacts: Critical to a Free and Open Indo-Pacific
Through the COFAs, the three countries voluntarily grant the United States uniquely extensive defense and security access over a critical corridor that runs roughly between Hawai’i and Guam – and on to Taiwan and U.S. treaty allies the Philippines and Japan. The U.S. is also obligated to protect Palau, the FMS, and the RMI from any attack or threat.
This “Corridor of Freedom” (including freedom of movement) underpins U.S. strategic planning in the Pacific. No other countries on the planet have such deep relationships with the United States – apart from the defense ties, FAS citizens can live and work in the U.S., and the three countries even have U.S. postal codes.
As a result, the Compact states, two of which (Palau and Marshall Islands) also recognize Taiwan, are at the receiving end of a long running, well-funded, focused, and multifaceted attack by China.
Beijing’s goal is to undermine these entities’ relationships with the United States, weaken their state institutions, and ultimately create the conditions in which the U.S. is forced to give up its presence in the western Pacific. As one senior Chinese official told U.S. Admiral Timothy Keating: “You take Hawai’i east. We’ll take Hawai’i west.”
Congress and the Compacts
The financial and services components of the COFAs – for example, those covering postal services and education programs – need to be periodically renewed. We are in that renewal period now.
The terms have been agreed between the United States and the countries, but they need to be passed by the U.S. Congress.
The problem is not that they are considered unimportant or that there are disqualifying issues with the agreements – they have successfully passed out of the dozen relevant committees in both the Senate and the House. It’s that the COFA renewals have reached Congress during one of its most dysfunctional periods in recent memory.
They are sitting, ready and approved, waiting to be introduced so they can be voted upon.
First it was thought they would be included in the National Defense Authorization Act (NDAA). However, Republicans were asking for “offsets,” meaning any dollar for the COFAs needed to be taken from somewhere else in the budget.
While the COFA budget for the three countries over 20 years is $7.1 billion, the offsets required are only around $2.3 billion. If you average that out, it comes to under $40 million per country per year.
That amount couldn’t be found. From the Departments of State, Defense, or Interior – no one offered a politically acceptable solution. So, the COFA renewals didn’t go in the NDAA.
The next idea was that they would be included in the Emergency Supplemental budget request, which would not require an offset. If you’ve been following U.S. politics, you might know that as the politically charged bill covering border security, as well as aid for Israel, Taiwan, and Ukraine. Until as late as last week, drafts also included COFA funding.
When the official draft came out on Sunday, COFA wasn’t in it. Not that it mattered, as it seems likely that the bill, at least in its current form, won’t pass.
So, as of now, that renewal is months late and not in any legislative vehicle.
Technically both the RMI and FSM financial and services agreements with the United States expired with the end of last financial year, on September 30, 2023.
Given Congress hasn’t even managed to pass a budget, they were included in the subsequent Continuing Resolutions (CR), ensuring funding and services would continue at the old rates. That level of funding is far below the new agreements, but at least the banks wouldn’t shut down (yes, that was a concern for the FAS banks that are U.S. insured), the Federal Aviation Administration (FAA) could continue operating in the countries, and there was a level of financial support.
Palau’s Urgent Situation
Palau’s agreement expires on September 30, 2024, and some have used that as a justification for not including it in the CRs. But, as per its existing agreement, Palau’s financial transfer from the U.S. tapered down to a low amount in this, the final year of the previous COFA funding agreement – and that amount was supposed to be dedicated primarily to maintaining infrastructure relevant for the U.S. military.
There was enough concern for Palau’s financial stability that, when the Senate appropriated money for the Pacific Islands, the committee, in its report on the legislation, directed the State Department to use $20 million of that to assuage Palau’s budgetary challenges. That hasn’t happened.
So, Palau is stuck. If the funding isn’t approved, and quickly, Palau may have to make cuts, including to pensions, as well as borrow – leaving it even more vulnerable to internal instability and outside influence.
Already, direct flights from Macau to Palau (which recognizes Taiwan) are landing almost daily, and the amount of money pouring in from China is enormous. There are also increasing criminal cases that may be linked to organized crime, including the recent murder of a Chinese boat operator, for which four other Chinese citizens have been arrested.
The president of Palau is having a hard time funding and getting the tools he needs to combat China-linked and -funded influence operations. He also has to explain to voters – the election is in November – why the United States is a good partner, given that Palau has acted in good faith, signed the COFA renewal agreement, and now is going to have problems even just paying teachers and pensions.
Palau has been here before. From 2010 to 2018, due to similar complications with Congress, its funding was discretionary rather than mandatory, permeating its economy with uncertainty. China took full advantage.
Beijing worked to build up Palau’s dependence on Chinese tourism. In 2008, there were 634 Chinese tourists in Palau, less than 1 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 its diplomatic recognition 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.
Palau stood firm. But it was not easy, especially after COVID-19 added a second hit.
Now, the Chinese tourist flights are coming in again – just in time for the election.
Completely coincidentally, the Palau Senate has issued a resolution againsthosting U.S. Patriot missiles batteries in the country.
Similarly, China may have offered the Federated States of Micronesia $100 million in infrastructure – $20 million for the federal government and $20 for each of the four states. That would mean bringing in more Chinese companies and labor, opaque budgets, and relationship building. And China’s largesse provides more reason for those inclined to publicly question why the United States can’t even pass the exiting agreement.
As the presidents of the FAS wrote in their letter to Senate leaders: “Although we understand the delay in the legislation’s approval, it has generated uncertainty among our peoples. As much they identify with and appreciate the United States, which formerly governed our islands, this has resulted in undesirable opportunities for economic exploitation by competitive political actors active in the Pacific.”
The Real Cost of Failing on the Compacts
In his congressional testimony, Grant Newsham, a retired Marine colonel and a senior fellow at the Center for Security Policy, estimated that should the COFA renewals fail, the cost to the U.S. of paying for the ships, aircraft, missiles, submarines, and troops required to secure the 5.6 million square kilometers covered by the Compact states would be around $100 billion – a year.
This has implications for the whole region. As Representative Amata Coleman Radewagen from American Samoa put it, the Compacts are “[o]ne of [the] most important tools that the United States has in supporting democracy and good governance while denying China the ability to project strategic power throughout the vast Pacific region.”
Some have argued that the defense and security components of the COFAs are unaffected by the current renewal process, as they are in a different part of the agreement.
However, first, note the word “Free” in “Compacts of Free Association.” The Freely Associated States voluntarily entered into the Compacts and can voluntarily withdraw from them – all parts of them (and that is clearly China’s long-term goal for the region).
Second, people in the FAS view “security” very differently. For many, it is the financial and services elements of the COFAs that provide them with security – including the ability to withstand the social, democratic, and political attacks that come with China’s deliberately and hugely destabilizing thrusts into their economies, societies, and countries.
Beijing, adept as it is at political warfare, knows that the way to neuter the FAS from a U.S. defense and security perspective is to enter first via local economics and politics. FAS citizens and leaders know it as well, and are raising the alarm. If, because of U.S. inaction on an already signed agreement, Palau can’t pay its pensions, the United States is going to be less likely to be able to base Patriots in Palau. That’s very reductionist, but still accurate.
Currently, legislatively, the COFA renewals are not even in a position to be voted on. They are nowhere. It is hard to overstate the damage this can cause to U.S. defense architecture in the Pacific and the United States’ reputation across the region – not to mention the lives of the people living in America’s closest defense allies.
The U.S. is obligated to protect the FAS from any attack or threat. While the attack may be coming from China, the threat is coming from U.S. government. /end
US Congress’ COFA Delay Jeopardizes a Key Element of the ’Free and Open Indo-Pacific’
The U.S. government concluded COFA renewal talks with Palau, Micronesia, and the Marshall Islands in 2023. Months later, Congress has yet to approve the funding.
thediplomat.com
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