Federated States of Micronesia flags substantial boost in US assistance

The Federated States of Micronesia, an island nation in the militarily strategic western Pacific, will receive a substantial increase in U.S. financial assistance over the next two decades, its president said.

Micronesia has agreed to funding of U.S.$2.8 billion, an increase of about 75%, and a U.S.$500 million injection to a trust fund, Micronesian President David Panuelo said in a statement Tuesday.

“This is how we can provide better pay to doctors and nurses employed at the state level, all while better supplying our public education and health infrastructure throughout the nation,” he said.

Under agreements known as compacts of free association, the Federated States of Micronesia along with Palau and the Marshall Islands allow the United States to have military control of their territories in exchange for economic assistance and the right for their citizens to live and work in the U.S. 

The funding arrangements are up for renewal and analysts have said the outcome of the negotiations will be an important signal of Washington’s commitment to the Pacific region as China presses for greater influence with Pacific Island states.

Home to about 200,000 people, the three countries comprising dozens of islands are spread across a vast area of ocean between the Philippines and Hawaii and are part of the U.S. military’s capacity to project power in the Pacific and East Asia.

Palau in January signed a memorandum of understanding with the United States government that would double its economic assistance compared with a U.S. offer it rejected in 2020. The agreements are subject to approval by the U.S. Congress. 

Panuelo said the Federated States of Micronesia is yet to sign a memorandum of understanding with the United States but aims to do so by mid-February.

He said he met U.S. officials including the White House’s Indo Pacific coordinator Kurt Campbell in Washington in late January and came to a preliminary agreement so that funding would be included in the next U.S. federal government budget and not delayed for a year or longer.