Pacific Islands Development Program/East-West Center
With Support From Center for Pacific Islands Studies/University of Hawai‘i


HONOLULU (Pacific Islands Report, Dec. 18) –President George Bush has signed an amended Compact of Free Association, providing US$3.5 billion in financial aid to the Republic of the Marshall Islands and the Federated States of Micronesia.

The newly signed agreement extends expiring U.S. funding to the two Pacific nations for the next 20 years and allows the continued use of Kwajalein Atoll as a U.S. military missile tracking station.

According to Guam congresswoman Madeleine Bordallo, Bush signed the Compact of Free Association Amendments Act of 2003 yesterday, ending two years of intensive negotiations to renew the countries’ fiscal and strategic relationships.

"The President's signature today was the final U.S. step in the process and now we look forward to the years ahead in this renewed friendship," Bordallo said.

"Compact II," which extends U.S. funding to the two Pacific countries for the next 20 years, provides about US$3.5 billion. The agreement, which also allows the U.S. to continue using Kwajalein Atoll as missile tracking site, is meant to gradually wean the Marshalls and the FSM off of U.S. support over the course of 20 years – a goal that some close observers have called wishful.

Also included in the pact is US$30 million a year – double the previous allocation - in "compact impact" funding earmarked for Guam, Hawaii, American Samoa and the Northern Marianas, which have been burdened by costs associated with the migration of Pacific islanders.

Guam's share of that annual reimbursement is expected to be about US$14 million, according to the Pacific Daily News on Guam. The new agreement also allows the U.S. to forgive US$157 million from the government of Guam's debt to the federal government in order to offset the millions the island already has spent providing government services to those immigrants.

According to Bordallo, "The new law extends the original Compact with the FSM and the RMI for another twenty years, and continues key U.S. economic assistance to facilitate capacity-building and self-sufficiency in the FSM and RMI with new accountability controls; strengthens immigration provisions and protects the right of FSM and RMI citizens to migrate freely to the U.S. for work, education, and residence; addresses the impact of migration on affected U.S. jurisdictions, including Guam, the CNMI and the State of Hawai'i; and provides a 50-year lease extension for U.S. access to Kwajalein Atoll in the RMI, home of the Ronald Reagan Missile Testing Facility.

December 18, 2003

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