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U.S. POLICY IN THE PACIFIC:

THE STRUGGLE TO MAINTAIN INFLUENCE

HEARING

BEFORE THE

SUBCOMMITTEE ON ASIA AND THE PACIFIC

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

SECOND SESSION

JUNE 23, 2016

Serial No. 114–176

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

DANIEL DONOVAN, New York 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON ASIA AND THE PACIFIC

MATT SALMON, Arizona Chairman 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

SCOTT PERRY, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

BRAD SHERMAN, California 

AMI BERA, California 

TULSI GABBARD, Hawaii 

ALAN S. LOWENTHAL, California 

GERALD E. CONNOLLY, Virginia 

GRACE MENG, New York 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Matthew J. Matthews, Deputy Assistant Secretary for Australia, New 

Zealand, and the Pacific Islands, Senior Official for APEC, Bureau of East 

Asian and Pacific Affairs, U.S. Department of State ........................................ 4

Ms. Gloria Steele, Senior Deputy Assistant Administrator, Bureau for Asia, 

U.S. Agency for International Development ...................................................... 15

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Mr. Matthew J. Matthews: Prepared statement ................................................... 8

Ms. Gloria Steele: Prepared statement .................................................................. 17

APPENDIX 

Hearing notice .......................................................................................................... 34

Hearing minutes ...................................................................................................... 35

The Honorable Matt Salmon, a Representative in Congress from the State 

of Arizona, and chairman, Subcommittee on Asia and the Pacific: Material 

submitted for the record ...................................................................................... 36

(1)

U.S. POLICY IN THE PACIFIC:

THE STRUGGLE TO MAINTAIN INFLUENCE 

THURSDAY, JUNE 23, 2016

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ASIA AND THE PACIFIC,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:12 p.m., in room 

2172, Rayburn House Office Building, Hon. Matt Salmon (chairman of the subcommittee) presiding. 

Mr. SALMON. The subcommittee will come to order. 

Members present will be permitted to submit written statements 

to be included in the official hearing record. 

Without objection, the hearing record will remain open for 5 calendar days to allow statements, questions, and extraneous materials for the record subject to the length limitation in the rules. 

The Pacific Island region, far from both the mainland United 

States and the core of Asia, is perhaps the most overlooked region 

of the Asia-Pacific. This cluster of 14 sovereign states, although 

home to only 9 million people, nevertheless deserves the United 

States’ attention for the important roles that they play in regional 

security, as participants in international organizations, and as the 

neighbors to our own U.S. territories of American Samoa, Guam, 

and the Commonwealth of the Northern Mariana Islands in the Pacific. 

I welcome the Delegates to Congress from the U.S. Pacific territories who have joined the hearing today. Thank you for coming. 

We appreciate your attendance. 

Many of us remember the Pacific Island countries for the role 

they played during World War II. Following the war, the United 

States administered a number of the Pacific Islands under an arrangement with the United Nations. This included three now independent nations, Palau, the Marshall Islands, and Federated 

States of Micronesia, with signed a Compact of Free Association 

with the United States of America. 

The United States maintains a specific relationship with these 

three countries today, including important military ties. The Marshall Islands, for example, hosts the vital Ronald Reagan Ballistic 

Missile Defense Test Site, which provides regional radar centers 

and launch sites. Our strategic planners following World War II 

also recognized the importance of the Pacific Islands to regional security, developing the island chain defense theory where our U.S. 

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territories and compact states form the second island chain defensive line. 

The Pacific Island states are also of economic interest, especially 

for the U.S. fishing industry and as the South Pacific supplies 

roughly one-third of the world’s tuna. For the past 28 years, the 

U.S. tuna fleet has gained access to these rich fishing grounds 

under the South Pacific Tuna Treaty, which exchanged fishing 

rights for licensing fees and $20 million in U.S. aid. Earlier this 

year, the United States suspended the treaty as the terms were ‘‘no 

longer viable.’’ The treaty is now under renegotiation, and I look 

forward to hearing from our witnesses about our efforts to support 

U.S. business and jobs in this important treaty negotiation. 

We are not alone in recognizing the importance of the Pacific Island nations. Our friends in Australia and New Zealand play an 

active role as major donors and in promoting peace and security in 

the Pacific Islands region as they work to maintain a good relationship with their neighbors. 

France, which also maintains territories in the South Pacific, 

plays an active role in the region as well. But not all new activity 

in the Pacific Island region is aligned with our interests. Five years 

ago, the Secretary of State Hillary Clinton testified to Congress 

that the United States was in direct competition for influence in 

the Pacific Island region. But very little seems to have been done 

since then to bolster our position. Beijing, on the other hand, has 

made significant advances. It has opened new Embassies in the Pacific Islands, provided an average of $150 million per year in economic assistance and established a strategic partnership with eight 

Pacific Island countries. China has started providing military training and equipment to some Pacific Island countries, and the People’s Liberation Army frequently refers to the island chains in their 

own planning documents. 

Chinese trade with the Pacific Island states is nearly 10 times 

larger than the United States. China has targeted the Pacific Islands in its diplomatic efforts. Vanuatu, a country that qualified for 

U.S. Millennium Challenge Corporation compact in 2006, is one of 

only eight countries to publicly back China’s position that arbitration in the South China Sea is illegitimate. Although China is 

working to gain ground in the Pacific, the United States and its 

friends still maintain solid relationships there. 

I do want to recognize the Pacific Island nations of Kiribati, the 

Marshall Islands, Nauru, Palau, the Solomon Islands, and Tuvalu 

for maintaining full diplomatic relations with Taiwan. That, to me, 

is very, very important and near and dear to my heart. In light of 

this competition between the United States and China in the Pacific, how is the United States faring as it struggles to maintain its 

longstanding influence in this important region? Have we devoted 

adequate resources to the Pacific Islands as part of the administration’s rebalance? 

I look forward to hearing from our witnesses on these issues, and 

I am going to refer, first of all, to the other member on the committee before I go to our guest today, so, Mr. Perry, did you have 

an opening statement you would like to make? 

3

Mr. PERRY. Thanks, Mr. Chairman. I really don’t. I didn’t want 

to waste the time of everybody so I want to hear from the witnesses, but I appreciate the opportunity. 

Mr. SALMON. Okay, well, great. We have a couple of guests today, 

and I will first turn to Congressman Sablan. It is customary to recognize the other sides of the aisle in the next statement, so we welcome any opening statements you would like to make. 

Mr. SABLAN. Well, thank you very much, Chairman Salmon. I got 

promoted to ranking member just like this in probably my second 

invitation to this committee. 

But, Chairman, thank you very much for inviting me to participate in today’s hearing on the struggle to maintain United States 

influence in the Pacific. Before I continue on, I would like to recognize in the room the presence of the Dean of the Diplomatic Corps, 

the Ambassador of the Republic of Palau to the United States, Ambassador Kyota. 

Ambassador, welcome. 

Mr. Chairman, you could say that I am a Member of Congress 

today because of America’s decision over half a century ago to 

maintain its influence in the Pacific. After World War II, the 

United Nations created a Trust Territory of the Pacific Islands out 

of islands that the United States had fought the Japanese for and 

the United States took responsibility for incorporating those islands into our Nation or giving them a path to independence. 

The people of the Northern Mariana Islands voted to join the 

United States in 1976 and became U.S. citizens 10 years later. And 

as of 2009, the people of the Northern Marianas are represented 

alongside other Americans here in this House of Representatives, 

the seat I now hold. So America’s influence in the Marianas, part 

of the Pacific, an area the size of California and Oregon combined, 

by the way, is secure. The people of the other three districts of the 

trust territory, however, chose independence. These new independent nations were created in free association with the United 

States. If we want to maintain influence in the Pacific, I believe 

then it is particularly important to focus on keeping those existing 

relationships with America strong. And I am very concerned about 

the relationship with one of those nations, the Republic of Palau. 

The relationship is based on a Compact of Free Association, 

which established Palau’s existence as an independent nation. The 

compact also pledged United States’ economic support for the new 

republic and gave the United States exclusive military rights in the 

land and waters of Palau. The original compact, negotiated in 1994, 

also calls for a renewal of the agreement after 15 years. And, in 

2010, the U.S. Representatives signed the renewal updating and 

extending the provisions of the compact for another 15 years. 

Unfortunately, however, 6 years later, that agreement to extend 

the compact has not been approved by Congress. So, instead of giving Palau the assurance of a long-term commitment, we have been 

sending assistance to Palau on an installment basis, year by year. 

From the point of view of the Republic of Palau, you can imagine 

how this appears. It seems as though the United States is not good 

for its word. From my point of view, the people of Palau are very 

patient people. But patience has its limits. From the point of view 

of Palau’s neighboring nations, imagine how America’s unfulfilled 

4

promise appears? This is no way for our Nation to maintain influence on what is becoming, every day, a more strategically important and contested area of the world. 

To address our unfulfilled promise, I introduced legislation in 

this Congress to approve the 15-year extension of America’s compact with Palau. My legislation would make up to Palau for the financial assistance that it would have received under the extension 

agreement but which it has lost because of the Congress’ inability 

to act. And to further push for resolution, in December, a group of 

Members from the Pacific—Ms. Bordallo of Guam, Ms. Gabbard 

and Mr. Takai of Hawaii and I—asked the Defense Department to 

support including the compact extension in the 2017 National Defense Authorization Act. And I understand the Defense Department 

has now reached out to both the House and Senate Armed Services 

Committees supporting resolution of the Palau issue in this year’s 

NDAA. Hawaii Senator Mazie Hirono was also able to include in 

the Senate-passed defense bill this month a sense of Congress 

statement calling for resolution of the Palau issue. 

The Defense Department sent letters, and Senator Hirono’s 

amendments are important signals that we may be ready to get the 

congressional approval of the Palau Compact extension, but we 

have to get to the finish line in this Congress. And I am glad to 

report the chairman Bishop of the Natural Resources has agreed 

to hold a hearing on my bill approving the compact extension on 

July 6. And the hearing today, shining a light on America’s struggle to maintain influence in the Pacific, can also help us reach our 

goal. 

Mr. Chairman, I congratulate you for your decision to hold this 

hearing, and again, I thank you very much for inviting me to be 

here. 

And I yield back my time. 

Mr. SALMON. Thank you. We are very grateful to be joined today 

by Mr. Matt Matthews, the Deputy Assistant Secretary for Australia, New Zealand, and the Pacific Islands, as well as senior official for APEC in the State Department’s Bureau of East Asian and 

Pacific Affairs—welcome—and Ms. Gloria Steele, the Senior Deputy Assistant Administrator in the U.S. Agency for International 

Development’s Bureau for Asia. 

And we thank the panel for joining us today to share their experience. 

We will start with you, Mr. Matthews. 

STATEMENT OF MR. MATTHEW J. MATTHEWS, DEPUTY ASSISTANT SECRETARY FOR AUSTRALIA, NEW ZEALAND, AND THE 

PACIFIC ISLANDS, SENIOR OFFICIAL FOR APEC, BUREAU OF 

EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF 

STATE 

Mr. MATTHEWS. Thank you, Mr. Chairman. 

Mr. Chairman, Ranking Member Sherman, and members of the 

subcommittee, thank you for the opportunity to testify on U.S. public policy toward the Pacific Island countries and for your leadership on these issues. The Pacific Island region has been free of 

great power conflict since the end of World War II, and we have 

enjoyed friendly relations with all of the Pacific Island countries. 

5

This state of affairs, however, is not guaranteed. Our partnerships 

and engagement in the region matter very greatly. Today, we partner together on a number of issues of global importance from 

standing together for human rights in the U.N. and contributing to 

global security through peacekeeping operations to combating climate change and illegal, unreported, and unregulated fishing. 

The Pacific Islanders punch above their weight, and the United 

States must continue to encourage them through our support for 

their sustainable and inclusive development. However, it is equally 

important that we do not take Pacific goodwill for granted. Our relationship with our Pacific partners are unfolding against the backdrop of a shifting strategic environment where emerging powers in 

Asia and elsewhere seek to exert a greater influence in the Pacific 

region through development and economic aid, people-to-people 

contacts and security cooperation. There is continued uncertainty 

in the region about the United States’ willingness and ability to 

sustain a robust forward presence that has been a hallmark of 

much of the 20th century and that has contributed to peace, stability, and prosperity in the region. To counteract this uncertainty, 

the administration continues to ensure that the Pacific piece of the 

rebalance to the Asia-Pacific is not forgotten. The United States 

has always been a friend and partner to the Pacific Islands, providing the region with significant levels of foreign assistance. 

Under the rebalance, we have stepped up our level of engagement, 

including expanding our staffing and programming and increasing 

the frequency of high-level meetings with the Pacific Island leaders. 

In 2011, President Obama met with Pacific Island leaders on the 

margins of APEC, and in 2015, he met with the leaders of the Marshall Islands, Kiribati and Papua New Guinea at the COP-21 climate meetings in Paris. In 2012, Secretary Clinton became the first 

Secretary of State to attend the Pacific Islands Forum, the key policy body of the region. Since then, we have continued to engage Pacific Island leaders at high levels through the annual Pacific Islands Forum leaders’ forum, most recently with the visit of Deputy 

Secretary of State Heather Higginbottom to the forum in 2015. 

U.S. engagement at the Pacific Island Forum provides an opportunity to press issues of concern with Pacific Island leaders and for 

the U.S. to be responsive to the region’s needs for assistance and 

economic development. The Pacific continues to look to the United 

States for leadership and support, including on fostering sustainable economic development, enhancing maritime security and combating climate change. The United States has provided over $350 

million in Fiscal Year 2014 in its engagements with the region 

through 15 U.S. departments and agencies. 

U.S. assistance includes $21 million annually provided to the Pacific Island parties to the U.S.-South Pacific Tuna Treaty. As we 

speak, the United States is in active negotiations over the future 

of this nearly 30-year-old treaty. As we deepen our longstanding 

engagement with the region, the United States partners closely 

with Australia and New Zealand, which like us, share a strong interest in ensuring the peace and prosperity of our Pacific neighbors. In recognition of the leading role Australia and New Zealand 

play in the Pacific, we frequently consult with them on our straVerDate 0ct 09 2002 14:49 Aug 03, 2016 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\WORK\_AP\062316\20532 SHIRL
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tegic and development issues. And we work to ensure our assistance to the region is complementary, advances our common objectives to promote sustainable and inclusive development. 

While Australia and New Zealand frequently play a lead assistance role in the South Pacific, the United States and the countries 

of the North Pacific share especially close relationships. In particular, the Freely Associated States of the Republic of Palau, the 

Republic of the Marshall Islands, and the Federated States of Micronesia are an important component of the U.S. position in the Pacific. Through our respective Compacts of Free Association, the 

United States has maintained extraordinarily close relations with 

the FAS. In Fiscal Year 2014, we provided over $200 million in assistance primarily administered by the Department of the Interior 

to support their governance and economic advancement. 

In the United Nations, the FAS have some of the highest voting 

coincidence with the United States. For example, in 2014, Palau 

had the second highest voting coincidence with the United States. 

Despite an increase in assistance from others interested in enhancing their engagement with the region, Palau has not only supported the United States on Israel- and Cuba-related votes but has 

been at the forefront of actively helping garner support of others. 

Palau has supported U.N. resolutions seeking to combat the 

spread of weapons of mass destruction and joined in efforts to address systemic human rights abuses in North Korea, Syria and 

Iran. 

Our relationship with not only Palau but with other FAS states 

allows the United States to guard its long-term defense and strategic interest in the region. We have full authority and responsibility for security and defense matters in and relating to each of 

the FAS, and we have the right of denial of third-country military 

access to them. Admissible FAS citizens have the right to work and 

live in the United States as non-immigrant residents. While the 

FAS does not maintain their own military forces, their citizens are 

eligible to serve in the U.S. Armed Forces. Citizens of FSM, RMI, 

and Palau volunteer to serve in the U.S. military at high rates, and 

we are grateful for their sacrifices and dedication to promoting 

peace worldwide. 

In February, I accompanied Assistant Secretary Russel, U.S. Pacific Fleet Commander Admiral Swift, and U.S. Coast Guard District 14 Commander Rear Admiral Atkins to several Pacific Islands. One of the countries we visited was Palau. As Assistant Secretary Russel said, our commitment to the development and selfdetermination of the people of Palau will always endure because it 

is built on common history and values. We are united by the sacrifices of the thousands of Marines and other U.S. servicemembers 

who were killed or wounded liberating Palau during World War II, 

and we appreciate the Palauans who serve in the U.S. Armed 

Forces today. 

The original process that led to our compact with Palau and the 

subsequent review was based on a solemn promise to help them 

achieve self-governance and long-term economic advancement. The 

assistance package within the agreement as set forth in the administration’s February legislative proposal is designed to reduce 

7

Palau’s dependence on U.S. direct economic assistance as it continues to grow and reform its economy. 

In addition to U.S. assistance, the terms of the agreement commit Palau to a range of economic reforms designed to help increase 

fiscal transparency, sustain progress achieved under compact funding, and create a stronger foundation for economic self-sufficiency. 

After nearly 6 years and multiple endeavors by the administration 

and Congress, we have as yet been unable to secure the funding 

necessary to bring the Compact Review Agreement into force. But 

bringing the agreement into force will demonstrate to Palau and 

our partners across the region that our commitments are not empty 

promises. 

Mr. Chairman, in conclusion, I wish to reiterate the Pacific region’s strategic importance to the United States. Our identity as a 

Pacific power was affirmed on the beaches of the Pacific during 

World War II. And since that time we have built positive and 

multifaceted partnerships with these countries. Our engagement in 

this region is about our long-term strategic interests. We will continue to work constructively with our partners in the region to 

maintain peace and foster sustainable, inclusive development. But 

we will also need the support of Congress, not only to secure funding for the Palau Compact but also to continue to support our engagement efforts across the Pacific. Thank you for the opportunity 

to testify before this committee. 

[The prepared statement of Mr. Matthews follows:]

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Mr. SALMON. Thank you, Mr. Matthews. 

The Chair recognizes Ms. Steele. 

STATEMENT OF MS. GLORIA STEELE, SENIOR DEPUTY ASSISTANT ADMINISTRATOR, BUREAU FOR ASIA, U.S. AGENCY FOR 

INTERNATIONAL DEVELOPMENT 

Ms. STEELE. Chairman Salmon, Ranking Member Sherman, 

members of the subcommittee, thank you for the opportunity to testify on USAID’s role in advancing U.S. foreign policy interests, including the Asia-Pacific rebalance in the Pacific Islands. The Pacific Island nations may appear as tiny and scattered dots on the 

globe, but they are as central to global security today as they were 

during the Second World War. Their strategic position in the AsiaPacific make them more vital than ever to the global economy. A 

vast proportion of the world’s shipping passes through Pacific waters on which millions of people depend for food and income. Many 

of these nations, however, are threatened as never before by the 

depletion of their natural resources by health threats such as HIV, 

TB, and the Zika virus, and especially by natural disasters. While 

typhoons and cyclones have long plagued the region, they are becoming more frequent and more intense. 

Rising seas threaten the very existence of low-lying nations such 

as the Marshall Islands, the Tuvalu, and Kiribati. Ocean acidification and rising sea temperatures are damaging coral reefs and fisheries, posing major threats to food security. At USAID, our mission 

is to end extreme poverty and promote resilient democratic societies while advancing security and prosperity of the United States. 

Key to achieving success in the Pacific Islands is helping nations 

cope with the changing environmental conditions. Our development 

assistance across 12 Pacific Island nations helps people improve 

their lives while building a more sustainable, equitable future for 

all. 

Next, I will provide brief overviews of our primary assistance 

areas. First, on adapting to changes in climatic conditions: The people of the Pacific Islands depend primarily on tourism, fisheries, 

forestry, and agriculture for their livelihoods, all of which are highly sensitive to changing climatic conditions. In 2015, we supported 

over 280 communities across 12 Pacific Island nations to mitigate 

the negative impacts of natural disasters. With an emphasis on 

women’s participation, we are also providing grants and training 

civil society organizations to help communities adapt to changing 

climate while also addressing related community needs such as improving livelihood and food security. At the same time, USAID is 

focused on increasing regional cooperation and coordination on climate change and on strengthening intra- and intergovernmental 

capacity at the national level to address issues related to climate 

change. When disasters do occur, USAID delivers humanitarian assistance to help with basic needs. For example, in response to the 

drought in the Marshall Islands, which is affecting nearly 40 percent of the population, we are helping to provide supplemental food 

assistance, hygiene supplies, and safe drinking water. In the Marshall Islands and in Federated States of Micronesia, we also assist 

in post-disaster reconstruction. To help reduce the need for disaster 

assistance in the first place, we support communities in effectively 

16

preparing for, responding to, and mitigating the impacts of natural 

disasters. Assistance includes programs to develop early warning 

systems, train volunteers on first aid, and climate-proof water 

sources and community infrastructures. 

On fisheries, it is estimated that more than 200 million people 

in the Asia-Pacific region are dependent on fisheries for food and 

income, yet illegal, unreported and unregulated fishing poses a 

major threat. In support of sustainable fisheries management, 

USAID is helping to develop an electronic traceability system to ensure that fish and other marine resources are legally caught and 

properly labeled. Currently, we are piloting this system in Indonesia and the Philippines, and once operational, we plan to expand 

it to other countries, including the Pacific Island nations. We are 

also working with the Government of Papua New Guinea on a new 

bilateral assistance agreement to improve sustainable management 

of natural resources and biodiversity. In health, we are helping to 

address Papua New Guinea’s HIV/AIDS epidemic and related gender-based violence. We are responding to the government’s recent 

request for assistance in addressing its multidrug-resistant TB crisis. And, finally, in democratic governance, USAID has targeted efforts to address trauma and other social issues in post-conflict Autonomous Region of Bougainville in Papua New Guinea. We are 

also helping to increase awareness of and preparation for its referendum on full independence that is slated to take place in 2019. 

USAID provided election support in Fiji during the run up to the 

country’s 2014 elections, the first to be held since the 2006 coup. 

Mr. Chairman, USAID’s investments in the Pacific Islands are a 

critical part of the United States’ vision for a peaceful, prosperous 

and stable Asia-Pacific. Our support for the region’s sustainable inclusive development contributes to stronger U.S. diplomatic, commercial, and people-to-people relations with the Pacific Island countries, helping to advance our own security and prosperity. I appreciate the opportunity to testify today and look forward to your 

counsel and questions. Thank you. 

[The prepared statement of Ms. Steele follows:]

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Mr. SALMON. Thank you. 

The Chair recognizes Mr. Sherman. 

Mr. SHERMAN. Thank you, Mr. Chairman, for a chance to deliver 

an opening statement. We had a markup and a hearing scheduled 

at various times, and I am glad that we have started this hearing. 

I want to thank you for holding this hearing on countries with 

9 million people living in a dozen countries. These islands, as has 

been noted, play an important role in U.S. history over the last 75 

years, particularly during World War II. I believe these islands will 

be more important this century than perhaps they were last century because they, you know—I want to get testimony on this from 

our witnesses—they control an enormous amount of economic zone 

ocean floor and fish resources. The ability of our species to exploit 

the ocean and its floor are going to increase. Our need for natural 

resources is going to increase. And 200 miles around every inhabited island adds up to a tremendous portion of the Pacific. 

I will also be asking our witnesses, and they may or may not 

know this, whether an island that has previously been uninhabited 

acquires a 200-mile radius economic zone when one family chooses 

to live there. Many of these islands, as noted, were important in 

World War II. They were important during the cold war, and we 

get support from most of these countries when issues come before 

the United Nations. 

The Compact of Free Association that we have with Micronesia, 

the Marshall Islands and Palau, represent our recognition of our 

international partnership with these countries over the years and 

our joint interests. One issue that needs particular attention is the 

Palau Compact review. This agreement was designed to help people of Palau achieve self-governance and economic self-sufficiency. 

The United States should abide by its commitments. I know we 

have had difficulty securing the funds necessary to bring the Palau 

Compact review fully into force, and I look forward to working with 

the administration and our colleagues to achieve that. 

As to climate change, the nations of the Pacific are the most vulnerable, along with the other island nations in the Indian and Atlantic Oceans, to climate change. Climate change is already impacting the everyday lives of residents through sea level rise, more frequent storms, et cetera. Assistance in responding to these impacts 

often constitutes a large part of our aid and our other relations 

with Pacific Island countries. Extreme climate events have also impacted water, coastal, and marine resources and agriculture. I will 

point out that there are some on the right who will say we 

shouldn’t talk about this because there couldn’t be any global 

warming, and then there are some on the left who say you cannot 

talk about remediating or preparing for global warming either because you should not admit that that is a possible thing to do or 

because anything that diminishes the harm of global warming diminishes our incentive to deal with it. The fact is we need to be 

practical. There is global warming. We will not fully stop it in the 

decade to come, and helping our friends of the Pacific deal with it 

is one of the best uses of our USAID budget. 

I would like to hear specific details from USAID of efforts to help 

these countries deal with critical climate affected needs. What proVerDate 0ct 09 2002 14:49 Aug 03, 2016 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 F:\WORK\_AP\062316\20532 SHIRL
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grams have worked and what countries have been most capable of 

working with us? 

Finally, I want to address a legal matter involving Tonga. Two 

families in the San Fernando Valley were among the victims of an 

investment fraud scheme where the alleged fraudster absconded to 

Tonga. For the past several years, efforts to extradite him to face 

trial in the Central District of California, where he has been indicted, have moved, shall we say, slowly through the Tongan 

courts. A lower Tongan court recently determined that the U.S. 

Tongan fraud laws were too dissimilar to warrant extradition 

under the treaty, a decision that appears highly questionable. 

The application of dual criminality that is at the extradition law 

concept—the alleged criminal activity must be a crime in both 

countries in order for it to be an extraditable offense—has been applied, but it should be applied to lead to extradition. In this fraud 

matter, it would be a violation if—and obviously, the defendant has 

not been convicted—but the crimes set forth in the indictment 

would constitute a crime in every country of the world that maintains as reasonable rule of law system. So now that decision is 

being appealed by the Tongan Government with the expectation 

that the appeal will be heard in September. And I for one will be 

looking to see whether the rule of law and reasonable decisionmaking is taking place in Tonga. 

The life savings of my constituents were wiped out. There is an 

indictment of an American suspected of having defrauded them and 

others. The activities for which the individual is wanted in the 

United States would be a crime in every country, and he ought to 

be extradited as soon as possible. And keep in mind, this is an 

American suspect. There is no argument that somehow a Tongan 

is going to be discriminated against in the United States court system. 

I urge the State and Justice Departments to work closely, and 

I know our witnesses, whether they choose to comment on this case 

right now, I know that the State Department will be focused on 

this. 

I yield back. 

Mr. SALMON. We will now go to the questions. 

I would like to ask the first question. The U.S. still hasn’t completed a long-term solution to the Tuna Treaty stalemate. Voices 

within the U.S. tuna industry continue to view the treaty as obsolete, irresponsive to market conditions, and economically 

unfeasible. How would the U.S.’ withdrawal from the South Pacific 

Tuna Treaty affect the diplomatic relationships between the United 

States and the Forum Fisheries Agency member countries, Mr. 

Matthews? 

Mr. MATTHEWS. Mr. Chairman, if in fact it comes to the point 

where there is no way to bridge differences over the key elements 

of extending the Tuna Treaty and we do, in fact, complete withdrawal, I believe that the United States’ relationship with Pacific 

Island nations are sufficiently broad and deep that we can find 

ways to sustain our close cooperation and the important relationships that we have today. I believe there are many ways in which 

we are providing assistance and development aid, that our cooperation on capacity building and in areas of security will continue. 

24

That said, the Tuna Treaty and the work that has been done under 

it has been very helpful in maintaining our position, so we do continue, even as we speak, to work during a fifth round of negotiations that are currently being conducted in Auckland in hopes that 

some workable path forward can be found. 

Mr. SALMON. Thank you very much. 

My next question is regarding Taiwan. And, Mr. Matthews, you 

were just there so maybe it would be appropriate. It would probably be appropriate for either one of you, but of the 22 nations that 

maintain full diplomatic relations with Taiwan, six are Pacific Islands region: Kiribati, the Marshall Islands, Nauru, Palau, and Solomon Islands and Tuvalu. With tension between President Tsai’s 

new administration and the government in Beijing, some experts 

are worrying about a return to dollar diplomacy and efforts to 

change recognition ending a multiyear truce. Are we concerned 

about such efforts in the Pacific? Are we taking steps to encourage 

countries in the Pacific to maintain the status quo? Would you like 

to take a first stab, Mr. Matthews? 

And, Ms. Steele, I would love to hear you thoughts, if you have 

any, on that. 

Mr. MATTHEWS. Thank you, Mr. Chairman. 

Ms. STEELE. No, I would defer to my colleague on this. 

Mr. MATTHEWS. The United States has a longstanding policy of 

supporting the maintenance of international space for Taiwan. We 

do that through a number of different venues. Of course, we support Taiwan’s participation in any international organization that 

does not require sovereignty. And those organizations that do require sovereignty, we still seek meaningful participation for Taiwan, and we also have additional venues for helping Taiwan maintain international space, and that includes a cooperation framework that I participated in just a few days ago in Taiwan, the 

Global Cooperation Training Framework, where we work together 

with Taiwan to bring international players to Taiwan where Taiwan’s expertise and the United States’ expertise can be used jointly 

to help promote development and dissemination of important 

knowledge. That last session that we had was on energy efficiency, 

and it not only had participation from India and Southeast Asia, 

but also from Pacific Island nations. 

So I think there are a number of venues by which we are able 

to assure that Taiwan does have international space. I won’t say 

that there is not any concern that there might be some, you know, 

future stress placed on their international space, but it is clear that 

the United States is there to help support and maintain it. 

Mr. SALMON. I thank the gentleman. 

I am going to recognize Mr. Bera. 

Mr. BERA. Thank you, Chairman Salmon, and thank the witnesses. 

You know, let me ask my first question. 

Ms. Steele, as, you know, the administration pivots to Asia, you 

know, we often talk about China, Japan, Korea, South Asia, you 

know. With regards to the pivot to Asia and the Pacific Islands, 

specifically, you know, could you give us how the administration is 

viewing the potential for Pacific Islands and what their focus there 

is? 

25

Ms. STEELE. Thank you, Mr. Bera. Just as soon as then Secretary Clinton announced the pivot to Asia, within a month, we 

opened up a USAID satellite office in Papua New Guinea, and 

within 6 months, we started implementing climate change programs. These are very important to the people of the Pacific, as I 

have mentioned earlier. They are among the most disaster-prone 

countries in the world, and we are helping to mitigate the impact 

of the natural disasters and helping them to be prepared for those 

impacts. 

And in Papua New Guinea itself, we have set up programs to address HIV/AIDS and TB. They are suffering from multidrug-resistant TB right now and the related gender-based violence in those 

countries. And in the runup to the elections in Fiji, we also provided assistance, which has resulted in contributing to the drafting 

of their Constitution of 2013 and a very successful election in 2014, 

the first one since 2006. 

Mr. BERA. Great, thank you, Ms. Steele. 

Either Mr. Matthews or Ms. Steele, you know, the ranking member touched on climate change. He touched on preparations for climate change. If you were to quantify, you know, how big a threat 

climate change and rising oceans is going to be and then also how 

the islands are preparing. I don’t know if you want to start, Mr. 

Matthews, or——

Mr. MATTHEWS. Well, I think it is commonly recognized that particularly Pacific Island nations that are atoll nations and who have 

very little space to deal with in terms of the high points above sea 

level—some nations have a maximum of 3 meters above sea level 

is their highest point. And these Pacific Islands, like the Marshall 

Islands, like Kiribati, are particularly vulnerable. They are vulnerable to the potential impacts of sea rise, but they are vulnerable 

already to major climatic storms and sea surges, and they already 

suffer problems and do, in fact, require remediation. As Congressman Sherman mentioned, remediation is a necessary aspect of the 

work we do with them, and we are, in fact, already engaged in a 

number of programs. But we are also, under the new Paris Agreement, going to be ensuring that we provide access for Pacific Island 

nations to funding that will be a part of the global fund, and we 

are actually initiating programs to help them learn how to go about 

doing that and to do it effectively and efficiently. 

Ms. STEELE. If I may add, Mr. Bera. 

Mr. BERA. Yeah. 

Ms. STEELE. The Pacific Islands, as I mentioned earlier, bear a 

lot of the brunt of natural disasters. Just look at statistics, when 

we first opened their operations there, emergency assistance was at 

$175,000 for the entire year. Last year, in 2015, it was $13.3 million. The frequency and the intensity of the disasters have become 

very obvious. The strongest typhoon hit Micronesia in 2015, and 

then in Fiji in 2016. And so it is an issue because these countries 

depend largely on natural resources, tourism, fisheries, agriculture, 

and forestry. 

Mr. BERA. In the last minute that I have, in terms of preparation 

to deal with sea rise and the increasing frequency of these natural 

disasters, what do you think it will take, and what is our timeline 

like? 

26

I don’t know, Ms. Steele or Mr. Matthews, whatever. 

Ms. STEELE. It will take a significant amount of effort and collaboration and cooperation among the different parties involved, 

from the communities to civil societies to governments and regional 

institutions. There is a lot of work that needs to be done, measures 

that need to be taken at the household and the community levels, 

and proper planning and policymaking at the national level. 

Mr. BERA. And do you see that taking place right now, the framework of that? 

Ms. STEELE. Yes, Mr. Bera. All of the donors are coordinating 

and working very closely, leveraging each other’s resources to support the different countries in the 12 Pacific Island nations. 

Mr. BERA. Great. Thanks. 

My time has expired. I will yield back. 

Mr. SALMON. Thank you. 

Mr. Sherman. 

Mr. SHERMAN. Oh, you don’t have a——

Mr. SALMON. We actually go to the noncommittee members after 

all of the members have asked their questions. 

Mr. SHERMAN. Tulsi, you want to go now, or do you want me to 

go now? 

Ms. GABBARD. Either way. 

Mr. SHERMAN. Why don’t we go to the gentlelady from Hawaii? 

Mr. SALMON. Great. We will. 

Ms. GABBARD. Thank you, Mr. Chairman, Ranking Member, 

thank you both for being here today. 

I wanted to ask you about Vanuatu. According to a recent report 

from the Center for Strategic Studies’ Maritime Transparency Initiative, they added Vanuatu—or Vanuatu is on the list of countries 

that publicly stated the South China Sea arbitral tribunal under 

the U.N. Convention on the Law of the Sea is illegitimate. I am 

wondering if you could share your thoughts on why they have 

taken this position and where you think other Pacific Island nations stand on the Philippines v. China tribunal case. 

Mr. MATTHEWS. I believe, you know, China has been reaching 

out to Pacific Island nations over the past year seeking their support. I believe, to date, Vanuatu is the only Pacific Island nation 

that has spoken out in support of Beijing’s position on the arbitral 

panel’s future decision. The other Pacific Island nations, I believe, 

like us, believe that the outcome of the arbitral decision is going 

to be any member of the UNCLOS treaty is subject to it and that 

they should abide by the outcome of that. 

They also believe that—and they have not agreed to China’s 

claims to the South China Sea. Most recently, there were statements from Beijing that Fiji, in fact, had agreed to Beijing’s position, and the Prime Minister Bainimarama specifically spoke out to 

say, no, that was not the case and that they did not take a position 

on among claimants and that they stood for international law applying to the resolution of those decisions. 

So I think, in general, we are in a very good place. Once our new 

Ambassador to Vanuatu, who is resident in Port Moresby in Papua 

New Guinea, is able to present her credentials, she will be reaching 

out to the government there to engage on this issue. 

27

Ms. GABBARD. With respect to Fiji and our relationship with Fiji, 

given the strain that occurred after their military coup and the 

democratic elections that followed, can you speak to what the status of our relationship is and, you know, kind of what you see as 

the path going forward, both with Fiji but also looking to see how 

we can strengthen our relationship with these other Pacific Island 

nations? 

Mr. MATTHEWS. In the case of Fiji, we do, in fact, welcome the 

return to democracy in 2014. And since that time, we have been 

increasing our interaction with them, both on the diplomatic side 

but on the security side as well.That process will continue in a 

step-by-step fashion, and we are continuing to encourage the Government of Fiji to create greater space for civil society and for their 

opposition consistent with their commitment to democracy. And as 

that happens, I think you will find the pace of our relationship 

speeding up and strengthening. 

For other Pacific Island nations, I mean, we have ongoing warm 

and close relationships with all Pacific Island countries, and I fully 

anticipate that will continue to be the case. 

Ms. GABBARD. Were there any specific hard actions that were 

taken by the United States against Fiji or anything withheld after 

the military coup took place? 

Mr. MATTHEWS. Well, there was a cessation of military exchanges and training, and that is beginning to come back into play 

as a part of the Pacific Command’s general process of reengaging. 

And I think that is fully appreciated by the Fijians. 

Ms. GABBARD. Okay. Thank you. 

Thank you, Mr. Chairman. 

Mr. SALMON. Thank you. Mr. Sherman, did you——

Mr. SHERMAN. No, absolutely. 

The briefing materials for this hearing basically indicate that, for 

the area, we are providing $233 million per year in aid and elsewhere say that China may be doing $150 million, but the $150 million is really just loans similar to what our Ex-Im Bank would do; 

that is to say promoting their own economy by giving concessionary 

financing for the export of their goods and services. 

If we want to compare apples to apples, aid dollars, here is 

money to benefit you, you get to keep, are we at 233, and what is 

China at? 

Mr. MATTHEWS. The figures I have, Congressman, are that our 

total package of assistance in 2014 was actually $350 million. That 

is in addition to aid. There is a lot of direct government—U.S. Government agency assistance to the Pacific Islands. There are over 30 

different government agencies and departments that actually do 

contribute. And that is real substantial assistance. 

For China, I actually don’t know what the split is between actual 

grant amounts and the actual loan amount. I would be happy to 

go find that information out for you and get back to you on that. 

Mr. SHERMAN. Okay. The information I had included development assistance, economic support fund, global health programs, 

international military education and training, and regional development mission to Asia plus the South Pacific Tuna Treaty. In addition to those that did add up to 233, what are the ones that are 

missing from our briefing materials? 

28

Mr. MATTHEWS. There is other assistance that is provided. The 

FAA provides assistance for aviation authorities in the Pacific Island states. I believe in the case of Palau, there was over $30 million provided over the past couple of years to help upgrade their 

airport and other associated facilities. Health and Human Services 

provides assistance, and I would have to go back through, but there 

are—it is actually pretty substantial. 

Mr. SHERMAN. Good. And, yet, we still are not in compliance with 

the agreement with Palau. 

Mr. MATTHEWS. To the extent, you know, all of the aid I have 

noted is really important, but as many people have already spoken 

up to say, if we can fulfill our obligation under the 2010 treaty to 

fund Palau, we will be in a far better place. It is incumbent on us 

to do that and the sooner——

Mr. SHERMAN. Is there any aid we are providing to Palau that 

doesn’t qualify under the treaty and if we just gave money for this 

rather than for that, without increasing our total expenditures, we 

would be in greater—we would be closer to compliance? 

Mr. MATTHEWS. I think we actually have to take this specific action to fund the agreement, and there is—the other thing I would 

say about this is that we want to be able to fund the agreement 

for the long term to actually fulfill our promise and to signal to the 

region that our commitment is real. 

Mr. SHERMAN. Well, then, let me move on to another question. 

Papua New Guinea has agreed to allow the Bougainville regional 

government to hold a referendum on self-determination. The date 

could be in mid-2020 or even a target date of June 2019. Is this 

referendum actually likely to occur by the end of 2020? And how 

is it likely to turn out? Are we about to see the birth of a new nation? 

Mr. MATTHEWS. Well, first of all, we really welcome Papua New 

Guinea’s decision to move forward on this. They are obligated to do 

so, but now they are actually clearly signaling that they are prepared to move forward on this, and it is very possible. Well, we 

don’t know what the outcome of that referendum vote will be, but 

it is possible that it would lead to the creation of a new state. 

Mr. SHERMAN. What would be the population of the new state, 

or what is the population of the regional government’s area? 

Mr. MATTHEWS. Bougainville, I am not sure. It is going to be 

under a million in any case. The total population of Papua New 

Guinea is a little over 7 million. 

Mr. SHERMAN. Got you. 

Ms. STEELE. If I may. 

Mr. SHERMAN. Yes. 

Ms. STEELE. We are currently helping the Autonomous Region of 

Bougainville by working with their civil society, raising awareness, 

and getting dialogue going about the meaning of the referendum 

that is coming, so that they are well aware of what this means to 

them, what the implications are when they go and vote, if and 

when they go and vote. 

Mr. SHERMAN. And you have a world structure that is based on 

a sovereign state being a much larger entity than that. I realize 

there are exceptions in the islands of the Pacific. I would hope that 

just in terms of defining what it is to be an independent sovereign 

29

state, that various regions that had a population of just a million 

or so could be suitably federated parts of or autonomous regions 

within states. When you start going to the United Nations General 

Assembly and meet people who represent fewer folks than I do, one 

wonders why the San Fernando Valley doesn’t have at least one 

vote in the United Nations. 

And I yield back. 

Mr. SALMON. Thank you. 

Mrs. Radewagen, did you have any questions? 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. 

I want to thank you and the ranking member for inviting me 

here to be at this hearing. The Pacific Island nations are near and 

dear to my heart because I have lived in the Marshall Islands as 

well as the Northern Mariana Islands. I have been all over those 

islands, and so I am very understanding of the compacts, as well 

as the Palau Compact, which I fully support. 

However, I am here today because of the importance of fishing 

in my home district of American Samoa. So I have a couple of questions here, Mr. Matthews. I understand that the U.S. Tuna Treaty 

negotiations, which are going on right now, are reaching a critical 

stage. I trust you realize how important the successful conclusion 

of these negotiations is to American Samoa. The treaty is vital for 

fishing access by United States vessels, many of which land their 

fish in American Samoa. I would appreciate assurances that the 

State Department is doing all it can to finalize a new treaty, which 

provides a viable future for the U.S. fishing fleet. And I understand 

that an agreement on minimum days has been reached or is close. 

But how companies contract for extra fishing days may be subject 

to Department of State approval. What is the reason for that? 

Mr. MATTHEWS. First of all, I can assure you that we are making 

every effort possible to reach what we believe, in consultation with 

the U.S. fishing industry, which also includes representatives from 

American Samoa—they have been participants in all four rounds, 

and I believe they are participating now—that we will reach an 

agreement if we can reach a sustainable economically viable outcome. That requires understanding on fishing days, charges for 

fishing days, certainty of how elements under the agreement will 

be dealt with to make sure that the American fishing fleet gets 

proper clarity on what its obligations are and how those will be executed for the period of the agreement and that the agreement will 

be for a substantial period of time to provide the industry with a 

clear path forward to know how to invest, how to prepare, and to 

know that they will have an economically viable future. 

All of these elements are critical. We certainly understand the 

great importance of American fishing to American Samoa and, particularly, to providing fish for the canneries that are there, and we 

will be making every effort to make sure we have an economically 

viable outcome. If we do not reach an agreement, if that does not 

happen, the American fishing fleet will still have the ability to negotiate with the relevant states on their own, and we will be working to make sure, though, that if there is any possible way to get 

to a viable outcome under the treaty itself, then that will be our 

first order of approach. 

30

Mrs. RADEWAGEN. Thank you. One of the key elements of the 

treaty and, even more importantly, of the United States’ position 

at the Western and Central Pacific Fisheries Commission, the 

other international mechanism governing U.S. fishing access in the 

region, is the matter of fishing on the high seas. I am sponsoring 

legislation intended to ensure that the WCPFC regulation of fishing by United States vessels, especially on the high seas, is sciencebased and establishes a level playing field relative to fishing by 

other flag fleets. I hope that the Department of State and other 

U.S. Government agencies will support this legislation. 

Mr. MATTHEWS. Thank you, Congresswoman. 

I just want to say that we are committed to ensuring that the 

U.S. Pacific fleet does, in fact, fish in a sustainable way in a manner which is consistent with laws and requirements, and we believe 

that their behavior over time has been exemplary. And we hope 

that other fishing fleets in the Pacific will follow similarly sustainable approaches. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. 

I yield back. 

Mr. SALMON. Thank you. 

The Chair now recognizes Mr. Sablan for any questions he might 

have. 

Mr. SABLAN. Yes, thank you very much, Mr. Chairman. 

Mr. Matthews and Ms. Steele, thank you very much for joining 

us today and also for your service to our country. 

I am the only Micronesian in Congress, having been a citizen of 

the Trust Territory of the Pacific Islands. And growing up, of 

course, I heard stories about World War II. Just to set the facts 

straight—and this is in no way intended to disparage anyone—

Guam was indeed liberated by the United States. The rest of the 

Pacific Islands were caught in a war between the United States 

and Japan, just to set the record straight. 

But let me ask if—I have been on two trips to Australia and New 

Zealand, actually booking on flights, one with Natural Resources, 

and the other one with Foreign Affairs. But, Mr. Matthews, how 

much do we rely on Australia to form our view of what is going on 

in the South Pacific? 

Mr. MATTHEWS. Actually, Congressman, Australia and New Zealand are both important partners for us and have extensive involvement in the South Pacific and provide a substantial amount 

of aid to Pacific Island nations in the South Pacific whereas we 

probably are the more, you know, critical partner in the North Pacific. 

Mr. SABLAN. I understand, but in terms of——

Mr. MATTHEWS. In the South Pacific, they are very important 

partners across the board, and we do, in fact, rely on them for a 

lot of our understanding about what is happening there, sir. 

Mr. SABLAN. Okay. And so when we are going—the difference between our treatment of Australia and New Zealand, there still remain some differences, I think, in the level of treatment. Is there 

any time in our foreseeable future where the Prime Minister of 

Australia would be welcome to the United States—and I don’t 

know what they call it—have a state dinner, maybe address a joint 

session of Congress? Are we getting close to that? 

31

Mr. MATTHEWS. For Australia? 

Mr. SABLAN. For New Zealand. 

Mr. MATTHEWS. Oh, for New Zealand. Well, we have a very close 

and growing partnership with New Zealand. The relationship between President Obama and Prime Minister Key is very close, very 

warm. They get together on the margins of international meetings, 

and Prime Minister Key has, in fact, visited Washington. And so 

whether or not there will be a state dinner planned, I can guarantee you that this is a relationship on an upward trajectory. 

Mr. SABLAN. That is what I would like to hear. I hope it continues to go upward——

Mr. MATTHEWS. It will. 

Mr. SABLAN [continuing]. And what has happened in the past 

will, you know, eventually be water under the bridge. 

Let me go back to my specific interest here. Does the administration believe that Palau is of strategic importance to the United 

States because of its geography and proximity to countries potentially unfriendly to the United States? 

Mr. MATTHEWS. We absolutely believe that Palau has enormous 

strategic value, not just Palau in isolation but Palau as part of the 

larger Freely Associated States. They represent a vast swath of the 

Pacific where the United States, under the compact agreements, 

has specialized defense rights, and its geographical location is in 

fact quite critical, and it is among the various reasons that we really ought to do everything we can to fund the Palau Compact as 

soon as possible. 

Mr. SABLAN. With no disrespect, but I am running out of time. 

There are 12 Pacific Island nations. And three have compacts with 

the United States, including Palau, of course. As for the other nine, 

China is trying to establish a foothold in the area. Cuba has actually established through a medical program in the Solomon Islands 

that relationship. Now, even Russia has engaged in Fiji. We have 

transfers of military equipment. The general population in the region is friendly toward the U.S., but if the U.S. does not follow 

through on its commitments to a compact state, that sends a bad 

signal to other states in the region. 

And you keep saying that you continue to engage with the different countries, but continuing to have conversations when you 

reach an agreement and then, for 5 years, not approve that agreement, not enacted it into law, that doesn’t send a good signal, does 

it, Mr. Matthews? 

Mr. MATTHEWS. Well, I agree with you totally, Mr. Congressman. 

But, actually, everything has been done to put that agreement into 

force, except the funding. 

Mr. SABLAN. Well, no, no, not everything has been done. 

Mr. MATTHEWS. The funding. 

Mr. SABLAN. Yeah, I don’t argue whether it is a problem with helium gas or U.S. passports, the cost of U.S. passports, but for the 

people of Palau, they are looking to the United States and saying, 

what happened to the piece of document we signed, we negotiated, 

we agreed? Why is the issue of helium gas and passports becoming 

their problem? 

Mr. MATTHEWS. All I can say is the sooner we can fund the 

agreement, the sooner it will enter into force. 

32

Mr. SABLAN. Then why did we enter into an agreement that we 

couldn’t fund? 

Mr. MATTHEWS. I have to refer that question back to Congress. 

It is up to Congress to decide how to go about funding it. 

Mr. SABLAN. Congress didn’t sign the agreement. With no disrespect, I am just trying to iron it out. 

Mr. MATTHEWS. Sure. I appreciate it. 

Mr. SABLAN. Thank you very much. 

Mr. MATTHEWS. Thank you. 

Mr. SABLAN. Mr. Chairman, I yield. 

Mr. SALMON. I thank the gentleman. 

And I thank the witnesses today. It has been a great hearing. We 

appreciate all your hard work on behalf of the islands and the region. And I thank the ranking member for his support for this 

hearing today. 

And, without objection, this hearing will stand adjourned. 

[Whereupon, at 3:07 p.m., the subcommittee was adjourned.] 

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