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COMPACT OF FREE ASSOCIATION WITH THE

REPUBLIC OF PALAU: ASSESSING THE

15–YEAR REVIEW

HEARING

BEFORE THE

SUBCOMMITTEE ON ASIA AND THE PACIFIC

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

NOVEMBER 30, 2011

Serial No. 112–84

Printed for the use of the Committee on Foreign Affairs

(

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

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

ROBERT TURNER, New York 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

SUBCOMMITTEE ON ASIA AND THE PACIFIC

DONALD A. MANZULLO, Illinois, Chairman 

RON PAUL, Texas 

BILL JOHNSON, Ohio 

DAN BURTON, Indiana 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

MIKE KELLY, Pennsylvania 

JEFF DUNCAN, South Carolina 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

FREDERICA WILSON, Florida 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS CARDOZA, California 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. James L. Loi, Deputy Assistant Secretary, Bureau of East Asian and 

Pacific Affairs, U.S. Department of State .......................................................... 14

Mr. Thomas Bussanich, Director of Budget, Office of Insular Affairs, U.S. 

Department of the Interior .................................................................................. 24

Brigadier General Richard L. Simcock, II, Principal Director, South and 

Southeast Asia, Office of the Deputy Under Secretary of Defense, U.S. 

Department of Defense ........................................................................................ 31

Mr. David B. Gootnick, Director, International Affairs and Trade, U.S. Government Accountability Office ............................................................................. 38

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Donald A. Manzullo, a Representative in Congress from the 

State of Illinois, and chairman, Subcommittee on Asia and the Pacific: 

Prepared statement .............................................................................................. 3

The Honorable Eni F.H. Faleomavaega, a Representative in Congress from 

American Samoa: Prepared statement ............................................................... 8

Mr. James L. Loi: Prepared statement .................................................................. 16

Mr. Thomas Bussanich: Prepared statement ........................................................ 26

Brigadier General Richard L. Simcock, II: Prepared statement .......................... 33

Mr. David B. Gootnick: Prepared statement ......................................................... 40

APPENDIX 

Hearing notice .......................................................................................................... 80

Hearing minutes ...................................................................................................... 81

The Honorable Dan Burton, a Representative in Congress from the State 

of Indiana: Prepared statement .......................................................................... 82

The Honorable Eni F.H. Faleomavaega, a Representative in Congress from 

American Samoa: Washington Post article dated November 28, 2011 ............ 83

Brigadier General Richard L. Simcock, II: Map .................................................... 86

Questions submitted for the record by the Honorable Eni F.H. Faleomavaega 

and written responses from: 

Mr. James L. Loi .................................................................................................. 87

Mr. Thomas Bussanich ........................................................................................ 90

(1)

COMPACT OF FREE ASSOCIATION WITH THE 

REPUBLIC OF PALAU: ASSESSING THE 15–

YEAR REVIEW 

WEDNESDAY, NOVEMBER 30, 2011

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ASIA AND THE PACIFIC, 

COMMITTEE ON FOREIGN AFFAIRS, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 11:43 a.m., in room 

2226 Rayburn House Office Building, Hon. Donald A. Manzullo 

(chairman of the subcommittee) presiding. 

Mr. MANZULLO. The subcommittee will come to order. 

In 1994, the United States and the Republic of Palau established 

a Compact of Free Association ending 49 years of direct American 

administration of that country and other island nations under the 

auspices of the U.N.’s Trust Territory of the Pacific Islands. 

Palau consists of eight main islands and more than 250 smaller 

islands, with a total population of approximately 20,000 people. 

The Compact with Palau was negotiated in the 1980s, at the height 

of the Cold War, with the goal of establishing democratic self-governance and economic self-sufficiency in Palau while preserving 

strategic control of the Western Pacific. 

The original Compact of Free Association was completed in 1986 

but did not enter into force for another 8 years. The Compact provided for several types of assistance, including direct economic assistance for 15 years to the Palau Government; establishment of a 

trust fund to provide Palau $15 million in annual payments from 

2010 to 2044; infrastructure investments; and the provision of Federal services such as postal, weather, and aviation. The Government Accounting Office, which is represented here today, estimated 

that Palau received a total of $852 million between 1995 and 2009. 

Under the Compact, citizens of Palau are granted uninhibited access to reside and work in the United States and its territories as 

‘‘lawful non-immigrants,’’ and eligibility to volunteer for service in 

the U.S. Armed Forces. It should be noted that a number of volunteers from Palau have paid the ultimate sacrifice in service of our 

nation, and our hearts and thoughts go out to their families. 

Last year, the administration completed a 15-year review of the 

Compact, as required under the terms of the agreement, with a 

total cost of $215 million. The revised agreement does not change 

the fundamental provisions of the original Compact; however, it 

does gradually reduce the financial support provided by the U.S. 

and extends the life of the agreement to 2024. 

2

More importantly, the revised agreement greatly improves the 

likelihood of the existing trust fund’s ability to sustain payments 

through 2044 as originally planned. The revised agreement also requires visitors from Palau to have a machine-readable passport to 

enter the U.S., and it conditions future financial assistance on 

Palau’s progress in achieving key economic reforms. 

Just 2 weeks ago, the President announced a dramatic expansion 

of the U.S.-Australia defense relationship in part to counter China’s rapid development of its military forces. Palau is indeed an important friend in the region. It is one of six Pacific Island nations 

to have diplomatic ties with Taiwan, rather than China. Palau also 

consistently supports the U.S. and Israel at the United Nations by 

voting with us over 90 percent of the time. 

The relationship with Palau has evolved into a strong partnership with people who share American values. It is my hope that 

the witnesses today will provide acceptable offsets for the funding 

request that accompanies the revised Compact agreement. 

With our national debt now over $15 trillion, increases in expenditures must be justified and offsets found to balance the costs. 

Funding to Palau is no different. 

I thank the witnesses for appearing today. I now recognize Ranking Member Faleomavaega for his opening remarks. 

[The prepared statement of Mr. Manzullo follows:]

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Mr. FALEOMAVAEGA. Mr. Chairman, thank you for calling this 

hearing. I deeply appreciate again your leadership and your efforts 

in bringing this important issue before the members of our subcommittee. 

Thank you for calling the hearing on the 15th Anniversary Review of the Compact of Free Association with the Republic of 

Palau. 

Just as a matter of observation, Mr. Chairman, I have followed 

this matter with Palau as well as with the Federated States of Micronesia and with the Republic of the Marshall Islands, having 

served previously as a staff member on the Committee on International Affairs. 

An interesting observation, Mr. Chairman, is that immediately 

after World War II, we would just simply grab these Micronesian 

islands and say, ‘‘It is ours,’’ and we put a fancy term like ‘‘a strategic trust’’ of our country. We didn’t even have to ask permission 

from the United Nations. We just went ahead and took them. 

And in the process, becoming a strategic trust, we eventually 

then placed it before this trusteeship council, whereby we eventually worked up a very unique political relationship with these three 

Micronesian entities. 

The Compact of Free Association negotiations actually started 

with the Carter administration and was then continued on by the 

Reagan administration, which granted the islands sovereignty but 

retained military authority for the United States and in Palau and 

gave us some base rights for some 50 years. 

Programmatic and financial assistance were specified for 15 

years. And bilateral reviews of Palau’s needs at the 15, 30, and 

40th earmarks were required to determine assistance for the succeeding periods. Freely associated state citizens were also given 

free access, not only to come to the United States but they could 

also join the military. 

The extent of U.S. military authority in Palau raised questions 

there and at the United Nations. Palau has finally approved the 

Compact a few years after the Federated States of Micronesia and 

the Republic of the Marshall Islands gave approval of their own 

Compacts with our Government. 

The U.N. Security Council in 1994 finally left the trusteeship terminated. And this is where we are now. 

The Bush administration negotiated a revised Compact with the 

other two Micronesian entities: FSM and the RMI after their first 

15-year periods were approved by Congress in the year 2003, increasing financial assistance to 83 percent in one case, and the 

other one by a 47 percent increase for both FSM as well as RMI 

or the Republic of the Marshall Islands. 

In 2008, before the 15-year mark, the Bush administration began 

the review with Palau to ensure a seamless transition. However, 

there were a number of delays in the review on the U.S. side, but 

it finally produced an agreement that was signed 15 months ago 

by the President of Palau and an authorized representative of our 

Government. 

The State Department says this agreement was sent to Congress 

in January of this year but the last I heard, it still had not been 

6

received by the Speaker’s office. So I don’t know where this document is, Mr. Chairman, but we really need to follow up on this. 

At the insistence of the current administration, the agreement 

would provide 62 percent less financial assistance than during the 

first period of free association and would phase out these decisions 

before the next review in Fiscal Year 2024. This will require cuts 

in Palau’s budget, decrease in its revenues, and reduce GDP in the 

short term. 

This is shortsighted in my opinion, Mr. Chairman, in light of the 

stakes involved. The record will show that the levels of assistance 

are arbitrary and, in my humble opinion, without justification. 

The agreement would also amend the Compact for U.S. border 

security and revise seven agreement subsidiaries to the Compact in 

response to U.S. requests concerning civil aviation, Weather and 

Postal Service operations, as well as telecommunications. The 

stakes are primarily that Palau gives the U.S. military control over 

our military strategic interests in this part of the Pacific. 

The Pentagon had stated for the record that this ‘‘security arrangement’’ is ‘‘very critical and irreplaceable’’ for ‘‘the United 

States in an increasingly contested region.’’ Ever since we left 

Suvla Bay and Clark Air Force Base in Guam, the other Micronesian islands have now become very, very key and important parts 

of our strategic overall defense system in this part of the Pacific. 

I just want to give my colleagues a little sense of where Palau 

is located, Mr. Chairman. I brought a little map here. This is 

Palau. I know it doesn’t show it, but it is the same size as the State 

of Texas if we take the dimensions of the people, 20,000 population, 

but this is the capacity in terms of their EEZs or their zones that 

make them as the Republic of Palau. 

This is why these islands are so important, Mr. Chairman, I 

don’t know how else to say it but it is very, very critical that we 

not do the things that we are doing, especially in our current process of negotiating in good faith. I would hope that we are doing this 

in good faith with the leaders and the people of Palau. 

I will come back to the map again when I finish my opening 

statement, Mr. Chairman. And I thank you for this. 

Year after year, the State Department reports that Palau votes 

with the U.S. more than any other country, including on issues we 

are often isolated, such as Israel, Cuba, and even the Uyghurs. I 

am very, very curious to find out where we are with the Uyghurs 

given the effort the President of Palau made, despite all of the 

criticisms that they received on that. 

In my opinion, Palauans have become very Americanized in half 

a century. Despite our relationship with this important ally, they 

are becoming discouraged at the time the review and the agreements have taken. A few of the people of Palau and their leaders 

are wondering whether Palau should become more independent 

and benefit from the desires of China and other countries that are 

not necessarily friendly, but are interested in this part of the 

world. 

So yes, you mentioned earlier, Mr. Chairman, that we need to 

look at the offset that seems to be the crucial issue that we are 

going to be discussing here. The fact that this issue covers the jurisdictions of three committees, the Foreign Affairs Committee, the 

7

House Resources Committee, the Armed Services Committee, my 

gosh, you cannot have a more complicated issue than this. If it was 

possible in the 1970s and ’80s to work out an agreement, the fact 

of the matter is, it was the arguments made by the Department of 

Defense in the 1970s that made these Micronesian entities a very, 

very critical part of our strategic and overall importance to our defense system. 

Mr. MANZULLO. You are at 7 minutes. 

Mr. FALEOMAVAEGA. I am on 7 minutes already, Mr. Chairman? 

I will wait for my 5 minutes, then. Thank you for giving me a couple of more minutes. 

I look forward to hearing from our witnesses this afternoon and 

hope that this hearing will produce some good results. Thank you, 

Mr. Chairman. 

[The prepared statement of Mr. Faleomavaega follows:]

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Mr. MANZULLO. Without objection, Mr. Rohrabacher is welcome 

to join the subcommittee. 

Mr. ROHRABACHER. Thank you very much. Thank you very much 

for allowing me to sit in on your hearing today. I am here. 

I want to make sure that I express a deep-felt appreciation that 

I have for Palau. My father was a Marine during the second world 

war. And he landed in Palau many times. And the Marines paid 

a very heavy price for these islands. And you might say that they 

implanted the American spirit there. And we should never ever 

take that for granted, that sacrifice and the friendship that that 

sacrifice bought for our country. 

It has been 15 years since we signed, last signed. And it is the 

last element of the Compact of Free Association. And I think that 

the free association has served us well. 

And now that we are entering a time when we face an economic 

crisis in our country and a potential threat and a gathering storm 

with China entering the Pacific in a very, very dramatic way, it 

pays us to maintain that friendship and that relationship with 

Palau, both on economic terms in the long run, having such a relationship with the country there in the vast Pacific, which I see as 

a tremendous economic resource as well as the expansion of the 

Chinese military. If we have Palau on our side, we are a safer 

country. So those things taken for granted are taken into consideration. 

I think that I appreciate this hearing and hope that we do justice 

by this relationship. 

Mr. MANZULLO. Thank you. 

Mr. Sablan? 

Mr. SABLAN. Thank you very much, Mr. Chairman and Ranking 

Member Faleomavaega, for the opportunity to join you and other 

members of the subcommittee on Asia and the Pacific in assessing 

the 15-year review of the Compact of Free Association with the Republic of Palau. 

The Compact of Free Association with Palau was originally negotiated by the Reagan administration because of the strategic importance of the western Pacific. The Compact gives the United States 

military control of an area as large as, as Congressman 

Faleomavaega said, the State of Texas. The Pentagon says that 

this security arrangement provides a foundation for the United 

States in an increasingly contested region, allowing critical access, 

influence, and a strategic position. 

The relationship between the United States and the Republic of 

Palau will only grow in importance. Together with our partnership 

with the other freely associated states and in conjunction with the 

U.S. Territory of Guam and the Commonwealth of the Northern 

Mariana Islands, which I represent, we have built a network of 

strategic alignments here in the western Pacific. This gives the 

United States presence and position in an area of the world that 

is more and more a center of commerce and a source of economic 

resource. 

The Compact the Reagan administration negotiated promised assistance to Palau for 50 years. It specified programs and grants for 

the first 15 years and required periodic bilateral review to assess 

the relationship and to determine future assistance. Talks initiated 

12

under President George W. Bush produced an agreement which 

was finally sent to Congress this year that phases non-financial assistance during the current 15-year period. This period ends with 

Fiscal Year 2024 and reduces assistance to Palau by 62 percent. 

This hearing comes at a critical time. Delays in approving the 

agreement negotiated by the Bush administration and the proposed 

cuts in assistance are causing some in Palau to question their relationship with the United States. 

The Palauan people are a very patient people, but, as we all 

know, patience sometimes has its limits. 

The present Government of Palau stands firm in wanting to 

maintain these strategic ties, but we in Congress need to be aware 

that other voices are asking whether Palau should be more independent and develop relationships with other powers in the region. 

This would be a very dangerous outcome. 

As our Department of Defense has advised, failure to follow 

through on our commitments to Palau, as reflected in the agreement under consideration today, would jeopardize our defense posture. 

The Natural Resources Committee Subcommittee on Fisheries, 

Wildlife, Oceans, and Insular Affairs, of which I am ranking member, shares jurisdiction with respect to the Compact with Palau. 

In addition, the relationship with Palau is very close to my heart 

because the islands that I represent in Congress were once part of 

the United Nations trust territory of the Pacific islands, along with 

Palau. And, to this day, the Northern Marianas is home to many 

citizens of Palau. And, to this day, I am the only Micronesian Member of Congress, of which Palau is a part of. 

So as someone who knows Palau and the western Pacific and understands the history and strategic importance of our region, I 

strongly urge the Subcommittee on Asia and the Pacific to approve 

the agreement now before us. 

Again, thank you, Mr. Chairman, Mr. Faleomavaega, and other 

members of the committee, for the courtesy extended to me in allowing me to be part of today’s hearing. I look forward to the testimony of the witnesses. Thank you. 

Mr. MANZULLO. Thank you, Mr. Sablan. 

Mr. Duncan? 

Mr. DUNCAN. Thank you, Mr. Chairman. 

Reading through some of the opening statements and whatnot, 

in listening to the gentleman’s from California comments, it 

sparked something that I am interested in hearing about. And that 

is the fact that some of the detainees from Guantanamo Bay have 

been repatriated here. And I would love to hear how that is working out, how those gentlemen are adapting to the society. If somebody could just throw that in at some point in time during your 

testimony, it would be great. Thanks. 

Mr. MANZULLO. Thank you. 

Our witnesses are James Loi, who became Deputy Assistant Secretary for the Bureau of East Asia and Pacific Affairs at the U.S. 

Department of State on July 18, 2011. He is responsible for relations with Australia, New Zealand, and the Pacific islands. 

Previously, Mr. Loi served as chief of staff and special assistant 

to Dr. Kurt Campbell, Assistant Secretary of State. He has also 

13

served at the National Security Council as Director for Australia, 

New Zealand, and Pacific Island Affairs and as Director for East 

Asian Economic Affairs. 

Prior to the NSC, he was a visiting fellow with the Freeman 

Chair in China Studies at the Center for Strategic and International Studies. From 1986 through 2005, he served in various capacities with the U.S. Navy in both enlisted and commissioned officer status and on active and reserve duty, attaining the rank of 

Commander. 

Thomas Bussanich is the Director of the Budget and Grants, 

Management Division of the Department of Interior’s Office of Insular Affairs. His responsibilities include management of the Compact of Free Association funding to Palau, the Federated States of 

Micronesia, and the Marshall Islands, and of capital improvement 

programs in the U.S. territories. 

Mr. Bussanich has been involved with U.S.-affiliated Pacific islands since 1978 when he served as a Peace Corps volunteer in Micronesia. He is a graduate of the University of Colorado. 

Brigadier General Richard Simcock currently serves in the Office 

of the Secretary of Defense, Asia and Pacific Security Affairs, as 

the Principal Director of South and Southeast Asia. 

Prior to that, he served as the legislative assistant to the Commandant at the U.S. Marine Headquarters. In 2008, General 

Simcock served as the director of the Tactical Training and Exercise Control Group in Palms, California after relinquishing command of the 6th Marine Regiment. 

In 2003, General Simcock graduated from the top-level school at 

the Naval War College in Newport, Rhode Island, after which he 

reported to the U.S. Marine Corps Headquarters as a Congressional Liaison Officer to the U.S. House of Representatives. 

He first joined the Marines in 1983 and had a long and successful career filling a wide variety of positions on bases in California, 

Florida, Hawaii, Virginia, and Japan. 

David Gootnick has been Director of International Affairs and 

Trade at the Government Accountability Office since 2001. His 

portfolio includes insular affairs, humanitarian aid, development 

assistance, economic assistance, and global health. 

From 1994 through 2001, he served as Director of the Office of 

Medical Services at the U.S. Peace Corps. Prior to that, he was a 

practicing physician and director of the University Health Services 

at New York University. 

We welcome our witnesses. The lights show 5-minutes for your 

testimony. When it turns yellow, you have 1 minute remaining. 

When it turns to red, then you supposedly should stop at that 

point, although I am not going to throw the gavel at you. 

We will start with our first witness, Mr. Loi. Thank you for coming here. 

Mr. LOI. Thank you, Chairman. I do have a——

Mr. MANZULLO. Please start. All the witnesses’ testimonies, in 

written form, will be made part of the record. Eni, this includes 

your complete opening statement, which you didn’t have a chance 

to read. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

Mr. MANZULLO. Proceed. 

14

STATEMENT OF MR. JAMES L. LOI, DEPUTY ASSISTANT SECRETARY, BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, 

U.S. DEPARTMENT OF STATE 

Mr. LOI. Thank you, Mr. Chairman, Ranking Member 

Faleomavaega, and members of the subcommittee. Thank you for 

the opportunity to appear before you today to discuss the Pacific, 

sometimes the overshadowed second part of Asia-Pacific but, nonetheless, an integral part of the administration’s enhanced focus on 

and engagement with the Asia-Pacific region. 

The vast stretch of the Pacific and the island countries that reside within it are critical to our national security, with our close 

friends and allies like Palau forming a security arc that stretches 

from California to the Philippines, safeguarding our interests in 

the Pacific as well as critical sea lines of communication, through 

which much of our trade flows. 

Of our many friends and partners in the region, we have perhaps 

none stronger than Palau, a country which paid a dear price in 

blood and treasure to liberate in 1944, a country to which we made 

a solemn promise to help transition from trusteeship to independence through our Compact of Free Association, and a country which 

provides us strong support, whether that be in regional fora, multilateral institutions through the many Palauan sons and daughters 

that joined the U.S. military at per capita rates higher than any 

U.S. state, or through its voluntary actions, such as the decision in 

2009 to accept 6 Guantanamo detainees when few others would 

step up to the plate. 

And perhaps let me just break here and respond to Congressman 

Duncan’s question. Sir, from what I understand, a number of the 

Uyghurs have adjusted well to life in Palau with one or two perhaps still struggling to find permanent employment. I think it is 

safe to say that most, if not all, of them, though, are interested in 

permanently relocated to a third country. 

And I know my colleague Ambassador Fried at the State Department is working that. I also know that there is a representative 

from the Palauan Government in Washington this week who will 

be meeting with Ambassador Fried to talk about next steps on the 

detainees. But beyond that, I don’t have much additional information. 

With respect to foreign policy goals, I think we have two critical 

ones with respect to Palau: Firstly, continuity in reinforcement of 

our full authority and responsibility for the security and defense of 

Palau; and, secondly, ensuring that we continue to earn and enjoy 

Palau’s strong support in regional and multilateral fora. 

On the first, my colleague General Simcock will speak in detail, 

but suffice it to say that Palau does enjoy, as the ranking member 

Faleomavaega said, a strategic position in the western Pacific as 

part of the so-called Second Island Chain. 

Our Compact of Free Association provides the United States the 

critical right of strategic denial foreclosing access to Palau by military forces and personnel of any nation except the United States. 

In light of the evolving security climate in the Asia-Pacific, the relatively modest annual cost associated with the proposed legislation 

approving the results of the 15-year Compact review are worth this 

rate of strategic denial alone. 

15

With respect to the second goal, Palau is amongst our strongest 

supporters in regional and multilateral fora. In the former, Palau 

has been an ardent advocate for enhanced U.S. participation and 

engagement in the Pacific Islands Forum and a positive partner as 

we were to ascend the South Pacific Tuna Treaty, an agreement 

that provides access for the U.S. tuna fleet to the rich waters of the 

South Pacific and which supports thousands of tuna industry jobs 

here in the U.S. and American Samoa. 

At the United Nations, Palau’s voting confidence with the United 

States is about 90 percent. This compares to 67 percent for the 

United Kingdom, 66 percent for Canada, 49 percent for Japan and 

South Korea. So it is markedly higher. 

Despite enticements from others interested in enhancing their 

engagement in the region, China, Russia, the Arab League nations, 

Palau has not only supported us 100 percent on Israel and consistently on human rights in Cuba-related votes but has been at the 

forefront of actively helping us garner the support of others. 

My colleague from the Department of the Interior will discuss in 

greater detail the specifics of the Compact and the legislation the 

administration has submitted, but let me just state that over two 

decades ago, the framers of the Compact undertook a promise to 

help this young nation through financial and other assistance to 

achieve self-governance and a sustainable economic development 

path. They were wise in recognizing that any plan would require 

review and its necessary adjustments. 

The 15-year review finds us at a point where the goal of self-governance is firmly in place but the goal of sustainable economic development, while progressing well, remains a work in progress and 

requires additional financial support. 

The tiered nature of the support agreed to in this 15-year review 

is designed to ease Palau off dependence on U.S. direct economic 

assistance and toward that sustainable reliance and economic development. 

Importantly, the resulting agreement will require the Palauan 

Government to undertake economic and fiscal reforms. And should 

the United States believe that progress toward such reform is adequate, we will be able to withhold assistance. 

In closing, members of the subcommittee, since that bloody battle 

in Peleliu in 1944, the United States has embarked on a long road 

of partnership with the people of Palau, from liberation to trusteeship and, finally, to independence. 

The United States and the American people are admired around 

the world for our sense of duty, commitment to the well-being of 

others, and integrity in upholding our word. With Palau, one can 

see all three of these threads woven into the fabric of our bilateral 

relationship. 

It was a sense of duty that led thousands of Marines to pay the 

ultimate price in freeing Palau from colonialism and occupation. It 

was a commitment to Palau’s future that led us to help Palau transition from trusteeship to independence. And it is our integrity that 

has driven us and must drive us to uphold our commitment. 

The implementation of the results of the Compact review will 

help ensure that our hard-fought investments in this young country 

achieve their intended returns. Importantly, as the generation for 

16

which the second world war was a defining experience passes and 

other emerging powers seek to increase their influence in the region, passage of this legislation will send a reassuring signal to 

others that the United States is and will be engaged and remains 

a faithful friend and ally through both good and challenging times. 

Thank you. I look forward to answering your questions. 

[The prepared statement of Mr. Loi follows:]


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Mr. MANZULLO. Thank you. 

Mr. Bussanich? 

Mr. BUSSANICH. Thank you, Mr. Chairman. 

STATEMENT OF MR. THOMAS BUSSANICH, DIRECTOR OF 

BUDGET, OFFICE OF INSULAR AFFAIRS, U.S. DEPARTMENT 

OF THE INTERIOR 

Mr. BUSSANICH. Chairman Manzullo and members of the subcommittee, thank you. I am pleased to be here today to discuss the 

agreement between the United States and Palau following the 

Compact of Free Association section 432 review. My statement 

today will focus on financial assistance for Palau. 

The Compact of Free Association has proven to be a very successful framework for United States-Palau relations. The goals of the 

first 15 years of the Compact have been met: The trusteeship was 

terminated; Palau’s self-government was restored; a stable democratic state was established; third countries were denied military 

influence in the region; and the United States financial assistance 

provided a base for economic growth. 

The United States, through the Department of the Interior, has 

provided $600 million in assistance to Palau, including $149 million for a road system, in the capitalization of the Compact trust 

fund. 

The Compact trust fund was an important feature of U.S. assistance. Capitalized at $70 million, the objective was to produce $15 

million annually as revenue for Palau’s Government operations 

from 2010 through 2044. 

Palau has made economic gains under the Compact of Free Association. Its growth, in real terms, has averaged just over 2 percent 

per year. Palau’s governmental services are meeting the needs of 

its community. And the country has taken control of its destiny 

and is moving in the right direction. 

As the United States and Palau began the section 432 review, 

both countries agreed that prospects for economic growth relied on 

four key factors: The viability of the trust fund to return $15 million a year; the implementation of fiscal reform; increased foreign 

investment and private sector growth; and, the continuation of 

some United States assistance and domestic programs. 

For the United States, the viability of the Compact trust fund 

was of paramount concern. As the 15-year review began, Palau’s 

trust fund, which had earned roughly 9 percent annually since its 

inception, had suffered significant losses. As GAO reported in 2008, 

it was uncertain that the trust fund could meet its goal of providing $15 million annually through 2044. 

The condition of the trust fund, fiscal and economic reforms, and 

private sector growth became the focus of the bilateral review. The 

agreement that arose from the 15-year review will address these 

concerns, maintain stability, and promote economic growth. 

The agreement extends United States assistance, in declining annual amounts, through Fiscal Year 2024. The total of direct financial assistance to Palau under the agreement is over $200 million. 

The declining amount of assistance is intended to provide an incentive for Palau to develop other sources of revenue and serves notice 

25

that the Palau has agreed to make systemic adjustments to its government. 

The agreement contains five categories of financial assistance: 

First, direct economic assistance for education, health, public safety, and justice in amounts starting at $13 million, declining to $2 

million, the last payment, in 2023. The timing of payments is conditioned on Palau’s making certain fiscal reforms. 

Second, infrastructure projects are provided in the amount of $40 

million spread over 6 years. 

Third, the agreement creates an infrastructure maintenance fund 

using annual grants of $2 million to protect crucial United States 

investments in Palau that significantly contribute to economic development. Palau will contribute matching funds of $150,000 annually to this fund. 

Fourth, a fiscal consolidation fund of $10 million to help Palau 

reduce its debt. The United States creditors must receive first priority. 

Fifth, the trust fund. The agreement aims to bolster the viability 

of the trust fund to yield payments of up to $15 million annually 

through 2044. The United States will contribute $3 million from 

2013 through 2022 and contribute $250,000 in 2023. 

Palau will delay withdrawals from the fund, drawing only $5 million annually through 2013, and gradually increasing withdrawals 

to $13 million in 2023. From 2024 through 2044, Palau is expected 

to withdraw up to $15 million annually, as originally scheduled. 

Withdrawals from the trust fund may only be used for education, 

health, and administration of justice and public safety. 

The United States and Palau will work cooperatively on economic, financial, and management reforms. Palau will be judged on 

the elimination of operating deficits, reductions in its annual budgets, reducing the number of government employees, implementing 

meaningful tax reform, and reducing subsidies to public utilities. If 

the United States has determined that Palau has not made significant progress on reforms, the United States may delay payment of 

economic assistance. 

The Palau Compact legislative proposal does have PAYGO costs. 

These costs are included in the President’s budget along with a 

number of legislative proposals with PAYGO savings. The offset 

proposals include: Net receipt sharing, termination of payments for 

reclaiming abandoned coal mines, and production incentives, fees 

on non-producing Federal oil and gas leases. 

The administration looks forward to continuing our partnership 

with Palau. The Department of the Interior is proud of the positive 

advancements our assistance to Palau has provided over the last 

15 years and looks forward to the progress that we anticipate will 

be made over the next 15 years. 

Thank you. 

[The prepared statement of Mr. Bussanich follows:]

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Mr. MANZULLO. Thank you. 

General Simcock? 

STATEMENT OF BRIGADIER GENERAL RICHARD L. SIMCOCK, 

II, PRINCIPAL DIRECTOR, SOUTH AND SOUTHEAST ASIA, OFFICE OF THE DEPUTY UNDER SECRETARY OF DEFENSE, U.S. 

DEPARTMENT OF DEFENSE 

General SIMCOCK. Chairman Manzullo, Congressman 

Faleomavaega, other members of the subcommittee, thank you for 

the opportunity to talk with you today. 

It is obvious from the comments I have heard already that there 

is an in-depth knowledge about Palau today. I think with a lot of 

stories, it is difficult to start a book in a middle chapter. And there 

is a history of Palau from a security perspective that I would like 

to talk about just a little bit today, if I may. 

Sir, I also brought a map with me using technology you can see 

on that one. If I could ask you to think about today. Let’s say today 

is 30 November 1940. And I am talking to Members of Congress 

about Palau. I feel pretty confident that none of the members 

would know where Palau is. I wouldn’t have the benefit of having 

two Pacific island nation representatives here. 

So, even if I brought a map and pointed it to it, most of the members would say, ‘‘General, so what?’’ I would basically be told, 

‘‘Thank you for your interest in national defense. We here on Capitol Hill have more pressing issues. In 1940 fiscal considerations at 

that time are more important. Please go back to the Pentagon and 

do what you do.’’

Now, gentlemen, if I can roll the clock forward to 7 December 

1941 and the attack, the empire Japan on Pearl Harbor. All of a 

sudden, we started paying attention to the Pacific region. And we 

watched Japan occupy large areas within the Pacific region. Islands that we had never heard of were all of a sudden were on 

headlines throughout papers throughout this country. 

Now I ask you to roll the clock forward one more time to September 1944, when the United States paid the price of 10,000 casualties, U.S. Marines and sailors, to liberate Peleliu, modern-day 

Palau, from the empire of Japan. Everyone knew where Peleliu 

was at that time. 

The strategy that the empire Japan had at that time was to cripple our fleet and to set up a defense-in-depth for the purpose of securing resources, resources that Japan did not have and could not 

get through peaceful means. So they took by force. The empire of 

Japan misread the United States in our will to fight through that 

defense-in-depth and liberate those islands and actually defeat the 

aggression of Japan. 

Now, Mark Twain said that history doesn’t repeat, but it certainly rhymes. I ask you now to roll the clock forward to 30 November this year and why is Palau important. 

The map behind me depicts two island chains. The first island 

chain is the island chain closest to mainland Asia. Second island 

chain is the one moving eastward, further out in the Pacific. Palau 

is part of that second island chain. 

Today China is securing resources around the globe. And I know 

you members are very familiar with that. But the physical characVerDate 0ct 09 2002 10:50 Jan 17, 2012 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 F:\WORK\AP\113011\71398 HFA PsN: SHIRL
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teristics of the Pacific Ocean have not changed. It will be used by 

China the same way that the Japanese used it 60 years ago, as a 

way to bring resources back to the homeland. And China is very 

concerned about that. 

The map behind me was not produced at the Pentagon. That is 

not my map. That map was produced in China by an organization 

I can loosely affiliate to a think tank. 

What the Chinese are concerned about when they look at the 

map, are those island chains and a defense-in-depth, if you will, in 

reverse because they look at those lines are ways of stopping them 

from getting the resources around the world that they are purchasing today back to mainland China. And they are very, very 

concerned about that. 

So when I talk to the defense attache from China, he talks to me 

about Cold War strategies and strategies of containment that our 

country is trying to do to their country. And it is an issue that he 

brings up with me on a daily basis when I see him. 

So I would say to you that when you look at Palau and the strategic importance from a security aspect, I think you can use the 

strategy of 60 years ago. And it is very applicable today in what 

one of the countries in the region is trying to accomplish. 

And the last thing I would just say, sir—and that is to Congressman Rohrabacher and your father—when we liberated Palau, as I 

said, it was 10,000 Marines and sailors. Jim Loi and I were there 

about 4 or 5 months ago. And you talk about, sir, a homecoming. 

And it wasn’t because it was Rich Simcock. It was because a U.S. 

Marine was coming to Palau. And you want to talk about being 

treated like royalty, very similar to what the chairman talked 

about with the Ambassador from South Korea. 

I have never had to be on the receiving end of being liberated 

from occupation, but the South Koreans understand it. And I am 

here to tell you, sir, that the Palauans understand it. And they pay 

off that type of response to our nation. Approximately 500 

Palauans serve in the military today. That is how they say thank 

you. So there is tremendous strategic importance to Palau. 

Gentlemen, I look forward to your questions. Thank you. 

[The prepared statement of General Simcock follows:]

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Mr. MANZULLO. Thank you, General. 

Mr. Gootnick? 

Mr. GOOTNICK. Thank you, Mr. Chairman. 

STATEMENT OF MR. DAVID B. GOOTNICK, DIRECTOR, INTERNATIONAL AFFAIRS AND TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. GOOTNICK. It is a remarkable parable that Brigadier General 

Simcock has put forward. I am going to return to some of the much 

more mundane aspects of the economic provisions under the Compact. And thank you for asking GAO to participate in this hearing. 

As has been stated, the 1994 Compact provided 15 years of economic assistance; established the trust fund; built the Compact 

road; provided for postal, weather, and aviation; and, importantly, 

established the basis for discretionary U.S. Federal programs, including Head Start, Community Health Centers, Pell grants, airport improvements, Special Education, and numerous others. 

Taken together, Compact and U.S. program assistance is valued at more than $850 million, of which U.S. program assistance was 

nearly a third. 

My statement, which I will briefly summarize, describes first the 

economic provisions of the agreement; second, the impact of the 

agreement on Palau’s trust fund; and, third projected Palau Government revenues under the agreement. 

First, as Mr. Bussanich has well-covered and well-stated, the 

agreement would provide $215 million in assistance, with a steady 

annual decrement from roughly $28 million in 2011 to $2 million 

in 2024. If you have the graphic in the GAO testimony statement, 

the cover page or page 11 has a nice display and shows you that 

annual decrement. 

It shows that $107 million, roughly half of this assistance, would 

support government operations and that the agreement also provides $40 million for infrastructure projects, $28 million in the 

maintenance fund, $10 million to debt relief, and adds $30 million 

to the trust fund. And, importantly, the agreement extends postal, 

weather, and aviation, and the authority to continue discretionary 

Federal programs. 

The agreement puts certain conditions on the $215 million package. For example, economic assistance is directed to specific sectors, such as health, education, and public safety. Also, an advisory 

group would be appointed and tasked to make recommendations for 

fiscal and management reforms. And the U.S. may delay funding 

conditioned on the progress of reforms. 

For the infrastructure funds, a project must have a land title and 

a certified scope of work to get funding and the maintenance funds 

primarily for U.S.-financed projects, in particular the Compact road 

and the international airport. 

Debt relief prioritizes U.S. creditors, requires U.S. concurrence 

on debts to be paid. 

Second, regarding the trust fund, the proposed U.S. contributions 

and the $89 million delay in scheduled withdrawals would markedly improve the fund’s prospects. In 2009, we reported that the 

trust fund would require an annual return above 10 percent to 

yield its proposed schedule through 2044. However, under the 

39

agreement, as of the end of Fiscal Year ’11, the trust fund would 

need only 5.5 percent return to yield its new scheduled withdrawals. And this is well below the 7.4 percent it has earned to 

date. 

Lastly, Mr. Chairman, to offset the steady decline in budget support through 2024, estimates prepared for the Government of Palau 

project a growing reliance on trust fund withdrawals and domestic 

revenue as well as steady access to U.S. Federal programs. Specifically, the estimates project a steep rise in domestic revenue from 

roughly 40 to nearly 60 percent of total government revenues by 

2024. 

And the estimates project that discretionary Federal programs 

will grow at roughly the rate of inflation. And they are projected 

at half of all U.S. assistance over the next 15 years. 

As you know, Mr. Chairman, unlike other components of this 

agreement, these programs, U.S. Federal programs, depend on annual appropriations. 

In summary, the economic provisions of the agreement extend 

and gradually reduce Compact assistance through 2024, establish 

new conditions for the use of U.S. funds, and reset the trust fund 

to significantly improve its long-term prospects. Palau has employed projections of its long-term fiscal condition that rely on increased domestic revenue and the continuation of U.S. Federal programs. 

This completes my remarks. I am happy to answer any questions. 

[The prepared statement of Mr. Gootnick follows:]

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Mr. MANZULLO. Thank you so much. 

Mr. Faleomavaega, you are recognized for 5 minutes. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

I want to thank the members of the panel for their most eloquent 

statements. I would like to pose some questions that hopefully will 

give us a little better understanding of the situation that we currently face concerning Palau. 

Correct me if I am wrong on this because it seems that the basis 

that we dealt with these island entities immediately following the 

second world war, given the fact that there was no question about 

the importance of these islands when we entered in the war 

against Japan, when they invaded us in 1941. 

I do want to thank General Simcock for his testimony because 

it appears to me that we have three agencies involved. We have the 

Interior Department, the State Department and the Defense Department, all involved in some way or another not only with the 

administration but also have political ties with the Republic of 

Palau. 

And let me ask General Simcock, would it be fair to say our 

number one priority and the very reason why we have this relationship with the island entities is because of our strategic and 

military interest in this part of the world. Could that be considered 

the number one reason why we are there? 

Put it another way. Is Palau important as part of our overall 

strategic importance in this part of the Pacific? Because here is another problem I am faced with, General. There is no way you can 

talk about Palau without discussing the Federated States of Micronesia, without discussing the Republic of the Marshall Islands, why 

we conducted 67 nuclear test bombs that we dropped in those island entities and the fact that Guam is now about a $40 billion 

military presence there in terms of its importance strategically 

when we look at Asia, if that is where the potential danger is posed 

and, of course, the Northern Mariana Islands. My good friend Mr. 

Sablan represents that important island group. 

General Simcock, is it fair for me to say that this is the very reason why we are there in the first place, because Palau is a very 

important part of our overall strategic military interest in this part 

of the Pacific? We are the size of Texas, even though 20,000 people 

there are scattered all over the place. 

General SIMCOCK. Congressman Faleomavaega, you are absolutely right. The quick answer to your question, yes. I would just 

expand on one more point. And I would just say that it always 

starts with security. Everything builds from security. If you don’t 

have security, all of the other interests, be they economic, diplomatic, whichever you want to talk about, sir, they go away. But 

you are absolutely right. But today the scope is narrow on Palau, 

but Asia-Pacific region is very, very vast. 

Mr. FALEOMAVAEGA. I want to also note as a matter of interest—

and correct me, General, if I am wrong on this—I read the summary reports that we currently have 700 military installations in 

and outside the United States. When I asked how many military 

bases does China have outside of China, the response I got was 

zero. Is that correct? We currently have well over 700 military installations in and outside the United States currently right now? 

66

General SIMCOCK. Sir, I don’t know the exact figure. 

Mr. FALEOMAVAEGA. Can you provide that for the record? 

General SIMCOCK. Yes, sir. 

Mr. FALEOMAVAEGA. It is a very interesting situation. We cur- rently have a $700 billion budget to defend our country for 1 year, 

provide enough resources for our Navy, Army, Air Force for 1 

year’s time schedule? 

Would it be correct also for me to say that if there is any agency 

that should be part of the overall providing the necessary resources 

that we deal with, Palau should also be with the Department of 

Defense? 

Here is a problem that I am faced with. The State Department 

does the negotiations. Defense Department says it is very critical 

to our needs for national survival. Yet, the results of the negotiations totally does not match in terms of the importance of Palau. 

And, yet, the essence of what we are giving Palau, a 62 percent 

decrease in funding. It just blows my mind. And, yet, in negotiations, renegotiations of the two contacts with the Republic of the 

Marshall Islands and the Federated States of Micronesia, the increases are 47 percent for one and 63 percent for the other. And 

we are decreasing Palau’s needs by 62 percent. 

Maybe Mr. Loi can help us with this. Can you give us a sense 

of why the discrepancy or is this a discrepancy on my part? Please 

correct me on that. 

Mr. LOI. Congressman, I am not—I don’t know the specifics of 

the discrepancy. I mean, all I can say is this agreement was 

reached between two sovereign countries, negotiators agreeing on 

the specifics. You know, I was not in this position when the review 

agreement was——

Mr. FALEOMAVAEGA. Mr. Secretary, I fully understand that and 

I don’t want to blame you for this. Could you provide for the record 

why we had this problem? 

Here is another problem I would like to add on to my——

Mr. MANZULLO. You are at 6 minutes now. We can come back. 

Mr. FALEOMAVAEGA. Okay. I will wait for the second round. I am 

sorry. Thank you, Mr. Chairman. 

Mr. MANZULLO. Do you have questions, Mr. Duncan? 

Mr. DUNCAN. According to Wikianswers, there are 761 U.S. military bases around the world, 156 countries. 

Anyway, recently I was in the Philippines. And we were talking 

with Filipinos about China’s extension of their territorial waters 

and the Spratly Islands actively staking claim to some areas that 

historically were areas claimed by the Philippines. And so we see 

this growing extension of China into these waters. So, General, I 

know that the U.S. Coast Guard plays a role in patrolling the waters in and around Palau. 

Given this growing assertion, assertiveness of China within the 

Pacific theatre and really around the world when you get right 

down to it with them gobbling up control of resources, are we planning on increasing U.S. naval presence in and around the waters 

around Palau? I mean, what is our plan there to combat this? 

General SIMCOCK. Sir, thank you for the question. Again the 

quick answer is yes. I mean, our national leadership has stated the 

vital interest within this region to the United States. As such, we 

67

are taking appropriate plans and actions to use our military to support U.S. interests in that region. 

In fact, the chairman mentioned in his statement we have concluded agreements with Australia to have rotational forces go 

through Australia. It is an increase, if you will, of forces in the region of southeast Asia conducting a rotational presence, training 

within that area. 

So, sir, yes, the quick answer is we are taking actions to increase 

military presence and commitment to the region. 

Mr. DUNCAN. Getting back to the U.S. military presence around 

the world, I am fine with that. Protect American national interests, 

wherever they may be. A lot of the countries have asked the United 

States to station military personnel there. So I personally don’t 

have a problem with any of that. 

For my second question, given the difficulties in implementing 

the 2006 base realignment agreement with Japan to relocate the 

U.S. Marine Air Base from Okinawa to Guam, is Palau being considered as a potential location for that or any other resources, to 

your knowledge? 

General SIMCOCK. To my knowledge, sir, not in the way that you 

posed the question that it would be directly tied to Guam or any 

other area. The answer would more accurately I think be that we 

are looking at all possibilities to increase engagement and to have 

ways to facilitate the commitment and presence within the region. 

Mr. DUNCAN. I have no further questions. 

Mr. MANZULLO. Mr. Sablan? 

Mr. SABLAN. Thank you very much, Mr. Chairman. 

I also would like to say thank you to the witnesses for, you know 

your testimonies and providing insight into the issue before us. I 

would like to think that sometimes, you know, like any business, 

for example, banks, they spend a fortune trying to bring in new 

customers. And then once they capture the customer, they charge 

a $5 monthly fee and lose that customer after they spent a fortune. 

It looks like this is something that we are headed here to. 

I have not heard anyone put any less importance to the relationship between the United States and Palau. It has been critical for 

what I hear. 

I also understand that the only impediment to approval of this 

agreement that any Member of Congress, from what I understand, 

has had the need for an offset of the relatively minor cost, now less 

than $184 million over 10 years because of appropriations to date. 

The administration has suggested offset proposals that the bipartisan leaders of the House and Senate Natural Resources Committees say it will not pass their committees. While one offset has 

shown to have support in Congress, the others, and this one included, seem to be standing at a stalemate. 

Either Mr. Loi or Mr. Bussanich, will the administration propose 

an offset that is more viable legislatively? 

Mr. BUSSANICH. Well, sir, I have to say that the offsets that have 

been proposed by the administration, the three that I mentioned 

have been vetted through the Department of the Interior and the 

Office of Management and Budget and are included in the overall 

budget of the President. 

68

So at this time, this is the recommendation of the administration 

to look at, particularly, these three elements, which are the abandoned mine land payments, the fee on non-producing leases, and 

the net revenue receipt sharing on minerals. 

But the position of Congress, as you have just related to me, is 

something that we will make aware, pass back up the chain as we 

discuss this. Certainly this is the proposal that is on the table at 

this point from the administration’s point of view. 

Mr. SABLAN. So there is a possibility of a more viable, much acceptable offsets? 

Mr. BUSSANICH. Well, all I can say, sir, is that the administration is firm in its support of this agreement and the continuation 

of the relationship with Palau. 

Mr. SABLAN. Thank you. 

General Simcock, thank you very much for your testimony. 

Thank you for your service to our country through the Marines. 

That also liberated the Northern Marinas Saipan particularly. 

I appreciate your insight, sir, into the national defense perspective and why this agreement is important for the United States. 

You mentioned in your testimony Palau forms a part of that security zone under the exclusive U.S. control. That expands the second 

sort of like border or boundary. That includes the Northern Marianas and Guam. 

So can you give me a better understanding of the role Palau 

plays in the security of the Asia-Pacific in relation to the other islands, such as the Northern Marianas, that chain? 

General SIMCOCK. Yes, sir. I think when you are trying to single 

out Palau, Palau is important, absolutely, but it plays a part of the 

overall regional perspective. And I would say to you that other locations are also important, but the map that I showed you, sir, 

again, that was not my map. That is another country’s map and 

the way that they are looking at from their perspective U.S. presence in the region. 

And I think that their position is we have a strong position within the Pacific. And it is a strong position militarily we need to 

maintain. 

Mr. SABLAN. So in their perspective, Palau is part of that chain 

that goes up to Guam and Northern Marinas, all the way up to 

Okinawa or Iwo Jima, for example? 

General SIMCOCK. Yes, sir. 

Mr. SABLAN. All right. So are you planning on increasing the 

U.S. naval engagements in the waters of Palau? 

General SIMCOCK. Sir, we don’t have plans to do that. 

Mr. SABLAN. So how does this impact the defense strategy in relation to the rest of the islands? 

General SIMCOCK. An example, sir, part of our training Pacific 

partnership, we have ship visits to Palau. We have small detachments of military personnel that provide engineering support on 

Palau. The relationships and the engagement that we conduct on 

Palau maintains that relationship so that we don’t lose the position 

of strength that we enjoy in the Pacific today. 

Mr. SABLAN. All right. Mr. Gootnick, I just want, Sir, to take this 

moment to thank you for the many things you do for us in the 

69

Northern Marianas and other parts of Micronesia. Thank you very 

much. 

I yield for now, Mr. Chairman. 

Mr. MANZULLO. Thank you. 

Mr. Kelly? 

Mr. KELLY. Thank you, Chairman. 

And to all of the panel, thank you for being here. General, I was 

particularly interested in your comments. I can remember years 

ago listening to a tape of General MacArthur’s address to a joint 

session of Congress in April 1951. And I had asked Mr. Fong to get 

me some of that information. 

Let me just read back to you because you referenced people who 

don’t study history. In that address, General MacArthur, when he 

talked about the island chain and talked about our Westernmost 

defense, said,

‘‘A vast moat to protect us as long as we hold it . . . [a] protective shield for all of the Americas and all of the free lands of 

the Pacific Ocean area, a chain of islands extending in an arc 

from the Aleutians to the Marianas held by us and our free allies, from this island chain, we can . . . prevent any hostile 

movement into the Pacific.’’

And not to belabor this, but there is an old saying that an ounce 

of prevention is worth a pound of cure. We seem to always—when 

a war threat is over, we down-throttle. Then, all of a sudden, we 

have to traject way up again. 

If you can, if you can articulate because I think it is so critical 

that people understand, when I look at that, that chain of islands, 

the strategic importance to us as a nation and to our allies in the 

Pacific as we look into the future, the People’s Republic of China 

and Arab states in Palau. So if we were to vacate that, if we were 

no longer to have our strong presence there, if we were to go away 

from what General MacArthur told us based on history, loss of life, 

wealth, and everything that we have invested in that area, long 

range, strategically from a defense standpoint, this is critical for us 

to maintain that presence, is it not? 

General SIMCOCK. Congressman Kelly, you put me in a difficult 

position when you start comparing me to General MacArthur, probably one of the——[Laughter.] 

Mr. KELLY. Well, it is history. 

General SIMCOCK [continuing]. Finest military minds that our 

nation has produced, sir. 

Can I put it in these terms? 

Mr. KELLY. Absolutely. 

General SIMCOCK. Sir, I am in violent agreement with you. Everything that you just said is absolutely true. I am a product of the 

all-volunteer force. And one of the reasons the all-volunteer force 

was developed was so we wouldn’t have to go through the cycle, sir, 

that you talk about, the deep downturns in defense, because postwar draw-downs and then just as the clock moved along be put into 

a position where we had to build back up again. 

So the all-volunteer force has done, arguably, a very good job of 

maintaining a very capable and credible military worldwide. If you 

narrow it down, sir, to the region that we are talking about, the 

70

argument is still the same. And, as I said to Congressman Sablan, 

we are in a good position now. And it is not a position that we 

want to relegate to anyone else. That’s about as best as I can put 

it, sir. 

Mr. KELLY. And I appreciate that. I listened to that tape several 

times over and over and over again. And I keep thinking to myself 

as I go back. We just don’t remember. Our memory falls short of 

what has happened to us before. And it kind of ensures the fact 

that we can lose it again in the future because of our refusal to believe what has happened in the past. And we keep backburnering 

these things. 

And I know the dollars are critical. I understand that. But my 

greatest fear is that we continue to believe that these threats don’t 

exist. That is the part that bothers me. 

I really believe that we have lulled ourselves into believing that 

we are truly safe and we don’t need to keep up a stronger front. 

But that western border extends far beyond California and the 

Western states. It goes way out beyond Hawaii, beyond the Aleutians. And that is where that island chain is so critical for us in 

defense as it goes forward. 

And I do know the People’s Republic of China has great plans. 

Being a person who has been to Korea many times in the southern 

part of the peninsula, I again understand you are talking about the 

people from Palau when you stepped there. The Koreans are so 

thankful for our commitment in freeing them in 1949 and 1950. So 

I’m with you on it. 

So thank you so much for your service. And all members of the 

panel, thank you so much for being here today. Thank you. Thank 

you, Mr. Chairman. 

Mr. MANZULLO. Mr. Kelly, Mr. Loi has retired as a Commander 

in the Navy. He might feel slighted if you don’t ask him that same 

question. [Laughter.] 

Mr. KELLY. I don’t want to slight anybody that has performed a 

service for our country, but I just thought with the General sitting 

here today. And I am going to try to find that CD because if anybody has listened to General MacArthur’s treatise on that and 

what he saw coming in the future—and his warning was, his fear 

was, that we would forget what we had just been through because 

time has a way of insulating us from the pain. And that is the 

problem that I see happening right now. We have to really be 

aware of how much pain that caused then and it can cause again 

if we don’t keep our guard up. So thank you. 

And if I offended anybody who served before, I certainly did not 

mean to do that. 

Mr. MANZULLO. I just wondered if Commander Loi wants to 

weigh in on it. 

Mr. KELLY. Would you, Commander? 

Mr. LOI. Congressman, I think the only thing I would add is, like 

the General, I violently agree with you. And I think I am happy 

to say that I think the administration understands that. If you 

read the Secretary’s speech, Secretary Clinton’s speech, that she 

gave in Hawaii a couple of weeks ago in the piece that she published in Foreign Policy talking about the pivot as we draw down 

from Afghanistan and Iraq, that the question that faces us is, do 

71

we do what we have done in the past after tragic campaigns and 

withdraw home and kind of tend to our domestic issues, which obviously are important, or do we pivot? Do we pivot to the region 

that is going to shape the history of this century beyond, and that 

is the Asia-Pacific? 

And so what we are very focused on—and it is not just the State 

Department. It is also other agencies at the table. It is, how do we 

pivot? How do we make sure that we don’t do what we have done 

in the past and that we build up our presence, our engagements 

in the Asia-Pacific? And that is what we are trying to do? And that 

is why, you know, this agreement is important. 

Mr. KELLY. And I appreciate that. And I think it is so important. 

I think that one of the things that I have learned is that sometimes 

our allies start to wonder about where we are, when we are with 

them really strong for a while, and then we disappear. Geopolitically, we face a great deal of loss there. 

I know in Korea, the southern part of the peninsula, it was great 

geopolitical consequences. And the course was very critical for us 

to get established for the people of Korea, southern Korea, to understand that we are still on board with them and how important 

they are to us in a geopolitical and from a defense strategy. So 

thank you again. 

Mr. MANZULLO. Thank you, Mr. Kelly. 

The problem here is not the fact that Congress does not understand the strategic——

Mr. FALEOMAVAEGA. Will the chairman yield? I just wanted to 

compliment Mr. Kelly for his keen insights and observation about 

this issue because I have been here 23 years now as a member of 

this committee and I have been saying the Pacific has been totally 

neglected by Washington for all of these years. And saying this 

with all sincerity, we keep saying it is very, very important. But 

we just don’t match it with actually giving the proper resources 

that we need to do this with. 

But I want to compliment you, sir, for your observation——

Mr. LOI. Thank you. 

Mr. FALEOMAVAEGA [continuing]. On what is happening here in 

the Pacific. And I thank the chairman for this. 

Mr. MANZULLO. Okay. The problem is money. That is the problem with this entire city in these budgetary times. 

My question is technical, Mr. Bussanich. The offsets that you 

have listed on page 5 come out of the Interior budget. Is that correct? 

Mr. BUSSANICH. That is correct, sir. 

Mr. MANZULLO. Is it necessary for the offsets to come out of the 

Interior budget or can they come out of other budgets? 

Mr. BUSSANICH. Well, sir, this issue has certainly been considered by the administration. And I think by the virtue of history 

and the relationship that the Interior Department has had with all 

the Pacific islands and the fact that it has been essentially the lead 

agency in the Micronesian region, including for Guam and the 

Northern Marianas. It has been the lead agency since the ’50s, that 

that funding relationship is and remains appropriate. 

Mr. MANZULLO. But, there are three committees of jurisdiction. 

There is State, which is well-known for wasting a lot of money; and 

72

Defense, which has a lot of issues as well. The Interior budget is 

a lot smaller—isn’t that correct?—than the other two? 

Mr. BUSSANICH. Yes, sir. 

Mr. MANZULLO. Maybe, Mr. Gootnick, you can help us on the 

technicalities of this. I mean, we really want to get this thing done. 

As I said, Congress is in agreement that Palau is extraordinarily 

important and the resources have to be there, but the issue is 

from—Mr. Gootnick, can you help us? Do you understand my question? 

Mr. GOOTNICK. Mr. Chairman, I have always had a persnickety 

relationship with cutting-edge technology. 

Mr. MANZULLO. But you are a physician, so you should be able 

to figure that out. 

Mr. GOOTNICK. I can’t speak directly to the offsets. It is my general understanding that the offset requirement really relates to a 

current rule of budgeting and the Congress. 

Mr. MANZULLO. Okay. 

Mr. GOOTNICK. And so there would be flexibility to obtain the offsets wherever you rationally find them. 

Mr. MANZULLO. So is it your understanding that if Congress 

wanted to, it could try to find the offsets in areas besides Interior? 

Mr. GOOTNICK. Well, it would be good to get concurrence from 

my colleagues at the table, but that is my understanding. 

Mr. MANZULLO. Well, it could be a legal issue and none of us has 

the exact answer at this point. It is something that we can explore 

unless anybody is comfortable in trying to answer that. 

The other question is the—I tell you what. Eni, why don’t you 

go ahead and I will just yield my time to you. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

I once read somewhere in the Bible, it says that if I were to talk 

between—well, anyway, it talks about Moses, you know, freeing the 

Israelites from the bondage from Pharaoh and it takes only 2 

weeks to walk from Egypt to go to the Promised Land, where Israel 

is now located. But, in essence, it took the Israelites 40 years to 

finally get to the Promised Land. 

I want to ask Secretary Loi because I am a little fuzzy about 

this. The administration claims that you sent the agreement to 

Congress in January of this year. However, we contacted the 

Speaker’s office, and they never received the document. 

Please, this is not putting you on the spot, Mr. Secretary Loi but 

can you follow up on this and find out exactly where this agreement is between the White House and also here at the Speaker’s 

office? Where is the agreement? Now, this was in January. This is 

almost 12 months. 

Mr. LOI. Sir, I mean, I can update you. 

Mr. FALEOMAVAEGA. Can you? 

Mr. LOI. Well, the Speaker’s office has acknowledged receipt. In 

fact, they acknowledged receipt in January and told us that it had 

been sent to the committee in February. We confirmed that again 

yesterday. So I don’t know——

Mr. FALEOMAVAEGA. Okay. 

Mr. LOI [continuing]. Where the report is coming from, but at 

least what we are being told by the Speaker’s office is that they did 

acknowledge receipt. 

73

Mr. FALEOMAVAEGA. Okay. I have a couple of laundry list items 

I would like for you, Secretary Loi, if you could follow up on this, 

I really would appreciate it. Again, you are not at all at fault for 

what has happened because you just came on board a couple of 

months ago so I fully understand your predicament. 

The cost of conducting audits, for which this continues with the 

renegotiating of the two Compacts with the Marshall Islands and 

also with the Federated States of Micronesia, you rejected this to 

continue with Palau. That is one issue. 

The other issue is also dealing with the FCC requirements dealing with fiber optics, with which Palau really would like to work, 

for which was granted also to the Marshall Islands and the Federated States of Micronesia. And this again was rejected for Palau’s 

needs. And then also the question of the postal service, the rates 

for domestic means of Palau. And this again is somewhat of a fuzzy 

situation YAD. This issue was done also by some way reconciling 

in the way that FSM and RMI also be given the same benefit in 

the uses of the postal service. 

And there is also the question of the excessive inflation if there 

is, tell me the time when something happens, that this kicks in and 

somehow we can work this thing out. Here again this is another 

issue that, as I understand, was not part of the agreement negotiations. 

Going back to General Simcock’s observation, it is one of these 

ironies that the State Department is the primary negotiator with 

this agreement, also talking about the funding in all of this. And, 

yet, when it comes to the actual funding, it goes to the Interior Department for the administration. 

Do we have other activities like this that go on that State Department could bless the negotiations; yet, the funding comes out 

of Interior and the reason why we can’t find an offset because the 

Interior budget obviously is much, much less than the State Department? 

And I would like to ask Mr. Bussanich, where does the Interior 

Department stand on this? 

Mr. BUSSANICH. Well, sir, actually, we were full partners in the 

negotiation. We were at the table on every occasion. In fact, it was 

I who was at the table on every occasion. For any of the discussions 

that took place with Palau, I was authorized to participate and was 

a full partner. 

And certainly the discussions going back to the negotiations and 

the liaising with the Office of Management and Budget and other 

budget officials was done through the Department and done 

through my office. So we are fully apprised. This is not a State Department deal that was done in the darkness without the Interior 

part of it, participating in it fully. 

I can, if you would like, answer I think some of the questions or 

at least provide a little information regarding a couple of the things 

you just raised——

Mr. FALEOMAVAEGA. Sure. 

Mr. BUSSANICH [continuing]. Particularly the question of audits, 

the postal service, and inflation. Under the original—I would like 

to point out that the Compacts between the financial provisions 

of——

74

Mr. FALEOMAVAEGA. You know, I am sorry, Mr. Bussanich, but 

my time is running. So could you submit that for the record? 

Mr. BUSSANICH. Absolutely, sir. 

Mr. FALEOMAVAEGA. I would really like the response from the Interior Department concerning this issue. 

Mr. BUSSANICH. Very much. 

Mr. FALEOMAVAEGA. I also would like to have the GAO, Dr. 

Gootnick, your observation as to the GAO study that was conducted, was this before or after the negotiations took place? I am 

just curious where the GAO comes into play on this. 

Mr. GOOTNICK. The presentation I have offered you today is 

based on our current analysis of the agreement, the September 

2010 agreement. Previously we had done work at the request of 

Congress on the Compact of Free Association in the run-up to the 

15-year review and reported out in 2008. 

Mr. FALEOMAVAEGA. Okay. You mentioned something about the 

trust fund that seems to have some problems and also seems to be 

one of the key issues in the negotiations. Can you elaborate on this 

again with the trust fund? 

Mr. GOOTNICK. Right. Well, we initially did an analysis of the 

status of the trust fund for our 2008 report and have updated that 

now three times. So what we are able to do is take the trust fund 

balance, the historic rate of return for the portfolio that is held by 

the fund, and run a variety of statistical simulations which help us 

understand essentially the health of the trust fund and are able to 

determine the rate or return it will require in order to achieve its 

projected——

Mr. FALEOMAVAEGA. Let me just say, Mr. Chairman, at this point 

in the negotiation, what we are doing, in my humble opinion, the 

leaders of Palau are not very happy with the way negotiations are 

being conducted. And the fact that there seems to be such a fuzziness going on between the administration and the Congress, there’s 

interest in trying to approve funding as part of the negotiations. 

General Simcock, many of my relatives are in the Marine Corps 

and are very proud of being part of the Marine Corps. But I think 

I need to weigh in, Mr. Chairman, as I represent the Army. I believe it is the most senior of all of the military agencies represented 

here. 

At any rate, General Simcock, we can talk about us currently 

having 11 nuclear super carriers, 21 altogether with carriers that 

we have. China only has one. In my opinion, the Chinese are not 

stupid, but they do have, what, close to 100 nuclear submarines 

floating all over the place. 

As a very knowledgeable and strategic person, General Simcock, 

if you had a choice, would you rather have an aircraft carrier or 

a nuclear submarine running around the Pacific? 

Mr. MANZULLO. You don’t have to answer that question. 

Mr. FALEOMAVAEGA. Okay. You don’t have to answer the question. I know my time is up. I just want to say one thing. 

Mr. MANZULLO. Especially with the Navy present at the table. 

Mr. FALEOMAVAEGA. I just want to say this. We spent almost $1 

trillion when we went against Saddam Hussein. We are spending 

over $120 billion a year on the war in Afghanistan. And I cannot 

in trying to explain to the leaders of Palau the $184 million, whatVerDate 0ct 09 2002 10:50 Jan 17, 2012 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 F:\WORK\AP\113011\71398 HFA PsN: SHIRL
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ever it is for the 10-year period, that my Government cannot come 

up with a solution to this very simple solution of giving what is 

proper and what is reasonable in our relationship that is important, if we really consider Palau just as important as Guam or the 

Northern Marianas or even the State of Hawaii, when it comes to 

our strategic and military policies. 

In my opinion, Mr. Chairman, the way things are going on now 

and as a—I am still learning how to speak English, Mr. Chairman. 

What do you call that? A hypothetical. 

What if the Chinese want to come and set up a marine submarine base in Palau? Wouldn’t that be a good thing for studying 

how less important these islands are or maybe——

Mr. MANZULLO. On that question, I am going to have to——

Mr. FALEOMAVAEGA [continuing]. Or even have Fiji come in, ask 

China to come and set up a submarine base. Wouldn’t that be an 

important part of our national posture looking at how important 

these islands are to simply say they are not important as part of 

our national forum. 

So, with that, Mr. Chairman, I know my time is way, way over. 

Mr. MANZULLO. It is over. 

Mr. FALEOMAVAEGA. I thank you for your patience. And I want 

to thank the gentlemen from——

Mr. MANZULLO. But this is your area of the world. 

Mr. FALEOMAVAEGA. Well, thank you, Mr. Chairman. 

Mr. MANZULLO. Mr. Sablan? 

Mr. SABLAN. Thank you very much, Mr. Chairman. 

This morning I was talking to my staff about the question I 

posed earlier. And they inserted the word ‘‘relatively minor cost,’’ 

not less than $184 million. 

I agree with nickel and diming Palau, not just have we done that 

to one of our best allies and a very important partner in the Pacific. We can’t seem to find a way to live up to that commitment 

we made in that agreement reached between our Government and 

the Government of Palau. 

And, again, I said earlier that the people of Palau are a very patient people. And I know them because I grew up with them. I was 

11 years old when I first went to Palau. They are a very patient 

people, but patience has its limits. And we have I think invested 

a large sum of money in trying to capture Palau in the sense of 

and we are going to charge them that $5 bank fee, and they are 

going to walk away unless we get to do something. 

We need to find our offsets because we can sit here and talk and 

talk until we turn blue, but I don’t think this is going to go anywhere unless we find viable offsets that is acceptable to Congress. 

And somebody needs to do that because we all agree that this is 

important. And it is enough to nickel and dime them through the 

fine work of some of us here in this table. 

I mean, I am not blaming anyone. You are doing your job. And 

then we turn around and talk among ourselves that we can’t find 

the nickel that we need that we agreed 62 percent. Only Palau can 

give that kind of bargain, only the good people of Palau. And now 

we can’t even live up to that commitment. Now, we should be 

ashamed of ourselves. 

76

I am not ashamed, but, you know, we should try and work hard 

and find a way to do this, Mr. Bussanich. I know Interior has the 

smallest pot. I agree with you. Maybe Mr. Loi and the General. I 

am not saying that we do, but we need to sit down at the table 

again and find something that is acceptable so that the committee 

of jurisdiction, Natural Resources, will move forward with this because I know the objection is already offset. And please, you know, 

this is in our interest, not in Palau’s interest. We are talking about 

the interest of the United States. 

And I thank everyone for being here today. I appreciate the time 

and the testimony. Chairman Manzullo and Ranking Member 

Faleomavaega, thank you, sir, for including me in today’s hearing. 

I am very grateful. Thank you very much. 

Mr. MANZULLO. I appreciate that. 

Mr. Bussanich, I have a job or a request for you. We are going 

to mark this up next year, and I am going to put in the markup 

that the money comes from three departments: State, Defense, and 

Interior. If you consider yourself to be the point person to work 

with our committee on this, or somebody else in Interior, we want 

to get this thing done. 

It is too critical. It is too important. It is too strategic for us to 

have all this work done and then come down to these offsets which 

come out of a department that really doesn’t have that much to 

work with the first place. I can appreciate the fact that you had 

to get creative to come up with these three offsets. 

Could you be willing to work with Mr. Su on the subcommittee 

and with the other two departments to see if they are willing to—

I mean, I am going to try to put it into organic legislation that they 

have to take Palau into consideration. 

Mr. BUSSANICH. Well, certainly, sir, I will do that. And I know 

that my colleagues here understand what you are saying. And we 

will work through the administration to find the most appropriate 

offsets for this. 

Mr. MANZULLO. Okay. Well, thank you for a very enlightened 

hearing. Eni, you are correct. We don’t spend enough time talking 

about what is going on in the Pacific. 

Mr. FALEOMAVAEGA. No. They are just a bunch of dinky islands. 

They are not that important to our overall strategic——

Mr. MANZULLO. No. Come on. I have corn in my district, and you 

have tuna. You know? 

Mr. FALEOMAVAEGA. I do want to thank you, Mr. Chairman, for 

your initiative. And I really look forward in working with you. 

Probably the best way that we can find the offsets is to have commitments from all three agencies in how best to resolve this. 

I don’t consider this problem so complicated from Palau. It is just 

that——

Mr. MANZULLO. I am sure we will get some feedback. 

Mr. FALEOMAVAEGA [continuing]. Why do we make it so complicated? This is what is really puzzling to me. I really look forward 

in working with you, Mr. Chairman, on this legislation. 

Mr. MANZULLO. Okay. 

Mr. FALEOMAVAEGA. If I may, Mr. Chairman, I would like to submit for the record, unanimous consent, a Washington Post article 

dated November 29, 2011. There is an article written by Mr. WalVerDate 0ct 09 2002 10:50 Jan 17, 2012 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 F:\WORK\AP\113011\71398 HFA PsN: SHIRL
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ter Pincus. It is entitled ‘‘Gauging the Asia-Pacific Region’s Defense 

Levels.’’ Very, very important. 

Mr. MANZULLO. You want to make it for the record? 

Mr. FALEOMAVAEGA. Yes, for the record. 

Mr. MANZULLO. For the record——

Mr. FALEOMAVAEGA. Like I said, the President has made a pivot 

and I don’t know if it is because he plays basketball. I suppose you 

pivot a lot from Afghanistan and Iraq. And now we are going to 

pivot to the Asia-Pacific region as if the Asia-Pacific region is not 

important. So I am trying to see if there is another very, very 

good——

Mr. MANZULLO. Well, we will probably have a hearing, bring 

PAYCOM in. That whole area is to the extension of——

Mr. FALEOMAVAEGA. Yes. 

Mr. MANZULLO. China is extending its borders way beyond. 

Mr. FALEOMAVAEGA. Yes. 

Mr. MANZULLO. Going into the interior of other countries I think 

is quite interesting. And it obviously saw part of this. 

Mr. FALEOMAVAEGA. Yes. 

Mr. MANZULLO. General, thank you for coming up with this very 

fascinating diagram that demonstrates exactly what Congressman 

Kelly was talking about. I want to thank all four of you witnesses 

for bringing in material, your testimony. I am going to leave the 

record open for 10 days if anybody else wants to submit any additional testimony or additional remarks. 

Eni, did you still want the General to give you the information 

on the bases? 

Mr. FALEOMAVAEGA. I just want to share with the General——

Mr. MANZULLO. Well, first of all, did you still want the information? 

Mr. FALEOMAVAEGA. Please, by all means. 

Mr. MANZULLO. Okay. 

Mr. FALEOMAVAEGA. Yes. 

Mr. MANZULLO. All right. 

Mr. FALEOMAVAEGA. I just want to share with the General that 

years ago I was privileged to go with the late Senator Chafee from 

Rhode Island. We went to Solomon Islands. And the Congress was 

appropriated $5 million to build a brand new parliamentary building for the Government of the Solomon Islands. As you know, General, this is where Guadalcanal was when Senator Chafee was a 

19-year-old Marine. Let me tell you, Mr. Chairman, it was a very 

spiritual experience for me. And the irony of it all was when we 

asked who built the parliamentary building for the Solomon Islands, it was the Japanese, very ironic of the whole thing that we 

fought the Japanese in World War II and that when the bids went 

out, it was a Japanese company that built the parliamentary building for the Government of Solomon Islands. 

Guadalcanal, we can go on and on. I cannot say enough about 

the valor and the courage of our Marines for what they have done 

for our country. For that, General Simcock, you have my utmost respect for all that you do and all of our men and women in uniform. 

Thank you for your services to our country. 

Mr. MANZULLO. Thank you very much. This subcommittee is adjourned. 

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[Whereupon, at 1:14 p.m., the subcommittee was adjourned.] 

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A P P E N D I X 

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ARTICLE SUBMITTED FOR THE RECORD BY THE HONORABLE ENI F.H. FALEOMAVAEGA, 

A REPRESENTATIVE IN CONGRESS FROM AMERICAN SAMOA


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