FSM's outgoing President David Panuelo Photo: RNZ / Kelvin Anthony
The Federated States of Micronesia's diplomatic ties with China could give the country "leverage" when it comes time to sign off its third Compact of Free Association says a Marshall Islands journalist.
The FSM signed a memorandum of understanding (MoU) that oulines the framework for what its updated compact will look like last week. The full agreements are expected to be signed in the coming months.
Palau and the Marshall Islands signed memorandums of understanding in January.
The compacts give the United States exclusive rights to maintain defence assets in the countries in exchange for financial assistance.
After signing the MoU, FSM's president, David Panuelo said he negotiated "the big top numbers" before signing off on the agreement.
Panuelo said during the 2003 to 2023 compact agreement, the FSM received about $US80 million annually in sector grants, this will increase to $US140 million a year for the 2024 to 2044 period.
"We can expect that, in the next compact period, we will be able to provide much better education, health and infrastructure services to our citizens, including pay level rises for teachers and doctors and more and better supplies for our schools and health centres," Panuelo said in a speech addressing the nation.
Giff Johnson Photo: Fanny Moulin/Yokwé Films
Majuro-based RNZ Pacific correspondent Giff Johnson said the current geo-political competition between China and the US did give the FSM "a bit more leverage".
"It certainly raises the FSM's visibility in Washington and I think the US has shown great willingness to work with president Panuelo," Johnson said.
"You have both Republicans and Democrats saying the same thing, which is get these agreements locked in with Palau, the FSM and the Marshall Islands.
"These three countries may be the only thing that the Republicans and Democrats in the US Congress agree on; both political parties have been vehement in calling for the executive branch to get things resolved."
The FSM has a Chinese Embassy in its capital and is the only country of the three freely associated states that have diplomatic ties with China.
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Johnson said the Marshall Islands was important for the United States because of the Kwajalein missile range and Palau had security value due to its proximity to Asia.
"Meanwhile, the FSM has never had a US military presence but the diplomatic ties with China in the current geopolitical competition really does give them a bit more leverage."
He said when the initial compacts were negotiated in the 1970s and 1980s, the countries had security value for the United States because of the Cold War.
However, later Washington "back-burnered" the nations when tensions dropped.
"Here we are, the last three, four years with the new geo-political situation between China and the US. So that's elevated the leverage of the islands, even if it may still be relatively modest," said Johnson.
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