U.S. Leadership in the Pacific Is at Risk

The United States became a Pacific country more than 100 years ago, acquiring strategic positions in Hawaii, the Philippines, Samoa, Guam, Midway, and Wake Island in a manner that the famous U.S. historian Ernest May described as “unconcernedly and almost unthinkingly” in his book, Imperial Democracy: The Emergence of America as a Great Power. Today, the same process might just be occurring in reverse. In a fit of political absentmindedness, the United States stands on the verge of relinquishing a major piece of the geopolitical chessboard that has been the bedrock of U.S. leadership in the Pacific for decades. An obscure agreement that gives the United States a firm foothold in the region awaits congressional funding approval, in the absence of which China will be handed a significant opportunity to weaken U.S. security posture in the Indo-Pacific.

For the last four decades, the United States has been party to agreements known as the Compacts of Free Association (COFA) with the sovereign states of the Republic of Palau, the Republic of the Marshall Islands, and the Federated States of Micronesia. These relationships have provided the United States exclusive military access in exchange for economic assistance and access to certain federal programs and services. These expired in fiscal year (FY) 2023 for two of the countries and will expire at the end of FY 2024 for the third. These agreements, which enjoy broad bipartisan support in Washington, were successfully renegotiated for 20-year extensions in a process started by the Trump administration and concluded by the Biden administration. Yet, as congressional budget battles intensify, COFA continues to pop in and then out again of funding bills. The sum of $360 million per year—less than 0.04 percent of the annual defense budget and 0.006 percent of the federal budget—to fund the agreements are in danger of dropping off the political map—and out of the budget.

The strategic case for funding COFA is clear. These agreements are the foundation of the U.S. historical relationship with the broader Pacific region and allow for unilateral U.S. defense access from the Philippines to Hawaii. Failing to fund COFA would undercut three thriving democracies, critically undermine the U.S. military’s force posture, heighten questions about U.S. reliability, and unnecessarily give Beijing an opening to expand its influence and military access across the Pacific.

But as waffling on funding COFA drags on, this is becoming about much more than just maintaining U.S. strategic advantages in the North Pacific. Delays in funding COFA are signaling to friends and foes alike U.S. hesitancy to match action to rhetoric. This potential miscalculation is being fueled by three dangerous assumptions: that congressional waffling doesn’t matter, that kicking the COFA can down the road is a viable option, and, most critically, that these countries will wait indefinitely for Washington to act.

The lack of action on COFA has already harmed U.S. credibility in the Pacific. This comes as the United States strives to demonstrate its commitment to the region after decades of relative neglect. Recent U.S. reengagement with the Pacific region has been aimed not just at creating new initiatives and assistance but also institutionalizing U.S. presence and commitment in ways that speak to continuity. Yet the inability to fund COFA—arguably the United States’ most foundational and long-lasting commitment in the region—sends a clear signal to all 14 Pacific countries that the United States is unwilling, and perhaps not even able, to deliver on this rhetoric.

Moreover, the United States’ inability to fund COFA plays directly into the Chinese narrative of the United States as an unreliable partner—a superpower in decline that is unable to maintain even the most foundational of international commitments. Worse, it risks dampening faith in the power of democratic institutions by undercutting the U.S. assertion that democracies can deliver, both for their people and for the world. As Washington continues to kick the can on COFA, these leaders will start to look elsewhere. It would be ignorant to think they have not already started considering, perhaps only peripherally, other offers. Beijing is nothing if not opportunistic, and China has proved itself adept at making quick offers unhampered by a democratic process of debate. 

These nations are strongly inclined to partner with the United States. In addition to historical and cultural ties, they share with the United States common ideals of democracy, freedom, and independence. But the challenges facing Pacific nations are great. Climate change continues to ravage the region, causing mass flooding, storm damage, and rising sea levels that complicate everything from low-lying critical infrastructure to an agriculture-dependent soil base. Covid-19 wreaked havoc on economies that rely heavily on tourism, and the resulting economic slowdown has affected every critical sector from healthcare to education. Pacific leaders are hardly ignorant of the pitfalls inherent to Chinese dealmaking, but for governments looking to meet the pressing needs of their citizens, the time may well be approaching when pragmatic decisions trump the hope for future solutions.

Global competition with China is challenging under the very best of circumstances. It involves difficult and complex issues such as preserving peace across the Taiwan Strait, responding to massive disinformation campaigns, and offsetting economic coercion. Yet, COFA presents an opportunity for an easy win—the low-hanging fruit of great power competition. If the United States cannot do the easy, there is less chance it can undertake what is required for intense, complex, and long-term competition.

The strategic importance of COFA cannot be overstated. The United States has willing partners. The budget is relatively small. China is waiting in the wings. Congress understandably has major issues on its plate, but the United States would be hard-pressed to recover from such a strategic miscalculation, and this moment calls for bipartisan action. Competition with China can sometimes take on an abstract quality. COFA offers Washington not just a concrete opportunity—it provides a test and one the United States cannot fail.

Charles Edel is senior adviser and Australia Chair at the Center for Strategic and International Studies (CSIS). He served on the U.S. Secretary of State’s Policy Planning Staff from 2015 to 2017. Kathryn Paik is senior fellow with the Australia Chair at CSIS and previously served as Director for the Pacific and Southeast Asia on the National Security Council from 2021 to 2023.