The United States and Allies Should Make a Big Offer to the Pacific Islands

Earlier this week, the Biden administration announced the launch of the process to establish a new Indo-Pacific Economic Framework for Prosperity (IPEFP). When concluded, the IPEFP will serve as an economic cooperation initiative that brings together 13 market-oriented nations and creates a trade- and investment-centered economic partnership. As the process unfolds, and with a great power competition underway, the Biden administration should think big and prioritize building transformative partnerships with the Pacific Island countries, prioritizing the three P’s: partnership, peace, and progress.

The Chinese foreign minister, Wang Yi, has embarked on a Pacific tour of unprecedented scope and ambition, traveling to eight countries across the region in 10 days. Ahead of this trip, reports have emerged that Beijing is seeking to expand its influence in the region by creating a new Pacific-wide partnership covering issues ranging from cybersecurity to trade and investments. The tour has stoked anxieties in Washington and Canberra after Beijing signed a controversial security pact with the Solomon Islands last month, and reports of similar arrangements with Papua New Guinea emerged last week. China’s growing footprint in the Pacific region is a cause for concern, and Washington should not take it lightly.

Constituted of 15 sovereign island states, the Pacific Island countries are scattered across a geographic area that is 15 percent of the planet’s surface area (larger than the African continent). Although small and geographically isolated, the countries have a combined population of over 10 million, celebrate diverse and rich cultures, are home to abundant natural resources, and are full of biodiversity. Because of their geographic characteristics, these countries are endowed with limited infrastructure connectivity that deters private investments, impacting their performance on economic growth and human development indicators. At the same time, the Pacific Island countries sit astride geostrategic sea lines of communications between the United States, Australia, and the broader Indo-Pacific region.

The newly appointed Australian prime minister Anthony Albanese and his Labor party are capable partners for the Biden administration on broader security and economic cooperation issues. One of the first moves of the new Australian government was to signal a major uptick in priority and attention that Australia will give to its “Pacific family.” Moreover, Australia’s membership in the Quadrilateral Security Dialogue (Quad) makes it a natural partner for broader cooperation. The Biden administration should build on the momentum that it gained with Australia and like-minded allies coming out of the IPEFP announcement, and assess how the framework can be developed to provide economic partnership opportunities for the Pacific Islands. Specifically, the Pacific Island countries can tremendously benefit from a more integrated regional economy that would foster trade, as well as new private investments in climate-resilient and sustainable infrastructure capacity.

But the United States would be wise to exercise caution and humility if it transitions from a light footprint in the Pacific Islands to something of greater substance. Australia is the largest bilateral donor in much of the Pacific (New Zealand is a close second) and is a hotbed of Pacific expertise and connectivity that the United States will need. For a new alliance to generate the paradigm shift needed and to shore up U.S. relations, it should put the sovereignty and aspirations of Pacific Island communities at the heart of its engagement, recognizing these countries are much more than a theater for geostrategic competition. Approaching these countries as pawns in a China v. the West battle will be counterproductive. Indeed, the president of the Federated States of Micronesia has already signaled his unwillingness to engage in any security arrangement that would trigger conflicts between China and the West.

The Biden administration should not sit on its hands bilaterally while it looks to reset an ambitious multilateral alliance arrangement.

First, the Biden administration should prioritize, accelerate, and conclude its ongoing negotiations to renew the Compact of Free Association (COFA). Signed in 1982 and codified into U.S. law by 1986, COFA established an economic and military assistance-based partnership between the United States, the Federated States of Micronesia, the Marshall Islands, and Palau. In 2003, COFA was renewed for another 20 years and is now set to expire in 2023. President Biden recognizes that letting COFA expire would be a strategic blunder and has designated Ambassador Joseph Yun a special envoy for compact negotiations to better understand the terms for renewal that would be mutually favorable. But given the pace at which Beijing is moving, it is prudent for Washington to accelerate and conclude its negotiation process and do so while offering a superior alternative to the Chinese plan.

Second, the United States should be creative and collaborative in its approach. In addition to supporting and enhancing Australia’s efforts, U.S. officials ought to lean on the expertise of other bilateral donors, such as New Zealand and Taiwan, who have long-standing interests and investments in the Pacific Island countries. Specifically, these experts can play a crucial role in developing sustainable business practices around travel, tourism, and the hospitality sector, mining and other extractive industries, and fisheries. Furthermore, the recent electoral verdict in Canberra heralds the beginning of a new chapter in the Australia-New Zealand relationship. The prime ministers, Jacinda Ardern and Anthony Albanese, have a significant overlap in their foreign policy and security strategies due to their political orientations. They are, thus, well-positioned to complement their countries' bilateral development assistance and efforts to increase economic resilience and integrity among Pacific Island countries and the region at large.

In addition to bilateral cooperation, the Asian Development Bank (which the United States coleads with Japan as the largest shareholder) can also be leveraged to support development projects that focus on digital connectivity, higher education capacity building, and climate-resilient energy infrastructure development. Japan, France, and possibly South Korea would also be helpful partners.

Third, the United States should establish its credentials as a serious, long-term, and trusted player in the Pacific Islands. This can be achieved in several ways which the United States can consider:

  1. A high-level listening tour of the Pacific by senior officials, including critical visits beyond capital cities

  2. Increasing the Peace Corps volunteers it will redeploy to Pacific Island countries

  3. Appointing high-caliber, career U.S. foreign service officers with relevant technical expertise as U.S. ambassadors to the 15 nations

  4. Separating the Pacific Affairs component from the State Department’s Bureau of East Asian and Pacific Affairs, appointing a new assistant secretary of state to head the new bureau

  5. Orienting its development finance tools and capabilities to catalyze private capital into infrastructure development projects, particularly in the digital and communications sector

  6. Convening an annual summit (ideally in one of the 15 island countries) attended by the heads of governments of the Pacific Island countries and the president of the United States

  7. Investing in greater academic and sector expertise among U.S. scholars

  8. Scaling up the U.S. South Pacific Scholarship Program (USSP) to increase soft power exchange between the United States and the region while building domestic knowledge capacity that can meet the region’s most pressing development needs

  9. Swiftly moving to operationalize the Memorandum of Understanding between Australia’s Department of Foreign Affairs and Trade and the U.S. Agency for International Development

Daniel F. Runde is senior vice president, director of the Project on Prosperity and Development and holds the William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Bridi Rice is a Fulbright visiting scholar wih the CSIS Project on Prosperity and Development.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2022 by the Center for Strategic and International Studies. All rights reserved.

Daniel F. Runde
Senior Vice President; William A. Schreyer Chair; Director, Project on Prosperity and Development
Bridi Rice
Senior Associate (Non-Resident), Project on Fragility and Mobility and Project on Prosperity and Development