The Implications of Losing Pacific Power: US Security, Economy, and Alliances

For the United States, a powerhouse in the Pacific, it is crucial to maintain favorable relationships with the island nations situated between Hawaii and the Philippines. A diplomatic representative from the Freely Associated States (FAS) tackled this late last month, speaking at the Hudson Institute.

FAS special envoy Joseph Yun said the US should continue fostering influential ties with the Federated States of Micronesia (FSM), the Republic of the Marshall Islands, and the Republic of Palau to remain a Pacific power.

Increasing US Engagement in the Pacific with Special Envoy Joseph Yun | Hudson Join me tomorrow for an important discussion with a remarkable diplomat about America’s future as a Pacific power! ⁦@StateDept⁩ ⁦@RMIMission⁩ #Palau ⁦@FSMPIO⁩ https://t.co/m5r7zz3d5E

— Patrick M. Cronin (@PMCroninHudson) April 27, 2023

As you all know by now, China has been quite aggressive in rapidly modernizing its military in recent years, mainly focusing on developing advanced technologies such as hypersonic missiles, stealth aircraft, and, notably, its naval capabilities. While Beijing has been cranking up its defense spending to boost its military presence in the South China Sea, it also has its eyes set on expanding its influence in the southwestern part of the Pacific region.

Driven by its expansionist ambition, Beijing has been seeking to pursue this goal in the Pacific region primarily through diplomatic and economic relations, which is something Washington has been slow to respond to due to other factors.

According to an article published by Asia-Pacific Center for Security Studies in October last year, Washington’s oversight in addressing the growing concerns – including climate change, economic development, and sea pollution – in the southwest Pacific region has enabled China, in one way or another, to spread its influence among these island nations. It also mentioned how America’s quest to fight against so-called Islamic terrorists, especially in the aftermath of the September 11 attacks, had somehow paved a one-track mind and failed to consider that a poverty-ridden nation like China could and would eventually rise as the second-largest economic and military powerhouse.

Furthermore, the gap has allowed China to progress in its agenda by providing financial aid and infrastructure development assistance to the struggling three island nations, as well as building political relationships and influence over the region. While Beijing has primarily used diplomatic and economical approaches, its growing military strength and capabilities recently enabled the country to establish a naval presence, particularly with the Solomon Islands.

The second island chain is on #China's strategic horizon, since it presents a long-term roadblock to Beijing's global maritime ambitions. Given the small size of the #Pacific island countries, China has a few tools to make inroads — and at little cost. https://t.co/JiJmj3RKkG pic.twitter.com/LiyAASq2VR

— RANE (@RANEnetwork) February 23, 2019

Going back, Yun said that the US is trying to catch up and answer complaints it received from the Pacific Islands that piled up over the years, mentioning an ongoing negotiation for a new 20-year compact. This renewed deal will cover infrastructure and development, including the preservation of fisheries and other natural resources, as well as education, health services, and immigration with the three island nations.

Additionally, Yun highlighted some of China’s aggressive peddling of influence through bribery, physical threats to local officials, and espionage, which might pose a challenge to the US.

Digging deeper into the muddy approach of Beijing, Yun referenced a 13-page letter from outgoing Micronesian President Daniel Panuelo, accusing China of staging “political warfare” in his country and threatening his personal safety.

Prior to the release of the recent lengthy letter, Panuelo previously wrote two highly influential letters, each covering analysis of China’s behavior in its attempt to build diplomatic relations with FAS, which Beijing might have viewed as a threat to its ambition in the region as the Micronesian President seeks to maintain strong ties with Washington.

In his letter, cited by The Diplomat, Panuelo expressed his concern that China is using political warfare and “Grey Zone” activities to manipulate Micronesia’s position in the event of a potential conflict between China and Taiwan as the advancing superpower Beijing, sees the Pacific island nation as a crucial player.

Reportedly, China considers FSM, along with Marshal Islands, as a part of the “Second Island Chain,” a crucial theoretical line of defense that the US and its allies sustain to counteract Beijing’s expanding military presence in the Pacific region.

In case a conflict arises between China and Taiwan, Panuelo said that the former country wants to ensure FSM aligns with them instead of favoring the US or remaining neutral. By gaining political influence with Micronesia, China could advance its agenda, thereby recognizing Beijing’s efforts as a threat to FSM’s sovereignty and stability.

Panuelo exposed the covert bribery behind closed doors between FSM officials and representatives from the People’s Republic of China (PRC), stating:

“One of the reasons that China’s Political Warfare is successful in so many arenas is that we are bribed to be complicit, and bribed to be silent. That’s a heavy word, but it is an accurate description regardless.”

“At worst, in the short-term, it means we sell our country and our sovereignty for temporary personal benefit,” Panuelo added. “At worst, in the long-term, it means we are, ourselves, active participants in allowing a possible war to occur in our region, and very likely our own islands and our [neighbors] on Guam and Hawaii, where we ourselves will be indirectly responsible for the Micronesian lives lost.”

Losing grip on the Pacific power could trigger a significant shift in the balance of power, simultaneously potentially reducing US military presence and influence and allowing China to build bases across the region. The imbalance could also pose economic repercussions for the US as it loses its foothold in the Pacific, such as decreased access to natural resources and trade opportunities—not to mention the potential security threat, as Beijing’s military expansion could challenge Washington’s ability to project power in the area. Another unfavorable consequence worth noting is a likely loss of support from the US traditional allies, including the three island nations that have been going on since the end of World War II.

FAS and the US are nearing completion of a new 20-year compact, which is expected to undergo final approval by Congress, as the existing one is set to expire at the end of September this year.