China courts Pacific island states in pursuit of ‘foothold’ as US risks losing influence, Rand report warns

Current agreements that provide US exclusive defence access to strategically important waters could be undermined by China’s economic incentives to Pacific states

Beijing considers island nations a critical part of belt and road strategy, and views economic support as stepping stone towards increased military presence, analysts say

Reading Time:3 minutes

US Secretary of State Mike Pompeo during his visit to the Federated States of Micronesia. Photo: AFP

Published: 5:44pm, 8 Aug 2019Updated: 10:16pm, 8 Aug 2019

Beijing is challenging Washington’s influence in Pacific island states where the US maintains strategic defence access by offering financial incentives that could lead to “debt traps”, according to a report released on Wednesday by Rand Corporation, a US government-funded think tank.

Beijing has been courting the Federated States of Micronesia (FSM), the Marshall Islands and Palau, aiming to gain access to their strategically important waters, the report said. The US currently claims exclusive rights to these waters under agreements known as the Compacts of Free Association.

“The US seeks to prevent China from obtaining such a foothold through economic and diplomatic overtures to these islands,” said Derek Grossman, a former Pentagon analyst on Pacific security and one of the report’s co-authors.

Under the compacts, US economic assistance to these Freely Associated States (FAS) is set to expire in 2023, creating an opportunity for China to fill the void, Grossman warned.

The report said Beijing could challenge American dominance by “floating economic incentives in exchange for loosened ties with Washington”, and warned these incentives, offered as part of China’s belt and road strategy, could create unsustainable levels of debt in the FAS.