MAJURO — The Compact funding gap between U.S. and Marshall Islands negotiators has been narrowed significantly since the Marshall Islands rejected the initial U.S. offer at the end of March.
A new U.S. proposal is “unlike the previous one that we immediately rejected,” Marshall Islands compact negotiator Robert Muller said Friday. “This one is more forthcoming, it narrows the gap. We can work with it.”
He said Marshall Islands negotiators returned from a week of technical meetings in Washington in late May much more upbeat than their late March visit.
The new Marshall Islands proposal and counter-offer from the U.S. are focusing on a 20-year term, through 2023.
The U.S. has increased its offer by nearly $10 million a year. In March, the U.S. offered an annual base grant of $23.8 million, but has now increased that to $29.8 million and has added an additional $4.1 million for special needs at Kwajalein Atoll, home to 10,000 Marshall Islanders who live in slum conditions next to the key U.S. missile testing range. The U.S. is also offering to start annual trust fund contributions at $7 million.
This brings the U.S. offer—base grant, Kwajalein special needs and trust fund—to $40.9 million a year.
The Marshall Islands has countered with a request for a base grant of $36.6 million and a first year trust fund contribution of $12 million, for a total of $48.6 million—$7.7 million above the U.S. offer.
The original Marshall Islands request totaled $68 million per year over a 15-year period. The Marshall Islands has agreed to the U.S. government’s proposed 20-year term, rather than a second 15-year period. The first Compact funding period was for a 15-year period, starting in 1986, with a two-year grace period that expires in Oct. 2003.
Muller said that beginning in 2024, when the new package is slated to end, the trust fund, if funded at Marshall Islands-requested levels and earning at 6 percent annually, could produce an annual payment for government operations of about $32 million.
Muller said that while the Marshall Islands negotiators see the latest U.S. proposal as a more positive sign from Washington, “we do have concerns about it.”
He commented that the U.S. had reduced its annual proposed trust fund contribution from $8 million to $7 million, while the Marshall Islands is seeking $12 million in the first year. “It must be at this level for 20 years to generate proceeds of at least $31 million,” Muller said. “If the U.S. can’t do it, then we suggest a 25-year term at the lower level to sufficiently build up the trust fund to fill the financing gap (at the end of the Compact).”
Under its Compact with the U.S., the Marshall Islands is an independent nation “freely associated” with America and entitled to federal assistance, programs and grants. Marshallese, like the citizens of the other freely associated states of Palau and the Federated States of Micronesia, are allowed to migrate to the U.S. and its territories.
In return, the freely associated states provide access to the U.S. military and consult Washington, D.C. regarding their national defense and foreign affairs policies.
