MAJURO — The U.S. State Department is demanding significantly increased control over accountability measures in the next phase of long-term funding for the Marshall Islands.
It is “necessary to improve monitoring and oversight of the U.S.-provided funds,” the State Department says in a funding proposal to the Marshall Islands that Majuro officials released yesterday.
The Marshall Islands late last month rejected the U.S. offer of $31.8 million in annual funding—a more than 50 percent cut over what the Marshall Islands is seeking. “The amounts proposed will not promote, but hinder political, social and economic stability in the Marshall Islands,” Marshall Islands Foreign Minister Gerald Zackios told U.S. negotiators in a letter rejecting the U.S. proposal.
Zackios said the U.S. proposal did not provide a “viable and realistic framework for future economic assistance, and is therefore unacceptable in its current form.”
The U.S. wants to control a Joint Economic Review Board proposed by the Marshall Islands to review use of U.S.-provided funding, as well as to institute stricter grant enforcement provisions than existed in the first 17-year funding period of the Compact of Free Association between the two nations that ends next year.
“The U.S. shall appoint three members including the Chairman, and the Marshall Islands shall appoint two members to the JERB,” State Department Compact negotiator Albert Short proposed to the Marshall Islands.
In December, however, the Marshall Islands proposed the JERB to the U.S., with the recommendation that the each side would appoint two members and the other member would be an independent third party agreed to by both sides. The Marshall Islands wants the chairmanship to rotate annually.
The aim of the JERB is to assess the performance of the Marshall Islands government in meeting agreed-to economic development performance standards.
In other measures proposed to give the U.S. increased control of Marshall Islands spending, Short said:
• The U.S. intends to amend the “full faith and credit” provision for future Compact funding. The U.S. will continue to ensure a multi-year “mandatory” appropriation for Compact funding from the U.S. Congress but will not extend the ability of the Marshall Islands to pledge or assign future Compact funding as a source for repaying debt, without specific prior approval of the U.S. government. The Marshall Islands used the “full faith and credit” provision to obtain loans in the late 1980s, using annual U.S. funding as collateral to pay off the debt. By the late 1990s, debt payments amounted to approximately 25 percent of the national budget.
• The U.S., after consulting with the Marshall Islands, will each year attach grant terms to federal grants provided to the islands to ensure the effective use of the U.S. funding. The U.S. “may withhold funds for violation of grant terms and conditions,” the State Department proposal said. During the first Compact, U.S. agencies rarely held up funding to insure compliance with grant funding requirements.
• On a planned Marshall Islands national trust fund, the U.S. is proposing a similar membership makeup as with the JERB. The U.S. would appoint three members, including the chairman, and the Marshall Islands would have two trustees on the board.
