Compact Chief Representative Joshua Koshiba in a letter to Alcy Frelick, Director, Office of Australia, New Zealand, and Pacific Islands Affairs and head of the U.S. advisory group, dated Oct. 22, said that that the offer of $156 million in direct assistance is “nothing more than an arbitrary determination made without due consideration of the facts of the ground here with respect to the funding Palau needs to continue to thrive.”
Direct assistance to Palau was supposed to stop this year but both members of the respective Compact advisory groups agreed to a continuance of financial assistance.
The two groups met on Oct.19 but no agreement has been reached.
Koshiba calls the Oct. 19 meeting as a charade because the US did not consider the financial analysis presented by Palau and why they need more than the amount offered to them.
Koshiba said Palau will not be pressured by a timetable being set by U.S. to conclude the review. The U.S. wants a conclusion of the review last Oct. 19.
“Palau will not be pressured by a timetable not of our own making and we will not agree to accept a package that we do not believe is responsive to the requirements of the review, adequate and in our best interest,” Koshiba said.
The US has offered a financial package of $178.5 million which includes over $22 million which is intended to support the United States Postal Service to all Freely Associated States.
Palau wants a financial assistance on the same level in has been receiving all this years. Palau is receiving at least $15 million in direct assistance, that amounts to $225 million for the next 15 years.
Chief Compact Representative Joshua Koshiba said that the amount minus the postal service money, will only be at $156 million.
Koshiba said the US offer of $156 million are inadequate it will result to lowering of per capita income of Palau by 23 percent in the next six years and 14 percent in the next 15 years.
The proposal, he said would also mean a 26.4 percent cut in Palau’s budget- an amount equal to 12.9 of the islands gross domestic product.
The offer he said will zero out Palau’s Trust Fund by 2028, well before the 15th anniversary of the Compact in 2044.
The positive offer by the US is the continuance of programs such as postal, Federal Aviation Administration, education, health, national weather service and agriculture.
The two countries are locked horns over the amount, Palau said that the U.S. should honor its commitment under the Compact.
“We are under the distinct impression from your repeated statements about Palauan independence , foreign aid , and aid levels to other countries etc. that you consider Palau to be nothing more than another foreign country seeking aid and the U.S. is nothing more than another donor to Palau,” Koshiba said.
Koshiba said Palau chose to develop from territory status to become a state in free association with the U.S. and not just another independent country.
He said that because of this agreement, “Palau gave the U.S. significant basing rights for 50 years and right to deny access to any other country in perpetuity – a cession that can call our national sovereignty into question.”
Koshiba said under Title 4, Article II of the Compact, when there are disputes between governments there should be a conference and if necessary a binding arbitration.
Koshiba said the US needs to make improvements in its proposal and Palau in turn is also ready to make any potential modifications and improvements of a U.S. offer to a thorough and credible analysis.
He said a meeting is not necessary unless the U.S. gives a meaningful response to the economic analysis of the existing proposal.
