On Palau

June 16, 2011
10:47 AM
 Opening Statement of Chairman Bingaman
“Good morning, and welcome to all of our witnesses. The Committee will receive testimony on S. 343, which is legislation to approve the Agreement reached last year between the United States and the Republic of Palau. 
“Palau is one of the United States’ closest and most reliable allies. This relationship began in 1944 at the battle of Peleliu (Pay-lay-loo) where over 1,700 U.S. servicemen lost their lives.  The relationship grew during the 47 years that the U.S. administered Palau under the U.N. Trusteeship.  Today, this close relationship continues under the Compact of Free Association that was entered into force in 1994 and which affirms our nations’ shared commitment to democratic principles, economic development and mutual security.
“The Agreement to be approved by S. 343 was reached at the conclusion of the joint 15-year Review as called-for in the 50-year Compact between the U.S. and Palau. This Agreement would make several modifications to the Compact, including an extension of U.S. annual financial assistance – on a declining basis – until being phased-out in 2025.  $215 million, or an average of $15 million annually, would be provided for operations, fiscal consolidation, construction, maintenance and trust fund contributions. This proposed second term of assistance would be a substantial reduction from the average of $37 million annually that was provided during the first term of assistance.
“The Agreement would also enhance accountability by requiring Palau to undertake financial and management reforms, and by authorizing the Secretary of the Interior to delay payment of funds if the U.S. determines Palau has not made progress in implementing those reforms.
“The departments of State and Defense have recently written to the Committee to underscore the vital role of the Compact in meeting the United States’ security interests in the Pacific.  The State Department wrote, ‘This right of strategic denial (under the Compact) is vital to our national security.’  The Defense Department wrote, ‘Failure to follow through on our commitments to Palau, as reflected in the proposed legislation, would jeopardize our defense posture in the Western Pacific.’  We will insert the full text of these letters, from the departments of State and Defense, into the Record.
“Unfortunately, notwithstanding the close historical ties between the U.S. and Palau, and the vital role that the Compact plays in regional security, the current fiscal and political situation in Congress means that this bill cannot move forward without a provision to offset the 10-year, the $194 million increase in mandatory spending that is directed by the bill.
“So we look forward to hearing from the Administration witnesses today, specifically on proposals for this offset, and to continue to work with the Administration to consider what options are available, if that becomes necessary.”
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