*EPF312 06/18/2003
Transcript: Panel Chair Concerned Over Compact Bill's "Awkward Timing"
(Leach says short calendar leaves little margin for error) (1120)

Congress will have only a short time to deal with the bill to reauthorize the Compact of Free Association between the United States and the Republic of the Marshall Islands (RMI) and the Federated States of Micronesia (FSM), according to Representative James Leach (Republican of Iowa).

Leach, the chairman of the House International Relations Subcommittee on Asia and the Pacific, made those observations in remarks June 18 during a hearing to reauthorize the Compact of Free Association.

The foreign policy and strategic interests of the United States "have been well-served by the Compact of Free Association," Leach said in opening remarks.

"The islands have been steadfast friends of the United States and enjoy a special place in the hearts of the American people," said the Iowa Republican.

Leach noted that under the current Compact, U.S. financial assistance to the island nations and U.S. defense rights had been set to expire in 2001, but were continued for an additional two years during renegotiations on a new agreement.

The Bush administration, Leach said, had recently concluded revised Compacts of Free Association with both the FSM and RMI.

"The Administration is expected to transmit to Congress a package of authorizing legislation for those Compacts within the next week or two," Leach added.

The Iowa Republican then noted his subcommittee's concern over "the awkward timing" of the submission.

"Assuming we receive the draft legislation in the next few days, Congress will still be left with just a few weeks to act before the current Compact lapses at the end of the fiscal year (September 30, 2003)," Leach said.

The short legislative calendar, Leach cautioned, "leaves us with little margin for error."

He said the House would move to reauthorize the Compacts "shortly after we return from the July 4 recess."

Following is the text of the chairman's statement:

(begin transcript)

Opening Statement
Representative James A. Leach
Chairman, Subcommittee on Asia and the Pacific
Hearing on Reauthorizing the Compacts of Free Association
June 18, 2003

On behalf of the Subcommittee, I would like to welcome our distinguished witnesses. We are pleased to welcome Mr. Albert V. Short, Director, Office of Compact Negotiations, U.S. Department of State, Mr. David B. Cohen, Deputy Assistant Secretary for Insular Affairs, U.S. Department of the Interior, and Ms. Susan B. Westin, Managing Director, International Affairs and Trade, General Accounting Office. I should also note that we are pleased to welcome to our hearing today a Member of the Armed Services and Resources Committees, Representative Madeleine Bordallo, who has the honor of representing the great Territory of Guam. You are most welcome.

At the outset, I would like to express my appreciation to the Administration for agreeing to the unusual format for today's hearing. Customarily Executive Branch witnesses testify first, but because of the busy legislative schedule the Administration has agreed to accommodate the Subcommittee in this instance. So there is no misunderstanding in terms of precedent, the Administration always has the discretion to insist on testifying prior to other governmental or private sector witnesses.

Our hearing today will focus attention on U.S. efforts to renegotiate "the Compacts of Free Association" with the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI).

The United States has shared a uniquely close and mutually beneficial relationship with the peoples of Micronesia and the Marshall Islands for the past half-century. For almost forty years after World War Two, the U.S. administered both Micronesia and the Marshall Islands (along with Palau and the Northern Mariana Islands) as part of the United Nations Trust Territory of the Pacific Islands. In the Marshall Islands, the U.S. conducted atmospheric nuclear tests during the 1940s and 1950s, and has maintained a U.S. Army base and missile test range at Kwajalein atoll since 1964.

In 1986, Micronesia and the Marshall Islands chose to become sovereign states and entered into a Compact of Free Association with the United States. The Compact was intended to ensure self-government for the new island nations, to assist them in their economic development toward self-sufficiency and to advance certain national security objectives.

In general, U.S. foreign policy and strategic interests have been well-served by the Compact of Free Association. The islands have been steadfast friends of the United States and enjoy a special place in the hearts of the American people. It is impressive, for example, how many Marshallese and Micronesians serve in the U.S. armed forces relative to the islands population.

Unfortunately, this Subcommittee was greatly concerned to discover that the first Compact was marred by a combination of poor planning, mismanagement, misuse of funds, and inadequate oversight. We are therefore keenly interested to know how the new Compacts propose to remedy this circumstance both with respect to project design and implementation.

Under the current Compact, U.S. financial assistance and U.S. defense rights were set to expire in 2001, but could be continued for an additional two years while the nations renegotiated the expiring provisions. The U.S. and the two island nations began renegotiating those provisions in the fall of 1999, and recently finalized revised Compacts of Free Association with both the FSM and the RMI. The Administration is expected to transmit to Congress a package of authorizing legislation for those Compacts within the next week or two.

Here I would underscore the Subcommittee's concern with the awkward timing of the Administration's legislative submission. Assuming we receive the draft legislation in the next few days, Congress will still be left with just a few weeks to act before the current Compact lapses at the end of the fiscal year. The short calendar leaves us with little margin for error. Nevertheless, we intend to move expeditiously to reauthorize the Compacts shortly after we return from the July 4 recess.

I will leave it to the Administration to describe the new Compacts in detail. Suffice to say that these authorizations involve substantial financial commitments by the United States to the FSM and RMI through 2023. The new Compacts anticipate an end to U.S. annual funding by capitalizing a trust fund for each country that eventually will provide an income stream after U.S. grant assistance ends. The Subcommittee fully expects not only that the new Compact funding will be structured to ensure more robust oversight and planning than occurred under the original Compact, but that the U.S. will also be able to fully ensure appropriate use of trust fund monies.

We appreciate your appearance today and look forward to your testimony.

(end transcript)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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