Kwajalein: the key to a

Business

Kwajalein: the key to a Marshalls-US economic deal

By Giff Johnson

WITH renegotiation of

the economic terms of the Marshall Islands-United States Compact of Free Association looming in 1999, the big question is how will the islands fare with a cost-cutting Republican-controlled Congress who are expected to question why, after $7OO million was provided over the first 12 years of the pact, there is little economic development to show. The

Marshalls, while acknowl edging that some of the gov ernment investments were “overambitious” and “some were questionable”, says that it has made a bona fide attempt to develop the econ omy - but that in 13 years it has been impossible to achieve the development which US strategic interests intentionally thwarted for decades during the islands’ status as a United Nations Trust Territory.

Critics, however, including

the State Department, contend that the Marshal! Islands has yet to demonstrate its willingness to make the necessary reforms that will spur development of the economy and break the decades-old dependence on funding from Washington, D.C.

While there is debate over Marshall Islands’ use of its Compact funds, there is no argument that the country remains largely dependent on the US. In the cur rent fiscal year budget, more than 55 per cent of the funding is directly from the US, while indirect American aid provides addi tional support.

The Compact’s economic provisions expire in 2001 (with a two year grace peri od that extends funding through 2003 in case negotiators are not able to arrive at an early agreement on a new pact).

And there is clearly no unanimity on the US side as to what will be offered, though increasingly US State and Interior Department officials have let it be known that the Marshalls shouldn’t expect as big an economic package as it received in the original Compact that was negotiated at the peak of the Cold War between the US and the USSR.

But the Marshall Islands still has its ace in the hole: the Kv/ajalein missile range (below), the only testing facility of its kind in the world into which the US has invest ed an estimated $4 billion.

The “cornerstone” of the Marshalls relationship with the US is Kwajalein, which means the country will be able to secure adequate financial support from the US in the future, Finance Minister Tony deßrum told parliament in early November.

The question is - with the end of the Cold War, defense spending down, and some US states such as Alaska, attempting to establish missile testing ranges - just how valuable is Kwajalein going to be to the US after the turn of the millenium and how much will it be willing to pay for it?

In a mid-November visit to the Marshall Islands, Lt. General John Costello answered that question, at least from the Army’s point of view. Calling Kwajalein the “gem in the crown” for the

United States, Costello predicted that the importance of the Kwajalein missile range will grow in the future as missile defense programs move to a more advanced level of testing.

Costello, the commander of the Army’s Space and Missile Defense Command at the Pentagon, said in an interview that Kwajalein is important today but will become “more significant in the future” with the high priority the US government is placing on theater and national missile defense programs.

“Kwajalein is the singular place where

all the capabilities exist to gauge the success or failure of (missile defense) systems,” he said.

Costello’s observations are good news Marshall Islands leaders, who have been buffet ted by an increasing barrage of questions and criticism from the State Department.

Stanley Roth, the State Department’s deputy assistant secretary for Asia and the Pacific, told a US Congressional oversight hear ing in early October that if the

US were to cut most or all of its funding assistance to the Marshalls after 2001, it would devastate the islands. But, he added, that didn’t mean that the US must continue provide the Marshalls “with more funding per capita than any other nation in the world. Our obligation to US taxpayers dic tates that even historical bonds must be reexamined in light of changed global con ditions and new fiscal realities”.

The Marshalls government, Roth said, “has exhausted its financial holdings and boiTowing capacity, and has not created a climate attractive to foreign investment. I think the record shows that it is not yet clear whether or not the RMI government is committed to genuine economic reform”. According to the terms of the Compact, the US has the right to automat

ically extend use of Kwajalein for another 15 years, without the requirement of hav ing to provide the additional funding for economic development and government operations that was the quid pro quo for use of Kwajalein in the initial term of the Compact.

But the Defense Department is clearly in support of renegotiating funding for the Marshalls beyond base rental payments because, in the words of a Pentagon offi cial, the Comapct as a whole creates a “positive local environment” for the Army.

“A renegotiated Compact, in some form, is in the best interests of the United States and the Freely Associated States,” said Kurt M. Campbell, the Deputy Assistant Secretary of Defense for Asian and Pacific Affairs, told the Congress in October. “One of the most important aspects of the Compact is the foundation it provides for our day-to-day working rela tionship with the people of the (Marshall Islands),” Campbell said.

A renegotiated Compact “will help the (Marshall Islands) continue to work toward their national goals, while serving our national defense interests”. That’s good

news for the Marshalls' negotiators, but why so much fuss about Kwajalein, which has been in use as a missile testing facility since the early 19605?

A boomerang shaped necklace of coral islands in the central Pacific, Kwajalein houses some of the world’s most sophisti cated computers, missile tracking equip ment and launch facilities that are used to fire missiles to intercept incoming “reentry vehicles” carried on missiles launched from California, as well as tracking every phase of flight of the incoming missiles.

It is, in a word, unique.

Costello said that individual missiles and component parts of defense systems are being tested now at a missile range in the US, at White Sands, New Mexico. But Kwajalein is the only place where all of the components can be combined in what he called tests of “family of (missile defense) systems”.

“These tests have to shift to Kwajalein because there is no other place to do it,” he said. “We can’t test the full capability (of systems) at White Sands. If we tell Americans that a national defense system will work, it better work. The only place in

the world to do precision testing (needed to confirm whether the missile defense sys tems work) is at Kwajalein. The resources and investment we’ve made over the years - we can’t pack it up and move it anywhere else”.

That sentiment was echoed by Pentagon spokesman Campbell. “The overriding defense interest in the negotiations (with the Marshall Islands) will be continued use of the Kwajalein Missile Range and the facilities on Kwajalein Atoll,” he said.

“The requirements of our missile defense and space surveillance programs combined with the uniqueness of Kwajalein’s loca tion, infrastructure, investment and real world treaty restrictions, make this an issue of the highest priority”.

Kwajalein is the target for a variety of missiles launched from California, 4,200 miles away.

Radar, high speed infrared cameras and other tracking equipment monitors every phase of the missile’s flight, and comput ers analyse the performance of the “reentry vehicles” that make their descent into

Continued on next page

Continued from previous page

Kwajalein, splashing down in and around the lagoon. Anti-missile defense is a key mission at Kwajalein. Often interceptor missiles are launched from islands in Kwajalein against incoming reentry vehicles. And, in the past couple of years, missiles have been launched from neighboring Aur Atoll to be inter cepted by Kwajalein-launched missiles to test the capability of short range, the ater missile defense capabilities.

Beyond that, Kwajalein provides support to NASA launches and the Space Shuttle, and supports a variety of other Defense agency weapons programs.

Despite Kwajalein’s apparent impor tance to the US, the Army is conducting a rigorous modernisation program at the missile range in line with continuing US Congressional funding reductions, Costello said. Kwajalein’s budget was sliced by $ll million this year. But, Costello said, that was a minor decrease when compared to cuts that the Army sustained in other areas of its budget.

The State Department’s Roth said, “it goes without saying that any future pro vision of assistance must serve to help the Federated States of Micronesia com plete its reforms and compel the Marshall Islands to adopt and implement more wide-ranging reforms. Past policy failures must therefore be addressed if future aid is to improve economic per formance.”

For its part, the Marshalls is gearing for the 1999 talks. “It’s our plan to go to the US with a proposal in hand,” Foreign Minister Phillip Muller said. This plan will propose a variety of trade and investment incentives that can be includ ed in the new agreement, as well as a new trust fund “to provide for the basic future needs of the Marshall Islands,” he said. “We’ve learned from our mistakes and we’re setting priorities for enhanc ing the private sector.”

In addition, the Marshalls will be seeking a longer term for the Compact’s extension - possibly 35 years, he added.

During the negotiations in the late 1970 s and early 1980 s that led to the pre sent Compact, the Defense Department played the dominant role on the US side.

Whether State and other agencies con tinue to defer to Defense in the upcom ing talks may well define the level of funding which the Marshalls can hope to gain from the U.S. for a new Compact period. ■