On August 28, 2020, US Secretary of Defense Mark Esper visited the island nation of Palau as part of a campaign to shore-up partnerships in the Pacific Ocean and South China Sea. In the wake of that visit, Palauan President Thomas Remengesau has reportedly urged the United States to construct land and naval facilities in the southeast asian archipelago. If such action was taken by the Trump Administration, Palau would see a major boost in economic activity, greater investment in infrastructure, and heightened tensions with the People's Republic of China.
According to The Guardian, an American news service, Remengesau hand-delivered a letter to Mr. Esper in which he argued for the construction of, "joint-use facilities." He further declared that a permanent deployment of United States Coast Guard and Navy to his nation's waters would be welcomed by the Palauan people, as the island nation lacks the ability to guard its own marine reserve from hostile actors.
Overview
An archipelago of 345 islands, Palau boasts a small and dispersed population of 23,000. Originally a member of the United Nations Trust Territory of the Pacific Islands (UNTTPI), the archipelago's residents opted to begin the process of becoming a sovereign state in 1986. This dream was realized on October 1, 1994, with a Compact of Free Association approved by both the US and Palauan governments. Following the birth of the Republic of Palau, the United States maintained a small presence on the island through the continuation of civil affairs and infrastructure development operations.
US Strategic Outlook
The United States has increasingly viewed the Republic of Palau as key to advancing national interests. In 2018, the Department of Defense specifically pointed to the archipelago as, "key to our strategic presence in the region." This declaration is a confirmation of a strategic reality discovered nearly 76 years ago, when American marines, soldiers, sailors, and airmen mounted a bloody operation to capture Palau from its Japanese leadership. Although the United States maintained basing rights throughout the Cold War and 2000s, units deployed to the island chain were usually small, limited in deployment endurance, and ill-equipped to challenge Chinese or Russian aggression.
As tensions between the US and PRC increase in the wake of the COVID-19 pandemic, Palau will serve as a base from which the DOD can project American hard power into the Western Pacific and South China Sea. The stationing of United States Coast Guard units in addition to regular naval vessels would allow Washington to contain Chinese fishermen who increasingly target foreign waters in Asia and South America, and thus violate national sovereignty. Investment in the archipelago would also greatly benefit the Department of State, with Palauan leadership more likely to continue its recognition of Taiwan and willing to stand in opposition to Chinese political influence.
PRC Strategic Outlook
The People's Republic of China has several reasons to object to an increased American military presence on Palau. Obviously, a new US naval installation on an island near strategic national interests is a major threat to Beijing. Additionally, Palau's continued recognition of Taiwan is a thorn in the side of China's diplomatic initiatives. In order to combat these negatives, China will continue to use economic and military force to sway the policies of Palauan leaders. Beijing has used such tactics in the past, with the most recent example coming in 2017. When Palau took steps deemed in opposition to Chinese objectives, the PRC banned the sale of Palauan tour packages to Chinese citizens. As tourism accounts fro nearly 35% of the country's economy, this step greatly damaged Palau's public and private finances.