Assistant Secretary Cantor Announces $66 Million in Compact Funding for Palau

WASHINGTON, D.C. - The Department of the Interior’s Assistant Secretary for Insular and International Affairs Carmen G. Cantor today announced $66 million in funding to the Government of Palau and completed the first bilateral economic consultations on June 26 and 27 in Koror, Palau. The U.S. implemented provisions under Public Law 118-42 and the recently negotiated Compact of Free Association (Compact) Section 432 Review signed between the United States and Palau on May 22, 2023.

Assistant Secretary Cantor and U.S. Ambassador to the Republic of Palau Joel Ehrendreich led the U.S. delegation for the bilateral economic consultations with a Palau team headed by Palau President Surangel Whipps, Jr., Minister of Finance, Kaleb Udui, Jr., and other cabinet officials.

Since the Compact of Free Association Amendments Act was signed into law by President Biden on March 9, Interior has transferred $66 million to the Palau Government for the following purposes:

• $50 million – Palau Compact Trust Fund – to support Palau’s efforts in the provision education, health, climate adaptation and the environment, the administration of justice, and public safety, or for expenses related to the audits required under the Compact Review Agreement.
• $10 million – Palau Fiscal Consolidation Fund – to assist the Government of Palau in paying debts it incurred prior to April 1, 2023. This is the first annual contribution of $10 million to be provided over a six-year period.
• $6 million – Compact Infrastructure Maintenance Funds for fiscal years 2022, 2023, and 2024 which represents the last remaining U.S. financial obligation to Palau under the 2010 Compact Review Agreement. The $6 million was earlier announced in Palau.

“These consultations demonstrate the United States’ commitment not just to maintain our relationship with Palau, but to strengthen it,” said Assistant Secretary Cantor. “The United States is proud to continue to be Palau’s strategic partner as democracies and free market economies. Our bonds of shared values, shared interests, and friendship run deep. We want Palau to succeed as a democratic and prosperous nation for its own people and as a model for others in the Indo-Pacific region.”

The bilateral economic consultations included briefings on Palau’s economic initiatives, Palau’s National Development Plan, and the planned use of economic assistance under the Compact. The group also discussed “dashboard” performance measures and recommendations provided by the Economic Advisory Group for Palau as related to the island nation’s economic, legislative, financial, and management improvements. 

The bilateral consultations are one of the requirements under the Agreement to review Palau’s progress in achieving reforms to help Palau frame and execute a vision for successful and sustainable economic recovery, reconstruction, and development. This was the first bilateral economic consultation between the two countries under the 2023 Compact Review Agreement.

Under Public Law 118-42, there were also updates to the types of services that individuals from Palau and the other freely associated states are eligible for while living in the United States. An initial list of program and policy updates from various agencies that reflect the amended Compact are available here and will be updated as needed.

The Assistant Secretary - Insular and International Affairs and the Office of Insular Affairs (OIA) carry out the Secretary of the Interior’s responsibilities for the U.S. territories of American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands. Additionally, OIA administers and oversees federal assistance under the Compacts of Free Association to the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau. The OIA also administers a discretionary Technical Assistance Program for all the Insular Areas. Find information about OIA and its work on www.doi.gov/oia, Facebook, X, and YouTube

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