Witnesses say USAID reductions and a tiny Office of Insular Affairs weaken Pacific territories' prosperity and U.S. interests

At a House Natural Resources subcommittee on Indian and Insular Affairs hearing, witnesses said cuts to USAID and the small size of the Interior Department's Office of Insular Affairs are undermining long-term economic resilience and U.S. strategic interests in the Pacific territories.

Witnesses told the committee that USAID and OIA field presence were critical tools for the territories to build resilience, respond to disasters and provide alternatives to Chinese economic outreach. Francisco Ben Cosme, the former China policy lead at USAID, said the agency's ground programs were "visible signs of U.S. leadership" in the Pacific and that recent changes risked leaving partners "in the lurch."

The testimony said those gaps have real consequences: USAID had been expanding offices in Suva and Papua New Guinea and had co-funded projects such as the Pacific American Fund and an undersea cable spur for Palau. Ben Cosme said, "Gutting foreign assistance limits our ability to influence and address the challenges in The Pacific." He warned that sudden U.S. withdrawal can make partners view the United States as "unreliable and unpredictable." The former USAID official also noted that USAID had been the lead U.S. agency designated by compact agreements to coordinate disaster response for some Freely Associated States.

Cleo Pascall, a nonresident senior fellow at the Foundation for Defense of Democracies, told the panel that the Office of Insular Affairs is responsible for a highly strategic zone but has very limited staff on the ground. She recommended expanding interagency coordination, placing an Interior Department official on the National Security Council process for the region, and boosting local technical assistance to counter corruption and ICAD (illegal, coercive, aggressive and deceptive) influence. In her testimony Pascall urged more local investigators and suggested establishing FBI field presence on Guam and satellite offices in the Northern Mariana Islands and American Samoa.

Members from the territories described acute economic stress tied to reductions in federal personnel and programs. Representative Jill Tokuda (note: transcript lists "Ms. King Hines" as speaking for the Northern Mariana Islands) told the committee she would introduce legislation asking Congress for a $400,000,000 bailout requested by her governor because the Commonwealth of the Northern Mariana Islands is "on the cusp of an economic collapse." Representative James Moylan of Guam and Delegate Aumua Amata highlighted rising drug use, IUU (illegal, unreported and unregulated) fishing and unfunded territorial programs as drivers of instability.

Witnesses and members repeatedly connected U.S. program cuts to increased opportunities for PRC influence. Ben Cosme and other witnesses cited examples where Chinese investments and bilateral deals filled gaps left by U.S. assistance, and they pointed to the Palau undersea cable and other infrastructure projects as strategically significant.

The subcommittee held the hearing record open for written questions and asked members to submit questions under committee rules by 5 p.m. on Monday, 03/10/2025.

The committee did not take formal votes at the hearing; members asked witnesses to respond in writing to follow-up questions.