How Palau Resists Beijing’s Pressure Campaign in the Pacific | Kambes Kesolei
[RUSH TRANSCRIPT BELOW] I recently traveled to the Pacific island nation of Palau, home to one of the deadliest battlefields of World War II. And geography still matters: Today, it’s a security flashpoint for the United States and its closest Pacific allies.
Palau is one of 12 countries in the world that maintain formal diplomatic relations with Taiwan. Because of this and its strategic position, Palau faces continual and mounting pressure from Beijing.
Veteran Palauan journalist and Compass Point Institute founder Kambes Kesolei says that China wants “to appear like the good guys.” Indeed, he continues, “they just want to weaken your spirit.”
In this episode, he breaks down Palau’s unique history and relationship with the United States—and what’s at stake as Beijing expands its ambitions in the region.
Why doesn’t Palau just give in?
“Palauans are very loyal people,” Kesolei said. “They—like the allies they have chosen—value democracy, human rights, and freedom of religion.”
Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of The Epoch Times.
RUSH TRANSCRIPT
Jan Jekielek:
Kambes Kesolei, such a pleasure to have you on American Thought Leaders.
Kambes Kesolei:
Thank you for having me.
Mr. Jekielek:
So, we’re here in Palau, one of the three countries that is in the Compacts of Free Association with America. We have big powers interested in Palau, stark geopolitics of the Pacific Islands Forum [PIF] Leadership Meeting. Tell me, what is the most important thing from your perspective that we need to know about Palau and Palauans?
Mr. Kesolei:
When you talk about geopolitics, Palau is in there. Why? Because Palau has a close relationship with the United States of America and also recognized Taiwan diplomatically. And this geopolitical rivalry is between these two major economies—economic and military powers trying to gain influence. And there’s China and there’s America on both sides.
Palau is in the middle because of its recognition of Taiwan diplomatically. I think that’s very important to know because Palau is an island country. It’s about 188 square miles with a population of less than 20,000 people. So it’s not big. But it has made international news. It’s now a site for military radar installations, high-altitude military radar installations.
Palau, when you look at it, it’s in the U.S. defense posture. It’s the second island chain; it’s at the southern end of the second island chain. And so that is why Palau is very important in the geopolitics because of its recognition of Taiwan, which China does not like, with the United States’ defensive posture, as is identified or as is part of the Compacts of Free Association, which Palau publicly approved so many years ago, and it’s still in effect today.
Mr. Jekielek:
So, you mentioned this radar array that’s being built by the United States in the north. I’m recalling that one of these properties that was leased, I think, for 99 years by Prince Group, this group that was designated by the U.S. Treasury Department not too long ago, had a property immediately abutting this radar installation.
Mr. Kesolei:
It’s concerning because, you know, here’s the United States with a Compact agreement for Palau. And so that TACMOR [Tactical Multi-Mission Over-the-Horizon Radar] site is there because of this agreement that was negotiated and approved by the Palauan public. On the other side of the street is that property you mentioned. They probably are doing that to monitor whatever is there, what is happening, what is the United States doing here, what military installations will be placed there. So, they’re trying to counter each other.
I also looked into some other areas. Some of the hotels here, and I think there’s a hotel development on one of the islands here. They had this hotel development, a resort with over 100 rooms. They had a device that monitors communications. Yes, and this developer is a Chinese developer, so it raises suspicions and then confirms what you seem to have heard: that the Chinese are here for reasons other than just building hotels and trying to invest. Their foreign direct investment might be coming in with other elements beyond pure business or economic reasons.
And with that TACMOR site in the north, the latest that I heard is that property that the Chinese have leased on the opposite side; they’ve started clearing the property, maybe for other purposes or something. But the fact that some of these U.S. military installations always have Chinese-leased land next to them just gives you this sort of feeling that maybe there’s a battle within Palau that is happening right now.
As we are speaking, Palau is hosting the 55th Pacific Island Forum Leaders Meeting. Six heads of state did not come to Palau. Is that because of Palau’s recognition of Taiwan, China has to work hard to forbid its friends from attending, to kind of delegitimize Palau’s role in hosting this? Those are the things that come to our heads.
Mr. Jekielek:
Well, I can tell you, I had an exclusive interview with the president, who said that this envoy to the Pacific Islands from communist China basically told him that it’s not acceptable to have Taiwan be part of the events. It needs to be excluded. Of course, obviously, he rejected this because Taiwan is here. But then again, after Taiwan attended the opening ceremony as a partner, not as a participant, but as kind of an observer partner, the same envoy reiterated that there will be consequences. The president said that the envoy told them there would be retaliation, basically.
Mr. Kesolei:
So, yes, those are very strong statements. And it is exactly those kinds of statements from big countries like China that don’t help. The islands and their sovereignty has to be respected, meaning that let them be allowed to make their own decisions, what they want. Just sit down and listen to what they want to say to you and help them if you can. If not, then let them decide on their own. Let the Pacific Island countries decide what they want to talk about, come up with their own decisions. So that is a very unfortunate statement from China.
The Palauan people have decided that, yes, there’s a one-China policy. But we share the same values with Taiwan. We share the same history. We were also part of World War II, like when the Japanese administration came to this island, the military. So those are very important to us. They will threaten, face the consequences. But Palau is strong. I think we are strong. We are very strong because we also have our own history.
Mr. Jekielek:
I’ve been learning about the history of Palau and how these Compacts of Free Association came to be ratified. It was a difficult process, right? And I mean, in fact, you know, your family, historically, I’ve learned, was actually not so interested in seeing them ratified. Can you give me a picture of that history, right? And maybe go even further back, right? Like, how is it that it came to be that these compacts became an opportunity for Palauans in the first place?
Mr. Kesolei:
So during the 60s and the 70s, there was a movement in the Pacific region. Many islands were searching for their political status because for a long time we were under major colonial powers. Palau, for example, has been under Spanish, German, Japanese, and then the United States. And so there was a movement in the Pacific islands trying to search for their political status. Palau was one of those.
So the idea of the Compacts was adopted from what New Zealand had with the Cook Islands. Palau faced the choice for their self-determination, whether they wanted to be like the Commonwealth of the Northern Marianas, they wanted to be the Commonwealth of the United States, or they wanted to be a fully independent country.
But the Compacts of Free Association served as an in-between, where the United States would give us economic aid in return for military rights and then allow Palauans to migrate to the United States visa-free to live and work and go to school, get their education, and come back. So that was like a good deal. But when they started to negotiate for the Compacts of Free Association, around the same time Palauans were also deciding on their own political status to draft a constitution. So it was during the drafting of the constitution that the idea of a nuclear-free constitution came out.
At that time, the environmental movement in the Pacific, the anti-nuclear movement, was also present. During that time, during the drafting of the Palau Constitution, the United States government warned Palau that this may not fly with how the negotiations of the Compacts of Free Association were going to be. Because this compact gives the United States the right to come in militarily, and when they come in, they come in with nuclear-powered military vessels, naval. So already, Palauans are thinking about prohibiting any form of nuclear substance in their territory, which will not fly well with the United States, given the spirit of the compact.
Mr. Jekielek:
And just if I may jump in very briefly, this is in the context—and maybe correct me if I’m wrong—of there being these massive nuclear tests in places like the Marshall Islands and so forth, and people were watching this, and, you know, there was literal fallout from this, right?
Mr. Kesolei:
Yes, and it was also during that time. So, for the Marshall Islands, it was in the 50s, and most of the atomic bomb testing was done then. But at that time, the French were still conducting nuclear tests in Moruroa, in the South Pacific. So they were actively still doing that. So when the United States expressed to Palau that this nuclear-free constitution may not mesh well with the Compacts, the Palauan people just went ahead and approved the constitution with those nuclear-free provisions.
And when I say nuclear-free, if any nuclear power is allowed into the country, then the people have to approve that by 75 per cent of the vote, three-quarters of the vote. And so that was like an insurmountable number that the Palauan public had to overcome to allow any forms of nuclear substances into the country. It was a turbulent time during the 1980s because, at that time, the Palauan community split between those who were in support and those who were opposed. And so they went through seven plebiscites, public referendums, trying to overcome that 75 per cent to approve the Compacts of Free Association. And because the Compacts of Free Association would allow the United States to come in with the military, you know, the nuclear-powered vessels.
So it was during that time that the community split. The tension was high. There were fire bombings and killings during that time. And it was only after the seventh plebiscite that they decided to change the approach because during those seven plebiscites, the compact easily won a majority of the voters. So there was support right there, but it was the nuclear issue that did not meet that 75 per cent requirement from the Constitution. So there was a referendum to lower the requirement, and it succeeded. So when it succeeded, it was easier for the public to then approve the compact of Association with a simple majority.
Mr. Jekielek:
Many people that will be watching this aren’t as familiar with Palau as I’ve become, really, only recently. And so this is a country with an official number of 18,000 people, you know, smaller than many small towns in the United States or Canada. It’s almost hard to imagine that you could have sovereignty, right? And do you really have sovereignty with this type of compact? You know, these big powers are so interested in imposing themselves?
Mr. Kesolei:
Yes, that is a very good question. We are at this point, Palau doesn’t, even though we are an independent country with a seat in the United Nations among the over 190 countries with a seat, but we are not fully independent in the sense that we need to survive. Economic survival is important. As a small country, we look to the United States with our relationship with the United States and then Japan, our foreign partners and diplomatic allies, to help us in our national development.
For example, for our road system, the Compacts gave us around $150 million to put up a circumferential road around the big island of Palau, connecting roads to the villages on the coast. We are independent in a sense that we can elect our own leaders, presidents, and congress, and they make our own laws. But the real independence to be economically independent is not there. We have a budget of about $165 million, a proposed budget for the fiscal year 2027. That’s $167 million, including this Compact funding and other sources of revenues. But most of the funding is grant assistance from the United States.
For example, when Palauans go to university, they go to the United States. We have our own scholarship office that provides scholarships to our students, our children who go to the United States. Many Paluans get scholarships to Taiwan, the Ministry of Foreign Affairs award. So, every year Palauan students graduate from universities in Taiwan, Australia, and Japan. So, in terms of educational development, we still rely on our foreign partners to help fund our children to get higher education outside and healthcare as well.
So, the United States government also provides a lot of assistance, and Japan and Taiwan, our diplomatic allies, help with our foreign healthcare system with either sending experts, specialists to come to the island to help check the locals for their illness, to help, for example, like during COVID, the U.S. The CDC sent experts to come to Palau to help explain what COVID, the virus, is. Taiwan provided us with masks and other medical equipment that would help as we try to fight COVID.
As a small, remote island country, most of the sources of our energy come from diesel fuel. And so we are very susceptible to any price increase or any conflict worldwide. And so we are paying a huge amount of money just for fuel. Diesel fuel raises electricity prices, which raises everything on the island. It’s not only that, but 70 per cent of the world’s fertilizers come through the Strait of Hormuz, and we know what’s going on in the Strait of Hormuz.
As an island country with poor soil quality, we need to condition our soils to be able to plant crops to feed ourselves. So everything is linked. As a small island country, your independence also depends on being ready to handle those unplanned events that happen all around the world.That is one of the main core issues that this Pacific Island Forum Leaders Meeting is looking at and trying to address because we share the same challenges.
For example, just a matter of transport getting you from island to island—you have to fly. We need reliable transportation because our economy is fueled by tourism dollars. Around 50 per cent of our GDP is funded by tourism, so we need that constant and regular connection to fuel our economy. So these are also the very issues that touch on not only Palau but the rest of the Pacific Island countries.
Mr. Jekielek:
I want to talk a little bit about this tourism because I was at this press conference recently where the Taiwanese foreign minister was responding to this mainland China envoy to the Pacific Islands, basically saying Taiwan has no business being at this PIF event. And he was saying, well, you know, we’re actually open to having everybody there. And one of the ways that he said we’re responding is we’re promoting tourism in Palau. So, tourism, because it’s such a, obviously, like you said, it’s half of your economy. That’s astonishing. It can also be used as a weapon and has been. So let’s talk about that a little bit.
Mr. Kesolei:
So, yes, there was, and even our president has mentioned it in many of his remarks, that China is weaponizing tourism. In 2015 or 2016, that was the biggest year for tourism in Palau, fueled by visitors from mainland China. In a span of a few years, we hit over 160,000 tourists, driven largely by the Chinese tourist market. And it was during that time that the Palau government also started to be conscious that, okay, this is just mass tourism. One of the issues was that this spike in Chinese tourism coming to Palau displaced the traditional big-spending tourism from Japan. So there’s less money coming to Palau’s economy. We just have these huge numbers going up.
Before COVID hit, COVID really devastated the world’s tourism economy. The number just dipped because that’s when there was this statement that was made that China wanted Palau to ditch Taiwan and establish diplomatic ties with China. But Palau did not. Palau continued to value its diplomatic relationship with Taiwan. And so, as a punishment, the Chinese government then told the big tourism agency, tourism booking agency, to stop selling tour packages to Palau. And most tourism coming from China is tour package tourism, not individual travelers. And so that really affected the numbers coming to Palau. And then it dived down to, you know, imagine like many tens of thousands of tourism just dived down.
And then at that time, COVID hit. And then every tourist, whether Chinese or anybody, just stopped coming. Then Taiwan, in 2022, helped Palau develop its tourism. So, when the world was still scared of traveling, Taiwan and the Palau government decided to establish this bubble tour tourism. So, between Palau and Taiwan, trying to restart our tourism economy during COVID. It did not, there were visitors coming to Palau, but not as much as we wanted. But it demonstrated the closeness of Palau and Taiwan, with Taiwan willing to help Palau, seeing that its economy has been devastated by tourism, that they are willing to help.
On the other side, there was also a complaint by the local boat operators because there are types of businesses that are reserved for Palauan citizens. And one of them is a boat operator to take divers and snorkelers out to the reef. Boat operators because the tourism number was just going up. So they went to the bank, loaned thousands of dollars, bought boats and new engines, and then suddenly there were no tourists coming. And so they are stuck without any customers to generate income to pay the loans. So that also became a big issue.
And then the Chinese businesses, they come in, they run hotel operations or tour operators. But then they hire their own boat drivers, taking away what should be an income to the Palauan companies, the Palauan boat operators. So, those were the fears that they would eventually take over this entire industry, displacing the Palauans who are depending. This income should belong to the Palauans. It should be guarded for the Palauans. It should not be open. We cannot compete with a well-resourced company or rich people from China coming in.
Mr. Jekielek:
It’s a pretty unique situation that you face. I’m just kind of imagining what this looks like for you. I know that you’re fostering entrepreneurship. You wear many hats. I think Palau’s first think tank, you’re a journalist for decades. I think you’re still part of an umbrella, or maybe leading it, of event nonprofits in the area, and also, but entrepreneurship, right? This is something that’s central to your thinking.
Mr. Kesolei:
Yes. That’s why it’s very important that our policymakers have to really look and protect industries for the Palauans. So when you talk about Palauans’ business environment, it’s a tourism-based industry. That’s where most of the money comes in. But then also, most of the money is generated through rental properties, both commercial and residential. I think that’s where most of the wealth is.
If you want to build wealth, those are the vehicles to use. But if you, for example, are a photographer or a videographer, you have to partner with outside entities. You just don’t have enough. The economy cannot sustain your profession or your livelihood. You have to be outside. So there’s always that part that Palau will continue to bring in others.
There’s foreign direct investment. Palau is looking for those. But then, you know, two or three months ago, no, earlier this year, the U.S. Treasury Department’s Office of Foreign Asset Control sanctioned Chinese nationals who were investing in multimillion-dollar projects in Palau. Their names are involved in criminal activities.
Mr. Jekielek:
You’re talking about Prince Group.
Mr. Kesolei:
The Prince Group, yes. And, you know, if they come in and establish themselves on the island, they have these huge financial resources. And with a criminal element already coming in, I mean, just imagine, we have no way of knowing who these people are, what they are, what criminal activities they are involved in. The Treasury Department is a great help for Palau because we don’t have the ability to check on this criminal enterprise, these criminal people.
But the United States, that was a great help to us because, you know, if not, they would have entrenched themselves and then they could create, they can start influencing policy decisions and then make Palau like the wild West or what? That is something that we have to continue to maintain. And so, our independence can also be strengthened, depending on how much security we can provide.
It’s not only to limit or to stop the outside criminal influence from infiltrating into our country, infiltrating into our economy. Palau has had experience with Chinese nationals coming in or Chinese operators coming in, leasing a big building, and then bringing in laptops and computer equipment and then bringing in Chinese nationals to come in and do online gaming. So they’ve busted some operations here on the island. So there’s continued experience with this thing.
And that is a challenge for Palau, especially when Palau is in the middle of this geopolitical rivalry between the United States and China with our diplomatic recognition of Taiwan. Everything is kind of like being looked at through that prism, like, okay, maybe these Chinese elements coming in, is their way of trying to gain influence or trying to. It is their way of weakening us as a country to ward off criminal infiltration to the island. Even the methamphetamine, some methamphetamine.
Recently, in recent cases, the people who were caught bringing them in originated from flights originating in Hong Kong. And these are Chinese nationals as well. So, we don’t know whether it’s their, no, this irregular warfare, the cognitive warfare that they are conducting, which we don’t know anything about because when we talk about geopolitical rivalry, we think about conventional warfare, aircraft, naval vessels, but there are other forms of warfare that are being conducted on our island. And I think that is also very important that the people, the leadership, should know about, should be aware of.
Mr. Jekielek:
Apparently, tourism warfare.
Mr. Kesolei:
Yes.
Mr. Jekielek:
Right? From what you’ve been saying.
Mr. Kesolei:
Right. There’s a distrust among the people. It’s not good. That is the biggest threat from all of this.
Mr. Jekielek:
To Palau, is this the division sown among the population? Is that what you mean?
Mr. Kesolei:
Yes, that’s what I mean. And then it emanates from the economy, the economy, and then people start making money and they’re competing for their livelihood, they’re competing for whatever dollars are out there in the economy. The use of social media is so pervasive in our community. Misinformation, disinformation, can be out there, generated by this competition that can be influenced by outsiders, sowing discord, distrust among the people. And I’m saying this thing about cognitive warfare that can do that.
Mr. Jekielek:
That’s a topic we’ve covered a lot on this show, all sorts of players, but of course, Communist China being a major, major one. The Chinese Communist Party likes to frame the situation, not just in Palau, but in many of these 18 island nations, as this is a U.S. vs. China thing, right? How do you respond to that?
Mr. Kesolei:
But I don’t think that’s accurate. Yes, and it might be that’s how the Chinese want to frame it because it’s also part of their messaging. They want to appear like the good guy. They bring this Belt and Road Initiative down to the Pacific to help with infrastructure development and other assistance, health, education, trying to convince the Pacific Islands that, hey, this is the U.S. vs. China.
There was an article that I read about the Chinese also wanting to make it appear that fighting China is a futile exercise for the Pacific Island countries. They just want to weaken your spirit. How much you go out and you blah, blah, blah, say what. It doesn’t matter. It does not affect them a bit. So I think it’s just a consistent way for them to continue to have this message across to the countries and to the people of the countries.
Mr. Jekielek:
You mean the Chinese Communist Party’s messaging is that it’s just a yes. You might as well give in.
Mr. Kesolei:
Yes, it’s inevitable. How much do you bark or stamp your feet? It’s a lost cause. Why don’t you just give in? That’s what they are trying to do. And this framing, I think, is consistent with that analysis.
Mr. Jekielek:
Why doesn’t Palau give in?
Mr. Kesolei:
The Palauan people are very loyal. We have a shared history with many countries and shared democratic values. We value human rights. We value your right to enjoy or practice your own religion. We value your rights to be able to engage directly with your leaders, review government documents, and speak your mind. These are things that we value the most. And then we have friends and allies that we have chosen with whom we share those values. So I think that is us, and that’s how we operate. We have that worldview.
Mr. Jekielek:
Many Palauans are Christian. So, what’s the role of faith in your identity as a country?
Mr. Kesolei:
We are a Christian nation. If you go to the preamble of our constitution, it mentions in the very last sentence that we move forward with the guidance of Almighty God. And that just shows that Palau is a Christian nation, and everything that we have is because we were blessed with the island. Our reefs generate so much income for our country, and it’s our pride and joy as Palauans to have the country that we have.
Mr. Jekielek:
So, tell me a little bit about your think tank, the Compass Point Institute [CPI].
Mr. Kesolei:
So, the think tank was established this past January, and I had this idea for a long time to establish a think tank, but what really brought it to the forefront was during the past 2024 presidential election for Palau. I was just so disappointed with how the election was conducted, especially by the voters, because many of the important issues or information were analyzed so emotionally, attached to both presidential camps.
There was no trust among people. There was distrust among the voters. There was distrust between the people and their leaders. So that really brought about this idea that, okay, perhaps what was needed was a neutral party, a third party that could just come in and lay out all the facts and let the people decide. That’s how the Compass Point Institute came to be.
So we are still in the initial setup, but we are focusing more on culture and history as the first project. A big chunk of our history is not being taught in school, and that’s mainly because there are no prepared materials. For example, the events in the 60s, 70s, 80s, and 90s are not there. That shows Palau’s journey starting from after the war to when Palau started searching for its political self-determination—what are we going to be?
To the Compact plebiscites, to that turbulent 80s, into the 90s, until we gained our political independence from the United States. Those are very important. It’s not easy, but I’m willing just to start the project: to put those into some form of written materials that can be taught in schools and for the Palauan people to read and learn more about their history. That’s what I want to do.
Mr. Jekielek:
It’s interesting that you say the idea came from the challenges in the 2024 presidential election, right? Because I understand that you facilitated one of the presidential debates. Well, to the point where it wasn’t clear to people if you were favoring one or the other candidate.
Mr. Kesolei:
That’s what I aim to do because in Palau we are very close people, connected by families, clans, and organizations. So maintaining neutrality, being neutral, is valued because once you show yourself to be part of a candidate, it just discredits you. It’s done, you’re labeled as such. So it’s very hard for you to regain that neutrality. And so I take my role very seriously. And the CPI, that will be our goal to bring truth. Just lay out the facts. Let the people decide, as long as we provide the true information. And then if you use the information, the true information. To debate among yourselves, fine.
Mr. Jekielek:
Well, Kambes Kesolei, it’s such a pleasure to have had you on.
Mr. Kesolei:
Thank you so much for having me on the program.
This interview has been partially edited for clarity and brevity.
