MAJURO, Marshall Islands, (Marianas Variety, Jan. 13) - The inability of United States negotiators to reach agreement with Marshall Islanders on rental increases for a prized central Pacific missile testing range is threatening to derail a $1 billion, 20-year aid package.

Formal negotiations are scheduled for later this week in Honolulu focusing on the Kwajalein missile testing range and unresolved Compact of Free Association issues relating to funding and access to U.S. federal programs for a new 20-year funding cycle.

Foreign Minister Gerald Zackios said that Kwajalein is a "make or break" issue for the Marshall Islands because it is central to the entire agreement with the U.S.

Kwajalein, a unique multi-billion dollar test range, is central to U.S. missile defense testing programs. Its boomerang shaped necklace of coral islands are dotted with radar and other sophisticated missile tracking equipment that have produced data that underpins the Bush administration’s current push to deploy a limited missile defense system in Alaska by 2004.

The Marshall Islands is expecting to receive a formal reply from U.S. negotiators on future use of the Kwajalein missile range at the talks next week.

But Kwajalein Negotiation Commission Chairman Christopher Loeak, a senator in the country’s parliament, isn’t optimistic about the upcoming negotiating session with the U.S. "I hope they’ll make a reasonable offer next week," he said Thursday.

But the landowners were disappointed with the U.S. rental offer of about $14 million annually made in December. Landowners now receive $11.3 million a year and want it hiked to $19.1 million. "For the U.S., it’s just numbers," he said. "For the landowners, it’s their very livelihood."

The Kwajalein Negotiation Commission that Loeak heads was formed in late 2001 to represent the interests of landowners from Kwajalein in the negotiations for extending U.S. use of the testing range. The current lease expires in 2016. But both the U.S. and Marshall Islanders want to extend it –– the U.S. to 2043, the Marshall Islands to 2053.

But the landowners have already dropped their request significantly, and don’t want to drop from the $19.1 million figure. To the United States, the amount the landowners are seeking is a "drop in the bucket, but to us it makes a big difference," Loeak said.

He added that the landowners are insisting on the $19.1 million.

The Marshall Islands government is under the gun to get a deal signed and submitted to the U.S. Congress for review and approval because guaranteed U.S. funding expires on Sept. 30 this year. Zackios said the Marshall Islands hopes to wrap up negotiations with the U.S. by April so the document can be submitted for approval of long-term funding.

But in addition to the gap separating U.S. and Marshall Islands negotiators on rental payments for Kwajalein, there are three key unresolved issues:

• The U.S. is offering $41.1 million annually in grants and trust fund contribution; the Marshall Islands wants $48 million.

• The U.S. wants to eliminate Marshall Islands access to disaster relief services of the U.S. Federal Emergency Management Agency which currently are available, a move the Marshall Islands is refusing to accept.

• The U.S. is offering to adjust future Compact funding for 67 percent of inflation, but the Marshall Islands wants 100 percent adjustment so that U.S. funding isn’t losing value over the 20-year life of the pact.

January 13, 2003

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