CONCERNS RAISED OVER MARSHALLS MISUSE OF TRUST FUND

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By Giff Johnson

MAJURO, Marshall Islands (Marianas Variety, May 1) – The Marshall Islands government used US$1.7 million of Taiwan-provided trust funds despite an agreement not to touch the funds until a later date.

Taiwan officials in Majuro said they weren’t aware of the trust fund withdrawal, and this western Pacific nation’s foreign minister expressed concern over his government’s action.

Taiwan began contributing US$2.5 million annually to a government trust fund last year. But unlike more than US$8 million annually that comes from the United States that goes into the "A account" and cannot be touched until 2023, when U.S. grant funding ends, most of the Taiwan funding is going into the "D Account," which is available for government use after it reaches the US$10 million mark.

But the D account was only slightly over US$3 million when the government late last month withdrew about US$1.7 million to help resolve a cash crisis that threatened to plunge the capital into darkness for lack of fuel for its power plant.

Most officials here declined to comment about. Taiwan Ambassador to the Marshall Islands Bruce J.D. Linghu said Friday, however, that he had not been informed by the Marshall Islands about the trust fund withdrawal.

Marshall Islands Foreign Minister Gerald Zackios said Friday that he was concerned about his own government’s decision to tap into the trust fund, saying that the government, despite short-term financial demands, needed to remain focused on the long-term purpose of the trust fund, which is to accumulate funds for the future financial health of the Marshall Islands.

Taiwan is contributing US$2.5 million annually to the Marshall Islands trust fund, with US$1.75 going to the D Account and US$750,000 to the A Account.

A Marshall Islands government report on the trust fund issued last November said that the Marshall Islands promised Taiwan that as part of the agreement for it to provide trust fund donations "that the D Account will increase to US$10 million through additional contributions and investment earnings before it will be used for government purposes (by the Marshall Islands)."

The Marshall Islands diplomatically recognized Taiwan in late 1998.

Taiwan provides grants and technical assistance valued at about US$14 million annually in addition to its trust fund support, making it the second largest aid donor to the Marshall Islands behind the U.S.

Because of Taiwan’s trust fund contributions, it was granted a seat on the trust fund board. Four U.S. and two Marshall Islands officials are also on the trust fund board, which meets annually every July or August.

Government officials in Majuro indicated that they have received no official inquiries from the Taiwan government about the withdrawal, and there was no immediate indication from Taiwan whether this will effect future Taiwan contributions to the trust fund.

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