Palau's Strategic Role Grows Amid U.S.-China Rivalry in Pacific Islands

The Facts -

In the heart of the Pacific, the small island nation of Palau, with its population of under 18,000 spread across 500 islands, has found itself at the center of a geopolitical tug-of-war between global giants. The United States and China are vying for influence over the region, and Palau is playing a significant role in this rivalry.

The U.S. has been ramping up military infrastructure in Palau, while Chinese investors have been active in purchasing and leasing land. President Surangel Whipps Jr., who assumed office in 2021 and was re-elected in 2024, has been outspoken about Chinese organized crime in Palau, stating, “when I got into office, one of the things I was told was there was a lot of this Chinese organized crime operating in Palau, and that we needed to stomp it out.”

Whipps's administration is characterized by strong alignment with the United States and a cautious approach toward China. Yet, during a recent visit to Oahu for the Honolulu Defense Forum, he highlighted the challenges his nation faces, stating, “I want Washington to understand that we also have challenges.”

Palau is set to host the 55th Pacific Islands Forum Leaders Meeting this year, and Whipps extended an invitation to Vice President J.D. Vance to attend. “I think it’s important that Washington shows up,” he emphasized. “They need to be present and part of these activities if they say the Pacific is important.” Whipps also hopes for a visit from President Donald Trump, noting the missed opportunity for an American President to visit smaller Pacific nations. He mentioned a desire to show Trump the impact of climate change firsthand, despite the Trump Administration’s dismissal of climate change as a “hoax.”

Maintaining a strategic relationship with Taiwan, Palau has faced Chinese pressure to sever these ties. In 2017, a Chinese directive sharply reduced tourist numbers from China, impacting Palau’s economy. Chinese diplomats have warned that ties with Taiwan could result in further economic sanctions. Whipps termed these measures as “economic coercion by the weaponization of tourism.”

Partner of Choice

The U.S. military's strategic interest in Palau has been renewed, with projects underway, including harbor upgrades and radar installations. Accusations of cyber attacks by Chinese hackers on Palauan private and governmental institutions have surfaced amid rising tensions.

While many Pacific nations engage directly with China and participate in its Belt and Road Initiative, Palau maintains its ties with Taiwan. Whipps has criticized Beijing’s influence in other Pacific nations, where he claims it corrupts democratic institutions. He pointed out that new leaders in Pacific nations aligned with China are often welcomed with state visits in Beijing, a courtesy not extended by the U.S.

Palau’s internal politics reflect these tensions, with Senate President Hokkons Baules advocating for closer ties with China. Whipps, however, insists on collaboration with the U.S., asserting, “the reality is, we are in the middle of it, and as we know from World War II, whether the United States is there or not, somebody else will be there.”

The delicate balance of geopolitical relations continues as Palau navigates its position on the global stage, seeking support from the U.S. while managing the implications of Chinese influence. This struggle is a microcosm of the broader Pacific region, where the competition for influence impacts the lives and futures of its people.

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