Palacios pushes for military money, against communist Chinese investments

Arnold Palacios took a stand before Congress that no governor of the Mariana Islands from Saipan to Guam has ever made: ‘I do not want Chinese tourists, or any other type of infiltration from communist China.’

That is a paraphrase of the CNMI governor’s testimony before the Natural Resources Committee of the U.S. House of Representatives. The committee held a closed-door, though televised, hearing on Guam two weeks ago.

And Mr. Palacios’ comments position him in the greatest light to the U.S. military and the State Department, which for years have advocated against insular policies that unwittingly accommodate Chinese aggression in the Pacific.

“Today’s hearing is a testament to the significance and urgency of the role of the Pacific Islands in global geopolitics,” the governor said in his opening remarks to the committee August 24, adding, “It is in the interests of national and global security for the United States government to protect and fortify its Pacific territories and allies of the Freely Associated States of Micronesia (FAS) against the growing threat of the Chinese Communist Party (CCP).”

But the interests of American national security in Saipan and those of the CCP clash at the crossroads of the CNMI economy, which has benefitted from and been purposely postured toward the desires of the Chinese aggressors primarily by corrupt CNMI politicians.

“In the Northern Marianas, during times of economic hardship and vulnerability, we too have turned to Chinese investment for solutions,” Mr. Palacios said. “In fact, for almost forty years now, the People’s Republic of China (PRC) has had a firm foothold in our islands. Chinese investors were always conveniently there when we needed them, offering new industries and revenue sources that also directly or indirectly advanced the interests of the PRC in the Marianas.”

The governor said what most governors before him were, at the most, reluctant to admit: that the garment industry of yesteryear that brought shame upon the Commonwealth following revelations of major labor abuses was an example of CCP infiltration. It was a distortion of the economy that began a toxic tradition of local economic reliance on growing Chinese influence.

“When the garment industry shut down, the Commonwealth lost a major source of revenue, and drastic austerity measures had a deeply destabilizing effect,” Mr. Palacios told the American congressmen. “To make up for the loss, we turned to Chinese tourism, and also to Chinese casino gaming.”

Year after year, CNMI officials catered to Chinese investment, ultimately culminating in the failure of Imperial Pacific International CNMI LLC, a subsidiary of a group with direct ties to the CCP, according to research by Bloomberg.

The failed casino is a painful reminder of the network of corruption exploited by the Chinese, who succeeded in convincing just enough of the politicians that began the Ralph Torres era to turn their backs on a voter mandate against casino gambling.

All it took was one junket to Macau, and Mr. Torres, then a senator, along with Ralph Demapan of the House at the time orchestrated the return of casino. And a red carpet to the CCP.

All of those actions – and more – have been the target of a federal investigation, that also has revealed clues into the possibility of Chinese infiltrations into U.S. elections through the Commonwealth.

But is hasn’t just been the Federal Bureau of Investigations watching and monitoring the activity. The Defense Department, from internal position papers to reports to Congress, has been warning of the Chinese threat via the CNMI.

This is a threat Mr. Palacios takes seriously, according to his testimony, and for which he is committing to the U.S. military a rollback of CNMI economic policies; one that pulls away from China and supports military presence and expansion in the region.

The governor’s comments align directly with U.S. Indo-Pacific Command’s massive, multi-billion dollar, multi-year program to posture America’s defense against Chinese aggression.

“Shortly after I was inaugurated as governor earlier this year, I announced the position of my administration that we would pivot away from the commonwealth’s overreliance on Chinese investment, and seek to strengthen our relationships with our federal partners and allies in the region,” Mr. Palacios said. “I worried about the instability of the Chinese markets in light of shifting geopolitical currents. I also worried about the commonwealth’s potential exposure to national security concerns.”

He added:

“To strengthen its security architecture in the Pacific, and to bolster our defenses against CCP threats, the United States should expand its engagement with all of the island jurisdictions, and increase support for the economic and social development of these communities.”

A CNMI economic reform from Chinese investment is a hard reset for the Commonwealth government, especially with so many corrupt politicians in and lurking around the halls of power willing to negotiate legislation, land leases, and business deals with tentacles of the CCP. But that is exactly what Mr. Palacios has been signaling since taking his oath of office: a move toward more federal government investment, and a cutting off of Chinese infiltration.

In his testimony, Mr. Palacios proposed from the federal government both aid and an easing of certain restrictions that would open up the economy to more opportunity. These points we will cover in a subsequent story. But, the real winner from his remarks – if Congress is paying attention – is the American military.

Now, and for the first time in years, the Navy has an ally in the Commonwealth governor’s office who is singing their tune about China. And, that is a big deal.