Why do the US and China want control over Micronesia?

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This is the script for my video posted on July 29, 2026. Watch it on TikTok.

The Federated States of Micronesia, or FSM, has only about 700 square kilometers of land, but it governs an Exclusive Economic Zone of about 3m square kilometers. That's an ocean to land ratio of roughly 4000 to 1. For a country of less than 100,000 people, that's an awful lot of territory to control, and it doesn't go unnoticed by countries like the US and China. So how does FSM's unique geographical situation influence its geopolitical dynamics?

For thousands of years, the over 600 islands that now comprise FSM were occupied by indigenous Austronesian peoples, who migrated there over time by boat.

Centuries ago, the chiefs of the islands of Yap built a remarkable network of tributes and exchanges called the sawei, which linked Yap to islands hundreds of miles east. It peaked around 1400 CE, and though you'll sometimes hear it called the Yapese Empire, it was really just a web of ranked exchange relationships.

One of the region's first organized states arose on Pohnpei, where the Saudeleur dynasty unified the island and built the stone city of Nan Madol around 1200 CE. Pohnpei also holds FSM's modern capital of Palikir.

According to oral tradition, the oppressive Saudeleur dynasty fell in the early 1600s to an invader named Isokelekel, who established the decentralized system of chiefs called nahnmwarki that survived into the modern era.

Then in the early 16th century, Portuguese navigators became the first Europeans to land in the Caroline Islands of modern FSM. Spain claimed them soon after but didn't actually govern them on the ground until the 1880s.

Spanish rule didn't last long. Spain lost nearly all of its colonial possessions upon losing the Spanish-American War, and with Manila gone and its fleets destroyed, it could no longer administer or defend its remaining islands. So in 1899 it sold the Carolines to Germany, which folded them into German New Guinea.

Of course, Japan seized the islands in 1914 and received them formally as a League of Nations mandate after WWI. The Japanese mounted aggressive economic development, including exports of coconut flesh and fish in the Carolines specifically. Japanese, Korean, and Okinawan immigrants poured in and came to outnumber indigenous islanders in places like the Marianas and Palau, though less so in the Carolines that eventually became FSM.

WWII saw the lagoon at Chuuk become the forward anchorage for the Imperial Japanese Navy's Combined Fleet, with five airfields, a seaplane base, and bulk fuel storage. US naval operations hit it devastatingly, sinking around 45 ships, mostly merchant vessels that make Chuuk a premier site for shipwreck diving today.

The US secured a UN trusteeship in 1947 for the Trust Territory of the Pacific Islands, or TTPI. It was the only strategic trust of the eleven trust territories created after the war, meaning its administrator answered directly to the UN Security Council rather than the General Assembly. This allowed the US, which could veto resolutions, to administer it as a de facto closed military area. Naturally, the US then used it to conduct 67 nuclear tests in the Marshall Islands, which were part of the same trust territory but are a separate country today. No testing happened in what's now FSM.

In 1963, the economist Anthony Solomon led a mission commissioned by JFK that found conditions in the islands were terrible, and he recommended greatly increasing US spending to secure Micronesian loyalty and steer toward permanent US affiliation. The document leaked and became something for local nationalists to rally around, because it framed the islands as a permanent strategic possession.

The TTPI eventually fragmented because the districts had distinct cultures, languages, and interests. The Northern Marianas chose commonwealth status with the US. Then in a 1978 referendum, the Marshalls and Palau rejected the joint constitution and pursued separate compacts, while Yap, Chuuk, Pohnpei, and Kosrae approved it and became the Federated States of Micronesia. Its constitution entered force in 1979.

FSM entered into a Compact of Free Association, or COFA, with the US in 1986. Legally, FSM keeps full sovereignty and runs its own internal affairs, while the US takes on authority and responsibility for defense.

That gives the US the right to operate militarily in FSM's waters and, crucially, to block any other country's military from access. That's called strategic denial, and it's the primary reason the US is involved with FSM to begin with.

FSM citizens can also live, work, and study in the US visa-free as habitual residents, and that's the main engine of the country's steep depopulation. FSM's population fell from about 103k in 2010 to under 76k by 2023. Weak job prospects, climate pressure, and thin public services are contributing factors.

In exchange for the COFA, the US pays. Congress renewed the Compact in 2024 with roughly 3.3 billion dollars for FSM through 2043. That money is somewhere north of a quarter of the country's entire economy.

Meanwhile, ever since FSM recognized the People's Republic of China in 1989 over Taiwan, the two have grown closer. FSM joined China's Belt and Road Initiative, and China has built stadiums, roads, and government buildings in FSM, including the country’s national convention center.

But in 2023, outgoing president David Panuelo sent a 13-page letter to FSM state governors and congressional leaders alleging Chinese political warfare and gray zone activity. That included bribery of officials, research vessels deployed to spy and map resources and submarine routes, attempts to gain control of FSM's critical fiber-optic cables and ports, and direct threats against Panuelo’s personal safety.

Panuelo linked this to China's desire to ensure FSM stays neutral or aligned with the PRC during a Taiwan contingency, and he revealed that he had explored switching recognition to Taiwan for about 50 million dollars over three years. He'd lost his own seat days earlier, which colored how the letter landed with his own people.

Domestic reception of Panuelo’s letter was mixed, and the new administration under Wesley Simina hasn't changed recognition. But it has deepened the security relationship with the US, agreeing in 2025 to major airfield and seaport upgrades on Yap, with future US defense investment estimated above 2b USD.

The truth is, Micronesia has a tiny population relative to the territory it controls, and that territory is extremely important on the geopolitical stage. It needs a major foreign partner to defend itself, and it remains firmly aligned with the US, locked in by a Compact that runs to 2043 and defense terms that have no expiry date at all.

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