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A Problem in Palau: Negotiating Free Association Status with the Micronesian Islands

In a Hawaiian hotel room sat a U.S. ambassador and officials from Palau, peering over details of a treaty to define the tiny Pacific nation’s relations with the United States. The clock was ticking—if the two delegations were unable to reach an agreement by the end of that year, 1980, the results of the American presidential election could put the entire deal in jeopardy. The treaty in question was the Compact of Free Association, and it would determine not just the future of Palau, but also that of its U.S.-administered neighbors: the Marshall Islands and the Federated States of Micronesia.

Prospects for a deal grew markedly worse when Palau adopted a constitution containing provisions on nuclear weapons, eminent domain and territorial waters to which the United States strongly objected.  The crisis in Palau threatened to derail a years-long process in which Palau and neighboring U.S.-administered territories sought “free association” with the United States — an international status close to independence, which would give the Micronesian micro-states far greater control over their own affairs. The ambassador representing the United States in these complex negotiations, Peter Rosenblatt, helped engineer a solution that permitted Palau to waive its constitutional provisions in order to achieve the desired compact with the United States.  That saved the deal, despite Jimmy Carter’s loss in the 1980 presidential election and growing political opposition in the United States.

Ambassador Peter R. Rosenblatt recounts in his oral history the steps taken to ensure a successful outcome, benefitting both the Micronesian islands and the United States. Before the Micronesia negotiations, Rosenblatt worked as a White House staff member in the Johnson administration, then served as consul general in Saigon (Vietnam) from 1969-1970.

Peter R. Rosenblatt’s interview was conducted by Charles Stuart Kennedy beginning on July 12, 1991.

Read Peter R. Rosenblatt’s full oral history HERE

Drafted by Vinicius Storck

“Palau, when I first came aboard, was dominated, politically and economically, by a single individual.”

The Micronesian Negotiating Style: Palau, when I first came aboard, was dominated, politically and economically, by a single individual by the name of Roman Tmetuchl. Roman was a tough, experienced, capable, smart businessman, and he ran these negotiations the way he would if he were running a business negotiation…. He produced the members of his commission in order to help him in his internal meetings with them—to demonstrate parameters of what was possible. Very often he would just have me state the U.S. position, which he knew from me, so that he would not have to be the one to state it to them.

His lawyer was there to argue and negotiate with me, a very capable young man by the name of Stuart Beck from New York. But Roman was always ready to cut a deal. Very often I’d have breakfast with him, or we’d get off in a corner someplace and we’d work things out…  He wanted a deal cut as quickly as possible which, of course, conformed with our own desires.

And if we’d been negotiating with Palau alone we probably would have had a deal at the end of the first year, or at most two years of negotiation. However, we’d deliberately crafted the structure of the negotiations so that most of the terms had to be agreed to by all three Micronesian parties.

… My instructions [contained] a provision that the objective was to reach agreement before 1981, which… was to have been the beginning of Carter’s second term…. It imposed a degree of discipline on the negotiations. I used that as often as I could from day one that I was in the job.

“It became evident to me that things were happening in the constitutional convention which we had legitimate interest in expressing alarm about.”

An Impasse is Reached: [The constitutional assembly] convened in early 1979 in Palau. I felt that, because of the extreme sensitivity which all the Micronesians exhibited to any appearance of U.S. interference with their constitutional processes, and because the constitutional convention was an independently elected body, I should withdraw from Palau… a person who—as a conspicuous American in a tiny place reporting to me—could be charged with attempting in some way to interfere with their internal processes. So I withdrew him.

… After a while, there were a number of problems. Some dealt with human rights questions, and political freedom… And there were three others which I’ll mention specifically.

One was what appeared to be an effort on the part of the framers of this constitution to extend the territorial boundaries of Palau into international waters to an extent absolutely unheard of in international law.… The second was a provision which precluded a future Palauan government from using its power of eminent domain on behalf of a foreign government. Since we had already negotiated provisions with Tmetuchl which indicated our desire for options on certain Palauan areas for military purposes in the future, we thought that was a direct attack on what they knew to be our interests.

The third was a sweeping anti-nuclear provision… It was not only a ban against nuclear weapons, it was a ban against nuclear powered aircraft or vessels and the importation of any kind of nuclear material into Palau. We regarded that as inconsistent with a provision of the future Compact to which all the Micronesians had already agreed in principal, which would give the U.S. plenary authority in the area of national defense.

… The constitutional convention… cured our concerns on all but the three areas…. And that produced a crisis in our negotiations…

“… the way free association has worked out in actual practice, since it was implemented in 1986, demonstrated that it works best when it is designed as the next thing to independence.”

Resolving the Crisis in Palau: It was clear that Palau was… headed towards a showdown between Tmetuchl and his opponents, who controlled the constitutional convention. That showdown occurred later in November of 1979 when there were elections for a new Palauan legislature. Tmetuchl’s followers lost those elections and lost control of the legislature.

… I sent out a proposal to the new commission suggesting that we meet in Honolulu—the head of the commission and I—to try to get an understanding of each other’s positions.

… That was accepted, and Carlos Salii [new head of political status commission] came to Honolulu with a group of a half dozen or so members of his commission. I came with only one aide…. We sat down in a hotel room for a couple of days and went through the draft Compact as it then stood, point by point by point.

… We resolved the three outstanding issues in the following way. We didn’t force them to change the constitutional provision establishing these archipelagic lines, but we did include a provision in the Compact that their national boundaries would conform to international law.

… So far as the inability to use the power of eminent domain on behalf of a foreign power, we simply agreed in the context of the negotiations on the precise areas in which the U.S. had an interest. Palau was to commit itself in the Compact of Free Association to make those areas available to us, if in the future we desired to exercise those options.

… Everyone understood that there was to be no Compact without overcoming that anti-nuclear provision… We therefore agreed that the provision of the new constitution which made it possible to override that provision with a 75% vote would be employed. Now 75% vote… was possible in the political circumstances of late 1980 because Tmetuchl was for the Compact, and would have voted in favor of an override of the anti-nuclear provision. All of the forces which had been responsible for inserting the anti-nuclear provision had come to agreement with us on the need to override it. So there was no one against it.




     BA in Modern European Diplomatic History, Yale College                                 1950-1954

     LLB, Yale Law School                                                                                                   1954-1957

Joined the U.S. Agency for International Development                            1966

     Washington, D.C.—Deputy Assistant General Consul, USAID                           1966

     Washington, D.C.—Member, White House Staff                                                   1966-1968

     Saigon, Vietnam—Consul General                                                                            1969-1970

     Micronesian Islands—Ambassador                                                                          1977-1981