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Palau is under attack from PRC

Editor's ChoicePalau is under attack from PRC

There is a spike in activity now because China sees Palau’s 5 November election as an opportunity to put in place representatives that are more in line with its ambitions.

Palau/Washington, DC: Palau is under attack. The incursions are long-running, broad, and persistent—and so pervasive they have almost become normalized for Palauans. Why is Palau, a country of around 20,000 people east of the Philippines, under attack? Because China’s People Liberation Army (PLA) studied the World War II battle map and understands its strategic location.

Currently Palau recognizes Taiwan. It also has a Compact of Free Association with the United States that means the U.S. has the responsibility to protect the country. These are problems for Beijing. And so it has spent years directing political warfare attacks in—and against—the country.

There is a spike in activity now because China sees Palau’s 5 November election as an opportunity to put in place representatives that are more in line with its ambitions, or at least weaken institutional integrity so that the systems are less able to resist China’s influence operations.

Palau is not unusual in being such a target, but because of the small population, the methods and effects of the PRC attacks are unusually visible, and so worth attention by all countries that might be similarly targeted. And want to resist. Some examples.

ECONOMIC COERCION

China plays push-pull with its tourists to Palau—a country that depends substantially on tourism—creating deliberate economic instability when it can’t create dependence.

In 2008, there were 634 Chinese tourists in Palau, less than 1% of all tourists. By 2015, there were more than 91,000, or around 54%—something not possible without direction from Beijing. In November 2017, Chinese tour operators were ordered to stop selling packages. Tourism dried up.

Why did they do it? To put pressure on Palau to de-recognize Taiwan. And that pressure continues. According to Palauan President Surangel Whipps Jr., “when I was running for office, the Chinese Ambassador [to another country] called me up and he said ‘you’re a businessman, you understand the opportunities with us, the sky is the limit. What you need to do is you need to stop that illegal activity.’ And I said ‘what illegal activity?’ ‘Stop recognizing Taiwan because that’s illegal.’” Whipps refused.

PRC-LINKED ORGANIZED CRIME

An October 2024 United Nations Office on Drugs and Crime report on the Pacific Islands includes multiple examples of PRC-linked criminal activity in Palau, and how it is involving and corrupting key people in the country.

Describing raids in 2019 and 2020 that resulted in detaining over 200 foreign nationals the report reads: “Authorities also noted several suspicious connections between the foreign owners of the raided facilities and both past and present Palauan officials as well as other local, influential facilitators. Moreover, as a result of information found during the execution of one of the related search warrants, it was discovered that the illegal online gambling operation in one of the raided venues had previously operated out of another hotel connected to senior foreign triad members.”

The ongoing efforts to affect legislation were also mentioned: “an influential online casino lobbying group with clear and documented connections to Asian organized crime groups was pushing to legalize and regulate the gambling industry. During the recent 10th and 11th terms of the Palau National Congress, a bill was introduced in Congress to legalize and regulate online gambling.”

Chinese nationals have also been charged with murder, been involved in dodgy land deals with at least one influential politician, been implicated in human trafficking and there is at least one report of a direct handout from a Chinese businessman to a high-profile candidate in the upcoming election in the expectation of future favors.

Ask any Palauan on the street and they can likely name several elected officials widely believed to be benefitting from PRC-linked largess.

All of this is happening in a country with limited capacity to investigate and prosecute criminal activity. As a result, in spite of having a long list of “undesirable” foreigners, mostly Chinese, Palau would like to remove from the country, it doesn’t have the ability to do so and many known bad actors walk around freely.

STRATEGIC LAND ACQUISITIONS

Foreigners can’t buy land in Palau, but they can lease it for up to 99 years. Chinese citizens have leased land in highly strategic locations, including near U.S. military installations, coastal high ground, near the main airport and near spots that could become ports.

Additionally, during the Chinese tourism boom, Chinese leased properties that were then abandoned or half-finished, locking up potential economic development.

CYBER

Palau suffered a well-publicized cyber-attack in March 2024 on the same day Palau and the United States commemorated the Compacts of Free Association. Jay Anson, the Chief Information Security Officer for Palau’s Ministry of Finance said at the time “our analysis was that this was a hit against the Palau government but also the ability of the U.S. to provide security for Palau”.

Speaking to The Sunday Guardian Anson added that “We’re in an advanced persistent threat environment.” Palau has a Huawei mobile core which “means all of your phone traffic go through the Huawei network, and that’s connected to PRC. So, PRC can monitor all your traffic, if they want to. It’s designed that way to go to the central brain… We’re being infiltrated on a daily basis, because they can just come in and out of our networks whenever they want.”

SEAS

There are repeated unauthorized incursions of Chinese “research vessels” into Palauan waters, most recently in September. The timing was telling. According to Palau’s National Security Coordinator Jennifer Anson, it happened “Just one day before the Palau-U.S. Joint Committee Meeting”.

PUBLIC OPINION WARFARE

Public opinion warfare is one of the three warfares described in the 2003 “Political Work Guidelines of the People’s Liberation Army”. It can take a range of forms. In Palau, there was a failed attempt by a Chinese company linked to the state security services to make a deal with a local media company. But the failure of that deal doesn’t mean the PRC stopped trying. Nor that the influence operations need to be Palau-based.

Just days before that same the Palau-U.S. Joint Committee Meeting, a U.S. think-tank, the Quincy Institute for Responsible Statecraft, published a piece framing the relationship with the U.S. as a militarization of Palau. It was widely amplified on social media and carried in a local newspaper.

What wasn’t mentioned was that among the funders of the think-tank is East West Bank. East West Bank CEO and Chairman is Dominic Ng. Ng, a Hong Kong-born American, has strong ties to China. A 2023 letter from six Republican members of Congress states: “Between 2013 and 2017, he served as the executive director of the China Overseas Exchange Association (COEA) which is a front organization for the United Front Work Department (UFWD). UFWD is a Chinese intelligence service whose mission is to liaison with foreign political parties, [conduct] influence operations, and collect intelligence… COEA merged with the China Overseas Friendship Association (COFA), which remained a front group for UFWD when Mr. Ng began a 5-year term as COFA’s executive director in 2019. Organizations like the UFWD and its affiliated groups play an increasingly important role in Chinese foreign policy and allow political actors like Mr. Ng to gain influence in sensitive American institutions to advocate for the interests of communist China. This tactic is regularly employed by the CCP to infiltrate governments and influence policies for CCP-oriented outcomes.”

And just this past week, someone leaked an altered version of the tax records of the family company of the President of Palau (the one who didn’t take the PRC Ambassador’s offer). It was then reprinted in the local press.

Those wishing to damage a leader with a track record of protecting Palau’s sovereignty got an extra bonus as the President is suing the paper, so it can now be presented not as an attack on the President, but as a freedom of the press issue.

WHAT DOES THIS MEAN?

All this activity is designed to drive a wedge first between Palau and Taiwan and then Palau and the U.S.

Taiwan is popular among the people of Palau and both Presidential candidates say they will maintain ties. However, the challenger, former President Thomas Esang “Tommy” Remengesau Jr. is known to be more open to working with China.

It is possible that if, for example, there is a spike in tensions between China and Philippines or Taiwan, he could say that, to protect the people of Palau by keeping them out of the fight, he is derecognizing Taiwan. That might be understandable to Palauans who have strong family memories of being caught up through no fault of their own in the devastation of World War II.

Meanwhile, the U.S. had been slow to take up its responsibilities of assisting Palau in defending itself from the varied attacks, but efforts are starting to be made in a wide range of areas.

Recently, for example, U.S. Ambassador to Palau, Joel Ehrendreich announced: “In mid-September, as part of our security cooperation, a U.S. Coast Guard C-130 patrolling Palau’s exclusive economic zone discovered over 100 fishing aggregator devices, or FADs, in Palau’s EEZ….at the request of Palau’s government, the U.S. agreed to assist Palau in their removal.”

The country of origin of the FADs isn’t determined as yet. But with the help of the U.S. it may be discovered.

Palauans heading to the polls care about the same things as many voters: cost of living, taxes, crime in the communities, jobs for the youth. But some must also be wondering which countries are attacking them, and which are defending them. And which of their elected leaders are most likely to care.

Currently, Palau is a case study of a country under attack. Hopefully, it will become one of how to fight back.

* Cleo Paskal is Non-Resident Senior Fellow at the Foundation for Defence of Democracies and columnist with The Sunday Guardian.

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