Negotiation failures are leading U.S. Pacific Command (PACOM) to look for alternative locations for the $2 billion Department of Defense investment in infrastructure in Yap, Federated States of Micronesia (FSM).
On June 29, 2026, Admiral Samuel Paparo, the PACOM commander, wrote to President Wesley Simina of FSM that the country’s demand for a “$1.3 billion compensation package is unreasonable, unanchored to demonstrable costs, and divergent from the spirit of our partnership under the Compact of Free Association.” As a result, “U.S. PACOM intends to move forward by assessing alternative locations across the region to meet the needs of Pacific defense.”
Yap state, made up over a hundred islands, is a core part of the Second Island Chain. The main island in Yap state, also called Yap, is just over 500 miles southwest of Guam. The strategic importance of the Yap group of islands was proven toward the end of World War II. After the United States took the region from Japan, one of Yap’s atolls, Ulithi, became the largest and busiest American naval base in the world.
Map by Cleo Paskal and Pavak Patel.
FSM’s Compact of Free Association With the U.S.
