Allied Economics in Action: Lessons from Palau

The small Pacific Island nation of Palau offers some big lessons for how Washington, Tokyo and Canberra can transform common concerns about China into allied action.

When the COVID-19 pandemic hit, Palau was exploring options for its second undersea cable. Its bandwidth usage had grown sevenfold since the installation of its first cable three years earlier. But the pandemic sapped Palau’s finances, as it has for so many other developing countries, throwing the second cable’s future into doubt. Recognizing these stakes, Washington, Tokyo, and Canberra kicked their Trilateral Infrastructure Partnership into gear.

Several lessons stand out from allied cooperation on the project:

• The allies were proactive and fashioned an attractive offer that worked for Palau.
• Resources are needed to act swiftly when significant opportunities or threats arise.
• Enabling private sector activities is key.
• Allied economic agencies need more practice, and institutional innovations, to improve interoperability.
• Cooperation can take different forms as circumstances require.