Trust funds intended to support two Pacific nations are expected to fall short of providing what鈥檚 needed for those economies to continue operating at the same level without additional funding.

That鈥檚 according to a new report from the congressional Government Accountability Office that analyzed the consequences of ending about $93 million in annual U.S. payments to three Pacific countries, the Marshall Islands, Palau and the Federated States of Micronesia.

The countries have international agreements with the United States known as the Compacts of Free Association that were first established during former President Ronald Reagan鈥檚 administration in part to maintain U.S. military dominance in the Pacific.

The agreements give the U.S. strategic denial rights over the countries鈥� land, water and airspace, and as part of the deal, the countries receive financial support. But grants and services such as disaster assistance are expected to expire in 2023 and 2024 unless the U.S. agrees to extend them. Renegotiations of the compacts are ongoing.

Trust funds were set up to help ensure self-sufficiency, but the GAO report said the amounts aren鈥檛 expected to be adequate for the Marshall Islands or Micronesia.

Palau didn鈥檛 face the same shortfall with its trust fund as the other two compact nations, but the GAO noted the need for more auditing of existing funding and recommended the Department of State set up an economic advisory group for Palau that was supposed to have been established in 2018.

The group is scheduled to expire next year but hasn鈥檛 even gotten off the ground.

鈥淲ithout the Palau advisory group as an advisory mechanism, the Palau government may lack information necessary for its decision-making and the U.S. may lack insight into potential economic, financial, and management issues, including the impact of the economic assistance the U.S. provides to Palau,鈥� the report concluded.

Not extending the payments could be consequential for the island nations鈥� economies, the report found. The agency found that if U.S. compact payments expire, Micronesia would have a 36% chance of receiving no disbursements from its trust fund in one or more years.

In additional to financial shortfalls, the countries would lose access to disaster relief through the Federal Emergency Management Agency, deposit insurance through the Federal Deposit Insurance Corp. and the U.S. Postal Service. Access to these and other programs is worth about $16 million annually, the GAO estimated.

In official comments on the report, the government of the Marshall Islands agreed that their trust fund is insufficient.聽鈥淭he trust fund cannot guarantee sustainable, stable distributions,鈥� it said. 鈥淭he trust fund needs more time to grow before starting to make distributions.鈥�

The Government Accountability Office said the U.S. economic assistance to the countries is intended to promote their 鈥渆conomic advancement and self-sufficiency,鈥� but explained U.S. funding and programmatic support has become a crucial pillar of island economies.

In comments on the analysis, Eugene Amor, secretary of finance and administration at the Federated States of Micronesia, wrote that lower-than-expected funding from the U.S. 鈥渓ed to fewer children benefiting from early childhood care, less training for teachers, and fewer educational opportunities overall.” He emphasized continued access to the U.S. Postal Service is crucial.

鈥淥ur government currently lacks the capacity or resources to replace this vital service, which ties us to the world,鈥� Amor said. 鈥淢andatory appropriations for the FSM have always been a fundamental part of this relationship and in our view must continue to be so.鈥�

鈥淎ny U.S. departure from this current practice and commitment would be a dramatic change that would undermine our economic and financial viability. This issue is fundamental for the FSM,鈥� he added.

The report released Monday comes just days after President Joe Biden鈥檚 administration affirmed its commitment to conclude the negotiations, which have become increasingly important to U.S. foreign policy as China broadens its Pacific presence.

鈥淲e will seek to be an indispensable partner to Pacific Island nations, in ever-closer coordination with other partners who share that commitment, and will meaningfully expand our diplomatic presence in Southeast Asia and the Pacific islands,鈥� the Biden strategy said. 鈥淲e will also prioritize negotiations on our Compacts of Free Association with the Freely Associated States as the bedrock of the U.S. role in the Pacific.鈥�