Exclusive-US negotiator expects to sign new deal with strategic Marshall Islands on Monday

By David Brunnstrom

WASHINGTON (Reuters) - The United States has finalized a 20-year extension to its agreement on ties with the strategic Marshall Islands and expects to sign the $2.3 billion deal on Monday, chief U.S. negotiator with the Pacific island nation Joseph Yun told Reuters.

The Republic of the Marshall Islands (RMI) is one of three sprawling but sparsely populated nations that have U.S. ties governed by so-called Compacts of Free Association (COFAs), under which Washington is responsible for their defense and provides economic assistance, while gaining exclusive military access to strategic swathes of ocean.

After decades of relative neglect, the nations have found themselves at the center of a U.S. battle for influence with China in the Northern Pacific and the Biden administration agreed new deals with the two other states, Palau and Micronesia, earlier this year.

It had been haggling for months over details with the RMI, which had called on Washington to better address the legacy of nuclear testing there in the 1940s and 1950s.

Yun told Reuters he planned to sign the COFA deal with RMI Foreign Minister Jack Adding in Honolulu, Hawaii, at 2 p.m. local time (0000 GMT Tuesday). He said he understood Marshallese President David Kabua would also attend.

"This is the last of the three compacts that we have been doing. The other two have been done," Yun said. "Once we have signed, we will transmit it to the U.S. Congress, where together with the other two, I hope they will be enacted soon."

Yun, appointed last year by President Joe Biden to negotiate the COFA agreements, said Washington would be providing the Marshall Islands with $2.3 billion dollars over the next 20 years, made up of grant assistance and trust-fund contributions.

He said the grant assistance would go to areas such as education, healthcare, environment and infrastructure, and added: "In terms of trust fund, the money, where it goes to, the new trust-fund money is determined by the Marshallese government."

Analysts and former officials had blamed a delay in finalizing the Marshall Islands COFA on U.S. State Department lawyers wanting to control how new funds were spent and objecting to their being earmarked to address the nuclear legacy, fearing this could lay the U.S. open to more claims.

The Biden administration had hoped to see Congress endorse new funding for the three COFA totaling $7.1 billion over 20 years by Sept. 30, but that did not prove possible amid budget haggling in the U.S. Congress.

A 45-day stopgap funding measure passed by Congress last month averted a U.S. government shutdown but has left potential funding shortfalls for the COFA states until their deals can be endorsed by the U.S. legislature, which analysts and former officials said makes the U.S. allies economically vulnerable and possibly more receptive to Chinese approaches.

(Reporting by David Brunnstrom; Editing by Sandra Maler)