Islands gain freedoms, US keeps missile test sites in South Pacific

Sometime this afternoon, the postwar era will officially end. Following 16 years of negotiations under four presidents, President Reagan will sign an unusual ``compact of free association,'' restoring limited independence to the 2,000 Pacific islands of Micronesia. The compact terminates the last of the 11 UN trusteeships assigned to the United States as part of the general settlement ending World War II.

The region has played a key role in US defense since the war. During the 1940s and the 1950s, the Bikini and Eniwetok atolls in the Marshall Islands were the site of over 60 atomic- and hydrogen-bomb tests. Since 1963, the region has been a test range for US intercontinental ballistic missiles, including the new MX missile. Defense Department officials say the area will remain critical as a test site for the ICBMs and components of the administration's proposed Strategic Defense Initiative.

Pentagon officials say the area's larger strategic importance has been thrown into sharp relief by recent events that have challenged traditional US preeminence in the Pacific.

The 35-year-old ANZUS (Australia-New Zealand-United States) treaty, which helps protect US interests in the South Pacific, was dealt what could be a fatal blow earlier this year when New Zealand banned visits by nuclear-armed and nuclear-powered US ships. Later, Australia backed away from a decision to participate in monitoring test flights of the MX missile. Also, political unrest in the Philippines has raised questions about the future of the two most important US bases in the Pacific, Clark Air Field

and Subic Naval Base.

Meanwhile, the Soviet Union has begun using former US bases in Vietnam on a regular basis. In addition, the nearby Gilbert Islands have extended fishing rights to the Soviets, giving access to the region to Soviet fishing trawlers, that Pentagon officials say, are more than likely to carry sensitive electronic monitoring equipment.

US rights to the Kwajelein missile testing range officially expired on Oct. 1. But disagreements within the administration and Congress over tax and trade provisions -- plus controversy over a series of unrelated amendments to the compact -- held the compact up for weeks, leaving the Pentagon with no place to test missiles.

The original language of the compact allowed for trade privileges comparable to those extended to US territories, providing more favorable access for Micronesia to US markets than foreign countries have. It also included liberal tax incentives designed to attract foreign investors to the islands.

Both provisions -- which were consistent with US policy when negotiations began -- fell victim to tax reform and protectionist sentiments on Capitol Hill and in the Reagan administration.

Micronesia is comprised of 2,000 islands scattered across an area of the western Pacific roughly the size of the US. The total population of the region is just 130,000 -- about the size of Topeka, Kan.

The islands were captured from Japan during World War II and since 1947 have been administered by the US as a UN strategic trust territory. Unlike Puerto Rico and Guam, the four regions of Micronesia have not had the status of a US territory; thus residents of the islands are not citizens of the US.

The compact will cover two of the four governments in the trust territory: the Federated States of Micronesia (FSM) and the Marshall Islands. A 1976 accord made the third, the Northern Marianas, a commonwealth of the US. Residents of the fourth, the island of Palau, voted not to be party to the compact, though it is expected that it will soon follow the path of the Northern Marianas.

Under the terms of the agreement, residents of the FSM and the Marshalls will regain sovereignty over domestic and foreign affairs, protection by the US from military attack, plus over $2 billion in US economic assistance over the next l0 years.

In return, the US will retain some control over Micronesia's defense policy, including the right to deny any foreign power a military presence in the islands. In addition, the US will regain access to the Kwajalein test range for 30 years in return for an annual rent of $9 million.