KOROR, Palau -- Palauans are caught "between a rock and a hard place," as citizens of the tiny Pacific island nation say they are being pulled into a geopolitical power game between the United States and China that also threatens their environment.

In recent years, the U.S. has expanded its defense posture in the archipelago east of the Philippines. That includes constructing a Tactical Mobile Over-the-Horizon Radar (TACMOR) system for military surveillance, expected to be ready by the end of next year, and reconstructing a former Japanese military runway on the island of Peleliu to accommodate military-grade aircraft. It is also in the early stages of expanding the Malakal Port in Koror to hold larger vessels and rehabilitating a Peleliu dock.

Palau-U.S. relations are built on the Compact of Free Association, entered into force in 1994, which grants Washington full defense authority and access to Palau's land, waters and airspace in exchange for financial assistance and protection. Palauans can live and work in the U.S. and access social services. Palau has no diplomatic ties with China and instead maintains relations with Taiwan.

"Right now I feel like Palau is between a rock and a hard place," Tutii Chilton, Palau-based operations manager at the nonprofit Island Conservation, told Nikkei Asia. "It's damned if we do, damned if we don't. If we're friends with China, they're going to stop us from being friends with Taiwan. But we need economic development and we have a compact with the U.S., so we have to be friends with the U.S." The Post Office in Koror. Palau-U.S. ties are based on the Compact of Free Association, which grants Washington full defense authority and access to Palau's land, waters and airspace in exchange for financial assistance and protection.

U.S. Air Force Lt. Col. Grant Georgulis wrote in 2022 that the second island chain -- an arc of Pacific island countries, including Palau, and the U.S. territories of Guam and the Northern Mariana Islands -- is "strategically valuable" in providing support for U.S. air and maritime operations in case of a contingency involving Taiwan and China. "If the United States is serious about thwarting any overt Chinese Communist Party action against Taiwan, localized control of the air and sea is a must," he wrote in the Department of the Air Force's Journal of Indo-Pacific Affairs.

China claims Taiwan as its own territory and has not ruled out force to gain control of the self-governed island democracy. Kevin Rudd, former Australian prime minister and current Asia Society global president, in an address on Sept. 10 cited an "elevated possibility of military action by China against Taiwan in 2028," pointing to the former's heightened level of military preparedness and large-scale combat rehearsals. "Therefore, what is required is a combination of both declaratory and operational policies and strategies by the U.S. and its allies around the world to elevate that risk in the perception of the Chinese leadership," said Rudd, once an Australian diplomat in China.

Palau President Surangel Whipps Jr. stressed that the U.S. partnership "ensures security for Palau" and helps "promote peace and a free and open Indo-Pacific" in remarks to reporters on the sidelines of the Pacific Islands Forum Leaders Meeting held in Palau from late August to early September. But some Palauans fret about becoming targets in a potential superpower conflict. "What's the enemy going to take out first? The radar systems," said Chilton, a U.S. Army veteran. Ann Singeo, executive director of local grassroots environmental organization Ebiil Society, said Palau's size is also a concern.

"Palau is so small, it doesn't take much to have one bomb impact the rest of the communities," she told Nikkei Asia.

"We understand that increased defense activity can raise questions about security," a U.S. Pacific Command spokesperson told Nikkei Asia. "The purpose of strengthening defensive capabilities in Palau, including systems that improve regional awareness, is to deter conflict, not provoke it." U.S. soldiers stationed on Peleliu Island are seen having breakfast in 2025.

Australian military historian Peter Williams said locals' worries are not unfounded. U.S. activity in Palau "of course makes you a target, not in the first rank of targets, but in the second rank of targets" in a contingency, as Palau sits along the second island chain. "But small countries have to decide whether they want to be defended by great powers or not. If you want one of the big guys to defend you, there is a cost to that." Tarcisius Kabutaulaka, associate professor at the Center for Pacific Islands Studies at the University of Hawaii at Manoa, pointed to the Iran war as a turning point in perceptions.

"This idea that the U.S. military base or military presence is a source of security, I think, has been blown up by what we've seen in the Middle East with the Iran war," he said, referencing Tehran's missile and drone strikes on American military installations and hubs across the region, including in Jordan, Bahrain and Kuwait.

But President Whipps says Palau is vulnerable, no matter what. "We are already a target, whether the U.S. is here or not, because of our location," he told Nikkei Asia. "We need to understand that."

And China's test launch of a nuclear-capable missile that landed in the Pacific Ocean in July "is a reminder that it's important to be prepared," Whipps told reporters. China, however, says it poses no threat. "We never engage in military expansion," Foreign Ministry spokesperson Guo Jiakun said on Sept. 3. "China stands ready to work with South Pacific countries to contribute to peace, stability, development and prosperity of the South Pacific region."

The expanding U.S. military presence has also stoked concerns over Palau's tropical environment.

Palauan President Surangel Whipps Jr. speaks during a news conference concluding the Pacific Islands Forum Leaders Meeting in Koror, Palau, on Sept. 3.

In late 2024, seven Palauan students partnered with the Ebiil Society to file a complaint with United Nations human rights experts, saying the removal of swathes of forest to develop runways and radar facilities threatens endangered species, upends existing food systems for locals and renders Palau's nature-based tourism unviable.

"Palau's environment is its only jewel, the only resource that we have, other than its people," Island Conservation's Chilton said. "So this is the only thing we have that we need to protect, that we can share with the world."

Some back the U.S. military presence but worry about its impact. Sharp Sakuma, governor of Ngaraard state where the TACMOR transmitter site is being built, told Nikkei Asia he supports the project but remains concerned about "our environment and sovereign state of Palau." Sediment was discharged from the TACMOR site into mangroves and sea beds of the state's marine environment following major rainfalls, said a letter sent in August from the Ngaraard government to Palau's Environmental Quality Protection Board.

"We just want to make sure that all the steps are taken to ensure the safety of the people and our environment," said Sakuma, who in the letter asked the EQPB for an environmental damage assessment and improvement measures.

Kambes Kesolei, founder of Palau-based think tank Compass Point Institute, says both the government there and the U.S. need to step up dialogue with the Pacific island country's citizens. Kambes Kesolei, founder of the Palau-based think tank Compass Point Institute, said efforts by both governments have been lacking.

Palau leaders and the U.S. military "need to do a better job in reaching out to the community, explaining things to them and listening to their concerns," Kesolei said. "There are people, there are communities, there are cultures, and it doesn't mean that [if] the law allows it, you can do whatever you want; I think that that understanding is not there." Whipps, however, said the U.S. is doing all it can. "We have very stringent environmental and cultural laws and we've been following those laws," he told Nikkei Asia, "and the U.S. has done more than any other development [partner] in Palau to address those concerns."

The U.S. Pacific Command spokesperson cited the necessity of "continued communication with Palauan communities," adding the two governments have held seven public meetings on defense infrastructure projects in Peleliu, Ngaraard and Koror, and their associated environmental reviews since May 2024.

Peleliu was the site of a deadly battle between American and Japanese forces during World War II that contributed to decades of environmental pollution. Still today, unexploded bombs and legacy munitions leak picric acid that contaminates the ocean, and sunken vessels and aircraft on the seafloor threaten to leak oil. "We've never had any enemies," Singeo of the Ebiil Society said.

"The only time that we've had war taking place on our island was during World War II, and it wasn't even our war. And if this happens again, that truth remains the same. It will not be our war. It'll be somebody else's war, but we pay the price."