The Indo-Pacific’s quiet war loses a U.S. ally

Palacios' death leaves a vulnerable opening in buffer with China

Commentary by Brent Sadler, Washington Times, Tuesday, August 12, 2025

America lost a patriot last month when Arnold Palacios, the 10th governor of the Commonwealth of the Northern Mariana Islands, died unexpectedly. He leaves behind a grieving community and a vulnerable link in America’s island border with China.

Palacios died at a precarious moment. This decade, the Indo-Pacific has been the epicenter of strategic competition and potential conflict, and the Northern Mariana Islands, a U.S. territory just north of Guam, has a strategic role. This territory of fewer than 50,000 residents houses several military facilities and has been the target of Chinese criminal and foreign influence operations for years.

Chinese agents know that the Northern Mariana Islands’ economy relies on tourism, and the island has long sought ways to attract more tourists and investment. Chinese actors, armed with deep pockets and opaque intentions, have seized on this opportunity to exploit and endanger America’s place in the Pacific.

Under such pressures, as former Gov. Juan Babauta (2002-2006) put it, the territory had become as “corrupt as it could have ever been.”

When Palacios became governor in 2023, the tide seemed to turn. In sharp contrast with his predecessor, who was accused of accepting millions of dollars in payments from questionable entities, Palacios entered office with a clear mandate: to push back against corrosive Chinese influence. Testifying before the House Committee on Natural Resources in August 2023, he warned that the “commonwealth [was] acutely vulnerable to CCP exploitation” and pledged to “pivot from overreliance on Chinese investment.

Palacios meant what he said. In an April letter to Delegate Kimberly King-Hinds, Palacios requested an “increase [in] FBI presence” for “intensive investigations of public corruption,” and he claimed to have “considerable evidence to provide to the bureau.

It is uncommon for a sitting governor to call for an FBI investigation and rarer still when that investigation targets the very institutions they lead and may implicate former officials.

Palacios stood as a powerful and sometimes solitary voice in calling out corruption. He was a principled defender of America’s values and a powerful advocate of justice. His sudden death now seriously calls into question the Northern Mariana Islands’ ability — and, more important, resolve — to continue this fight.

The forces he was up against weren’t minor. One of the most glaring examples of foreign influence in the islands came in the form of a now-bankrupt Chinese-backed megacasino.

In the past decade, substantial amounts of Chinese money flowed into the Northern Mariana Islands through Imperial Pacific International Holdings, a Hong Kong-based company that operated a casino on Saipan. Over time, it developed local networks of support and influence.

While operating in 2017, the casino somehow processed more than $2 billion monthly in VIP bets across fewer than 20 tables. That’s several times the money of the most lavish casinos in Las Vegas, all in a city where, as Bloomberg reporter Matthew Campbell quipped, the “best hotel is a 1970s-era Hyatt.” Given all this, the potential for large-scale money laundering is high.

All of this happened on American soil. How?

The Northern Mariana Islands’ oversight body, the Commonwealth Casino Commission, received annual checks of $3 million from Imperial Pacific International Holdings. This plausibly eased the commission’s public meetings, where the commission seemed quick to dispense with major concerns. However, a 2021 Federal Election Commission Report uncovered that Imperial Pacific International Holdings contributed tens of thousands of dollars to campaigns.

Those campaign investments seemingly paid off. Local legislation has attempted to weaken oversight of the casino industry, including efforts to eliminate mandatory safety inspections and relax banking regulations.

Northern Mariana Islands representatives have also championed a visa waiver program that allows Chinese nationals to enter the commonwealth for up to two weeks. Although intended to boost tourism, the program has been exploited by Chinese nationals seeking access to sensitive areas, including those near U.S. military installations clustered across the Northern Mariana Islands and Guam.

This vulnerability is especially concerning given the strategic importance of both territories. The Defense Department invested $800 million in upgrading military facilities on Tinian, another commonwealth island, including airport renovations to support military operations and training.

Neighboring Guam is home to major U.S. Air Force and Navy bases. Guam’s location makes it America’s “strategic hub of the Pacific,” and the American population there is a prime target of hundreds of Chinese ballistic missiles.

Since 2022, 118 Chinese nationals have been documented trying to illegally enter Guam. Several appeared on federal watch lists as potential security threats. Earlier this year, U.S. Delegate from Guam James Moylan requested additional Homeland Security Department personnel, citing incidents of Chinese nationals “found inside U.S. military installations.”

Palacios was a courageous man who fought to prevent the Commonwealth of the Northern Mariana Islands and key territories in the Pacific from falling under Beijing’s nefarious influence. His fight must continue for the sake of America’s security.

• Brent Sadler is a senior research fellow for naval warfare and advanced technology at The Heritage Foundation Allison Center for National Security.