Every coastal nation controls the 244 miles of the ocean that extends from its shores. These “exclusive economic zones” give Pacific island states domain over huge swaths of the sea, with territorial waters that radiate in all directions from far-flung archipelagoes. Even as these countries face civilization-ending threats from rising tides, they’ve emerged as linchpins in protecting a biodiverse-rich region of the ocean from climate change, overfishing and pollution.

Some of the world’s largest marine sanctuaries come from the tiniest of countries. In 2015, Palau moved to prohibit commercial fishing in 80% of its EEZ. That same year Kiribati banned industrial fishing in a California-sized marine reserve. The Cook Islands designated its entire 1.9 million-square-kilometer (733,594-square-mile) exclusive economic zone as a marine protected area two years later, followed by Niue (population of 1,700) outlawing fishing in an expanse of ocean nearly as big as Greece.

These vast ocean preserves looked like significant progress towards a United Nations target of protecting 30% of the global ocean by 2030. But in recent years progress is receding in some places, due in part to economic pressures and the extraordinary, and often hidden, impact that wealthy US environmental groups have on Pacific marine protected areas.

In one of the most overt reversals, Kiribati has taken steps to open its entire marine preserve to commercial fishing as a result of what the country says is the failure of a trust controlled by two US conservation groups to fulfill a promise to compensate the government for lost fishing revenue. In Palau, the Nature Conservancy, the world’s largest environmental organization, has wielded enormous influence in helping craft a government plan that could dramatically shrink a globally significant marine sanctuary the size of Spain and reintroduce industrial fishing into protected areas.

The move to redraw the sanctuary’s boundaries has deeply divided Palau, a country of 18,000 people that is a global leader in ocean conservation and a top eco-tourism destination where arriving visitors sign a pledge stamped in their passports to “preserve and protect your beautiful and unique island home.”

The blueprint for shrinking Palau’s ocean preserve originated with a 67-page document prepared by the Nature Conservancy. It was delivered to the country’s president in February 2022 in response to his solicitation of ideas to redraw the marine sanctuary’s boundaries to increase fishing revenues while keeping some areas off limits. TNC recommended reducing the no-fishing zone from 80% of the country’s ocean to a minimum 30% while encouraging Palau’s government to invest in a sustainable fishing company partly owned by the Nature Conservancy, according to the proposal reviewed by Bloomberg Green.

The Pacific Island Nation of Palau Has Been an Ocean Conservation Leader

The Nature Conservancy warned of risks from the plan—including outrage among potential US donors to Palau. “Some funders may perceive” shrinking the sanctuary “as ‘conservation loss’ that they don’t want to fund,” the proposal said, noting that there’s “significant funder focus on securing new large-scale marine protections.”

A month later, Palau President Surangel Whipps Jr. pitched a nearly identical government document to potential philanthropic donors to the country at meetings in California arranged by TNC and other US environmental groups. Whipps was seeking $35 million for the initiative to redraw the marine reserve’s boundaries, promote sustainable fishing and establish a local tuna fleet, among other projects.

TNC and its partners provided $7.8 million toward that goal in exchange for limits on the number of fishing licenses Palau would issue without TNC’s permission and the passage of legislation to redraw the sanctuary’s boundaries.

A TNC spokesperson says its proposal reflected the consensus of a collaboration between the NGO, Palau’s government and other US environmental organizations. “TNC has never advocated for adjusting the Palau National Marine Sanctuary in any way,” the group says in a statement. “We have worked in Palau for over 30 years, and each administration has a different set of conservation priorities.” (Bloomberg Philanthropies is a financial donor to TNC, and was a funder of a 2015 Pew Charitable Trusts project that supported the creation of the Palau National Marine Sanctuary. Bloomberg Philanthropies is the charitable organization of Michael Bloomberg, the founder of Bloomberg LP, the parent of Bloomberg News.)

TNC says it doesn’t profit from the tuna company it co-owns — the other owner is the Marshall Islands — noting it provided capital to launch the venture and will exit once it becomes self-sustaining.

Whipps stresses that reconfiguring the sanctuary is necessary to raise fishing revenue after the pandemic devastated Palau’s economy. “We need to really balance protection and production,” he says. “We will have to demonstrate that whatever size that we do, it makes conservation sense, it makes economic sense and ultimately it’s sustainable.” Whipps says that TNC didn’t exert undue influence over the government. “We appreciate the help that TNC has given us and helping us administer and develop the plan,” he adds.

There are no allegations of wrongdoing against TNC. But the organization’s influence in Palau, particularly over the marine sanctuary, raises questions about the appropriate role of powerful foreign nongovernmental organizations in developing countries. As the climate crisis pummels small Pacific island nations, these cash-strapped countries are becoming ever-more reliant on the expertise, resources and priorities of rich Western NGOs. TNC, for instance, had revenues of $1.3 billion in 2021-2022, more than five times the GDP of some Pacific nations. How to help poor island states bearing the brunt of a catastrophe they didn’t cause has dominated the debate at the United Nations annual climate negotiations. After decades of ignoring their pleas, industrialized countries finally agreed at COP28 in December to compensate vulnerable countries for “loss and damage” from climate disasters. But those funds won’t necessarily finance measures like marine protected areas needed to mitigate the impacts of future climate change. Western NGOs have stepped into that void.

The involvement of NGOs in countries like Palau will be supercharged by a $100 million commitment made by the Bezos Earth Fund at COP28 to support the creation of marine protected areas across the Pacific over the next five years. The money will flow to NGOs. “We see the role of the international organizations as supporting the local organizations,” says Bezos Earth Fund Chief Executive Officer Andrew Steer, who adds that grants will primarily be made to island NGOs. The funding pledge comes as another big US environmental group, Conservation International, opened a Palau office in April to work on sustainable fishing and marine sanctuary issues.

Palau remains in control of the sanctuary plan. But former TNC employees in Palau play prominent roles in government policy. The two most recent Palau environment ministers have been TNC executives; the government minister who signed the $7.8 million funding agreement had a year earlier run TNC’s Palau operations. His former boss signed for TNC. The environmental group’s current local director is a former speaker of the Palau National Congress. The head of TNC’s Palau tuna program, meanwhile, is a former presidential advisor who serves on the board of the organization that manages the Palau National Marine Sanctuary.

That revolving door creates the potential to blur the lines between government and NGO. “This appears to be a shocking example of a big NGO inserting itself in the place of the government in ways I have not seen before,” says Paige West, an anthropologist at Columbia University who studies the relationship between Western conservation groups and Pacific island indigenous cultures. “There seems to be a seamless connection between the individuals in the government and individuals who work for TNC in Palau. What does that mean for Palau’s sovereignty?”

TNC says that its employees “seek job opportunities throughout their careers that apply their skills and further their professional development — including government agencies … and vice-versa.” It noted that it has “has strict protocols for how we work with sovereign nations and governments. We do not have our own independent agenda in Palau or anywhere we work.”

Former Palau President Tommy Remengesau Jr.’s administration established the marine sanctuary. “I’m probably one of the most ardent supporters of NGOs,” says Remengesau, who also happens to be the brother- in-law of Whipps, the current president. “But we shouldn’t let NGOs come in with a predetermined agenda and then have the government just put a stamp on it.”

Lying 4,700 miles (7,564 kilometers) southwest of Hawaii, Palau is an archipelago of 340 islands and coral atolls encircled by a vast barrier reef system whose first inhabitants arrived from other Pacific islands some 3,000 years ago. Between the 1700s and the early 20th century, colonial control of Palau passed from Spain, to Germany, to Japan. After World War II, the US administered the islands, and since Palau’s independence in 1994, the country has continued to rely on the US for military defense and funding. Its capital, a complex of imposing neo-classical buildings, improbably rises from the jungle overlooking the Pacific Ocean like a tropical Washington, DC.

The ocean remains a source of sustenance, livelihood and identity in Palauan society. Drive around Babeldaob and Koror, the adjacent islands home to most of Palau’s population, and you’re as likely to see a boat or two parked in a front yard as a car.

“A lot of guys may be fishing one day for their families and taking tourists sport fishing or on a reef dive the next,” says Jennifer Koskelin-Gibbons, who serves on the board of the Palau Sports Fishing Association and is involved in efforts to preserve the marine sanctuary.

That fishing is so interwoven with Palauan life makes the expansion and shrinking of the marine sanctuary a particularly personal issue for many. It’s also inseparable from the impact of foreign tuna fleets from China, Japan and Taiwan that have profited from Palau’s waters but contributed less than $3 million to the country’s annual revenues. Although the government pledged to continue to prohibit industrial fishing in the sanctuary until its boundaries are redrawn, already a Chinese company, Palau FengSheng Fishery Venture, has obtained a 25-year government license to deploy vessels in Palauan waters where fishing is still permitted, Palau Foreign Investment Board records show.

Tourism, on the other hand, accounted for as much as half of Palau’s $248 million GDP before the Covid-19 pandemic, when visitors journeyed to the islands to experience coral reefs and turquoise lagoons teeming with sharks, golden jellyfish and schools of Technicolor fish.

Tourism operators fear shrinking the sanctuary will tarnish Palau’s allure as an eco-tourism hotspot that attracts high-spending visitors. “Palau has a leadership position in marine conservation, and its brand has been built around the marine sanctuary,” says Dermot Keane, managing director of eco-tourism outfit Sam’s Tours, who recalls the days when foreign tuna boats would dump their trash around reefs and steam into port with the carcasses of illegally caught sharks hanging from the rails. “It gives Palau marketing exposure that we couldn’t otherwise afford.”

Millennia before Western scientists introduced conservation concepts like “marine spatial planning” and “no-take zones” to Pacific islanders, Palauans ensured the sustainable use of their ocean through the ancient precept of “bul.” When chiefs observed fish or another resource becoming scarce, they would issue a bul, or ban, on its exploitation until it could recover.

“The bul is not to punish the people but to preserve and protect our natural resources, not just for us today but for future generations,” says Raphael Ngirmang, the paramount chief among 16 traditional leaders that advise Palau’s president, known as the Council of Chiefs.

The law that established Palau’s first network of coastal refuges in 2003 is a bul. The world’s first shark sanctuary, created six years later in Palau and designed to reign in illegal finning, also is a bul. By 2013, Remengasau’s administration turned to TNC for ideas on creating the biggest bul yet in the form of a huge marine sanctuary.

TNC proposed making half the exclusive economic zone off limits to commercial fishing. In the other half, Palau would sell all of its tuna fishing rights to a consortium composed of TNC and foreign fleets, which would be required to operate more sustainably to reduce overfishing, according to a 2014 document reviewed by Bloomberg Green. In exchange, TNC would pay at least $1.5 million per year over five years. TNC would also help Palau build its own tuna fleet.

Remengesau, the former president, rejected the proposal. He wanted a bigger marine sanctuary, and his advisors saw little benefit from turning Palau into what they viewed as an NGO’s sustainable fishing laboratory. With the assistance of another US nonprofit, the Pew Charitable Trusts, the government proposed the Palau National Marine Sanctuary to ban commercial fishing in 80% of its territorial waters. A grassroots campaign mobilized public support for the initiative.

“Scientists want to come in, researchers want to come in, the environmentally conscious tourist wants to come to a place like Palau,” says Remengesau outside his beach house on Babeldaob in the shade of sprawling calophyllum trees. Giant clam shells sit in a pile on the exposed roots. “It translated into a growing tourism industry. We actually got more money than from fishing revenues.”

TNC executive director for Micronesia and Polynesia Noah Idechong, a pioneering Palauan conservationist and veteran politician who joined the organization in late 2021, says banning industrial fishing is not economically sustainable. “We have 80% of Palau locked up from fishing and what are we getting out of it?” he says at TNC’s offices in Koror. “For Pacific Islanders, we conserve by using our resources sustainably, not by locking them up.”

In a statement about its 2014 proposal, TNC says, “The Nature Conservancy has successfully used similar models to help communities facing overfishing in their fisheries” and that “nothing in the proposal involved Palau delegating fisheries management to TNC and/or its partners.”

Larry Goddard is an American attorney who lives in Palau and served as a senior advisor to Remengesau when the president sought to create one of the world’s largest marine sanctuaries. “It became clear that TNC had their own plan on what they wanted to do,” he says of the 2014 bid. “They never gave up on their plan.”

The pandemic offered reason to reconsider Palau’s sanctuary. Tourism disappeared overnight. Foreign fleets that sold some of their catch in Palau had already departed. That led to a tuna shortage and prompted fears that the reefs that Palauans rely on would become overfished by local fishers.

The loss of foreign fishing revenue, though just 1.2% of Palau’s GDP, was more keenly felt in the absence of tourism. As Palau’s congress considered legislation in 2021 to temporarily reopen the marine sanctuary to industrial fishing, Whipps took office and asked TNC and other NGOs help devise a strategy that would generate revenue from tuna fishing while keeping part of the sanctuary intact.

After Whipps presented his plan to the public, protesters turned up outside a high-profile ocean conservation conference Palau hosted in April 2022.

“At the end of the day, the question that needs to be asked is, ‘Who’s going to be fishing?’ ” says Palauan environmental advocate Ann Singeo. “And I think the answer is foreign vessels again, and I just don’t think that that’s fair to the Palauan people.”

The Council of Chiefs, which includes Whipps’ father and Remengesau, sent letters to TNC Chief Executive Officer Jennifer Morris and other US conservation leaders asking for help preserving the marine sanctuary and the ban on industrial fishing.

“The people of Palau have not been consulted nor have we, Palau’s traditional leaders,” the chiefs wrote. “This is very distressing to us as the Sanctuary was formed by, and born from, our culture and traditional knowledge.”

Morris never replied to the chiefs’ letter. Unbeknownst to the chiefs, the government and TNC were already completing an agreement to implement the plan to resize the sanctuary. In a text sent to a colleague just days after the chiefs’ plea hit her inbox, Morris wrote that, “We are hoping to finalize [the deal] with Palau this week.”

The deal was a $7.8 million funding agreement, underwritten by TNC and its US partners. It was designed to compensate the Palau government for the loss of foreign fishing revenue during the marine spatial planning process to redraw the sanctuary. But there were stipulations. To issue more than four fishing licenses, Palau needs “the prior written approval of the Conservancy.” Furthermore, the money was contingent on Palau passing legislation to authorize redrawing the sanctuary’s boundaries. The agreement, reviewed by Bloomberg Green, was signed on July 1, 2022, and the Palauan Congress subsequently approved a bill allowing the reconfiguration of the marine sanctuary.

TNC says that Morris didn’t reply to the chiefs’ letter because that “would have improperly inserted ourselves between Palau leadership and their Council of Chiefs advisors.” Rather, “Our country director handled this under appropriate local governance protocols which did not need a written response.”

Remengesau, who served four terms as president, says he doesn’t recall that an NGO has ever conditioned its financial support on Palau enacting legislation.

TNC declined to comment on the legislation requirement in the funding agreement. Steven Victor, Palau’s minister for agriculture, fisheries and environment, who joined the government from TNC in 2021, says the Nature Conservancy needed to ensure the funding wouldn’t be used to allow additional commercial fishing during marine spatial planning. “There was a lot of talk in town that we’re doing this to allow for foreign fleets to go fishing and some see this as strong-arming Palau, but there needed to be a mechanism that helps protect [TNC’s] interests,” says Victor, who signed the agreement with his former employer. Victor’s former boss at TNC, Michael Sweeney, signed for the NGO.

The marine spatial planning process, which will decide the areas of the sanctuary to reopen to fishing, involves TNC experts, local and regional scientists, a Council of Chiefs representative and government officials. It’s set to be completed by November 2024. A “sustainable ocean plan” is then to be drafted with policy recommendations on resizing the sanctuary.

The outcome could influence how other Pacific island nations set up big marine protected areas and further the scientific debate over the effectiveness of massive ocean sanctuaries in preserving biodiversity. A 2022 study of the world’s largest fully protected marine preserve in Hawaii found that populations of some tuna species had increased 54% between 2010 and 2019. “Anecdotally, what we’re hearing from some fishers is that fish are coming closer and they’re able to catch more fish now,” says King Sam, program manager for the Palau International Coral Reef Center.

Okada Techitong is a chief, a former lawmaker and the current chair of Belau Offshore Fisheries Inc. (BOFI), a Palauan company established to develop a local tuna fleet. “For the longest time, Palau’s resources have been enjoyed by foreign companies,” Techitong says, as workers cut filets from freshly caught yellowfin and bigeye tuna piled in freezers at BOFI’s waterfront office. “Our leaders can be easily persuaded by NGOs.”

Techitong says he worries that re-opening the marine sanctuary will attract foreign fleets that the government can’t control. He mentions the Chinese tuna company that has approached BOFI about a joint venture. The company is Palau FengSheng Fishery Venture, which received a Palau government license in 2022 and said it aims to supply the domestic market. It has a TNC connection: Its agent was the former fleet coordinator for the Palau operations of Hong Kong-based Luen Thai Fishing Venture, one of the world’s largest tuna companies. The fleet coordinator and Luen Thai have collaborated with TNC on sustainable fishing initiatives in the past. The company didn’t respond to requests for comment.

Ann Singeo serves as the executive director of Ebiil Society, an organization that promotes environmental education and ecological restoration in Palau. In a 2022 paper published in in the journal Conservation Biology, she advised Western scientists to bechachongii a sualem e me, or “come with an empty basket,” prepared to learn from indigenous conservation practices.

“Even for me, who lives in Palau and interacts with local communities, I cannot implement an initiative without hearing from the people,” says Singeo as she harvests taro for a family ceremony in a field across from her seaside home accompanied by her dog, Kuma. “Every time I go do any work in anyone’s village, I need to say, ‘You’re here, what are the issues? How can we help?’ ”

“I think TNC saw an opportunity to introduce their solution,” she adds, “but they’re only doing what Palau’s government is allowing them to do.”