Sydney: The US and Australia have announced a combined USD 580 million in funding for Pacific Island nations to strengthen regional engagement as both countries compete with China for influence across the Pacific.

The commitments were announced at the Pacific Islands Forum in Palau, where regional leaders are meeting amid intensifying strategic competition involving China, the US and Australia.

Australia will provide 600 million AUD (USD 430 million) to combat drug smuggling in the Pacific. The package includes funding for enhanced aerial surveillance and additional training for police and border officials.

Australian Prime Minister (PM) Anthony Albanese said the initiative was intended to support Pacific partners in tackling organised crime.

“The Pacific is our home and our family,” Albanese said, adding that cooperation was needed to tackle the illicit drug trade across the region.

The United States, meanwhile, announced USD 150 million in support for the region. Deputy Secretary of State Christopher Landau announced the funding at the forum, describing Washington's engagement with Pacific Island nations as an ongoing priority.

Of the US package, USD 60 million will go toward helping Pacific countries address the global energy crisis. The funding will support expanded fuel storage capacity and measures to improve electricity grid stability.

The combined announcement comes as China has expanded its presence in the Pacific through grants, infrastructure projects and other forms of assistance. Recent Chinese engagement has included infrastructure and strategic cooperation arrangements with countries such as Vanuatu, the Solomon Islands and the Cook Islands.

The US commitment also signals a renewed public indication of Washington's engagement in the region, following the dismantling of the US Agency for International Development last year.

The funding announcements have coincided with tensions at the Pacific Islands Forum over Taiwan's participation. China, which regards Taiwan as part of its territory, has opposed Taiwan's participation in the regional forum consisting of 18 members. Palau, which is hosting this year's meeting, is among the Pacific states that maintain diplomatic ties with Taiwan.

The Pacific Islands Forum began in August and is scheduled to continue until September 4.