Rough Seas Ahead: the Fsm Economy During Compact Ii

Hezel, Francis X. (2003-01-15). [www.micsem.org Rough Seas Ahead: the Fsm Economy During Compact Ii]. Micronesian Counselor (Report). Kolonia, Pohnpei: Micronesian Seminar. pp. 1–8.

• Has attachment: File:2LTJHUAM.pdf

Abstract: "Do you remember where you were on November 3, 1986? I happened to be in Fiji where I joined a large group of Micronesians, at the invitation of the FSM Embassy, at a special dinner celebrating the signing of the Compact of Free Association. After all those years as a Mandate and then a Trust Territory and then a self-governing but not completely independent nation, the Federated States of Micronesia had finally taken its rightful place in the community of nations. That night we drank toast after toast to a new nation and its bright future.

In 1986, under the terms of the original Compact, the US agreed to provide annual grants for the next 15 years, 60 percent of which would be used for operational expenses. The other 40 percent came in the form of capital investment that could be used for building up infrastructure or as seed money for development projects to strengthen the economic self-sufficiency of the new nation. The annual US assistance was to be cut at the end of each five-year period, so that by the end of the 15 years the aid would be reduced to roughly two-thirds of its original level. The hope was that gradually, with the help of Compact funding, a solid foundation for economic growth would be laid.

Not long ago, 16 years later to the day, we held another party on Pohnpei to celebrate the initialing of a new funding agreement between FSM and the US. This new agreement extended Compact funding for another 20 years–perhaps not quite at the level FSM negotiators had hoped for, but with US annual contributions to a trust fund that could go a long way to offering financial security for many years in the future. Parties are supposed to be festive occasions, not opportunities for hand-wringing, laments about the past, and recriminations. I don’t intend to spoil the party with any of that here. Just the same, it won’t hurt to take an honest look at the economy at this juncture and what we must realistically face down the road..."