For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Federated States of Micronesia

Geography
Area: 702 sq. km (about 270 sq. mi.) in four major island groups (Pohnpei, Chuuk, Yap and Kosrae) totaling 607 islands.
Cities: Capital--Palikir. Other cities--Kolonia, Moen, Lelu.
Terrain: Varies from mountainous to low coral atolls.
Climate: Tropical.

People
Nationality: Noun and adjective--Micronesian.
Population: 116,268.
Growth rate: 2.0%.
Ethnic groups: Nine ethnic Micronesian and Polynesian groups.
Religion: Roman Catholic 50%, Protestant 47%.
Language: English (official and common), and all four states have their own ethnic language.
Education: Literacy--89%.
Health: Life expectancy--male 66.7 years; female 70.6 years. Infant mortality rate--33.5/1,000.
Work force: More than one-half of workers are government employees.

Government
Type: Constitutional government in free association with the U.S.
Independence (from U.S.-administered UN trusteeship): November 3, 1986.
Constitution: May 10, 1979.
Branches: Executive--president (chief of state and head of government), cabinet. Legislative--unicameral Congress with 14 seats.
Judicial--Supreme Court.
Major political parties: No formal parties.

Economy
GDP: $224 million.
GDP per capita (nominal): $1,977.
National income (GDP + foreign assistance): $340 million.
National income per capita: $2,925.
GDP composition by sector: Services 77%, agriculture 19%, industry 4%.
Industry: Types--government, fishing.
Trade: Exports ($33 million)--fish, garments and buttons, betel nut. Export markets--Japan (80%), U.S. Imports ($85 million)--food, manufactured goods, fuel. Import sources--U.S. (73%), Japan, Australia.
External debt: $111 million.
Currency: U.S. dollar.

GEOGRAPHY AND PEOPLE
The Federated States of Micronesia (FSM) consists of 607 islands extending 1,800 miles across the archipelago of the Caroline Islands east of the Philippines. The four constituent island groups are Yap, Chuuk (called Truk until January 1990), Pohnpei (called Ponape until November 1984), and Kosrae. The federal capital is Palikir, on Pohnpei.

The indigenous population, which is predominantly Micronesian, consists of various ethnolinguistic groups. English has become the common language. Population growth remains high at more than 3%, ameliorated somewhat by net emigration.

HISTORY
The ancestors of the Micronesians settled the Caroline Islands over 4,000 years ago. A decentralized chieftain-based system eventually evolved into a more centralized economic and religious empire centered on Yap. European explorers--first the Portuguese in search of the Spice Islands (Indonesia) and then the Spanish--reached the Carolines in the 16th century, with the Spanish establishing sovereignty. The current FSM passed to German control in 1899, then to the Japanese in 1914, and finally to the U.S. under UN auspices in 1947 as part of the Trust Territory of the Pacific Islands.

On May 10, 1979, four of the Trust Territory districts ratified a new constitution to become the Federated States of Micronesia. The neighboring trust districts of Palau, the Marshall Islands, and the Northern Mariana Islands chose not to participate. The FSM signed a Compact of Free Association with the U.S., which entered into force on November 3, 1986, marking Micronesia's emergence from trusteeship to independence.

GOVERNMENT
The internal workings of FSM are governed by the 1979 constitution, which guarantees fundamental human rights and establishes a separation of governmental powers. The unicameral Congress has 14 members elected by popular vote. Four senators--one from each state--serve 4-year terms; the remaining 10 senators represent single-member districts based on population, and serve 2-year terms. The President and vice president are elected by Congress from among the four state-based senators to serve 4-year terms in the executive branch. Their congressional seats are then filled by special elections. The president and vice president are supported by an appointed cabinet. There are no formal political parties.

Each of FSM's four states has its own constitution, elected legislature, and governor. The state governments maintain considerable power, particularly regarding the implementation of budgetary policies.

The judiciary is headed by the Supreme Court, which is divided into trial and appellate divisions. The president appoints judges with the advice and consent of the Congress.

Principal Government Officials
Head of State and Government--President Leo A. Falcam
Acting Secretary of Foreign Affairs--Ieske Iehsi
Speaker of the Congress--Jack Fritz
Ambassador to the U.S.--Jesse Marehalau
Permanent Representative to the UN--Masao Nakayama

FSM maintains an embassy at 1725 N Street NW, Washington, DC 20036 (tel: 202-223-4383). It also maintains consulates in Honolulu and Guam.

ECONOMY
Under the terms of the Compact of Free Association, the U.S. will provide FSM with over $1 billion in grants and services from 1986 to 2001. The largest single item is an annual block grant, which has declined in three 5-year phases. Annual payments for seven specific categories of programs, including health and education, have been made in fixed amounts since the Compact's inception. The entire package is adjusted each year for inflation. In 1997 the U.S. provided more than $78 million in Compact assistance--an amount equivalent to over one-third of FSM's GDP--plus another $11 million through other federal programs. Total official development assistance from all sources was $101 million in 1997, with nearly 90% of that total coming from the U.S.

The FSM public sector plays a central role in the economy as the administrator of the Compact money. The national and state-level governments employ over one-half of the country's workers and provide services accounting for more than 40%of GDP. Faced with the potential decrease or cessation of some of the assistance programs upon the Compact's expiry in 2001, the Government of the FSM in 1996 began to implement a program of economic reforms designed to reduce the role of the public sector in the economy.

The fishing industry also is highly important. Foreign commercial fishing fleets pay over $20 million annually for the right to operate in FSM territorial waters. These licensing fees account for nearly 30% of domestic budgetary revenue. Additionally, exports of marine products, mainly reexports of fish to Japan, account for nearly 85% of export revenue.

The tourist industry is present but has been hampered by a lack of infrastructure. Visitor attractions include scubadiving (notably in Chuuk Lagoon), World War II battle sites, and the ancient ruined city of Nan Madol on Pohnpei. Some 15,000 tourists visit the islands each year. The Asian Development Bank has identified tourism as one of FSM's highest potential growth industries.

Farming is mainly subsistence, and its importance is declining. The principal crops are coconuts, bananas, betel nuts, cassava, and sweet potatoes. Less than 10% of the formal labor force and less than 7% of export revenue come from the agriculture sector. Manufacturing activity is modest, consisting mainly of a garment factory in Yap and production of buttons from trochus shells.

The large inflow of official assistance to FSM allows it to run a substantial trade deficit and to have a much lighter tax burden than other states in the region (11% of GDP in FSM compared to 18%-25% elsewhere). The government also borrowed against future Compact disbursements in the early 1990s, yielding an external debt of $111 million in 1997 (over 50% of GDP).

FOREIGN RELATIONS
The Government of the Federated States of Micronesia conducts its own foreign relations. Since independence, the FSM has established diplomatic relations with a number of nations, including most of its Pacific neighbors. Regional cooperation through various multilateral organizations is a key element in its foreign policy. The FSM became a member of the United Nations in 1991.

The Governments of the FSM and the U.S. signed the final version of the Compact of Free Association on October 1, 1982. The Compact went into effect on November 3, 1986, and the FSM became a sovereign nation in free association with the United States. Under the Compact, the U.S. has full authority and responsibility for the defense of the FSM. This security relationship can be changed or terminated by mutual agreement. The Compact provides U.S. grant funds and federal program assistance to the FSM. The basic relationship of free association continues indefinitely, but certain economic and defense provisions of the Compact expire in 2001, subject to renegotiation. Negotiations on extending the Compact began in November 1999.

Principal U.S. Officials
Ambassador--vacant
Charge d'Affaires--Deborah L. Kingsland

The mailing address for the U.S. Embassy is P.O. Box 1286, Kolonia, Pohnpei, Federated States of Micronesia 96941. Telephone: 691-320-2187. Fax: 691-320-2186. Email: USEmbassy@mail.fm.

[This is a mobile copy of Micronesia (02/01)]