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).
Cities: Capital--Palikir. Other cities--Kolonia, Weno, Colonia, Lelu.
Terrain: 607 mountainous islands and low-lying coral atolls.
Climate: Tropical.

People
Nationality: Noun and adjective--Micronesian.
Population: 107,665.
Growth rate: -0.19%.
Ethnic groups: Nine ethnic Micronesian and Polynesian groups.
Religion: Roman Catholic 50%, Protestant 47%, others 3%.
Language: English and nine ethnic languages.
Education: Literacy--89%.
Health: Life expectancy--male 68.8 yrs.; female 72.6 yrs. Infant mortality rate--27.03/1,000.
Work force: More than 50% of workers are government employees.

Government
Type: Constitutional confederation in free association with the United States. The first Compact of Free Association entered into force in 1986, and an Amended Compact entered into force June 30, 2004.
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 (FY 2007 figures)
GDP: $232 million.
GDP per capita (nominal): $2,300.
National income (GDP + foreign assistance): $377 million.
National income per capita: $3,501.
GDP composition by sector: services 56%, agriculture 30%, industry 14%.
Industry: Types--fishing, agriculture, tourism, construction, craft items.
Trade: Exports ($14 million)--fish, kava, betel nut. Export market--Japan (21%), United States (25%), others (53%). Imports ($133 million)--food, manufactured goods, fuel. Import sources--United States (50%), Japan (11%), others (39%).
External debt: $60.81 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 states are the island groups of Pohnpei, Chuuk, and Yap, and the island of Kosrae. The federal capital is Palikir, on Pohnpei.

The indigenous population consists of various ethno-linguistic groups. English has become the common language. The birth rate remains high at more than 3%, but the population of the four states remains almost constant due to emigration.

HISTORY
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 based principally in Yap and Pohnpei. European explorers--first the Portuguese in search of the Spice Islands 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, and then through the Treaty of Versailles to the Japanese in 1919. Following World War II, these islands became part of the United Nations Trust Territory of the Pacific Islands, administered by the United States.

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 United States in 1986. An Amended Compact entered into force in June 2004.

GOVERNMENT AND POLITICAL CONDITIONS
The FSM is governed under a 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 at large--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 4 senators at large who serve in 4-year seats. Once elected, the President and Vice President serve for four years. Their congressional seats are then filled by special elections. An appointed cabinet supports the President and Vice President. There are no formal political parties.

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

The FSM's highest court is 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 Emanuel Mori
Vice President--Alik Alik
Secretary of Foreign Affairs--Lorin Robert
Speaker of the Congress--Isaac V. Figir
Ambassador to the United States--Yosiwo George
Permanent Representative to the UN--Masao Nakayama

The FSM maintains an Embassy at 1725 N Street NW, Washington, DC 20036. Telephone: 202-223-4383. Fax: 202-223-4391. Email: firstsecretary@fsmembassydc.org. Internet website: http://www.fsmembassydc.org. The FSM also maintains consulates in Honolulu and Guam.

ECONOMY
Under the terms of the Compact of Free Association, the United States provided the FSM with about $2 billion in grants and services between 1986 and 2001. The Compact's financial terms were renegotiated for the 20-year period 2004 through 2023, with the aim of encouraging sustainable development. The United States will provide almost $100 million in direct assistance every year until 2023, which includes the systematic reallocation of a portion of the direct aid to a jointly managed Trust Fund. Additional federal grants to the FSM total approximately $35 million annually. Assistance under the Amended Compact is distributed by grants in response to a transparent FSM budget process, focusing on the following six sectors: education, health, infrastructure, public sector capacity building, private sector development, and the environment. The U.S. Department of the Interior is responsible for monitoring and implementing the Amended Compact.

The FSM government sector plays a central role in the economy as recipient and domestic administrator of Compact funds. The national and state-level governments employ over half of the country's workers, with government services accounting for more than 40% of GDP. Real wages nationwide have been flat for the past decade, as has the number of jobs in the economy (about 15,500.) Private sector jobs pay about half as much as public sector jobs.

The fishing industry is highly important. Foreign commercial fishing fleets pay over $14 million annually for the right to operate in FSM territorial waters. These licensing fees account for 28% of the national government revenues. Exports of marine products, mainly to Japan, account for nearly 85% of export revenues.

Visitor attractions include scuba diving, surfing, World War II battle sites, eco-tourism, and the ancient ruined city of Nan Madol on Pohnpei. Some 18,000 tourists visit the islands each year. However, the tourist industry has been hampered by a lack of infrastructure, limited commercial air connections, and a severely restrictive foreign investment climate. The Asian Development Bank has identified tourism as one of FSM's highest potential growth industries.

Agriculture is mainly subsistence farming. The principal crops are breadfruit, coconuts, bananas, betel nuts, cassava, taro, and kava. Less than 10% of the formal labor force and less than 7% of export revenue come from the agricultural sector.

The large inflow of official assistance to the FSM allows it to run a substantial trade deficit--imports outstrip exports by a seven-to-one ratio--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 borrowed against future Compact disbursements in the early 1990s, yielding a significant external debt, close to $60 million. In 2005, the FSM Government and Congress took positive steps toward establishing a nationwide tax system to improve collections and more fairly distribute the tax burden.

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, Japan, Australia, and the People's Republic of China. Regional cooperation through various multilateral organizations is a key element of its foreign policy. The FSM became a member of the United Nations in 1991.

U.S.-MICRONESIAN RELATIONS
The Governments of the FSM and the United States maintain deep ties and a cooperative relationship. Reflecting a strong legacy of Trusteeship cooperation, over 25 U.S. federal agencies continue to maintain programs in the FSM. Under the Compact, the United States has full authority and responsibility for the defense of the FSM. This security relationship can be changed or terminated by mutual agreement. Also under the Compact, Micronesians can live, work, and study in the United States without a visa. Micronesians volunteer to serve in the U.S. Armed Forces at approximately double the per capita rate as Americans; they are also eligible for admission to U.S. Service Academies. Americans can live and work freely in the FSM without the need for a visa.

The United States will provide about $100 million annually in assistance to the FSM over the next 14 years. A Joint Economic Management Committee (JEMCO), consisting of representatives of both nations, is responsible for ensuring that assistance funds are spent effectively, with the aim of fostering good governance and economic self-reliance. The basic relationship of free association continues indefinitely.

The United States is the FSM's largest trade partner. See the FSM Country Commercial Guide at http://www.buyusainfo.net/ for further information on the business climate of the FSM.

Principal U.S. Officials
Ambassador--Miriam K. Hughes
Deputy Chief of Mission--William Douglass
Management Officer--Jonathan Floss
Economic/Consular Officer--Jason Wemhoener-Cuite

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. Internet website: http://kolonia.usembassy.gov/

[This is a mobile copy of Micronesia (01/09)]