Showing posts with label Federated States of Micronesia. Show all posts
Showing posts with label Federated States of Micronesia. Show all posts

03 January 2018

U.S. TO INVESTIGATE IMPACT OF CHINESE ECONOMIC INFLUENCE IN FORMER TRUST TERRITORY OF THE PACIFIC ISLANDS

The $700 billion 2018 National Defense Authorization Act, signed by President Trump in mid December, calls on the Department of Defense (DOD) to investigate the growing role of China in former US territories in the Pacific. That is a recognition both of the islands’ importance to US global strategy, as well as the latest indicator that America’s decades long relationship with its former dependencies is a partnership under stress.
Strung across the Western Pacific, today’s Republic of Palau (ROP), Federated States of Micronesia (FSM), and Republic of the Marshall Islands (RMI) were liberated from the Japanese in the Pacific War and governed by the US as a UN authorized “trust territory” until the early 1980s. Since that time, these sovereign nations have enjoyed a unique status of “Free Association,” with the US, which provides for their defense as well as sending US bilateral aid that sustains public sector driven economies in the isolated, under-resourced, islands and atolls. Locals can, and in large numbers do, enlist in the US military.
The Compacts of Free Association (COFA) also provide easy entry for islanders coming to study, work, or simply live in the US. Their “eligible non-citizen status” affords them most rights, privileges -and even entitlements- otherwise reserved for native born Americans.
Because of their strategic location at the crossroads of the Pacific, the islands have a history of foreign rule, changing from Spanish to German to Japanese to US hands over the first five decades of the twentieth century. Today they are a defining feature of the Chinese “Second Island Chain” strategic concept of area denial, just as they once comprised the outer ring of imperial Japan’s similar pre-war “Line of Advantage.”
While DOD planners have long sought to control, or at least deny others access to, the islands, in practice US development policies have been criticized by Congressional watchdogs as wasteful, shortsighted, and ineffective. US funding, small compared to US foreign aid provided to other nations -but massive when tallied on a per-person basis for the tiny islands- mostly consists of block grants overseen by the Office of Insular Affairs at the US Department of the Interior.
Critics maintain the monies don’t always build local capacity, but rather tend to foster dependency by sustaining public services (and jobs) year-to-year. That has lead to frustration, even resentment, on both sides. Increasing aid and investment by the Chinese, on the other hand, is given with few obvious strings attached, and framed as a way for islanders to trade in “U.S. government handouts, which are scheduled to end in 2023 [for Micronesia and the Marshalls,] for the wide-open promise of Chinese-style capitalism.” The massive increase in migrants from these Freely Associated States (FAS) to Guam and Hawaii are seen as an indicator of the lack of educational, employment, and healthcare opportunities throughout the FAS.
“Congress and the Administration are to be commended,” said Neil Mellen, founder of Habele, a US educational nonprofit operating across Micronesia. “America is best served when her allies’ support comes from a position of strength, sovereignty, and real partnership, rather than mere dependency. Careful examination of our nation’s track record in the post-war Pacific, as well as the increasingly caustic role played by others, is long overdue.”
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DOD Budget Sec 1259D -- "Study and assessment of United States security and foreign policy interests in the Freely Associated States of the Republic of Palau, the Republic of the Marshall Islands, and the Federated States of Micronesia."

23 February 2017

Tensions rise in New Caledonia ahead of independence vote

Bougainville and Guam also moving toward referendums on constitutional status
MICHAEL FIELD
 Contributing writer

Guam Governor Eddie Calvo, center, held village meetings in December as part of his push for a referendum on revising the island’s political relationship with the U.S. (Courtesy: Guam governor’s office)
AUCKLAND -- Due east of Australia, and far removed from Europe, the Pacific island territory of New Caledonia is mulling a final break from France, ending a relationship lasting more than 150 years. In a referendum that will take place next year, New Caledonia will vote on the issue of independence.
The question that will be asked has not been determined, and neither has the eligible electorate. But tensions have worsened ahead of the vote, prompting former French Prime Minister Manuel Valls to promise in November that more soldiers would be sent to the territory to deal with the violence.
On Jan. 30, police were fired at in the region around the capital, Noumea, the latest in a spate of such attacks since an unarmed prison escapee was shot dead by police in October.
New Caledonia, a self-governing island with a population 260,000, has been ruled by France since 1853, but communal relations have been repeatedly scarred by failed revolts and violence between the indigenous inhabitants, known as Kanaks, and French settlers.
A 1987 referendum asked whether the territory should remain part of France, but was boycotted by the pro-independence group Front de Liberation Nationale Kanak et Socialiste, after Paris refused to allow United Nations supervision of the vote. Only 1.7% voted for independence.
Tensions continued to rise, and a year later FLNKS activists killed four French police and took hostage 27 others, together with a prosecutor and seven soldiers. A government-ordered assault finally freed the hostages, but 19 FLNKS activists and two soldiers were killed.
Valls acknowledged the increasing tensions in November, promising better security on the island, and noting that: "Even if we do everything we can to avoid it, we anticipate that the future will involve ... hazards and risks." He added, "The situation in New Caledonia has deteriorated in the area of security."
The French prime minister resigned shortly afterward, as part of an unsuccessful campaign to win the French Socialist Party's nomination for president in elections due in April and May. In a sign that New Caledonia could figure in the two-stage election, conservative Republican Party candidate Francois Fillon has already said he favors continued French sovereignty.
Meanwhile, there is no agreement on the electorate for an independence vote. Kanaks, who have lived on New Caledonia for 3,500 years, make up 39% of the population, according to a 2014 census. Europeans comprise 27%, and "Caledonians," who are mostly ethnic Europeans, account for 9%. The remainder are from other French Pacific territories such as Tahiti and Wallis and Futuna, together with some Indonesians, Vietnamese, Chinese and others.
Union Caledonienne, the main backer of independence, contends that voter registration procedures disenfranchise many Kanaks, while allowing shorter-term migrant voters onto the electoral roll. Its demand for systematic and unconditional registration of all Kanaks has been rejected by France, but Valls said before his resignation that the registration issue would be resolved by a census and a voter education campaign.
Anti-independence activists, some of whom have accused Paris of trying to push the territory into independence, say that people should not be registered to vote against their wishes.
What's the question?
There is also disagreement about the question that voters should be asked to answer. Pierre Frogier, leader of the anti-independence Rassemblement movement, said he was opposed to a simple question on independence, arguing that it would "result in the fragmentation of New Caledonian society and the incitement of Caledonians to fight."
Frogier, a former president of the island's government who now sits in the French Senate, said a referendum on independence risked destroying 30 years of working together on the island.
Opponents of independence have mobilized thousands of demonstrators in rallies against the independence vote, and control 29 of 54 democratically elected seats in the territory's law-making assembly. The remaining 25 members are split between those who favor independence and a group advocating a looser relationship with France.
Paul Soyez, a researcher in French-Australian relations at the Sorbonne University in Paris and at the University of Melbourne, said the wording of the referendum question was a serious problem for the French authorities, while there was a "quite high" risk of violence.
"The whole issue is to know how to phrase a question that will not be black and white but that will enable voters to choose between several forms of autonomy," he said.
Soyez said the prospect of violent clashes was "a real concern here in Australia, since stakeholders in Canberra don't know who Australian public opinion would support, France or Kanaks, and then who they would have to defend."
David Chappell, a University of Hawaii professor who has studied the island, said there was little direct dialogue between French loyalists and independence supporters, and noted that divisions were emerging within both groups.
Chappell, author of "The Kanak Awakening," said the loyalists would win an independence referendum, but forecast that the territory would shift closer to sovereignty over the next generation. "In a sense, the process of nation building is not suffering fragmentation of the old ethno-political blocs ... as much as it is diversifying within a still vague concept of nationhood," he said.
New Caledonia is one of several Pacific states and territories where people are agitating for new political leadership, including some in areas of countries that have already become independent.
Papua New Guinea, administered by Australia until independence in 1975, agreed on Jan. 24 to allow a referendum on independence in June 2018 in Bougainville, an autonomous region where constitutional tensions led to extensive violence in the 1980s and 1990s. Bougainville's future could also feature as a key issue in a Papua New Guinea general election in May.
Guam, a U.S. territory 2,500km south of Tokyo that hosts one of the largest American military bases in the Pacific, is also ironing out legal and constitutional issues ahead of a vote on its status. The territory has 165,000 residents, but only the 37% who are indigenous Chamorro  have been offered a vote in a non-binding independence referendum. (It is actually, non-ethnic 'native inhabitants' identified in the Treaty of Paris who would be the eligible voters - OTR)
A court challenge to the voting rules has delayed the announcement of a date for the referendum. Votes in 1982 and 1987 saw around 70% in favor of self-government, but no action was taken, leaving the island in political limbo.
"It's time that we confronted the fact that for nearly 400 years the state of our island has been colonial," Republican Governor Eddie Calvo said in February 2016, as the latest voting process started. "It is the unchanged and unrepentant shadow cast upon our long and unshackled destiny."
There is also talk of local independence within the Federated States of Micronesia, a sovereign nation of small islands that lies north of Papua New Guinea and east of the southern Philippines. The small state of Chuuk considered a break-away referendum in 2016 before backing away from the idea. But local elections on March 7 could revive the campaign.

09 March 2016

Micronesia Chief Executive Summits, Leaders sign joint communiqué






Chief Executives’ of the Micronesia signed Wednesday the joint communiqué which is a result of regional programmes of action in the areas of climate change, invasive species, regional, tourism, regional health and renaming the Micronesia Chief Executive Summits (MCES) as the Micronesian Islands’ Forum (MIF).
 
The communiqué committed the governments of Guam, Palau, Federated States of Micronesia (FSM), and Republic of the Marshall Islands (RMI), CNMI, Yap, Kosrae, Chuuk and Pohnpei to cooperation on several issues.
 
The Chief Executives “ discussed the issue of the structure of the MCES and the need to institutionalise the MCES beyond a ‘summit’ basis to strengthen the voice of Micronesia and to improve its response to regional issues on an on-going basis.  In line with this focus, the Chief Executives agreed to rename the MCES to MIF.
 
Remengesau said that the MIF would unify the functions and activities of the MCES and Micronesian Presidents’ Summit.
 
The leaders also endorsed the plan of locating the MIF Secretariat in Palau and announced that the Taiwan government is providing a US$400,000 grant for   the Micronesia Center for Sustainable Future. (MCSF)   


The Chief Executives also agreed in principle to an annual contribution of US$10,000 by each of the current MCES jurisdictions to the MCSF for two years to help support the Center.   The first contribution will be due by October, 2016.  Contributions will increase to US$15,000 in year three.    
 
Next year’s MIF will be hosted by Guam. Guam Governor Calvo said he is excited to host the next meeting and is hopeful that progress has been made from plans and agreements that they have agreed on during this Palau summit.
 
The leaders also recognized and expressed their support for a number of regional events scheduled to take place in the coming year, including the Festival of Pacific Arts in Guam, the Pacific Asia Travel Association (PATA), the Pacific Media Summit in Palau, the Micronesian Games in Yap, and the 47th Pacific Islands Leaders’ Forum in Pohnpei.  The Presidents agreed to provide all available support for these events.  
 
The Chief also Executives signed a resolution expressing their strong support of the International Peace Bureau’s nomination of RMI’s former Foreign Minister Tony A. deBrum for the Nobel Peace Prize.
 
The Chief Executives also expressed their support for the immediate ratification by all countries of the Paris Agreement on Climate Change.  The Presidents acknowledged the seriousness of the challenges posed by Climate Change, particularly in this El Niño year, which has already caused the FSM, the RMI and the State of Peleliu in Palau to declare states of emergency.  
 
Palau’s Congress this week ratified the Paris agreement. The agreement sets out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C.
The agreement is due to enter into force in 2020.
 
The agreement will enter into force after 55 countries that account for at least 55% of global emissions have deposited their instruments of ratification. Palau, is the second country in the world to ratify the agreement, the first one was Fiji.  
 
“It has been a productive three days, the leaders have banded together as one now called the Micronesian Islands’ Forum,” Remengesau said after the signing event.
 
“There is strength in numbers and unity,” Remengesau said.



27 February 2016

A "geo-strategic" view of the United States role in Micronesia

The Diplomat



America’s Micronesia Problem

By Thomas R. Matelski
February 19, 2016

Lieutenant Colonel Tom Matelski is a U.S. Army War College Fellow at the Daniel K. Inouye Asia Pacific Center for Security Studies. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of the U.S. Army War College, the U.S. Army, the Daniel K. Inouye Asia Pacific Center for Security Studies, the Department of Defense, or the U.S. Government.

In December 2015, in an oft overlooked corner of the globe, the Congress of the Federated States of Micronesia (F.S.M.) passed a resolution signifying the intent to end the Compact of Free Association with the United States of America in 2018. The two sides were in the process of discussing a potential renewal of the Compact when it expires in 2023.

While the rest of the world watches events in the South China Sea and the East China Sea, the People’s Republic of China is positioning itself to be in the driver’s seat in an area of key strategic interest to the United States. If Washington fails to act in a timely manner to renew the sometimes troubled Compact relationship, it will inadvertently drive the Micronesians into the arms of China and simultaneously leave a gaping hole in strategic access.

READ THE FULL ARTICLE HERE.

21 June 2015

IMF Executive Board Concludes 2015 Article IV Consultation with the Federated States of Micronesia




On May 11, the Executive Board of the International Monetary Fund (IMF) concluded the 2015 Article IV consultation1 with the Federated States of Micronesia (FSM).
Micronesia’s economy is stagnating, as externally-funded infrastructure projects are moving slowly while difficulties in the business climate, in particular those related to land tenure issues, continue to hold back private sector development. Staff estimates real GDP growth of around 0.1 percent for the fiscal year 2014 (ending September), while inflation has dropped to 0.7 percent on the back of falling oil prices. The current account strengthened in to 2½ percent of GDP in 2014, due mostly to a one-off increase in tax revenues and an increase in fishing license fees. Growth in 2015 is projected to remain subdued at 0.3 percent, while consumer prices are projected to further decline to -1.0 percent thanks to the continued pass through of low oil prices.
The Micronesian economy is projected to grow at 0.6 percent in the medium term, while risks on the outlook are tilted to the downside. The expiration in 2023 of grants provided under the Compact of Free Association with the United States is a significant challenge for Micronesia, requiring the country to implement wide-ranging reforms to enhance fiscal sustainability and private sector growth. Damages caused by the recent Typhoon Maysak have revealed again Micronesia’s vulnerability to tropical cyclones, while disaster assistance arrangements with the United States help the nation to recover from those damages.
Some reforms have been started recently, in particular, fiscal consolidation efforts by the state governments under the Long-Term Fiscal Frameworks (LTFF) and the establishment of the Unified Revenue Authority (URA). A new legislation on credit unions is being prepared to extend the supervisory authority of the Banking Board. The recently produced “2023 Action Plan” shows further policy actions that are required, including the implementation of the tax reform package and regulatory reforms. Most of these policy actions will require legislative measures – hence the critical importance in achieving a wide consensus in a nation with a loosely federated structure.
Executive Board Assessment2
Executive Directors noted that medium-term growth prospects in the Federated States of Micronesia (FSM) remain weak given sluggish private sector activity, while fiscal challenges loom ahead, in particular, with the expiration of Compact grants in 2023. They also expressed concern about the impact of the damage caused by Typhoon Maysak in April, notwithstanding the provision of emergency assistance by the international community. Directors stressed the importance of critical fiscal and structural reforms to help lift the economy’s growth prospects and achieve fiscal sustainability beyond the expiration of the Compact grants.
Directors called for the formulation of a realistic long-term fiscal framework based on a wide consensus across the national and four state governments, with a view to achieving budgetary self-reliance in the post-2023 period. While commending recent progress—including the establishment of the Unified Revenue Authority, the transfer of the 2014 fiscal surplus to the FSM trust fund, and the start of the Long-Term Fiscal Framework by the state governments—Directors encouraged the authorities to redouble their efforts in strengthening fiscal consolidation. They advised swift implementation of the long-debated tax reform package, in order to raise the revenue-to-GDP ratio closer to regional averages. Directors also noted the scope for improved prioritization of public spending, including through wage moderation and expedited implementation of an updated infrastructure development plan.
Directors emphasized that improving the investment climate is key to achieving private-sector-led growth in the FSM. They encouraged the authorities to undertake growth-enhancing policy actions, particularly by addressing land tenure issues through land surveys and registration. Efforts to strengthen investor protection and contract enforcement, and expedited investment application approvals would also help to attract foreign direct investment. In this regard, attention should be paid to safeguarding FSM’s cultural heritage and pristine environment. Directors also supported greater bank credit expansion, including to SMEs, in order to help boost economic activity and promote diversified growth. They noted that business skills of SMEs should be strengthened to support formulation of more bankable business projects.
Directors agreed that expanding regulatory oversight of credit unions would help to preserve financial stability. They supported the authorities’ efforts to prepare a new Credit Union Act that places credit unions under the supervision of the Banking Board, with technical assistance from the Pacific Financial Technical Assistance Centre(PFTAC).
Directors encouraged the authorities to redouble efforts to strengthen the capacity to produce timely economic statistics, with technical assistance from the Fund and other donors.
Micronesia: Selected Economic Indicators, FY2010–15 /1
Nominal GDP (FY2013):
US$315 million
Population (FY2013):
103,679
GDP per capita (FY2013):
US$3,034
IMF Quota:
SDR 5.1 million

FY2010
FY2011
FY2012
FY2013
FY2014
FY2015



Est.Proj.
Real sector (annual percent change)






Real GDP

3.21.80.1-4.00.10.3
Consumer prices

3.74.36.32.10.7-1.0
Employment

3.91.7-2.6-2.00.00.1
Public (incl. public enterprises)
1.1-0.4-0.8-0.70.00.0
Private

7.13.8-4.8-3.90.10.2
Nominal wages

2.70.43.81.61.81.9
public average wage/private average wage
2.22.12.02.02.02.0
Consolidated government finance (in percent of GDP)
Revenue and grants

68.265.066.062.368.661.9
Revenue

21.620.822.926.837.430.9
Grants 2/

46.644.343.135.531.231.0
Expenditure

67.865.665.359.656.159.0
Current

46.945.644.245.946.045.5
Capital

20.820.021.113.710.113.6
Overall balance

0.5-0.60.82.812.52.8
Overall balance (exc. Grants)
-46.1-44.8-42.4-32.8-18.7-28.2
Commercial banks (in percentage of GDP; end of period)
Loans

19.017.917.417.218.0
Deposits

52.553.862.767.875.4
Interest rates (in percent, average for FY)
Consumer loans

14.914.414.215.715.7
Commercial loans

6.66.66.46.46.4
Balance of payments (in millions of U.S. dollars)
Trade balance

-128.4-134.0-125.7-131.1-129.2-119.1
Net services and income

-29.8-32.5-25.8-11.75.55.6
Private and official transfers

113.8111.2110.3111.1131.7111.4
Current account

-44.4-55.3-41.2-31.68.0-2.1
(in percent of GDP)

-15.1-17.9-12.6-10.12.5-0.7
Current account excluding official transfers
-153.4-158.9-142.5-129.6-89.6-99.4
(in percent of GDP)

-52.2-51.4-43.7-41.2-28.5-31.5
External debt (in millions of U.S. dollars; end of period) 3/
Stock

86.489.890.385.283.083.7
(in percent of GDP)

29.429.127.727.126.426.5
Debt service

4.45.05.15.97.17.0
(in percent of exports of goods and services)
6.36.75.36.77.98.0
Exchange rate regime

U.S. dollar is the official currency
Real effective exchange rate 4/
109.9109.5112.4115.1115.8n.a.
Sources: FSM authorities and IMF staff estimates.






1/ Fiscal year ending September 30.
2/ Excludes grants to the Compact Trust Fund.
3/ Government and public enterprise debt only.
4/ Calendar year. 2003=100.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.