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The Federated States of Micronesia (FSM) ratified its amended Compact of Free Association with the United States in May 2004. As with previous compacts, the United States agreed to provide financial assistance and external defense in exchange for the right to maintain military bases in FSM. In January 2004, the proposal of a bill that would grant amnesty to "certain classes who are being accused, or yet to be accused, or who have been prosecuted of certain types of crimes" was met with broad public criticism.
The United States administered the FSM between 1947 and 1979 as a UN Trusteeship Territory. The FSM adopted a constitution in 1979 and reached full independence in 1984. The FSM's four states - Chuuk (formerly Truk), Kosrae, Pohnpei, and Yap - represent a total of 607 islands in the Pacific Ocean.
Micronesian voters in August 2002 rejected a proposed constitutional amendment that would have introduced direct elections for president and vice president. Under the current system, Congress chooses the two top officeholders from among its ranks.
In May 2003, congress elected Joseph Urusemal over former president Leo Falcam to be the sixth president of the FSM. Redley Killion was chosen as the vice president. Urusemal is a former governor of Yap, one of the constituent states of the federation, while Killion was vice president in Falcam's administration.
The new Compact of Free Association, which came into effect in December 2003, will cover the next 20 years. In the first three years, the FSM will receive $76 million in economic assistance grants for education, health, capacity building, private sector development, the environment, and infrastructure. Another $16 million will go to a trust fund that will be overseen by a joint board of U.S. and FSM trustees to ensure good management of U.S. assistance to curb widespread corruption and abuse. Beginning in the fourth year, an annual decrement of $800,000 from the sectoral grants would be re-allocated to the trust fund until 2023. FSM citizens will continue to enjoy visa-free access to the United States, work in the United States without work visa requirements, and access U.S. health services.
Compact funds represent a third of the country's national income, and the division of those funds has been a source of serious tension in federal-state relations. In 2003, the people of Faichuk in the state of Chuuk threatened to leave the federation and proposed a separate bilateral treaty with the United States unless Chuuk receives a larger share of the compact funds. This complaint resonated with people in the other states and spurred debates on federal-state relations. In November of that year, the federal government announced it would increase the share of compact funds to the four states.
Citizens of Micronesia can change their government democratically. A unicameral, 14-member legislature has one representative each from the four constituent states directly elected for four-year terms and 10 representatives from single-member districts directly elected for two-year terms. As Chuuk, the largest of the four states, has nearly half the country's population, it holds a proportionate number of congressional seats; this has been a source of resentment among the three smaller states. The president and vice president are chosen from among the four state representatives in the legislature to serve four-year terms. By informal agreement, these two top offices are rotated among the representatives of the four states. There are no formal political parties, although there are no restrictions against their formation.
Each state has its own constitution, elected legislature, and governor. State governments have considerable power, particularly in budgetary matters. Traditional leaders and institutions exercise significant influence in society, especially at the village level.
A bill proposed in January 2004 would grant amnesty to any FSM citizen charged with the misuse and misappropriation of any government funds over the past 17 years. Current charges for such crimes would also be dropped against all defendants. Just months prior to the bill's introduction, 14 people were named in an indictment for stealing $1.2 million in government funds, and a congressman was charged in 1992 with misappropriation of funds. Several other congressmen have also been charged with misuse of public funds. Intense public reaction to the bill forced the government to send it to a subcommittee for further study rather than pushing it through the parliament.
The media operate freely. In addition to government-published newsletters, there are several small private newspapers; and television stations operate in three of the four states. Each state government runs its own radio station, and a religious group runs a fifth station. Satellite television is increasingly common. Internet access is small but growing. However, the small populations and limited income in the FSM do not generate sufficient revenue for Internet service providers to reduce fees and expand bandwidth - a problem shared by most other Pacific Island countries.
Religious freedom is respected in this mainly Christian country. There were no reports of restrictions of academic freedom.
Citizens are free to organize civic groups, and there are a few student and women's groups. No labor unions exist, but there are no laws against their formation. The economy is dependent on fishing, tourism, assistance from the United States, and subsistence agriculture. No specific laws regulate work hours, recognize the right to strike or bargain collectively, or set workplace health and safety standards.
The judiciary is independent, but lack of funds hinders improvements in the functioning of the courts and prison condition. Cultural resistance to using the courts, particularly for sex crimes, means many offenders are not brought to justice.
Women suffer significant social and economic discrimination in the male-dominated culture of these islands. Domestic violence is common, and cases often go unreported because of family pressure, fear of further assault, or an expectation of inaction by the authority. Offenders rarely go to trial and those found guilty usually receive light sentences. In October 2003, the government ratified the UN Convention on the Elimination of All Forms of Discrimination against Women, but took exception to certain parts, including an article requiring employers to give women full pay and benefits when they take maternity leave.