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In 2010, ties between the Federated States of Micronesia (FSM) and China expanded, including additional offers of scholarships at Chinese universities for FMS students, the appointment of the first FSM ambassador to China, and the naming of China as a top candidate for exclusive fishing rights in FSM waters.
The United States administered Micronesia, which included the Marshall Islands and other Pacific island groups, between 1947 and 1979 as a UN Trust Territory. In 1970, the Northern Marianas, Marshall Islands, and Palau demanded separate status from Kosrae, Pohnpei, Chuuk, and Yap; the latter four territories, representing 607 islands, became the Federated States of Micronesia (FSM). The FSM adopted a constitution and became self-governing in 1979 as the trusteeship expired and status negotiations with the United States continued.
In 1986, the FSM signed its first Compact of Free Association with the United States, which provides the FSM with U.S. economic and defense assistance in exchange for U.S. military bases on the islands. FSM citizens also receive visa-free entry to the United States for health services, education, and employment. An amended compact, which extends this core commitment for another 20 years, came into effect in 2003. Compact funds, which represent about one-third of the FSM’s national income, contribute to education, health, and infrastructure, among other sectors. Money is also put toward a trust fund overseen by a joint board of U.S. and FSM trustees. The International Monetary Fund (IMF) warned in November 2010 that Micronesia’s economy could be threatened in the future by declining compact funds and out-migration.
The allocation of funds has been a source of serious tension in federal-state relations, as several states have threatened to leave the federation unless they receive larger shares of the compact payments. The federal Congress agreed to distribute larger shares to each of the four states in 2005. To improve transparency and accountability in its use of compact funds, a new record system was launched in November 2009 to track fund projects.
With limited domestic options for post-secondary education, FSM in early 2010 accepted offers of additional scholarships from Australia and China. FSM’s expanding ties with China were also reflected in the appointment of Akillino Susaia as the first ambassador to China in March. Additionally, Congress passed a resolution in May urging the president to bid out fishing rights exclusively to one country, and proponents of the resolution named China as a top candidate.
The FSM is an electoral democracy. The 2009 Congressional elections were deemed largely free and fair. The unicameral, 14-member Congress has one directly elected representative from each of the four constituent states, who serve four-year terms. The other 10 representatives are directly elected for two-year terms from single-member districts. Chuuk state, home to nearly half of the FSM’s population, holds the largest number of congressional seats; this has been a source of resentment among the three smaller states. The president and vice president are chosen by Congress from among the four state representatives to serve four-year terms. By informal agreement, the two posts are rotated among the representatives of the four states. Emanuel Mori of Chuuk and Alik L. Alik of Kosrae were chosen as president and vice president, respectively, in 2007. Each state has its own constitution, elected legislature, and governor; the state governments have considerable power, particularly in budgetary matters. Traditional leaders and institutions exercise significant influence in society, especially at the village level.