Polity: Presidential-parliamentary democracy (federal)
Population: 100,000
GNI/Capita: N/A
Life Expectancy: 66
Religious Groups: N/A
Ethnic Groups: Micronesian, Polynesian
Capital: Palikir

Political Rights Score: 1
Civil Liberties Score: 2
Status: Free


Elections for ten senatorial seats in the national congress were held on March 6. Negotiations with the United States to renew the Compact of Free Association continued throughout the year. In February, new legislation intended to crack down on money laundering was signed into law by President Leo Falcam.

The Federated States of Micronesia consists of 607 islands in the archipelago of the Caroline Islands located in the north Pacific Ocean. In 1899, Germany purchased the Carolines from Spain, and Japan seized the islands in 1915, ruling them from 1920 on under a League of Nations mandate. During World War II, the United States occupied the islands, and they became part of the U.S. Trust Territory of the Pacific in 1947.

In 1978, four districts of the Trust Territory (Yap, Chuuk, Pohnpei, and Kosrae) approved a constitution to create the Federated States of Micronesia. The United States granted the islands sovereignty in 1979, upon which the constitution took effect and the country elected its first president, Tosiwo Nakayama. In 1982, the territory concluded a Compact of Free Association with the United States, which came into force in 1986. Under the terms of the Compact, the country is fully sovereign, but the United States is responsible for defense. The United States obtains the right to maintain military installations on the islands and in exchange provides substantial financial assistance that averages $100 million per year. Micronesians also have the right to live and work in the United States.

In 1991, the congress elected Bailey Olter of Pohnpei state, a former vice president under Nakayama, as the country's third president. Olter was elected to a second term in 1995 over Senator Jacob Nena of Kosrae state. After Olter suffered a stroke in July 1996, the congress installed Nena as acting president. In May 1999, Leo Falcam, the former vice president, replaced Nena as the new president. Falcam has identified the protection of cultural values, economic development, and the establishment of effective international partnerships as priorities for his administration.

Negotiations with the United States over the future of U.S. economic assistance under a renewal of the Compact of Free Association continued in 2001. Micronesia seeks continued annual grant aid of approximately $80 million and access to many U.S. federal programs, including mail, education, and health services. Micronesia also proposed a $20 million trust fund. Talks continued throughout 2001, and the U.S. funding level will probably be tied to improvements in health, education, infrastructure, capacity building, good governance, and private sector development. U.S. fears over the expansion of Chinese influence in the Pacific make Micronesia an attractive strategic location for the Pentagon.

As for aid from other countries, Micronesia met with the Consultative Group composed of development partners, international organizations, and donor countries. The group gave a positive review of the progress report prepared by the Micronesian government. Substantial public sector reform has already strengthened government finances and improved economic stability. The government recommended further reforms to strengthen capacity for accountability and transparency in social and economic management and in legal and regulatory systems, as well as the formulation of a long-term development strategy to make Micronesia more independent economically. In April, Japan announced an aid package of $7 million for a road improvement project on the island of Yap, and it has continued to provide technical assistance to Micronesia's fishing industry.

The economy is dependent on fishing, subsistence agriculture, tourism, and U.S. aid. In anticipation of the expiration of the current Compact, the government has tried to bring in more foreign investment and expand the private sector. Like several other Pacific Island countries trying to develop an offshore banking industry, Micronesia has been linked to money-laundering activities and was blacklisted by the United States and Western European countries. In February, President Falcam signed new legislation that established money laundering as a national crime and would enable the government to identify, trace, seize, and confiscate the proceeds of such crimes.

Political Rights and Civil Liberties

Citizens of the Federated States of Micronesia can change their government democratically. The constitution provides for a unicameral, 14-senator congress. One senator is elected at-large from each of the four states for a four-year term, with the remaining ten senators elected for two-year terms from single-member districts based on population. The president and vice president are selected by congress from among its four at-large members. Although an informal rotation system for the top elected offices of the country is in practice, the perceived political dominance of Chuuk state, which holds nearly half of the population and a proportionate number of congressional seats, has created tensions with the three smaller states. Politics are based on state, clan, and individual loyalties. Political parties are permitted, but none has been formed.

The judiciary is independent. Trials are conducted fairly, and prison conditions meet minimum international standards. The local police are under the control of the civil authorities. In cases where the police were found guilty of mistreating citizens, the officers were subsequently dismissed from the force.

Press freedom has increased in recent years. An independent weekly newspaper, The Island Tribune, launched in December 1997, explores controversial and politically sensitive issues. Each of the four state governments and a religious organization operate radio stations, and the residents of Pohnpei and Chuuk have access to cable television. The federal government publishes a biweekly information bulletin, The National Union, and the state governments produce their own newsletters. Other papers, including the Pohnpei Business News and Micronesia Weekly, generally avoid sensitive topics. There has been an increasing level of public discussion on various Internet sites, which provide outlets for citizens to share opinions on social and governmental issues.

Freedom of assembly and association is respected, but there are few nongovernmental organizations other than women's and student organizations. Religious freedom is respected in this predominantly Christian country. Workers have the right to form or join associations, but no unions have been formed because of the small size of the wage economy. Current laws do not guarantee collective bargaining.

Domestic abuse is a growing problem. State and societal responses are inadequate, as domestic abuse is commonly regarded as a private, family matter. The number of physical and sexual assault cases against women outside the family context has been increasing. Women are increasingly active in the private sector and in lower- and mid-level government positions, but they remain underrepresented at the highest levels of government.

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