This report was initiated by UNDP, since this organization intended to sponsor a situation analysis on the Federated States of Micronesia. The report was, in theory at least, to reflect close collaboration between UNDP and the government of FSM in producing this work. In fact, several FSM citizens were approached about writing this report, but all declined. The UNDP representative then asked the principal author to consider undertaking the project. He agreed to do so on condition that two other expatriates be permitted to assist him in the undertaking.

This report, then, was written by three expatriates with long involvement in Micronesia. The principal author, Francis X. Hezel, is a Jesuit priest who has spent over 30 years in the islands, much of that time studying social change, past and present, in its various manifestations. Assisting him were Edwin Petteys and Debbie Chang, a married couple living in Hawaii but with a long association with the islands. Ed Petteys, is a state forester who has frequently visited the islands as a consultant and trainer; in fact, he was seconded to Pohnpei in the mid-1980s and lived on that island for a year.

The report was circulated in draft form to several persons, only one of whom offered any comments on the text. This report, then, is more the product of the team of writers than was thought desirable. It was written according to the norms set out by UNDP, however, and remains UNDP's analysis of the situation in FSM.

Sustainable Human Development

To further economic development has been the aim of many reports and studies done on Micronesia. Despite the flurry of activity that sometimes followed these reports, the results have usually fallen far short of what was envisioned. At times it is the lack of resources, or the distance from foreign markets, or the shortage of trained workers that is responsible for these failures. But there are other, perhaps more important factors that doom these projects. Many a frustrated expatriate advisor has departed FSM with the impression that the passionate commitment to development is missing in the the nation's people. The political will to transform policy into practice is absent. The fire in the belly is just not there-at least not yet.

It would be a wonder if it were, considering the total change in values and attitudes that is demanded of the development-minded Micronesian. The belief system and values that one imbibes in a traditional island society are a significant obstacle to the value system that underpins Western-style economic development. The length of the leap from subsistence lifestyle to a full cash economy should not be underestimated.

Yet sustainable human development is, by definition, much more than economic development. It looks not just to the generation of income for the nation and the individual, but to improving the overall quality of life for everyone in the country. The aim of sustainable human development, while including economic productivity, must always look beyond economic viability of the nation as a final goal. It looks to an equitable distribution of income among the population, involvement of all in the planning process, conservation of the nation's resource base, and ultimately to an enriched human life for all segments of the population. In a word, sustainable human development wants it all.

Sustainable human development is a single broad concept that embraces many different concerns. Too many, some argue. The concept works like a stack of filters, one on top of the other, each blocking certain rays of light that are judged harmful, so that the end result is darkness. In attempting to have it all, with safeguards carefully positioned to protect people from any flaw, sustainable human development leaves us with nothing.

Perhaps a fairer and more positive assessment of the value of the concept is that it helps direct our attention to legitimate human concerns that must be raised at some point in the development process. If it must do so all in a single bundle, this is certainly better than not doing it at all.

Sustainable human development, as it is used in this report, has four essential components:

• It aims to increase productivity, which always implies social change, but it is firmly anchored in the society's past and respects its cultural values.
• It is environmentally sound and does no permanent damage to the ecosystem, nor does it squander scarce resources.
• It aims at improving the overall quality of life, not just increasing the Gross Domestic Product.
• It is people-centered: both participatory (involving people in the decision making process) and empowering (bestowing confidence in their own ability).

Sustainable human development is especially pertinent to nations like the FSM in that it offers a broader and more realistic set of criteria for development than merely increase of wealth. Furhermore, in our modified version of the concept at least, sustainable human development also tries to take into account the cultural milieu of the people.

Aims of This Report

This report could end up, like so many similar reports, on the shelves of government offices never to be consulted again. It could be an academic exercise, as other documents on development have been. Our sincere hope is that this will not happen, although we view this report more as an educational tool than a planning document. It is the kind of work one might consult when looking for a brief overview of FSM and its socio-economic trends, but situated in a cultural context. We have tried to make the cultural background more than a formality, offering as much as might be needed to understand the particular issues raised, given the space limitations imposed.

The authors were instructed to prepare a situation analysis on sustainable human development in the FSM, with emphasis on certain key issues identified by the United Nations Development Program. Although the project was undertaken with the intention of following the guidelines offered, some modifications were found to be necessary as our work on the analysis proceeded. The norm we used in preparing this situational report was to focus principally on the issues that appeared to be most relevant to FSM at this particular stage in its socio-economic development. Hence, some of the topics suggested to us may have been relegated to a secondary status, while other, new issues have been highlighted in some cases.

The purpose of this report, in keeping with its focus on sustainable human development, is to stress the importance of integrating all its various components--economic, ecological, sociocultural, and political--in any future development planning. At the same time, this report is intended to be a reminder that empowerment of people implies that they be given the opportunity to share in the planning process at every level. Otherwise, they will not be in a position to make the choices that determine their future.

The aims of this report are these:

• To shed light on the sociocultural context of present-day Micronesia, including the social impact of past change and an appreciation of key social issues today, in order to provide a fuller understanding of how the culture may impact on development planning.
• To identify the key issues related to sustainable human development in the FSM; and to suggest, when appropriate, basic strategies for dealing with these issues.
• To assist the people of FSM in weighing the social and economic costs implied in any development program.

The methodology employed by the authors was to review as much of the abundant written materials on FSM development as time would allow. This material included planning documents and reports; historical studies; health and educational data; economic analyses done by international organizations such as the Asian Development Bank, the World Bank, and the International Monetary Fund; anthropological articles and books; and unpublished reports on all aspects of the national life. Fortunately, the resources of the Micronesian Seminar collection afforded us a wealth of material to draw from. We also had access to informed public officials, planners and other individuals who helped us critique and in some cases fill in the gaps in our information. These persons were especially helpful in offering anecdotal information that could be incorporated into case studies and which would put a more human face on development issues.

Although we are confident that the development issues we have highlighted in this report are among the key ones, we make no claims to a comprehensive treatment of these issues nor to having identified every single major issue. Moreover, we discovered, as many have before us, that reliable statistical data is often difficult to obtain in FSM. The reader should be warned that the tables in this report are only as accurate as the data on which we have drawn.

Assumptions

It is clear from reviewing the previous work done on FSM that there is no shortage of good analyses and sound development proposals for the nation. Solid plans abound. If anything is lacking, it is the commitment to implement them. In view of the rapid approach of the termination of the Compact of Free Association and the end of US subsidies, the time has come to act.

Often it happens that some of the greatest obstacles to development are the cultural attitudes and values of the people themselves. This could very well be true of Micronesia also. Nonetheless, the cultural values and attitudes that seem to pose an obstacle to development should be taken seriously and treated with the respect they merit. They are not just a barrier to be overcome, but a cultural repertoire that has served the people of the islands well for centuries. In any case, they represent a factor that is often not seriously considered in most development planning. We have tried to do so in this report.

We acknowledge that all genuine development must be a product of people's choices. Genuine development cannot be imposed; it must spring from the plans and convictions of the people. This is not just a moral aphorism, but a pragmatic consideration. Unless people truly subscribe to a development policy, they will find ways to sabotage it, through inaction if not by stronger measures.

In setting the agenda for development, the authors have tried to avoid priorities that are more reflective of a First World agenda than of FSM's. The human rights framework, although widely accepted in many developed countries, still does not speak convincingly to many people in Micronesia (see Appendix). Vulnerability should be defined as seems appropriate in these islands, even if the most vulnerable groups in the population differ greatly from what might be expected in other places. Likewise, our approach to women and children, while open to a modern redefinition of their rights and roles, should be governed by the sociocultural realities in Micronesia rather than a First World perspective.

Finally, we should not attempt to define specific strategies to resolve the development issues that are identified. Indeed, identifying these key issues is already a half step toward resolving them. Much of the crucial work of development consists in helping to build community awareness of these issues. This always constitutes the best strategy for development and is also an act of confidence in people's ability to resolve the issues that affect their lives. Hence, we can raise the issues, but we cannot offer a sure method of resolving them.

CHAPTER 1: Physical and Natural Resources

The Federated States of Micronesia (FSM) comprises the most diverse part of greater Micronesia and consists of 640 islands that span a distance of nearly 2,800 km (1,740 miles) in the Western Pacific. The islands exhibit a great deal of variability, consisting of four basic typ1es: high volcanic and basaltic islands, low atoll associated coral islands, raised coral islands, and low non-atoll coral islands. The population of 105,506 is found on 125 inhabited islands.

The climate is tropical and oceanic. Temperatures are relatively uniform , ranging from 24º - 30º C with humidities over 80 percent. Rainfall varies widely from year to year, but is generally high, varying from 300 cm per year in drier areas to over 1000 cm per year in the mountainous interior of Pohnpei. On most islands, especially in the West, there are pronounced wet and dry seasons in some years.

Gentle northeast trade winds blow from November to May, with the remainder of the year under the influence of the doldrums. The major typhoon tracks of the Western Pacific lie north and west of the FSM, but the region is subject to occasional typhoons.

Land has historically been the dominant resource of a family and holds a preeminent position in the cultural, political, and economic environment. Land ownership has been traditionally reserved for inheritance within a family or lineage, and many of the land parcels in the FSM continue to have extended family or communal authority over use and alienation rights. Most lands in each state are occupied by private land holders and are influenced by customary or traditional land tenure and land use systems (Perin, 1996).

Previous Spanish, German and Japanese administrations claimed as public domain all lands that were not in actual use by inhabitants. The titles to these lands claimed by previous foreign administrations were considered to be assumed by the U.S. Administration, which, in turn, adopted a policy of returning the lands to individual or lineage ownership. Present public lands are both those lands retained in the public interest, and those lands not yet returned.

Water
There are perennial streams only on Kosrae and Pohnpei, despite high average annual rainfalls of 300 cm to over 1000 cm. Towns on several of the high islands have water delivery systems fed by streams or wells, but the majority of the population relies on roof catchments supplemented by fresh and brackish groundwater springs and wells. Atolls and some coastal areas on the high islands get their water by catchments and by tapping into underground lenses of fresh or brackish water.

Soils
High islands have had soils surveys conducted by the USDA Natural Resources and Conservation Service. In general, soils run the full range from basaltic parent material to highly weathered volcanic soils to sand and coral rubble.

The coralline soils of most atolls are shallow, porous, and of marginal fertility, which may be enriched by using mulch or plant debris. The high islands have very complex soils, derived from basaltic lavas in the Eastern Carolines, grading to lighter granitic material in the Western Carolines.

Vegetation
The atolls offer a limited number and variety of plants, due to their poorer soils, often brackish ground water, and salt spray. The high islands are characterized by a greater number of plant varieties, ranging from strand and coastal plant complexes and extensive mangrove forests to the highly developed "cloud" forests in the uplands of Pohnpei.

All states except Chuuk have large forested areas, much of it secondary. The forests on the larger islands protect watersheds and prevent erosion. Mangrove areas filter run-off sediment and serve as nurseries for many marine species.

Currently, there is limited use of timber, with only one small sawmill operating on Pohnpei. The value of forest land, then, lies in its ability to support agroforestry activities and for its ecological and environmental roles, rather than as a source of commercial timber. Commercial timber operations are discouraged, according to the Second FSM National Development Plan.

Minerals
No significant minerals have been identified in the FSM. Deep ocean deposits of manganese and cobalt have been identified but not assessed. There was some historical phosphate mining on several of the outer islands of Yap.

Fauna
The only native terrestrial mammals are bat species. In addition, there are four species of introduced rodents and, on Pohnpei, the Sambar deer. There are a variety of domestic animals such as cats, dogs, pigs, goats, water buffalo, and cattle. Most have remained in the domestic state, though pigs, goats, and deer have become feral.

The greatest proportion of the FSM's terrestrial vertebrates are birds. They include a number of endemic species, two of which are extinct. Three more are considered endangered, and four threatened.

The marine environment is of great importance to the people of the FSM. It serves as a principal source of subsistence, recreation, and commerce, and much Micronesian culture revolves around it. More than other natural resources, it is central to future economic prospects for the FSM. The FSM claims an Exclusive Economic Zone (EEZ) that totals over 2.5 million square kilometers.

Offshore tuna is the primary fishery resource. While the full extent of the resource has not yet been fully assessed, this resource offers great potential for further exploitation. Present annual fish catches are estimated at over 150,000 tons (NEMS, 1993). Current estimates indicate that this harvest is within sustainable limits.

Inshore reef resources are largely consumed locally and are an essential source of nutrition in the traditional Micronesian diet. Estimates of harvest vary widely ranging from 1,000 to 5,000 tons annually. There is some export activity, but it is not quantified. Assessments indicate that fish populations in reefs close to the larger, more urbanized areas are depleted. In some areas, reef destruction from over fishing and dynamiting is extensive.

Natural populations of the clams as well as those of other shellfish are declining, and are almost completely gone from certain areas. Trochus, a conical shellfish, has been an important contributor to local economies. To date, the only marine sanctuary areas established are trochus sanctuaries at the state level.

Threats and Disasters

Typhoons
While the major typhoon tracks lie to the north and west of the Carolines, they pose a serious threat, particularly to the western end of the nation. They generally form between Pohnpei and Chuuk, and move northwest, increasing in intensity. Recent years have seen three typhoons hit Chuuk, one strike Pohnpei, and at least one hit Yap. A small shift in climatic patterns could increase the incidence of typhoons on Yap.

Drought
Severe droughts occasionally occur. Often associated with El Nino years, droughts have a profound effect on the well-being of FSM's population. Not only are human water supplies compromised, but agricultural activity is also affected. The drying of vegetation increases the potential for uncontrolled wildfires. During the 1983 drought, wildfires burned over an estimated 15 percent of the land area of Pohnpei.

Sea Level Rising
Current projections are that sea levels may rise globally by between 10 to 30 cm before 2030. If this happens, habitation of low coral islands in particular may be compromised, not only because of direct effects such as over-topping, but because of the destruction of fresh water lenses, increased salt spray, and salt water intrusion into cropped areas. Other impacts may be weather pattern changes, increased coastal erosion, reduction of mangrove habitats, and increased vulnerability to coastal developments and historic/cultural sites (Hay, 1994).

Physical Resources and SHD

It is the FSM's natural resources that hold the potential for SHD. However, they are limited and precious, integral to ecosystems and cultures, making it imperative that they be used properly. Needed are the proper inventorying, monitoring, planning, management, and regulatory environments to ensure that the use of resources is done in a sustainable way, and not over-exploited in the interest of immediate, short-term gains. This is difficult, given the transitional fiscal situation within the country, and the growing sense of urgency to generate revenue.

CHAPTER 2: The People and Their Cultures

The four states that make up the FSM have their own distinctive cultural traditions and languages. Some have more than one: Yap's outer islands, containing almost half the state's population, are far more similar in culture and language to Chuuk than they are to the high islands of Yap; and two of the outliers of Pohnpei are Polynesian in speech and custom.

Chuuk

The heart of this state is an atoll containing a number of rather small high islands. The Chuuk lagoon, in turn, is surrounded by several atolls to the north, west and south. Individual islands in the lagoon and even in the atolls were seldom unified under a single chief.

Even today the main social unit is the lineage group, descended from a woman and residing together on one or more parcels of land. The lineage group is usually broken down into two or three households. It retains the meeting house, or uut, that was originally the gathering place and living quarters for the unmarried males of the extended family. The symbol of unity in the lineage was once the cookhouse, where food was prepared for the entire extended family group. Although cookhouses can still be found in many places today, they are mostly used to prepare food for the household rather than the extended family.

In contrast to most other parts of Micronesia, women in Chuuk do offshore fishing while men work in the taro patches and pick breadfruit. Although food is commonly exchanged with other relatives, there is none of the competitive food exchanges that are still found in Pohnpei and some of the other islands of Micronesia. As in Kosrae, the church has assumed a large place in everyday life and people spend much time and energy in church activities. This may be partly due to the fact that Chuuk lacks the social rituals that other islands enjoy.

Pohnpei

The high island of Pohnpei is regarded as the garden island of Micronesia. The fertile soil grows a wide variety of food crops, including kava (called sakau) and yams. Both of these are customarily offered at funerals, feasts and other ritual gatherings. Together with pigs, kava and yams play a key role in the prestige economy of Pohnpei. In contrast to Chuuk and the coral atolls in western Micronesia with their simple social and political systems, Pohnpei has all the complexity of a Polynesian island.

Most adult male Pohnpeians receive a formal title and are always referred to by this title. Men who live in the village spend much of their time tending their yams and sakau, for every Pohnpeian male is expected to have these. Pohnpeians tend to be secretive about their cultivation of these plants, so Pohnpeian homesteads are often scattered over the countryside and rather distant from one another.

Although the society is organized into lineages descended from the mother's side, children inherit their land from their father and married couples usually reside on the husband's family estate. Several married brothers will often live with their families on one large piece of land. Their father would traditionally have been the head of the family group and made all decisions affecting the group, but this is changing today.

While the social organization in the outer islands resembles Pohnpei to some extent, these atolls are without much of the formality of Pohnpei's feasting rituals and prestige economy.

Kosrae

Kosrae is a single high island with a cultural tradition that was probably very similar to Pohnpei. During the 19th century, however, Kosrae suffered a drastic loss of population over a 40-year period that left the island with only 300 people by the end of the century. This depopulation, brought on by Western diseases, was far more severe than anything suffered by other islands in the region. As a consequence, many of the traditional institutions collapsed. They were replaced by social and political structures introduced by the American Protestant missionaries then working on the island (Hezel, 1983). The old title system, which was probably much like Pohnpei's, is long dead. Today rank and prestige are acquired through church office or a high position in the government.

Despite these changes, echoes of the traditional culture survive in new forms. Married couples usually live on the husband's land as part of a larger kin group. Many Kosraeans still support themselves by cultivating breadfruit and taro and by fishing. Villages are broken down into two or three sub-groups that vie with one another in carrying out village tasks. Men and women have their own parallel associations in the village, as they do in much of Micronesia (Alkire, 1977).

Yap

This westernmost state in the FSM has a reputation for being the most traditional of all the island groups in Micronesia. Until recently men walked around town wearing loincloths while women dressed in grass skirts. Although most have now adopted western clothing, Yapese retain a deep respect for their cultural ways. Women work in the taro patches to produce the staple item on the diet, while men fish.

The villages of Yap are tightly organized and ranked according to a caste system, with each village having its recognized status. The village is an important focal point of one's identity. Within the village parcels of land are named and ranked. The Yapese claim that people receive their name from the land rather than the other way around. All houses were traditionally built on stone platforms, and each village had its own old men's meeting house and young men's clubhouse. A married couple will usually take up residence on the man's estate along with the man's father and possibly some of his brothers.

Besides this patrilineal group, which is the dominant one, Yapese maintain an interest in their matrilineage. It is well understood that if someone for any reason should have a falling out with his father's lineage, he would usually be welcomed by his mother's relatives.

The coral atolls that make up much of Yap State are populated by a people who bear very little cultural affinity to Yapese. These Outer Islanders, as they are called, speak a language and practice customs that are much more similar to Chuuk than to Yap. Their way of life is simple; they subsist on fish and taro or breadfruit, wear their traditional dress (loincloth and lavalava), and carry on the long distance canoe voyages for which their islands were famous.

Notwithstanding their distinctive features, the cultures that make up the FSM share many common traditional values and institutions. This is not surprising since these cultures have a common ancestry that can be traced back to the first settlement of the islands. The cultures and languages of the eastern islands (ie, all except Yap proper) are especially close for they form part of what is known as the Nuclear Micronesian cluster. They also hold the common set of attitudes and values shared by all Pacific Islanders living a subsistence lifestyle, such as sharing and reciprocity.

Subsistence Mode of Life

A great majority of the people in FSM lead what can be called a subsistence or semi-subsistence mode of life. By this we mean that they produce most of what they need to feed themselves from the land and sea and so are able to live without full-time salaried employment. The cash they need to buy clothes and other imported items is usually obtained by occasional paid labor or through incidental cash cropping or sale of fish. Because of the high productivity of Pacific islands, families can produce all they need in an estimated three or four hours of male labor a day (Fisk, 1982). Social relationships are maintained through the process of subsistence production and exchange within the family and community and participation in the elaborate and time-consuming social rituals, including funerals and village feasts, that are prescribed in many places. The social recognition and enhanced prestige that individuals gain from this participation is seen as adequate repayment for the time and energy invested (Hezel 1992).

The subsistence way of life is as much a mindset as a mode of production. It implies a no-rush approach to life with a disdain for long hours of work day after day since the production of surplus food, apart from those relatively few times that the community is preparing for a major event, is useless anyway. It implies a leisurely cultivation of social relationships, which are regarded as the most important value in island life. In such a lifestyle, people can afford to take time out to let the land and sea resources regenerate, for their needs are relatively simple and can be easily satisfied without putting pressure on valuable resources. A form of natural conservation is an integral part of the lifestyle of those who live a subsistence mode of life.

Although these points are obvious enough to anyone familiar with the Pacific, there is a value in stating them here at the outset of this report since these attitudes are contrary to those required for rapid economic development. Creation of a surplus, accumulation of goods, intense and regular labor, and punctuality, while essential to development, are foreign to a subsistence mindset.

Land

The traditional attitude toward land, one that is still commonly held by Micronesians, is that "land is our strength, our life, our hope for the future." Land was traditionally understood to include the offshore flats and reef or fishing areas. It was the sole source of a family's livelihood in a day when people depended on it for food, housing materials, medicine and virtually everything else. Without it they would not have survived. People parted with land as unwillingly as they would surrender an arm or a leg.

Land has always been "both life and a way of life" for Micronesians (Alkire, 1977: 88). The family or descent group was related to the land in an almost mystical fashion. Land could never be merely a possession, much less a saleable commodity. It provided the kin group not only with its livelihood, but with its identity as well. Sometimes, as we have seen in the case of Yap, people and groups took their very names from the land parcels with which they were associated. Just as people sprang from the land, they were returned to their family estate at burial. Because of the close interrelationship between kin groups and land, kin systems and land tenure patterns were shaped to fit one another snugly.

Although the value of land in the eyes of Micronesians persists today, the intimate relationship between family and land has been altered to some extent. Land has assumed great economic value with the shift from subsistence to money-based economies. Increasingly, it is coming to be regarded as a negotiable commodity that can be bartered to situate a family or an individual in the modern economic system. Outright sale of land to foreign parties is forbidden by the FSM Constitution, but 50-year leases, the maximum allowable in the FSM, are often an attractive inducement to part with land. Sale of land to other Micronesians, a rarity in former times, is frequently recorded today.

Land disputes have become a common source of friction within the extended family, especially when the senior member of a lineage sells land without the consent of the others in his kin group. To guard against this, many lineages have filed official documents with their state land office attesting that any land transfer without the signatures of all members of the lineage should be regarded as void.

The search for jobs has motivated people to leave their ancestral lands to live in towns. They sometimes move in with relatives or end up squatting on government land.

The Family

The traditional Micronesian family everywhere included more than the parents and their natural children. The family consisted of the group living and working together on lineage land, which usually included collateral kin such as aunts and uncles and their children. It usually embraced three or sometimes even four generations. A typical residential group in Chuuk or Pohnpei might have numbered as many as 30 or 40 people. Besides this residential group, there were often lineage members living on other pieces of land who retained their close ties with the lineage.

Formerly, these relatives--all of whom were referred to as "mothers," "fathers," "siblings," or "children"--shared in the work of providing for the welfare of the extended family. They took their turns preparing food for the lineage group at a common hearth, and they formed a labor pool that the lineage head could draw on as necessary to cultivate and harvest food, put up buildings, and perform the many other tasks that had to be done. Even when lineage members slept in separate houses with their wives and children, their lives centered around the hearth and meeting house, the symbols of the lineage unity.

Just as they contributed to the material welfare of the lineage as a single productive unit, all members of the extended family cooperated in the vital task of child rearing. The natural father retained considerable direct authority over his children when they were young, but as the children grew to adolescence they were subject to the general supervision of all senior members of the extended family. Many older people had a hand in raising a young member of the lineage. They taught him the skills and lore he had to know to function in his broad family; they counseled and comforted him and disciplined him when necessary; they approved decisions on whether he would go off to school or whom he would marry. The parental authority role, like the support role, was shared by a number of older relatives.

The traditional family system was characterized by a system of delicate balances that Micronesians compared to their outrigger canoe. The matrilineal side--or the hull of the canoe, in this comparison--generally had the dominant claim on each young person. These claims were nearly always represented by the maternal uncle, whose relationship with his nephew and lineage mate was important enough to warrant a special kinship term. The maternal uncles were on hand to help socialize the young person and to do all that was needed to incorporate him fully into the lineage.

The counterweight to the matrilineage was the father's lineage, which was likened to the outrigger on the canoe. This second group was represented chiefly by the young person's father, although others in this kin group also exercised some measure of authority over the young person. The roles of the father and maternal uncle were complementary; if the maternal uncle was a strong authority figure, the father might be kinder and gentler to his son. In this way, the traditional family afforded a balanced support system, with built-in checks against excesses, for the raising of children.

In many parts of Micronesia a young man or woman's relationship with their father's lineage may have been dependent on whether they had been well-behaved and considerate. If their father's family judged them to be deficient in this respect, they could be disinherited and thrown off the family estate. With the mother's lineage it was a different story. No matter how badly a young person acted or what ingratitude he had shown, his matrilineage might serve as a safety net. His matrilineage was his true home, to which he might return when all other doors were closed to him (Hezel, 1989b).

Men and Women's Roles

In all Micronesian societies, and probably everywhere in the Pacific, there was a sharp distinction between the roles of males and females. Women were expected to do the weaving and plaiting, care for the children and perform the house holding chores, while men did the deep-sea fishing, built the houses and canoes, and conducted warfare. Work was divided a little differently from one island to another, but men's and women's roles were always complementary, with some tasks clearly assigned to women and others to men.

Even when working on projects involving the entire community, such as thatching the roof of a meeting house, men and women performed different parts of the work. To prepare for the project, the men made the rope from coconut fiber, while the women plaited the thatch segments used for the roof. When the community assembled to replace the roof, the men would climb up to haul down the old roof and position the new pieces of thatch. The women, meanwhile, would prepare the food.

On something as commonplace as preparation of breadfruit in Chuuk, the principle of division of labor by gender is still rigorously employed. The men pick the breadfruit and carry it to the cookhouse, where the women scrape off the skin, cut it up into pieces and cook it. When the breadfruit is cooked, the men pound it and shape it into loaves, leaving it to the women to wrap the loaves in banana leaves and store them. Woman's work, then, is clearly distinguished from men's work in every detail of joint work projects.

Just as labor was clearly split by gender, so were other roles in traditional Micronesian societies. Men and women enjoyed their own respective spheres of influence. In many islands women were looked upon as the caretakers of the land and they exercised a large measure of control over the allocation of land use rights within or outside of the family. Men, on the other hand, were the spokesmen for the family and the village; they held the titles and the chieftainships.

Although appearances can easily mislead one into believing that the function of men was to rule while that of women was to obey, this was certainly not the case in Micronesia. While women were barred from speaking in public and were expected to avoid center stage positions, they were often the real movers behind the scenes when it came to allocating resources and even initiating political intrigues.

In gender relations, as in other aspects of traditional life, there was a strong element of reciprocity. Just as women were required to show certain kinds of deference to men, especially to male relatives, men were also required to practice respect behavior towards women. Men were not only prohibited from using certain kinds of language in the presence of women, but they were expected to withdraw from the presence of close female kin in keeping with the avoidance behavior that was so common in island societies.

What we would today call women's rights, limited as they may have been, were well protected in traditional society. These rights, to be sure, fell considerably short of today's modern standards, for women might be slapped or hit by their husbands. Even so, the woman's family kept a close watch over her and was poised to intervene on her behalf in case of excess. In such an event they might retaliate against her husband by beating him up or even remove the woman from her husband and so terminate her marriage. Women could expect to be protected by their kinfolk even after they married and bore children. Women in traditional Micronesian societies surely did not enjoy equality with men, but they were not without a large measure of security and even power in those societies (Hezel, 1987).

Social Change under a Cash Economy

Since the early 1960s Micronesia has experienced a cultural upheaval due to the cumulative impact of the modernization program embarked upon by the US which then administered the islands as its Trust Territory. This program began under the Kennedy Administration with a build up of the education and health services system. Americans were recruited in great numbers to teach in the new schools and Peace Corps volunteers were introduced to the islands in 1966. Alcohol was legalized for islanders in 1960, after which drinking became a favorite recreation of young men. The communication systems were modernized to include government-run radio stations and, much later, cable television.

Underlying these changes and dwarfing their cumulative impact upon the cultures of Micronesia was the gradual monetization of the island economies. In the immediate postwar years and through the 1950s most Micronesians lived as they always had. They ate breadfruit, taro and fish and built their houses of local materials; whatever small cash income they might have had was used to purchase clothing, cigarettes, rice, kerosene and other small items.

This pattern began to change during the 1960's as the US subsidies to its Trust Territory spiraled upward, from $6 million in 1962 to $60 million a year by the end of the decade. With a much higher level of funding came new wage employment opportunities for thousands of Micronesians. In 1962 there were 3,000 Trust Territory citizens with full-time employment; by 1965 the number had doubled, and by 1974 it had doubled again to 12,000. As of 1977, when limited self-government was granted to the islands, there were over 18,000 Micronesians working for cash in Palau, the Marshalls and what would soon become the FSM (Hezel, 1988).

Meanwhile, Micronesians' total annual earnings skyrocketed from $2.3 million in 1962 to about $42 million by 1977. The annual per capita income in 1962 was about $60; fifteen years later it stood at more than $400. Even with adjustments for inflation and an annual population increase of more than three percent a year, the average income was three times greater than it had been in 1962 (Hezel, 1989b). For the first time in the history of the islands the cash inflow had reached a level sufficient to propel Micronesia into a monetized economy. Money could supplant land as the main source of livelihood--and it did so for many families.

Discovery of a viable alternative to a land-based economy ushered in other profound changes in Micronesian values and institutions. Formerly the livelihood of any individual was dependent on the kin group that held the rights to the land on which he lived. Now, with a cash salary, one could act independently of their lineage group. Accordingly, the economic ties between the individual and his kin weakened. So did the ties between people and their land. The heads of households began feeding their own families rather than putting the food at the disposal of the head of their extended kin group. They also began making decisions over their own children and on other household matters that once would have been referred to the lineage head in the past.

Under this new social order, fathers felt a new responsibility to provide for their own children even if this meant neglecting the children of their own lineage--that is, their sisters' children. Their attention came to be focused more and more on their own immediate family in contrast to the larger kin group. Under this pressure, land inheritance patterns started changing as fathers plotted to bestow their lineage land on their own children. At the same time, the extended family group, which had once assumed such an important share in rearing children, began to withdraw from this responsibility. This left it to parents to supervise and discipline their own children unassisted. The traditional extended family system was fading away, while the nuclear family system, in which the father had full authority over his children and provided their material needs, was on the ascendancy.

Life Today

Life has changed greatly in FSM today due to the changes of the last 30 years. Although the old mode of food production is still practiced by the majority of the island people in the nation, many families have come to depend mainly on a wage economy. The towns in all parts of FSM have expanded, especially during the 1970s, as thousands of Micronesians moved to these centers in search of employment, schooling, government services and entertainment. As income increased, hundreds have purchased automobiles or motorboats. The traditional thatch houses have given way to cement or wooden structures everywhere except in the most distant atolls--and even there can be found numerous buildings of modern construction.

With these changes have come still others. Young people today have greater access to educational opportunities than before; hundreds are going off to college each year, whereas 30 years ago the college-bound could be numbered in the dozens. Life expectancy is increasing, infant mortality is declining, and the number of options enjoyed by the average man or woman has multiplied enormously.

Yet, some of the changes are both profound and ominous. With the influence of a money economy, attitudes toward land have begun to change, altering land inheritance patterns and choice of residence and loosening the ties that once bound people to their own estates. The traditional family institutions have also been shaken by these changes. Although the extended family exists in some form in all parts of the nation, there has been a radical shift toward the nuclear family just about everywhere. This has had a great impact on social problems, as we shall see in Chapter 10. The boundaries between genders are being blurred and the social roles of men and women are in the process of being redefined. What had been a partnership in the past is sometimes viewed as a power struggle today. Many of the attitudes and values that were part and parcel of the subsistence mode of thought are beginning to crumble.

As significant as these changes may be, we should not overstate them. Micronesian people have retained the distinctive flavor of island life in many other respects. The generosity, gregariousness and hospitality, among other things, that have always been a trademark of island people are in evidence today, even if their lifestyle has been irremediably altered in the last generation.

CHAPTER 3: History and the Development of Government Systems

Traditional Political Systems

The political systems in Micronesia varied greatly from island to island, ranging from the more elaborate and stratified chieftainships of Pohnpei and Kosrae to the simple authority systems of the low atolls in the Central Carolines.

Pohnpei was fragmented into various polities for most of its history, although tradition tells of a period when the island was united under a dynasty known as the Saudeleurs. In more recent times Pohnpei was divided into five districts, each of them headed by a paramount chief (Nahnmwarki) who held title to all land in his district. His "talking chief" (Nahniken) was chosen from the second ranking clan in the district. These two figures stood at the head of parallel lines of high-ranking titled persons. The districts were broken up into sections (kousapw), each of them ruled by a sectional chief. The sectional chief received first fruits from all those under him, and he in turn was expected to pay the same kind of tribute to his paramount chief.

Kosrae's traditional political system was much like Pohnpei's but was more centralized. A single paramount chief (tokosra) ruled over the entire island, which was divided into several sections and more than 50 subsections. As in Pohnpei, the sectional chiefs paid tribute to the paramount chief while receiving first fruits from their people. Kosrae's chiefly system lapsed into disuse during the last century as a result of a sharp drop in the population. Today nothing of the traditional political system survives. Kosrae had a title system, but it was probably not as complex as Pohnpei's.

The high islands of Yap never had the strong, centralized authority system of the islands in eastern Micronesia. Political authority was most tightly organized at the village level, governed by a chief with a council composed of the heads of the other lineages. The fact that villages were ranked by caste made it easier to form sectional units, although these lacked the strong authority structures of the villages. The villages were traditionally grouped into eight districts, each headed by one of the highest ranking villages. In precontact times these groupings shifted depending on alliances.

Chuuk and the culturally related atolls of the Central Carolines had the least elaborate political organization. Each island was divided into several districts, with even the smallest atolls having two or three. The district chief was traditionally the head of the senior lineage in that district, but his authority over land and other community affairs was limited. In some cases one of the district chiefs might be recognized as chief of the entire island. When this happened, he never had the luxury of making decisions on his own. His role, instead, was to mediate between the other district chiefs to reach a collective decision on matters affecting the island.

Chuuk: Getting Used to Being Governed

Chuuk had always had a poor reputation among European seamen and copra traders for the belligerent nature of its people. "Living in Chuuk is like living over a volcano," wrote one Protestant missionary in the 1880's (Hezel 1995: 63). The tiny districts in Chuuk were constantly forming and reforming alliances to do battle with one another. Warfare was a chronic condition in precolonial Chuuk.

When the German district officer from Pohnpei paid his first visit to Chuuk in late 1904, he asked the people to turn in all their firearms. In a surprising show of compliance, the Chuukese surrendered over 400 rifles and 2,500 hundred cartridges without the least resistance. From early German rule through the end of the US trusteeship a decade ago, Chuuk remained a model of docile acceptance of colonial rule.

Chuukese may have found under colonial rule what they had never experienced before: unity and peace. Chuuk's traditional authority system was founded on small family units, with a lineage exercising control over a very limited land area on an island. As the land area under the sway of a lineage became more populated, it tended to fragment into still other fiefdoms. Chuuk was a divided society that never had the strong chiefly authority of Pohnpei or Kosrae. Its small districts could and did band together under traditional alliances, two or three of which are remembered in oral tradition, but these were impermanent and shaky arrangements aimed at gaining support in time of war.

With the coming of full self-government, the foreign rule that had unified Chuuk for years is gone. The Chuukese people, who lacked any form of centralized government, are now obliged to find some way to govern effectively. They must do so without the benefit of some of the political traditions that other states enjoy. Yap, with its strong village authority, had a legacy of common work to complete public projects: roads paved with stone, community meeting houses, village docks, etc. Pohnpei and Kosrae, with their paramount chiefdoms, had a long tradition of surrendering land and goods at the request of the chief for the good of the community. The high chiefs in both places once enjoyed, in effect, the power of eminent domain, for they could recall land allotted to people for their use.

Since political authority in Chuuk never extended far beyond the lineage, there was no opportunity to develop confidence in more far-reaching political systems. Today, under the modern government system, the people of Chuuk are being challenged to do this for perhaps the first time.

After about 50 years of regular contact with the West, during which period the islands received regular visits from warships to administer justice, Micronesia was finally annexed outright. Spain claimed the islands in 1886 and soon set up government headquarters on Yap and Pohnpei. Aside from the introduction of Catholicism, Spanish rule left no lasting mark on the islands.

When Germany purchased the Caroline Islands from Spain in 1899, fast on the heels of the Spanish-American War, it made an effort to develop its new colony. It appointed flag chiefs over those islands that had none, established chiefly councils, and succeeded in completing a series of public works projects on Pohnpei and Yap. Next the German government imposed a head tax paid in labor on all adults. The colonial government also sought to implement sweeping development reforms aimed at maximizing production on the land and eliminating the "wasteful" feasting that was so common in some places. These ended abruptly when a local uprising broke out on Pohnpei in 1910.

Japanese rule, which began in 1914 with the seizure of the islands from Germany at the outbreak of World War I, continued for 30 years and left a much more lasting imprint on the islands. With the help of Okinawan and Japanese settlers, the government effected an economic miracle in Micronesia. Production for export reached such a level that the foreign administration of the islands became self-supporting. Although the local population was largely untouched by this economic boom, they were introduced to a variety of consumer goods and foreign customs that had a genuine appeal for them. Japanese authorities continued the practice, begun by the Germans, of appointing flag chiefs and setting up island-wide councils.

When the US took possession of the islands as a United Nations trust territory after World War II, the navy's official administrative policy was intentionally the opposite of Japanese policy. The US determined that it would embark on no ambitious development programs in the islands unless Micronesians themselves led the way. On the other hand, the blind faith of the US in democracy was so strong that it felt obliged to impose new political structures on island people. The three-fold division of government into executive, legislative and judicial was established. The first elections were held in 1947, but Micronesians used them as an opportunity to reassert their own political traditions. In these elections they reinstated the legitimate traditional chiefs who had been ousted by the Japanese administration.

The final two decades of US administration were years of accelerated development. Millions of dollars were pumped into the construction of roads, docks, runways and other infrastructural improvements. New schools and hospitals were constructed, and the government payroll soared as hundreds of new employees were added each year.

At the very time that public services were expanding and the cost of government increasing, Micronesia was preparing for self-government. The Congress of Micronesia, which was created in 1965, was conducting negotiations with the US on its future political status. Eventually it agreed to the Compact of Free Association with the US, an agreement that gave FSM full self-government while delegating to the US responsibility for its defense and conceding military rights in the islands. The US agreed to give a yearly subsidy to the FSM in exchange for these rights.

In 1978, three years after Micronesian leaders had ratified their constitution, the FSM was granted self-government by the US and the first chief executives were chosen in a popular election. The new nation began to function in that year, although it was not formally recognized by the US and other world powers until final approval of the Compact of Free Association in 1986.

The Modern Government

The modern government system operates at three levels: the national, state, and municipal. The national (FSM) government and each of the four states have their own executive, legislative and judicial branches.

The Congress of FSM is made up of 14 senators, four of whom are elected "at large." The president and vice president can be chosen only from these "at large" members of congress. The FSM national government was originally envisioned as conducting foreign relations and regulating immigration, trade, banking, shipping and national resource development. With time, however, it has expanded its supervisory role over such fields as education and health services.

The states have their own constitutions under which they operate. All have elected governors who serve a four year term, an elected legislature, and their own state court. The government structures at the municipal level vary from state to state. Municipalities may legislate for their own communities providing their laws do not conflict with those of the state or national government.

A major issue that FSM faces is how to integrate the traditional political system into the modern government apparatus. Yap seems to have been more successful in this respect than any of the other states. The two councils of chiefs in Yap, one for the main islands and the other for the outer islands, have, by law, veto powers over issues of custom and tradition. In Pohnpei there are periodic attempts to legislate a formal status for high chiefs in the government, but this is always voted down on the grounds that it would cheapen their traditional position to have them join the political fray. One could add that it would also render the elected officials impotent. Hence, the traditional and modern systems continue to operate separately of one another. Although traditional chiefs continue to be paid customary respect, their de facto authority in community matters seems to be eroding.

It is worth noting that, appearances to the contrary, traditional leaders did not enjoy absolute power over their people. Even in former times when chiefs had full title to the land, their power was subject to what we might call checks and balances. In return for the respect shown them and the tribute paid them, chiefs were expected to be generous in their apportionment of land and redistribution of tribute and other gifts to their people. Despite their status difference, chiefs were bound by the obligation of reciprocity. Failure to fulfill these obligations could lead people to withdraw their support for their chief, sometimes with disastrous consequences for the chief.

This relationship has been altered greatly today. When paramount chiefs on Pohnpei bestow titles, they are sometimes given in return a check for several thousand dollars or the key to a pickup truck instead of the traditional feast with yams, pigs and sakau. In such cases the obligatory redistribution is ignored. It appears that the traditional system has frozen in place, thus denying commoners some of the protection and benefits they would have received in former times. One must then ask whether the reciprocity between the elected leaders in the modern government and the people they serve is faring any better.

Another issue often raised is what role women should have in FSM's modern representative government at all levels. If women's political power were to be measured in terms of their seats in the legislatures or municipal councils, the picture would look very bleak. No more than four women have been elected to the state legislatures since 1978, and women have never held a seat in the national congress. This absence of female representation, however, must be seen in the light of the strict separation of men and women's roles that has until recently been practiced everywhere in the FSM (see Chapter 2). At this stage in the political development of FSM, one must look, as a sign of progress, to the complementary but less public roles that women are beginning to play in today's society. This will be expanded upon in later chapters.

CHAPTER 4: Demographic Trends

Present Population and Distribution by State

The 1994 FSM Census showed that FSM had a total population of 105,506, of which 3,205 or 3% of the total population were foreigners (other Pacific Islanders, Filipinos, Chinese, Americans, and "others") .

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Table 4. 1 FSM Population by State, 1994

Area	Total Population	Non-Micronesians
Total FSM Chuuk Pohnpei Yap Kosrae	105,506 53,319 33,692 11,178 7,317	3,205 722 1,257 782 444

Source: 1994 FSM Census of Population and Housing (June and July 1996)

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Chuuk State had over half of the FSM total population, followed by Pohnpei with almost a third;
Yap and Kosrae made up the remainder.

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Population Trends

From the turn of the century through the Japanese Colonial period (1914-1945), all four states exhibited negligible or negative population growth, even as the Japanese population swelled during those same years. Despite the medical advances brought by the Japanese, fertility was low and infant mortality remained high. After World War II, by contrast, the four states experienced very rapid population growth. Even Yap, which had suffered a steady population decline since the 1880s, showed a reversal of earlier patterns. With the improvement of health services after the war, mortality declined dramatically while fertility remained high. The annual natural growth rate soared at well over 3 percent. This high rate of growth continued through the 1980s, alarming economists and development planners if not always the local population. Since the late 1980s, however, the growth rate appears to have dropped greatly, with a single exception. The growth rate of Chuuk remains high even today.

Population Density

As the population increases, so does population density. Population density is an important concern to this island nation which has a limited land area of 700 square kilometers (271 square miles), bounded on all sides by the Pacific Ocean. Limited land areas have limited natural resources. The population densities presented in Table 4.2 do not give an accurate representation of real population pressure, since all types of lands (not just habitable and arable) are used in the computations. As population density increases, those natural resources that are most accessible to settlers are vulnerable to over-use and environmental degradation.

Chuuk state's land area is roughly equal to Kosrae's and Yap's, but its population density is nearly three times the national average. All other state densities are lower than the national average. Pohnpei has the largest land area but is still the second most crowded state. Kosrae is the smallest in land area and the least crowded state.

Population Growth

At over 3 percent, FSM's annual population growth rate in post-war years was one of the highest in the world. For years its population growth has been regarded as one of the most serious of the nation's problems. This was seen as a grave obstacle to development, especially in view of the nation's small land area, limited natural resources, and the projected decline in US aid during the last years of the Compact.

1994 census data indicate a downward trend in the annual rate of population growth and total fertility rates. This is encouraging because FSM, with its limited economic potential, is having difficulty keeping up with the many needs of a rapidly increasing population. FSM's annual population growth rate dropped sharply in the early 1990s. Nonetheless, it is important to note that even if the reduced annual growth rate of 1.9% were to continue, FSM's population would double in about 30 years.

The recent drop in the natural growth rate can be attributed to two causes: heavy emigration from FSM since the beginning of the Compact period, and a significant decline in FSM's natural birth rate.

Emigration

Emigration to Guam and Saipan has been an important factor in the decline of FSM's population growth rate since 1986, the year of the inception of the Compact of Free Association. With the Compact provision allowing FSM citizens to enter the US and its territories freely for education or employment, thousands of people left FSM to find jobs elsewhere. Guam and Saipan were favorite destinations. Table 4.4 shows the estimated size of the migrant populations from FSM in both these islands in 1994 based on measured emigration from 1986 to 1992. The same table, using the sum of the 1994 resident population of FSM and the projected migrant populations on these two islands as a denominator, offers rough figures for the rate of emigration to these two islands during the early Compact years. Employing this method of aggregating FSM resident and migrant populations, we may estimate the emigration rate of FSM at about 1 percent a year, with Chuuk's rate the highest of the states at 1.2 percent.

Had it not been for the sudden increase in emigration during the Compact years, the annual population growth would have been significantly higher than it was. Table 4.5 indicates what the annual growth rate, state by state, actually was for the period 1989-1994 and what it would have been if there had been no emigration to Guam and Saipan.

Migration within FSM was also measured by the 1994 Census. Those figures showed that only Pohnpei had a net population gain, probably because it is the nation's capital and attracts national-level employees and their families. The other three states showed a net loss of people.

Birth Rate and Fertility Rate

The decline in the population growth rate is not only due to emigration from FSM. The birth rate has been decreasing for the last decade and a half, the 1994 FSM Census shows. The crude birth rate (CBR)-that is, the number of births in a year divided by the population-has dropped from 38.5 in 1980 to 33.3 in 1990, and has further declined to 31.4 in 1993 (FSM OPS, 1996a: 28-29).

This decrease has been reflected in the decline of fertility rates in FSM. The nation had a total fertility rate (TFR; total births to an average woman, 15-44 years of age) of 4.6, according to the 1994 census. While a 4.6 TFR still contributes to a rapidly growing population, the fertility rate of FSM has been steadily declining. If the current trend continues, FSM's fertility rate could be down to 3.2 by 2009.

The total fertility rate of FSM might be compared with those of other Pacific nations. Based on 1993 data, the Marshall Islands' rate was among the highest in the Pacific at 7.2. CNMI's rate of 2.4 is attributed to a low fertility rate among female migrant workers from Asia. If foreign women were excluded, the rate would very likely be about 5.6. Papua New Guinea, Solomon Islands and Vanuatu had fertility rates of over 5 (Haberkorn, 1995).

In 1994, Chuuk had the highest number of children per mother (average of 5.6 births) and Yap the lowest number (average of 3.7 births). However, Yap's fertility rate was affected by the significant number of foreign women on Yap Proper who were of reproductive age and had very low fertility. Yap and Pohnpei had high fertility rates among younger women, while Chuuk's high fertility rate among older women suggests an absence of family planning there. Fertility rates were lower for women with more education and women who were in the labor force, suggesting that policies to reduce fertility levels could be directed at increasing female education levels and participation in the work force. Strengthening of family planning programs and education of the people regarding population issues would also be advisable.

As evidenced by the near equal length of the lowest two bars of the FSM 1994 population pyramid, there was almost no growth in the youngest segment of the FSM population over the 10 years prior to the 1994 census and very little growth during the five years previous to this. This is mainly due to the decline in the FSM birth rate during the past decade and extensive loss through emigration.

Although the sex ratio has remained about 105 males per 100 females from 1973 through 1994, there appears to be a shortage of males in the 20-29 age group and in the 50+ group. This is thought to be due to selective out-migration of males, aged 20-29. The decline in the 50+ group may be due to a combination of emigration and mortality.

The FSM general population is gradually increasing in age. Since 1973 the median age has risen by one year, to 17.8 years, according to the 1994 census.

FSM's 1994 dependency ratio was 89 (meaning that for every 100 persons of working age, there are 89 dependents, i.e., children and elderly), a decline from 102 in 1973. This indicates a relative increase in the working age population. (The dependency ratio should not be confused with the economically active ratio which considers only economically active persons of working age.) The decrease in the dependency ratio can be considered a positive change, although the decrease in at least one state (Yap) could be attributable in part to the presence of 300 Asian workers employed at a garment factory that was opened in 1986.

Population Projections

Population projections are only as accurate as the assumptions used when calculating them. Such projections can be helpful to planners, policy makers, administrators, etc. in preparing for future population impacts on the nation's cultural, environmental, social and economic resources. Three projected population scenarios (based on possible variations in fertility, mortality and migration) are depicted in Figure 4.4.

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Table 4.7: Demographic Indicators from Other Micronesian Islands

Country	Census Year	Intercensal Growth Rates	Median Age	Sex Ratio
FSM	1994	1.9	17.8	105
Guam	1990	2.3	25.0	114
Kiribati	1990	2.3	19.9	98
Marshall Islands	1988	4.2	14.1	105
Nauru	1992	2.9	18.0	105
CNMI	1990	9.5	27.4	111
Palau	1990	2.0	25.2	117

Source: FSM Census 1994Figure 4. 4 Three Projected Population Scenarios, 1994 to 2014

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Source: 1994 FSM Census of Population and Housing

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Scenario 1 represents the upper population growth extreme by the year 2014, and is based on the presuppositions that the fertility rate will remain constant, the mortality rate will improve moderately, and no further migration will occur. Scenario 3 represents the lower population growth extreme by the year 2014; it presumes that the fertility rate will rapidly decline, the mortality rate will improve moderately, and the migration rate will decline moderately. Scenario 2 is believed to be the most likely situation over the next 10 years according to the FSM Office of Planning and Statistics. It presumes a moderate decline in the fertility rate, moderate improvement in the mortality rate, and moderate decline in the migration rate.

Whichever scenario proves to be more accurate, it is crucial for policy makers and planners to expect FSM's future population to be much larger no matter what happens to current fertility levels due to a "momentum of population growth." The momentum exists because in today's population the large numbers of young women entering their child-bearing years by far exceeds the number of older women leaving their reproductive years. Even if fertility levels continue to fall, this will be offset, at least for a time, by declining infant mortality rates and higher life expectancies (Haberkorn, 1995).

Population increases mean greater needs for job opportunities, schools, infrastructure, public utilities, police and fire protection, emergency services, housing, recreational facilities, health facilities and services, other social services, etc. Moreover, the large unemployed segment of the adult population will feel additional pressure on the limited land at their disposal to produce the food required to feed themselves. Needless to say, as the FSM develops its nascent tourist industry, the country will experience further strain on its infrastructure, public services, and other resources.

Population growth clearly remains an area of concern for FSM, as it is for most countries in the Pacific. In view of the declining birth rates and the heavy emigration over the last decade, however, it is no longer as critical an issue as it was ten or fifteen years ago. The most likely trajectories for the population change over the next 20 years would show a growth to between 140,000 and 150,000 by 2014. While population growth of this magnitude is a serious matter, FSM citizens can be expected to adjust the population to available resources, as the people living on coral atolls have always done and continue to do today. Emigration is a safety valve that was written into the Compact for that purpose and has drained off some of the surplus labor pool in the last ten years. A more serious question, and the one that commands the attention of the nation at this time, is: How even the existing population will fare at the end of the Compact in 2001.

CHAPTER 5: The Economy

The Uncertain Future

The Federated States of Micronesia has reached a critical point in its road toward economic development. After some 40 years of support from the US as a Trust Territory, FSM inaugurated a period of Free Association with the US that provided an additional 15 years of funding at declining levels. The last of the step-downs in the Compact funding became effective in October 1996. FSM now faces the prospect of the termination of US funding , at least at the level it has enjoyed for the past 30 years.

With Compact funds running down, FSM faces a dilemma that is different from that of most other Pacific Island nations. Most of the latter must weigh the social costs of industrialization and their impact on the old cultural ways against improving the living standard for a growing population. While FSM must deal with these concerns, it faces the more serious problem of replacing the US aid that has provided for the social and government services that its citizens have enjoyed in the past. Hence, economic growth and dynamic change is necessary in FSM simply to maintain the status quo.

The Upside-down Economy?

In most countries, the private sector is larger than the government sector, and it is through taxes on this private sector that government supports itself and provides essential services to the people. However, in the FSM, the process is reversed. The national, state, and municipal governments are the major sources of employment and cash. The small businesses that make up most of the FSM private sector are service rather than production oriented.

Micronesians passed a crucial point in the 1960s and early 1970s. With the great infusion of US funding, they came to rely on wage employment that depended on a large government bureaucracy. The character of their very families was being altered to accommodate the reality of a regular cash income. Education, the most expensive of the social services provided by the government, was regarded as a necessity. People had come to expect not six or eight years of schooling but twelve or even sixteen years. The population had acquired a taste for modernity.

In the face of such monetary abundance from the US, bad habits abounded. Rather than developing the private sector, great quantities of funding were spent on "pork" projects and short-lived equipment and amenities. Bureaucracies were expanded, hiring yet more citizens into government employ. When budgets ran short, the US found supplemental money to keep things going. The net result was to encourage governments to quickly spend and exhaust their annual budgets, so that they were ensured an early position in the queue for supplemental aid.

Attempts to boost production for export--through fishing, copra, and farm produce--were not successful. In recent years, the government has turned to the sale of rights as a source of income. The most notable example of this is the licensing of fishing rights to foreign countries.

With government being the largest "engine" running the economy, the question (and concern) is just how nation-states that lack a substantial resource base and a well-developed private sector economy will support their acquired tastes under their own government as US subsidies continue to dwindle.

In the early 1960s the US greatly increased its subsidies to what was then known as the Trust Territory of the Pacific. The US decided to abandon its earlier "go slow" policy and move towards rapid modernization, using the development theory that supported investment in social services as the key to modernization. There was little emphasis on economic development as such - the main targets were administration and social services, in addition to infrastructure projects such as roads, docks, and runways. Overall, one of the most visible effects of the increase in budgets was to employ hundreds of previously unemployed Micronesians. As more Micronesians found employment with the largest employer in the region, the government, a corresponding service economy evolved in the private sector.

In 1962, just before the period of rapid growth began, Micronesians' total wages and salaries were about equal to the value of their yearly exports, $2.3 million. By 1977, the total yearly earnings from salaries had shot up to $42 million, while the value of exports remained at about the 1962 level (Hezel, 1984). The economy was based on government wages rather than productivity. The linchpin of the village cash economy throughout the territory was the local public elementary school, which brought in more money through teachers' salaries than anything else (Hezel, 1982).

The Compact of Free Association

The country continues to rely heavily on grant aid from the US under the Compact of Free Association, which became effective in November 1986, and lasts for a 15-year period. The major element is a block grant, adjusted for inflation, of $60 million annually for the first five years, $51 million annually for the next five years, and $40 million annually for the final five years. By the terms of the Compact, 40 percent of the annual subsidy is to be used for capital projects, while the remainder may be spent on current operations. The Compact also provides for many smaller annual grants for specified purposes supervised by different federal agencies. Including non-Compact assistance, mainly for health and education, US grant receipts have amounted to over $100 million in recent years. The high level of external funding has enabled the governments to expand their operations with limited reliance on domestic revenue collection (FSM Economic Summit, 1995).

The first increment of Compact funds was targeted for infrastructure development, a stage referred to as "Transition and Reconstruction." The second increment was to be used in investments and economic ventures, and was called "Sustained Economic Growth." The last five years of Compact funds were to further refine earlier investment, "Achievement of Economic Self-Reliance" (FSM/OPS, 1992a)

The Compact is scheduled to end in 2001. While there are provisions to negotiate an extension, it would be dependent on the willingness of the US to provide continued funding.

The Structure

The resulting dual economy has a small modern sector concentrated in the urban districts of the main islands, and a traditional sector prevalent in rural and remote areas. The modern sector is thoroughly monetized. The traditional sector relies largely on subsistence activities in agriculture and fisheries. In general, while a few rural families may have an adequate cash income, people who live outside of the immediate area of the developed urban districts and towns tend to support themselves by subsistence or semi-subsistence activities. Subsistence production, estimated at 35 percent of the nation's Gross Domestic Product (GDP) in 1986, decreased to 21 percent of GDP by 1995. This reduction in the subsistence share of GDP is largely due to the expansion of the monetized economy since the start of the Compact, and not due to any real reductions in subsistence activity itself. Subsistence activity remains very important to the people of the FSM (Pohnpei State Economic Summit, 1996).

Imbalances

The economy is characterized by two major economic imbalances: 1) a large and growing internal fiscal deficit, an indication that the FSM government costs are not diminishing along with outside grants, and 2) a large foreign debt. Fiscal surpluses for the first four years of the Compact period have been followed by a series of fiscal deficits reaching as high as 5 percent of GDP. The external imbalance is characterized by large deficits, though the relative size of the deficit has decreased in recent years. The deficit has been financed by a combination of external borrowing and drawing down reserves, in effect getting "advances" against future Compact revenues (FSM Economic Summit, 1995). The government has been drawing on its future funds so it can finance projects it feels are important now. To date, two of the projects focus on infrastructural development - telecommunications and water and sewage development - and one project on agriculture. The remaining six focus on fishing, and range from the creation of cold-storage facilities to the purchase of vessels.

GDP and Growth

Government expenditures account for a large portion of the real GDP. In 1994, with a GDP of $200.9 million, government expenditures came to over 80 percent of the GDP, some $162.7 million.

GDP growth has been slow and erratic. The most recent contraction of real output was in 1992, resulting from a drought, a typhoon, and the first stepdown in Compact funding.

GDP per capita was estimated at $1,904 in 1994. Per capita growth has been negative in seven of the first nine years of the Compact, and the real per capita income level is slightly less in 1995 than in 1988.

Inflation has been somewhat higher than US rates - currently at about 4 percent - and has had the effect of diminishing the real value of Compact monies. This is significant since this diminishment accompanies scheduled stepdowns in Compact funds.

Exports account for about 30 percent of GDP and imports are equivalent to over 85 percent of GDP. Merchandise exports increased thirty-fold from 1986 to 1994, largely due to the fish and garment industries. The garment industry alone accounted for over $2 million in export value during 1994. Unfortunately, these exports offer a very low value-added potential to the FSM. For instance, the garment industry uses imported textiles and foreign employees, minimizing the possible contributions of the industry to the local economy and increasing imports for the material it uses. Likewise, the FSM has collected fees from other governments in exchange for allowing them to fish within the FSM economic zone, but does not yet have its own full-fledged fishing industry. This has been exacerbated by FSM policy which has, in the instance of fish, placed emphasis on quantity rather than quality, further discounting value added potential. For instance, while the nation receives around $22 million annually for fish licensing and access fees, the market value of the catch is about $250 million. This explains the slow and sporadic domestic output growth in the face of expanding exports.

Employment

The public sector has historically been the largest employer in the country. Predominant are jobs in the public administration and educational fields. In 1992, along with the first step-down in funds from the Compact (resulting in government job cutbacks), the number of jobs in the private sector finally surpassed those of the public sector (FSM/OPS, 1996a).

While the private sector increases are welcome, they come largely in the service industries - transportation, trade (including small stores), hotels and restaurants, etc., and do not normally command the highest earning power. Neither do they contribute to a balance of foreign exchange by providing goods and services that can be marketed abroad.

However, while job numbers in the private sector exceed those of the public sector, public sector wages have increased markedly since the early Compact years and significantly outpace private sector wages. This indicates that the earning power still rests within the public sector, a disincentive to those seeking employment in the private sector. Although males hold most of the jobs in both the public and private sectors, the proportion of males in the public sector is higher. However, these trends have shown declines recently, in the face of government hiring slowdowns and private sector growth, mainly in the wholesale and retail trade and in manufacturing. The wage gaps should close even further, given the intentions of national and state governments to freeze wages and reduce the number of employees.

Approximately seven percent of the FSM employed labor force is non-FSM citizens, over three-quarters of those being male. The foreign labor force seems to be concentrated in the following professions: doctors and medical personnel, accountants, mechanics, fishermen, craftsmen and construction workers.

Unemployment

Unemployed persons are defined, for the purpose of the 1994 census, as those who were looking and available for work in the four weeks preceding the census. At the time of the census, the working age population (15-64) numbered 59,573, or 56 percent of the