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COUNTRY BRIEFS


INTRODUCTION

The Federated States of Micronesia consists of 607 islands, of which 65 are inhabited, spread over an ocean area the size of Western Australia. The islands are in four main groups, which form the basis of FSM ’s four states: Yap, Chuuk, Pohnpei and Kosrae. The capital, Palikir, is located on the island of Pohnpei. FSM has a population of 111 000.

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POLITICAL OVERVIEW

FSM is an independent country in a Compact of Free Association with the United States. FSM has an American-style constitution adopted in 1978 which provides for a government composed of an executive branch, a legislative branch and a judicial branch. Each of the four states has its own constitution, an elected governor, a lieutenant governor and, except for Chuuk, a unicameral legislature. Chuuk has a bicameral system. The National Congress is unicameral and consists of 14 members. Four senators — one from each state — serve four-year terms. The remaining ten members represent single member districts based on population and serve two year terms. Both the President and the Vice-President are elected by the Congress from among its four-year members and both serve a four-year term. An appointed cabinet supports the President and Vice President. There are no formal political parties.

The President of FSM , currently Mr Emanuel Mori, is both Head of State and Head of Government. He is from Chuuk. Mr Alik Alik is Vice President and is from Kosrae. Both were re-elected to the Congress in the general election on 8 March 2011.

Under the Compact of Free Association, FSM controls domestic and foreign policy, but not defence and security, for which the United States is responsible. The original compact provided US$1.3 billion from 1986-2001, and included direct financial assistance from the United States for the development of FSM . The amended compact, which entered into force in June 2004, provides the equivalent of US$2 billion over the subsequent twenty years. That amount includes contributions to a trust fund which, from 2024, will replace direct financial assistance. From 2007, annual grants from the US to the FSM government decrease each year, while contributions to the trust fund increase accordingly. In addition to this, the compact grants FSM citizens access to US federal programs and favourable provisions for travelling to and working in the United States. The compact and its subsidiary agreements commit the US to continue to provide, at no cost to FSM , many services including air safety, weather prediction, health services and assistance in the event of natural disasters until the end of the compact. Under the compact, more than 40 US Government agencies such as the Federal Aviation Administration, US Postal Service, the Small Business Administration, and USAID operate programs or render assistance to FSM.

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ECONOMIC OVERVIEW

The economy is dominated by government services and largely reliant on external grants, with only a modest private sector. The fisheries sector is regarded as having the greatest development potential. With an Exclusive Economic Zone (EEZ )of 2.5 million square kilometres, FSM bestrides major equatorial tuna migratory paths and the fishing industry has been boosted by the construction of cold storage facilities and processing plants. Fishery licensing fees account for nearly half of domestic budgetary revenue.

The tourist industry is another area of potential for FSM , particularly diving and eco-tourism. Some 21 000 tourists visit the islands each year. Tourism development is, however, constrained by limited airline links, availability of infrastructure, including roads, power and water, and by geographical isolation.

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BILATERAL RELATIONSHIP

Australia established diplomatic relations with FSM in July 1987 and the Australian Embassy in Pohnpei was opened in November 1989. Australia enjoys a close and friendly relationship with FSM . The Parliamentary Secretary for Pacific Island Affairs, Richard Marles, visited FSM in February and December 2011.

Australia first provided small-scale development assistance to FSM in 1979 following the establishment of constitutional self-government. On 4 August 2010, President Mori signed a Pacific Partnership for Development with then Foreign Minister Smith in Port Vila, which has brought a new level of aid engagement with FSM in the priority areas of tax reform, environment management and aid coordination. Australia’s official development assistance to FSM will be approximately $5.14 million in 2011-12 and focus on scholarships, technical assistance and small grants. Further information can be found on the AusAID website (http://www.ausaid.gov.au/) .

In recognition of FSM 's vast EEZ and the importance of the fisheries sector to its long-term economic viability, Australia has provided two of FSM ’s three Pacific Patrol Boats and continues to support its maritime surveillance through assistance with a bilateral Defence Cooperation Program.

Australia, through the Australian Federal Police (AFP) and in partnership with the United States, supports the Micronesia Transnational Crime Unit in Pohnpei.

FSM has provided two police officers to work as a part of the Regional Assistance Mission to Solomon Islands Participating Police Force since March 2006.

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

Australia is one of FSM 's main sources of imports after the US and Japan. Australian exports to FSM in 2010-11 totalled $6.33 million (principally prepared or preserved meat and wheat flour). Australia's imports from FSM in the same period totalled $35 000.

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VISITOR INFORMATION

Australians travelling to FSM are advised to consult the Smartraveller travel advice (http://www.smartraveller.gov.au).

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Last Updated: January 2012

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