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Federated States of Micronesia

Flag of Federated States of Micronesia

Federated States of Micronesia country brief

Overview

The Federated States of Micronesia (FSM) — made up of the four island states of Yap, Chuuk, Pohnpei and Kosrae — has a population of approximately 112,600 people and shares maritime borders with the Republic of the Marshall Islands, Palau, Guam and Papua New Guinea. The capital, Palikir, is located on the island of Pohnpei.

Political overview

FSM is an independent country in a Compact of Free Association with the United States (US). FSM has an American-style constitution that came into effect in 1979 and provides for a government composed of an executive branch, a legislative branch and a judicial branch.

The National Congress is unicameral and consists of 14 members. Four senators, each known as "senators-at-large" (one from each state) serve four-year terms. The remaining 10 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 serve a four-year term. The senator-at-large seats vacated by the President and Vice-President are filled by a representative from their state. An appointed cabinet supports the President and Vice President. Each of the four states has its own constitution, an elected governor and a lieutenant governor.

The President of FSM, H.E. Mr David W. Panuelo, is both Head of State and Head of Government. Mr Yosiwo P. George is Vice President. President Paneulo assumed office in May 2019 and Vice President George in May 2015.

Compact of Free Association with the United States

FSM is an independent nation in a Compact of Free Association (Compact) with the US. The Compact provides for FSM's defence, financial assistance and access to US domestic services and labour market, in exchange for the US having exclusive rights to establish and operate military bases in FSM.

While the compact terms are indefinite, the financial provisions have a set term. The original Compact provided US$1.3 billion in financial assistance from 1986 to 2001. An amended compact, which entered into force in June 2004, provides the equivalent of US$2 billion over the subsequent 20 years. That amount includes contributions to a trust fund that, from 2024, is intended to 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.

Bilateral relations

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.

Development assistance

Australia's bilateral aid program in FSM has traditionally focussed on basic education and improving social and economic opportunities for women and girls.

More information on development assistance to the Federated States of Micronesia.

Australia Awards

Australia Awards delivered are an important component of the Australian Government's overseas aid program. Australia Awards Pacific Scholarships provide opportunities to study at selected education institutions in the Pacific region.

More information on Australia Awards.

Volunteers

The Australian Volunteers program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations to deliver effective and sustainable development outcomes. The Australian Volunteers Program provides opportunities for skilled Australians to contribute to the Australian Government's development cooperation program.

See the Australian Volunteers website for further information.

Direct Aid Program (DAP)

The Direct Aid Program (DAP) is a small grants program funded from Australia's aid budget. It has the flexibility to work with local communities in developing countries on projects that reduce poverty and achieve sustainable development consistent with Australia's national interest.

Visit the Australian Embassy in FSM website for further information on the DAP.

Economic overview

FSM's economy is dominated by government services and external grants, with relatively limited private sector activity. FSM's small, remote and dispersed population, narrow range of natural resources, and vulnerability to external shocks present challenges to growth. The fisheries sector is regarded as having the greatest development potential. With an EEZ of 2.7 million square kilometres, FSM has access to major equatorial tuna migratory paths and the fishing industry has been boosted by the introduction of the Vessel Day Scheme under the Parties to the Nauru Agreement. Fishery licensing fees account for nearly half of domestic budget revenue.

The tourism 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, limited infrastructure, including roads, power and water, and by the country's geographical isolation.

Trade and investment

Australian merchandise trade with FSM in 2018-19 totalled $5.9 million (principally specialized machinery and parts; prepared or preserved meat; wheat flour; and animal feed).

High level visits

December 2019: Ambassador for Women and Girls, Dr Sharman Stone visited FSM to engage in high level meetings to discuss issues relating to gender equality and gender-based violence.

June 2019: Assistant Minister for Forests and Fisheries Jonathan Duniam visited FSM for the Annual Ministerial Forum Fisheries Committee.

June 2018: Minister for Foreign Affairs Julie Bishop, Minister for International Development and the Pacific Concetta Fierravanti-Wells and their portfolio counterparts Senator Penny Wong and Senator Claire Moore visited FSM.

September 2016: Prime Minister Malcolm Turnbull and the Minister for International Development and the Pacific, Senator the Hon. Concetta Fierravanti-Wells, visited Pohnpei, to attend the 47th Pacific Islands Forum.

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