History
In 1525, Portuguese navigators in search of the Spice Islands (Indonesia) came upon Yap and Ulithi. Spanish expeditions later made the first European contact with the rest of the Caroline Islands. Spain claimed sovereignty over the Caroline Islands until 1899. At that time, Spain withdrew from its Pacific insular areas and sold all of them to Germany, except for Guam which became a U.S. insular area. In 1914, German administration ended when Japanese naval squadrons took military possession of the Marshall, Caroline and Northern Mariana Islands. Japan began its formal administration by a League of Nations mandate in 1920. Sugar cane, mining, fishing and tropical agriculture became the major industries.

The United Nations created the Trust Territory of the Pacific Islands (TTPI) in 1947. The Kosrae, Ponape (now Pohnpei), Truk (now Chuuk), Yap [these four districts comprise the Federated States of Micronesia (FSM)], Palau, Marshall Islands, and Commonwealth of the Northern Mariana Islands all constituted the TTPI. The TTPI came under DOI responsibility in 1951.

The President of the United States appointed a High Commissioner to administer the Trust Territory. Until 1979, the High Commissioner appointed a district administrator for each of the FSM states to oversee their programs.

In support of the evolving political status, the United States recognized the FSM constitution in 1979 and establishment of the Government of the FSM, both national and state levels.

Political Status
The Governments of the FSM and the U.S. signed the final version of the Compact of Free Association on October 1, 1982. President Ronald Reagan signed the Compact into law on January 14, 1986 (PL. 99-239). The Compact was fully implemented on November 3, 1986 (see Presidential Proclamation No. 5564).

Under the Compact, the status of free association recognizes the FSM as a sovereign state with the capacity to conduct foreign affairs consistent with the terms of the Compact. The Compact places full responsibility for FSM's defense with the United States.

The Compact also provides grant funds and Federal program assistance for 15 years. The funding procedures provide for a graduated reduction after the fifth and tenth years. The majority of funds from the Compact are provided through the Department of the Interior.

Under the Compact, the State Department is responsible for government-to-government relations, while Interior is responsible for the oversight and coordination of U.S. programs and funding assistance.

Government

The constitution separates the executive, legislative, and judicial branches. Its incorporation includes a bill of rights and a provision for traditional rights. It provided a unicameral legislature of 14 members, four members elected at-large on a nation-wide basis and ten members elected from congressional districts apportioned by population.

The President of the Federated States of Micronesia is now the Honorable Joseph J. Urusemal (from Yap). The other chief executives are as follows: Honorable Johnny P. David, Governor of Pohnpei, Honorable Robert Ruecho, Governor of Yap; Honorable Rensely Segrah, Governor of Kosrae; and the Honorable Ansito Walter, Governor of Chuuk. (Current FSM Administration)

The judiciary branch is headed by the Supreme Court which is divided into trial and appellate divisions. Each state government has its own legislative and court system.

Geography
The FSM extends 1,800 miles across an archipelago of the Caroline Islands. Palikir (located on Pohnpei), the FSM capital, is 2,900 miles southwest of Honolulu and 1,000 miles southeast of Guam. The four state capitals in the FSM are Kolonia, Pohnpei; Moen, Chuuk; Colonia, Yap; and Tofol, Kosrae.

The islands vary geologically from high mountainous islands to low coral atolls.

The weather conditions of the FSM is tropical. The average annual rainfall is 170 inches. Storms are common between August and December. FSM is subject to typhoons, especially between July and November. 

Population
Based on the 2000 census, the population of the FSM is approximately 107,000 (Pohnpei 34,000; Chuuk 54,000; Yap 12,000; and Kosrae 7,000).

Culture
The cultures within the four states of the FSM are tremendously diverse. Eight separate languages with different dialects are spoken throughout the islands: Yapese, Ulithian, Woleaian, Ponapean, Nukuoran, Kapingamarangi, Chuukese, and Kosraean. Three of the four state constitutions recognize the role of the traditional leaders and customs. Kosrae has no traditional leaders.

Economy
In Fiscal Year 1993, the FSM's total operating budget was $157.7 million. Of this amount, the U.S. Government appropriated and paid to the FSM and its four states $101.2 million of which only $6.1 million were not received through the Department of the Interior. FSM’s local revenues for Fiscal Year 1993 were $56.5 million.

Copra and fish account for the most of FSM's exports. The FSM has made agriculture and fisheries its top priorities in economic development. There is also a growing tourist industry.

The FY 2000 GDP was 2327.3 million.  Visitor arrivals in 2002 was about 19,000 that included 14,038 tourists.

 

Table 1. Gross Domestic Product by Major Sector of Economic Activity and State: FY96 to FY02
Total FSM	FY96	FY97	FY98	FY99	FY00	FY01 Est	FY02 Est
Nominal GDP (US$ millions)	212.75	208.50	205.77	210.19	227.30	233.20	232.82
Private Sector	66.15	60.88	62.15	63.73	73.57	74.02	72.59
Compensation of Employees	26.16	25.05	25.20	26.77	30.08	31.66	31.82
Operating Surplus	40.00	35.83	36.95	36.96	43.50	42.37	40.77
Public Enterprises	15.75	17.49	18.10	18.68	19.23	19.81	18.84
Government	64.19	59.28	50.75	50.78	53.12	56.08	58.69
Municipalities and Agencies	2.89	2.99	2.78	3.03	3.45	3.95	3.85
Non-Profits	6.29	6.86	7.53	8.13	8.95	9.84	11.34
Subsistence	29.94	30.80	31.37	32.05	32.67	33.55	33.65
Home Ownership	19.27	19.85	20.24	20.69	21.13	21.74	21.77
Indirect Taxes (net)	14.56	14.28	16.24	17.36	21.03	20.07	17.94
Subsidies	-6.29	-3.93	-3.39	-4.26	-5.86	-5.86	-5.86
Nominal GDP per capita	$2,007	$1,962	$1,932	$1,969	$2,124	$2,174	$2,165
Real GDP (FY98 US$ millions)	222.0	211.9	205.8	206.2	219.1	220.4	220.0
Real GDP Growth Rate	-3.2%	-4.5%	-2.9%	0.2%	6.3%	0.6%	-0.2%
Real GDP per capita	$2,094	$1,994	$1,932	$1,932	$2,048	$2,055	$2,046
Sources: FSM Department of Finance and Administration; FSM Social Security Administration; US Bureau of Labor Statistics (CPI)

Health Services
Each of the four FSM states has a hospital; however, their levels of expertise and resources vary significantly.

Land Ownership
Land is neither sold nor transferred to non-Micronesians.

Travel Requirements
U.S. citizens traveling to the FSM need a passport or birth certificate as proof of citizenship and for re-entry into the United States. Airlines usually require U.S. citizens have a passport. An initial 30-day tourist permit for Americans can be extended an additional 330 days. Non-U.S. citizens must carry a valid passport.

Emergency Contact
Contact: the Charge d’affaires, American Embassy, Kolonia, Pohnpei, FM 96941. The telephone number is 011 (691) 320-2187.

Currency
The U.S. dollar is the currency used in Federated States of Micronesia.

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