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A Report on the
STATE OF THE ISLANDS

Chapter 8: THE REPUBLIC OF THE MARSHALL ISLANDS

8.1 The Republic of the Marshall Islands

The Marshall Islands is a sovereign state enjoying a special relationship with the United States. The country is made up of five islands and twenty-nine atolls, each consisting of many islands, and has a total land area of about seventy square miles. The mean height of the land is about seven feet above sea level. The islands and atolls making up the Marshall Islands are divided into two separate parallel chains: the eastern is known as the Ratak (Sunrise) Chain; the western, the Ralik (Sunset) Chain. The Ratak Chain consists of fourteen atolls and two islands, while the Ralik Chain consists of fifteen atolls and three islands.

The country is located in the central Pacific about 2,136 miles southwest of Honolulu and about 2,300 miles southeast of Tokyo. The island nation is spread over a sea area of about 750,000 square miles. The country has a year-round warm and humid climate that averages about eighty-one degrees Fahrenheit during the day and seventy-one degrees Fahrenheit during the night.

The land is not only very small, but its soil is poor to the extent that only a few tree crops such as coconut and pandanus, and some vegetation such as banana, breadfruit, taro and sweet potato can be grown. These crops have traditionally been the source of livelihood for the people, in addition to fish.

The capital of the Marshall Islands is in Majuro Atoll which is one of the atolls in the Ratak Chain. The other urban area is in the Ralik Chain, Ebeye Island, part of Kwajalein Atoll, many of whose other islands military forces of the U.S. Government have used since 1945. Kwajalein is known to be the largest atoll in the world.

The country is connected to the outside world by regular cargo ships from Hawaii, the West Coast of the United States, Guam, and sometimes Fiji, New Zealand and Australia. Two airlines serve the Marshall Islands, Continental Air Micronesia, which flies between Majuro and Kwajalein and Kosrae to the south and Honolulu to the north, and Air Marshall Islands, which flies extensively within the Marshall Islands and to Kiribati, Tuvalu and Fiji.

International communications are well-established, and, starting sometime in August 1996, the Internet is expected to be introduced for eventual use by both residential as well as government and commercial customers.

8.2. History

The first European contact with the Marshall Islands occurred when Spanish explorers stumbled upon the islands in the sixteenth century. However, it took about two centuries for actual European expeditions to take place. For example, in 1776, Captain Samuel Wallis, who also made the first European contact with the islands now comprising French Polynesia, came upon some of the islands in the northern part of the country. However, the islands were nameless until Captain John Marshall, R.N., made the first, intended European contact in 1797 and named them after himself.

From the early to mid-nineteenth century American whalers often visited the islands for water and food supplies on their whaling expedition in the Pacific. However, during this period, the Marshallese often repelled incursions from the outside; consequently, some whalers lost their lives. In 1857 the Reverend George Pierson and the Reverend Edward Doane of the American Board of Missions (Congregationalist) from Boston, Massachusetts, arrived to establish in Ebon Atoll in the southern Ralik islands the first Christian mission in the Marshall Islands. Catholic missionaries (Jesuits) first arrived in the Marshall Islands in 1899 and built a church in Jaluit Atoll. German companies were also established at about the same, dealing and trading mainly in copra (dried coconut meat). The use of whale oil was declining and coconut oil was becoming a popular substitute for whale oil, and businesses sprang around the country to take advantage of the new commodity.

By an 1878 treaty negotiated with the atoll's iroij (chiefs), the German Reich secured rights to a coaling station in Jaluit Atoll. At the same time the German Reich appointed a consul resident in the Marshall Islands, stationed in Jaluit. In 1886, by agreement with the United Kingdom, the Marshall Islands became a German protectorate. As part of its administration of the Marshall Islands, the German Reich located trading stations in Jaluit and Ebon Atolls and carried out a flourishing trade in copra (dried coconut meat). Iroij continued to rule under indirect German administration, from 1906 centered in Rabaul, the capital of German New Guinea. The German Reich governed the Marshall Islands until, on behalf of the Allied Powers, military forces of the Japanese Empire occupied Enewetak Atoll on September 29, 1914, and Jaluit Atoll on September 30, 1914. On June 28, 1919, the German Reich renounced in favor of the Principal Allied and Associated Powers all its rights over its Pacific insular areas, including the Marshall Islands.

On December 17, 1920, the Council of the League of Nations confirmed a mandate to the Emperor of Japan for the former German insular areas north of the equator, including the Marshall Islands, to be administered in accordance with article XXII of the Covenant of the League of Nations. This was a period in which both copra production and the presence of Japanese military expanded. In 1944 the Americans drove the Japanese out by military force following some heavy fighting on Kwajalein, Enewetak, Jaluit, Mili and Wotje Atolls. On July 18, 1947, the U.S. Government entered into a trusteeship agreement with the U.N. Security Council and became the administering authority of the Marshall Islands and of the other former German islands north of the Equator whose mandatory power since December 17, 1920, had been the Emperor of Japan.

At its height, the districts of Trust Territory of the Pacific Islands (TTPI) were the Marshall Islands and Ponape (now Pohnpei), Kosrae, Truk (now Chuuk), Yap, Palau and the Mariana Islands (now the Commonwealth of the Northern Mariana Islands, a U.S. insular area). In 1979, however, the Marshall Islands held a district-wide referendum, whose results impelled the district to sever its ties with the rest of the TTPI in order to form its own national government. In 1983 the Marshall Islands and the U.S. Government signed the Compact of Free Association, which went into effective on October 21, 1986, providing the means for the Marshall Islands to gain international recognition as a sovereign state. The Compact between the Marshall Islands runs from its effective date until October 21, 2001. By October 21, 1999, the U.S. Government and the Marshall Islands Government must commence negotiations regarding those provisions of the Compact which will expire on October 21, 2001. If these negotiations are not concluded by October 21, 2001, the period of negotiations will extend until no later than October 21, 2003. During this two-year extension the provisions of the Compact will remain in full force and effect.

8.3 Society

The Marshallese inherit their land rights and titles through their mothers. However, the control and use of land and other resources often fall on Marshallese men, who are looked upon to provide for and to protect:

(a) the members of the men's immediate and extended families,

(b) others not generally thought of as the men's relatives but still historically or culturally associated with them, and

(c) their resources and those of these members and others associated with them.

Women, on the other hand, are looked upon traditionally as caretakers and supporters of their families' needs. Since the late 1960's gender-defined roles have changed, and it is not uncommon to see women doing things that used to be for men only.

8.4 Political System

Form of Government

The Marshall Islands Government follows a combination of both the U.S. form and the Westminster system. It is unitary rather than federal, but the American influence is seen in the importance attached to the committees in the unicameral, thirty-three-member Nitijela (Parliament). In addition, there are a Council of Iroij, which may:

(a) consider any matter of concern to the Marshall Islands and may express its opinion thereon to the Cabinet, and

(b) request the reconsideration of any bill, which the Nitijela has adopted on its third reading, affecting the Marshall Islands' customary law or any traditional practice or land tenure or any related matter;

An executive branch, the Cabinet, consisting of those members of the Nitijela who are the President and the ministers, and a judiciary, whose powers are vested in the Supreme Court, the High Court, the Traditional Rights Court and such district courts, community courts and other subordinate courts as are created by law. On November 17, 1979, the first and onlyPresidnet of the Marshall Islands was elected, the Honorable Amata Kabua, one of the Marshall Islands' eleven iroijlapap (paramount chiefs).

Election to the Council of Iroij is limited to those recognized by customary law or traditional practice as having rights and obligations analogous to those of iroijlaplap . Election to the Nitijela, however, is for any natural citizen of the Marshall Islands who is at least eighteen years of age. Elections are carried out on the basis of universal suffrage and take place every four years. The members, styled Senators, are elected from all the atolls and islands of the country. When seated, the members elect from among themselves the President, who in turn selects from among the members of the Nitijela the members of his cabinet, the ministers.

The Cabinet appoints, with the Nitijela's approval, the members of the Supreme Court and the High Court, whose judges serve quamdiu bene gesserint until they reach the age of seventy-two years. In the case of a judge not a citizen of the Marshall Islands, the judge may be appointed for a term of years or, in the case of a sitting judge in another jurisdiction, for a particular session of the court. The judges of the Traditional Rights Court are selected according to other criteria. This court is set up to deal with questions relating to titles or to land rights or to other legal interests depending wholly or partly on customary law and traditional practice in the Marshall Islands.

International Relations

Diplomatic Relations

The Compact recognizes that the Marshall Islands is a sovereign nation which can conduct its own foreign policy. In 1991, the Marshall Islands joined the United Nations. In its own right the Marshall Islands maintains diplomatic relations with fifty-eight other nations and has established embassies in Fiji, Japan and the People's Republic of China as well as in Washington, D.C., and a mission at the United Nations.

Joining the Aid Donors

After gaining international recognition as a sovereign state, the Marshall Islands joined the World's most important international organizations and financial institutions. For example, the Marshall Islands joined the Asian Development Bank in April 1990 and the International Monetary Fund and the World Bank in May 1992. Since joining, these institutions have provided some technical assistance to the Marshall Islands as well as loans for socio-economic development and public sector reforms.

8.5 The Economy

Overview

The Marshall Islands' economy is a mixture of subsistence and monetized economy. In the urban areas of Majuro Atoll and Ebeye Island, a cash economy is predominant. In the rural islands and atolls a subsistence economy predominates. People in the latter use money to buy imported goods, e.g. staples (rice and wheat flour) and other necessities, but depend heavily on taro, breadfruit, coconut and fish, which abound on or near their islands. However, there is high internal migration as people move from the rural islands and atolls to Majuro and Ebeye in search of jobs and better health and educational opportunities. Now the two centers constitute more than two-thirds of the Marshall Islands' population of fifty-six thousand inhabitants. The over-crowding on these urban areas has caused shortages in housing, environmental degradation and problems in the availability of other essential services.

As a small, island country in the middle of the vast Pacific, the Marshall Islands faces the same problems as do most other similar situated nations. Due to their small size and relative isolation, such nations are unable to exploit economies of scale in the production of goods and services; they are vulnerable to external shocks and natural disasters; they have difficulty receiving private foreign capital; their independence is limited in creating macro-economic policies; they are remote from markets; their labor force is not highly skilled; their domestic markets are fragmented; and they encounter shortages of domestic capital resources for investment. However, the major constraints facing Marshall Islands economic growth and development are the country's remoteness from major centers of trade, a very small natural resource base, particularly land resources, and a population highly dispersed among numerous, distanced atolls.

The economy is aid-dependent and dominated by the public sector. The bulk of all aid funds goes to the Marshall Islands Government to fund both its recurrent and capital expenditures. The aid makes it possible for the country to import all kinds of manufactured goods and services in excess of domestic resources. In the past three years exports averaged about thirteen million dollars and imports averaged about sixty-five million dollars per annum, resulting in a trade deficit of about fifty-two million dollars per annum.

Relationship with the United States

The Compact

The United States administered the Marshall Islands under the TTPI from July 18, 1947, until October 21, 1986, when the two countries entered into a bilateral agreement, the Compact of Free Association. Under the Compact, the U.S. Government gives and provides the Marshall Islands defense and substantial annual economic assistance, mainly through a series of grants to the Marshall Islands Government. Grants under the Compact totalled about fifty-three million dollars for each of the first five years and will decline to about forty-nine million dollars for the last five years of the Compact. Over the fifteen years in which the Compact is in effect, the

total amount which the Marshall Islands will receive is about nine hundred million dollars,adjusted for price changes.

The Marshall Islands' obligation under the Compact is to lease out many of the islands in Kwajalein Atoll to the U.S. Government for its military operations and to allow Americans to come into the country without immigration restrictions. The status for Marshallese to enter the United States is the same.

Federal Programs

Federal domestic programs provided by the U.S. Government make up the bulk of all the Marshall Islands Government's funding. About forty per centum alone go to the direct Federal grant. However, from 1994 to 1995 there was a substantial decline in the Federal grant contributions to around fifteen to twenty per centum in real terms. This is attributable to the winding down of the Compact's available funding.

Recent Development

Public Sector Reforms

The Marshall Islands Government has realized that its present size and dominant role in the economy cannot be sustained in the long term. It has realized that to stay viable, it must reduce its size by cutting down public sector employment and subsidies to public sector enterprises (PSE's).

After several years of review with assistance from U.N. Development Programme and the World Bank, the Marshall Islands Government has decided to trim the size of its civil service, privatize some government activities, increase training for Marshallese to become more technically qualified, eliminate organizational structures which are fragmented and consolidate the activities of its ministries and agencies. The government has begun to implement these measures.

Budgetary Reforms

Due to the decline in Compact funding and increased difficulty in borrowing, the Marshall Islands Government's fiscal situation has deteriorated in recent years. To deal with this serious fiscal situation, a government budget ad interim was developed after a consultative group meeting with its aid donors in Manila, The Philippines, in December 1995 and was approved by the Nitijela in early March 1996 with an effective date of early April 1996. Measures incorporated in this budget included the following:

(a) a five per centum reduction in the civil service salaries of those government employees who are making $10,400 and more per annum ;

(b) reduced subsidies to all government PSE's;

(c) increased import duties on cars and trucks from twenty to thirty-five per centum and on cigarettes and alcohol from one hundred to one hundred fifty per centum ; and

(d) closing down the Ministries of Public Works and Social Services.

The next step that the Marshall Islands Government is expected to take will be to privatize all shipping services and to phase out the Ministry of Transportation. Important steps are also being taken to improve the financial viability of the government-owned national airline, Air Marshall Islands.

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RECENT OIA GRANTS TO THE MARSHALL ISLANDS (FY 1993 to 1996)
Year Purpose Amount
Operations :
1995 Enewetak Support 1,089,000
1994 Enewetak Support 1,091,000
1993 Enewetak Support 1,091,000
Capital Improvements :
1995 Rongelap 1,983,000
1994 Rongelap 1,983,000
1993 Rongelap 1,983,000
Disaster Assistance:
1995 Ebeye Hospital 4,523,155
Maintenance Assistance :
(from start of program, 1991)
1995 MEC-Utility Mapping/GIS 10,000
1995 DPW & Ebeye Hospital (KALGOV) 412,500
1995 KAJUR-Year 1 O&M (KALGOV) 925,000
1995 O&M for Schools 424,236
1995 Training Needs Assessment 14,000
1995 Outer Islands Airfield Maint. 109,000
1995 Comm. College-Voc. Ed.-Yr. 2 42,280
1995 MEC-Jaluit Atoll PUC Start-up 115,200
1995 Elem. School Rehab./Renov. (Enewetak) 250,000
1991 RMI College-Voc. Ed.-Yr. 1 92,000
1991 KALGOV O&M Yr. 1 481,997
1991 DPW Reorgan./O&M - Yr. 1 443,000
General Technical Assistance :
1995 Canoes of These Islands 10,400
1995 Statistical Program Travel and Per Diem 17,500
1995 94/95 PIRAAP Block Grant 194,000
1994 Statistical Training Workshop-94 1,800
1994 Rongelap Professional Services 45,000
1994 Reconstruction of RALG Financial Records 8,333

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Last Updated on 03/12/08