Letter from Majuro
Letter from Majuro
The long road to accountbility and economic developement for the Marshalls, FSM.
2000 will go down as the year that the U.S. government decided that the Federated States of Micro-nesia and the Marshall Islands had to be accountable. The message: clean up corruption and reform financial management or the U.S. won’t continue being the Sugar Daddy that it’s been since President John F. Kennedy started throwing buckets-full of money into Micronesia.
A salient, but often overlooked, point in the U.S. rush to criticize FSM and Marshalls’ use of Compact funding is where these two island nations stood in 1986, when the deal came into effect. Basic infrastructure was in shambles, or didn’t exist because the U.S. Trust Territory government had never been overly enthusiastic about development. Up to the mid-1970s, foreign investment was actually banned by the U.S. When the Marshalls started building a 12 megawatt power plant in the early 1980s it was sharply criticized by U.S. government officials as much too big for Majuro’s power needs. At the time, few local businesses had computers. Why? Electricity provided by Trust Territory-era generators was fitful at best. Brownouts and blackouts were a way of life. But by the late 1980s, with power being reliably provided by the Marshalls Energy Company, virtually every business had computerized its operations. Indeed, the plant that was criticized turned out to be too small. By the end of 1999, Majuro had doubled its generating capacity to satisfy the growing demand.
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There is a basic critical mass of infrastructure — power, water, communications, transportation, health and education — needed to provide a minimum basic quality of life and for local businesses to expand, let alone for offshore investors to even take a look. Would PM&O and Star-Kist have built a tuna loining plant in Majuro, with its employment of more than 300 people, without the availability of reliable power? Ask any hotel operator in the fledgling tourist industries in the Marshalls and FSM about the impact on their business of 24-hour power, access to the Internet, and public water systems that work. Yet a U.S. General Accounting Office audit of the two countries dismisses communications and energy improvements as being insufficient to "promote significant private sector growth." The GAO missed the point; this infrastructure was needed just for the urban centers to begin functioning normally. Indeed, what similar size urban communities anywhere could do without such basic infrastructure?
Clearly there has been poor management, corruption and bad decisions in the use of Compact-provided money in both countries. Yet for the first 14 years of the Compact, the U.S. took a hands-off, no-enforcement approach to funding, giving license to many of the problems that developed.
The picture isn’t as black and white — or as bleak — as the GAO portrays it. I’d grade the first Compact as a C-, not an F. Much was done, more was learned. In terms of political independence and domestic institution building, the Compact was successful. In ‘Compact II’, there’s an opportunity to get the development side on the right track. National trust funds proposed by the two nations are one innovative plan to decrease long-term dependence on American largesse.
But the U.S. government in its current eagerness to impose reforms from the outside and dramatically cut aid could jeopardize the very changes it desires by undermining islanders who are attempting to bring about difficult long-term institutional changes in countries whose ‘development steering wheel’, for lack of a better term, has long been locked in one direction in large part due to American influence. It is encouraging to see younger politicians, community and business leaders who say, pointedly, that the islands need reform not just because the U.S. is demanding it, but because it’s essential to the well-being of these nations. It is a change of mind that is beginning to lead to action in the right direction. What is needed from outside donors is the requirement of accountability and sustainability in development, not a slash and burn approach to future aid.
