Letters from Majuro
Missing the Economic Development Boat
For all their faults, the Compacts of Free Association between the U.S. and the Marshall Islands, Federated States of Micronesia and Palau have succeeded in fostering stable and democratically-centered governments. They’ve been much less successful on the economic side, but politically, the North Pacific Micronesian area looks to be on sound footing.
Economic development is what everyone is on about now, as the FSM and the Marshalls renegotiate long-term funding with the U.S. — funding that expires in two years. The State Department is taking a hard line in the talks, telling the islands that it will no longer provide “block grants” as in the past for the governments to do with what they want. Instead, it’s going to focus only in six areas, with very stringent reporting requirements: education, health, infrastructure/maintenance, private sector, capacity building and environment.
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Both sides — as well as other foreign aid donors — may well be missing the economic development boat. For all the talk about “self-reliance”, nobody (that we’re aware of) is promoting sustainable marine resource development as a key ingredient in the FSM’s and Marshall Islands’ programs to develop more self-sustaining economies. The U.S. will be making a huge mistake, as it appears to be doing from its funding priority list, if it overlooks this area in the Compact economic negotiations. Both the FSM and Marshall Islands have wasted so much money in the past 15 years trying to develop commercial longline and purse seine fishing industries of their own that one would think they’d be in the forefront on this agenda item. But perhaps it’s not too late, with the talks only just starting for the Marshalls and mid-way for the FSM.
What needs to be the subject of much more funding and action is self-sustaining aquaculture products including black lip pearl oysters, clams and trochus (seaweed also has potential, and strong market demand, but is not as developed). In the FSM and Marshalls, all of these have been shown to grow, and to grow well. Except in the Marshalls, however, these potentially significant industries have essentially been farmed out to lackluster government agencies who’ve effectively back-burnered the obvious income-generating potential. In Kosrae, for example, a fairly expensive government-run aquaculture facility has been producing clams for more than a decade but hasn’t been able to figure out how to locate the U.S. aquarium market that has been buying hundreds of thousands of dollars worth of clams from neighboring Majuro since the mid-1990s.
The Marshalls clam success is, in part, due to the fact that it has the only privately-run clam farm in the region that, put simply, has to make money to survive. It also has two private sector-driven pearl growing operations that are in their infancy. But while they’ve got the business acumen and energy, both pearl operations suffer from lack of capital and technical support to make the leap to serious commercial levels of pearl production.
The key here is that each of these marine products a) has a strong overseas market, b) has been proven to grow well in the islands and c) is an ecologically-friendly industry. A 1997 report on a U.S.-funded pilot pearl oyster project in the Marshall Islands concluded: “There is virtually unlimited growth potential for this industry. The industry in French Polynesia is presently worth almost $150 million per annum. There is now no technical reason why this scale of production could not be replicated in the Marshalls.”
For islands that depend on the U.S. for up to 70 percent of their national budget, and for the U.S. that wants to start closing the aid tap, here’s the question: What are we waiting for?
