Terrorism
'Staggering' Losses For Marshall Islands
Wall Street Plunge Following
Marshall Islands investments in the American stock market suffered “staggering” losses in the weeks following the terrorist attacks in the United States. The value of a compensation fund for nuclear test victims, trust funds for the four nuclear-exposed atoll communities, and the Marshall Islands Social Security retirement fund all dropped dramatically when the stock market reopened a week after the September 11 attacks.
Asked about the level of the losses, Bikini trust liaison officer Jack Niedenthal, who oversees trust funds for the Bikinians, said: “In a word, ‘staggering.’” He estimates that losses to the three Bikini trust funds at about $20 million. At the end of August the Bikini trust funds amounted to $190 million.
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Marshall Islands Social Security’s investments in Wall Street suffered similarly, dropping from $26 million in August to $23 million. A valuation of the fund late last year, when it stood at $29 million, warned that the retirement fund was seriously under-capitalized to meet anticipated payments totaling about $190 million.
Neither Ministry of Finance nor Nuclear Claims Tribunal officials had received an update from the fund managers on the status of the government’s nuclear investment compensation fund, which stood at approximately $49 million at the end of August. Based on the 10-12 percent decline in the Bikini and Social Security funds, the nuclear fund has dropped to the $43 million level, with a final $4.5 million quarterly payment due in late October, closing out 15 years of quarterly payments under the Compact of Free Association, payments that go to the four nuclear affected atolls, the Claims Tribunal and a medical care program.
The stock market’s dramatic slide in September increases the pressure on the nuclear test compensation fund. About $30 million in personal injury claims remain unpaid, while more than $1 billion in land damage and nuclear cleanup awards have been made — but not paid — by the Nuclear Claims Tribunal that relies on drawdowns from the nuclear investment fund to make the compensation payments.
Niedenthal says that 2001 had been a bad year for Wall Street investments even before the terrorist strikes on September 11. The U.S. economy was heading for a recession even before the attacks, he notes. The outlook isn’t likely to improve much in the short term, as the uncertainty of what will happen from an anticipated American military response won’t immediately improve investor confidence.
