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Heavily dependent on US aid, Micronesia will need other sources of income

The Federated States of Micronesia are Yap, Chuuk, Pohnpei, and Kosrae, and consist of more than 600 islands and coral atolls in the Pacific.

The people of the federation, though few in number, include a great variety of cultures and languages. Chuuk is the largest state, with around half the population, followed by Pohnpei.

Most productive activity centres on subsistence farming and fishing. The main crops include breadfruit, taro, and coconuts, and there is a small export income from copra, black pepper, and handicrafts. The most important fishing catch is tuna though much of this goes to foreign fleets.

The islanders' primary source of cash income, however, is the government which is the main employer, providing 40% of total employment, and its expenditure accounts for over 40% of GDP.

Micronesia relies on transfers of US aid through a ‘Compact of Free Association’. Over the period 1986–2001 the country received $1.3 billion in US grants and in 2003 aid was worth $923 per person. This assistance is now being phased out. From 2004 the US government revised the compact and for three years of the subsequent 20-year period it gave $76 million in economic assistance grants, to be allocated among education, health, and other sectors. Another $16 million annually will go to a trust fund.

Tourism offers some potential, but so far has been confined to niche markets such as eco-tourism, visits to some ancient ruins, and shipwreck diving. However there are concerns about the impact of increased arrivals on the fragile environment.

There has also been some investment in manufacturing, notably in garment production, but expansion is hampered by poor infrastructure and the distance from markets.

Until 1986, the states were part of a UN Trust Territory. Then they became an independent federation, self-governing but in free association with the USA. Each of the four states has its own elected governor and legislative assembly. There are no political parties. In addition, there is an elected federal congress, which chooses the president. In 2007, it selected Manni Mori.

In many respects Micronesia functions more as four separate states. There are, however, signs of greater cooperation on common issues such as the environment and tourism.

www.fsmgov.org/ Government site

www.insideworld.com/oceania/micronesia.php Inside Oceania - Regional news source

Land area:1,000 sq. km.

Population:0.1 million—urban 23%

Capital city:Palikir

People:Micronesian and Polynesian groups

Language:English, Chukese, Pohnpeian, Yapese, Kosraean

Religion:Roman Catholic 50%, Protestant 47%, other 3%

Government:Republic in free association with the USA

Life expectancy:68 years

GDP per capita:$PPP 2,200

Currency:US dollar

Major exports:Copra, fish, pepper

Subjects: World History.

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