Path to independence from COFA funding

I'm curious. Does anyone in here have a plan they think would eventually lead to self-reliance, removing the dependency on COFA funding? I'm interested in near-specific plans [too specific could lead to massive posts] and timelines with milestones to mark/measure progress.



  • I don't see any foreseeable any future in which the cofa states can ever attain economic self reliance. Palau is seems like it is now but on the long run it wont, for every peak there's a steep fall. Unless oil is struct in these states then no.
  • edited December 2017
    Pacific Islands Development Bank, World Bank, Asia Development Bank
  • edited December 2017
    ]ust get the money and run!
  • I believe these speck of islands will forever depend on foreign assistance for survival. The don't have local resources large enough to propel them forward independently unless their vast ocean masses would produce additional means of survival. The present issues with the tuna industry won't be enough to satisfy them islands in future life.
  • that's right kinen, but not wholly if there is real collaboration among and between members of the community and leadership. Will that happen? Can that happen?
  • Looking at the natural dynamics of the islands, next to impossible.
    Maybe in the next life.
  • I imagine that long-term solutions will require as much emotional investment in making the FSM, as a country, work as much as financial investment. I can think of scarcely few Pohnpeians, for example, who call themselves Micronesians first and Pohnpeians second.

    However, financial investments need to occur as well. As humbled as I am by some congressmen representing their constituents--Ferny Perman, for example, strikes me as a man who legitimately cares about the people in his district--there remains much discussion on donations and less discussion on taxation. For example, let's say that I teach three classes per Saturday at Upward Bound, and I make $25 per class. My check is not $75 per week, of course, because I am taxed by the FSM. It ends up being a little over $60 per week that I make. I have no problem paying my taxes, and I consider it a patriotic duty to pay them. However, my contributions to FSM taxes do not come back to Pohnpei State Department of Education in our budget--they come back in the form of Congressman Perman's purchase of 200 laptops for the teachers in his district, which is very nice but does not contribute to sustainable programming.

    I have genuinely profound respect for this particular congressman, and I don't mean to pick on him by any means--but surely if we want to be independent from COFA funding, one of the steps we must take must be to align FSM revenue into FSM programming.
  • good luck Richard! btw tax monies are divided into different departments , for example tax from food items and alcohol etc..will fund health services not (teaching tax?).. If you can tell me where do each state get their funding, then I will support your ideas but it seems like most of us don't know where the Tax monies are we might as well let them deal with the fill in the blanks no need for explaining and don't worry about politics just teach them children well...thank you
  • kinen,

    What does natural dynamics mean?
  • lol, yeah what is that it a process or changes?
  • @RichardAndrewClark, I commend you on bringing up a sensitive topic that pretty much needs to be addressed.

    Yes, the matter of donations is a big issue and one that is rampant through out the FSM. In all seriousness and no offense to any particular congressman, they need to stop pushing out State allocated funds from congress as public projects.

    Only the State Government's should be able to govern these funds. It is only at the State Level that infrastructure and sustainability can be addressed. What Congress is doing has long been considered "Pork Barrel" and for some reason is now considered legitimate practice and procedure.

    It is no wonder Chuuk State wants to secede.
  • It is the Pork Barrel practice that causes some people not to trust the independence movement
  • Yes Sinbad, you are probably right however I also believe it is the inaccessibility of these funds at the state level created the driving force behind this independence movement.
  • Kinen,

    Your reference to the Tuna industry is an interesting one. To be clear, I make no claims to being an expert on that industry. Having said that, it seems to me that the companies that currently dominate it- for the most part foreign companies- are making hand over fist in profits. I could be wrong about that but I doubt it. Being that the stocks are not endless, to me at least, it raises the concern as to whether the stocks will be around long enough for our companies to mature enough, both environmentally and international business-wise, to gain a footing and, preferably, gain dominance, thereby redirecting all the revenue from a handful of very rich foreign owned companies, and their corporate structures abroad, to home grown companies that employee their staff here, with their families shopping in local stores, paying local taxes to local governments. Mind you, I'm not advocating for more aggressive, government owned fisheries company. I'm suggesting the costs of commercial tuna fishing licenses be lowered to the extent that it moves into the realm of possibility for local upstarts. Keep the licensing fees high for foreign owned companies? Yes. Some may see this is preferential treatment, but I feel it is necessary to give local business owners a fighting chance at benefiting from the single largest commodity our waters/lands have to offer before they are strip mined.

    I guess what I'm trying to say is I think there are resources that can be harnessed to propel us closer towards fiscal independence. Leverage taxes on any and all items that can be produced locally, and put funds into growing those industries. I think if we look at history regarding all the prospering nations in the world, they, first and foremost, focused on feeding themselves before they turned their focus to other endeavors.

    I'm going to stop there because, obviously, we could go on and on forever about this without even scratching the surface. In a nutshell though- I think it CAN be done. The question is do we have the right people with the right vision in the places need to get this moving in the direction we need it to go.

  • I don’t know Truth, I was thinking about the natural makeup of the islands. Their sizes, locations, etc.
    xectms, presently I don’t see any efforts/desire with fsm leadership to prepare the islands for eventual local ownership or management of the tuna thing. I think the present leadership may believe that the island govts can not fairwell against the well based big companies that have been in business for some time now.
  • easy! downsize the fsm government and let the states control themselves.
  • That seems to be very elusive biz e.
  • December 8, 2017

    WASHINGTON - Peace Corps announced it is officially phasing out of the Federated States of Micronesia (FSM) and Republic of Palau after many years of partnership. The phase out is due to operational and infrastructure challenges in areas ranging from vast geographic distances, medical care and transportation, and recurring staff vacancies.

    Peace Corps will phase out its volunteer operations in FSM, where there are currently 25 volunteers serving in the education sector, by June 30, 2018. This timeline will allow the volunteers to complete their primary assignments through the end of the school year and transfer knowledge to their communities and counterparts. Peace Corps remains fully committed to supporting the volunteers during this time as they complete their service.

    The last class of volunteers departed Palau in July 2017, having completed their assignments.

    Peace Corps is grateful to the people and governments of the Federated States of Micronesia and the Republic of Palau for their partnership and friendship. Since 1966, more than 4,300 volunteers have served in the region of Micronesia, working to address the need for trained men and women in agriculture, education, health, youth development, and community economic development.

    Long after the last volunteer’s departure, the most essential component of these nations’ cooperation with Peace Corps will remain in the fellowship between volunteers and their host families, colleagues, and friends. Returned volunteers' ongoing contributions as informal citizen ambassadors for FSM and Palau will serve as a lasting legacy of mutual collaboration. Many former volunteers have remained in these countries, continuing to contribute in a personal capacity to the development of the region.

    In the Pacific, Peace Corps will continue to operate programs in Fiji, Samoa, Tonga, and Vanuatu.
  • @RichardAndrewClark,

    Not to nitpick but, I do have a question regarding ones identification as "Micronesian" or "Pohnpeian/Chuukese/Yapese/Kosraean". I understand the idea of promoting the idea of a common identity, common struggle, common existence, and therefore common interest in progress, however, I am curious as to the context of the comment. From my experiences abroad, by and large, the overwhelming majority of "Micronesians" I encountered did, in fact, identify as "Micronesian" first and, for the most part, only elaborated further if the person inquiring knew of the region and/or pried further. Having said that, given the question of identity is fielded locally, It seems only natural to me that one would answer with greater specificity. I imagine this is driven by the assumption that, yes, we are all "Micronesians" here and the question is most likely of a more specific nature... I know the point is commonality, an acceptance that we are a single people and our future is better served tackling problems together but...I digress. My apologies for the tangent.


    I don't believe the question is whether we should be engaged in matters of government regardless of whether we have intimate knowledge of the tax code or not. I believe this question is, and should always be an emphatic YES. If we are not aware of the tax code, we should be educated on it. If there are gaps in the tax code, the people should have a say in what the tax code should be. After all, the government, in my humble opinion, is not in place to administer us but, instead, in place to perform administrative tasks FOR us. The latter requires our consent and, if we are ignorant regarding the solutions that require our consent, we might have a bigger problem than just tax loopholes. Can this be solved overnight? I don't think anyone has found that magic wand yet but, I believe, it is the direction we have to move in.
  • Palau is protecting it's fisheries.
    Japan Patrol Vessel Donation to Help Palau Counter Maritime Threats

    Poachers Target the Bounty of the Sea

    The island nation of Palau is known for its beautiful, calm, and crystal-clear waters. Divers hail it as one of the world’s top destinations, and words do not do justice to the true beauty of its ocean.

    But these beautiful waters are also facing considerable threats—not least illegal fishing operations carried out by foreign fishing outfits. In addition to this poaching, sales of weapons and drugs on the high seas, as well as Chinese military operations in the region, are starting to cast a dark shadow across the waters that are Palau’s pride.

    A nation of only 21,500 with no military of its own, Palau is sorely lacking when it comes to policing the 629,000 square kilometer exclusive economic zone that surrounds its islands. Although its precious oceanic resources are being taken advantage of by poachers, the country continues to grapple with an inability to counter the acts of these criminals.

    To address this issue, the Nippon Foundation has provided Palau with a 40-meter patrol boat, the PSS Kedam, one almost identical to those used by the Japan Coast Guard. With a gross tonnage of 257 tons, the vessel is capable of speeds up to 25 knots.


    Training a Part of the Gift
    The three countries of Micronesia—Palau, the Federated States of Micronesia, and the Marshall Islands, all of which have tiny populations and large EEZs to patrol—have been working with the Nippon Foundation, the Japan Coast Guard, and the Sasakawa Peace Foundation to improve their maritime policing capabilities. Cumulative project costs stand at ¥4.7 billion, with shipbuilding costs—¥1.6 billion for the vessel presented to Palau alone—being the single largest item in the scope of the project.

    Maritime security has historically been a challenge for all three nations, and the Kedam is the most recent development in a project tasked with combatting this issue. However, as the Nippon Foundation sees it, simply handing over the boat to Palau will do little to help unless proper support is also forthcoming.

    The foundation has also agreed to construct an office for Palau’s Division of Marine Law Enforcement, to build a berth for the vessel, and to provide the nation with enough fuel to cover 1,400 hours of patrols each year.

    The Kedam is currently docked at the southernmost point of Koror Island, awaiting its first cruise. Patrol staff—10 crew members and 5 officers—are currently undergoing a two-month training course at the Marine Technical College in Japan, paid for by Japanese funds. From April of this year, one Japan Coast Guard officer is to be stationed in Palau to help assist with the vessel’s operations.

    Up until now, Palau’s Maritime Security Bureau had only one midsize patrol boat—a gift from Australia—and three smaller vessels, a past gift from the Nippon Foundation.


    Thomas Tutii, who heads the Bureau of Maritime Security and Fish & Wildlife Protection, notes, “We want to get to work as soon as preparations for the new patrol boat are complete. Thanks to the fuel support we’re receiving, we should be able to make Palau’s presence known in the EEZ.”
  • Both COFA I and II funding have not really been efficiently utilized to build up both critical public infrastructure and the economy here in Chuuk. The general misconception has largely placed blame on Chuuk State apparently due to mismanagement, graft, cronyism, nepotism, and corruption. However Chuuk State's annual budget is also reviewed and approved by JEMCO. And, it is evident through the pattern and trends in the JEMCO approved sections of the Chuuk State budget, that the US Dept. of Interior Office of Insular Areas and JEMCO's priority is not sustainable government and economic development. Rather, it is however, primarily focused on adhering to the annual 20% decrement in COFA II. Everything else is just icing on the cake.

    And, in light of how JEMCO operates in regards to review and approval of Chuuk State's annual budget, there is clear evidence of gross negligence or abject indifference to Chuuk's economic plight. The sense you get when you delve deep into this subject is that the main agenda is for JEMCO to adhere to COFA II economic provisions regardless of whether it does harm or good to Chuuk State's economy.

    For example, when JEMCO imposed the 2 year degree requirement on the FSM Education system, they had failed to factor the economic impact it would have on the already fragile and already depressed small island economies in the FSM. Based on this alone, it would be unwise and foolish for the FSM to place all of its eggs into the JEMCO basket.

    Fortunately though, there is hope with the PNA revenue which is increasing almost every year. Perhaps one way to quickly raise funds to subsidize expansion in government operations and large scale economic development projects, is to issue PNA revenue bonds. This would allow the FSM and its States to quickly raise amounts such as $500 million in one year to divide and spend, instead of the annual $60 to $70 million in PNA revenue. If done right, this could help to quickly develop tourism and fisheries in the FSM.
  • edited March 2018

    State issued bonds... hmm.

    For investors, no offense to any and all sitting in office now or in the past, that seems to be asking for quite the leap of faith. I think we all understand bonds to be the safer investment as we are repeatedly told to shift the balance of our investments from stocks towards bonds as we get closer to retirement age because, as we are repeatedly told, bonds are more stable. For governments that have not proven themselves responsible and/or efficient (I'm not pointing fingers at any specific government but rather just making a point) an investor is left wondering on what basis should the bond purchase, or the faith in the bond, rather, be placed. Not be crass, but if a government cannot pay it's bills, how am I to expect it will pay me the interest, let alone the principal, on the bond[s]? The perception of stable is important since, as is a bonds nature, the profits aren't meant to be great.

    I get the logic behind the PNA based bond. The fisheries revenue is coming in (I assume that's what the PNA reference is, please correct if I'm mistaken), so why not leverage the potential? I assume anyone looking to purchase that bond would look for laws enacted to protect PNA revenues to the extent that it would give the bond holder some confidence as to their ROI. Without any laws to guarantee some separation, in some cases protection, from "general fund" type use would render "PNA" part of the name as simply decorative.

    As to expanding government operations, I'm not so sure. Governments aren't designed to generate profits or pay taxes, we call agree on this, I believe. They actually charge taxes. I think, and I'm no economists so I do welcome any replies to correct me if I'm wrong, the focus should be placed on growing the tax base. Do that through large-scale economic development? Sure, so no disagreement there. If there is any way to accomplish growing the tax base and engaging in large scale economic development without growing the government, that would preferable, to me at least.
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