Chinese ETG Development Project in Yap, Micronesia -- News on Being Overrun, Micronesian Economies
Chinese company seeks to build 'mega resort' on remote Micronesian island of Yap
By freelance correspondent Ben Bohane on the island of Yap
Updated Mon at 9:22pm
A traditional dance takes place on the island of Yap.
PHOTO: There are concerns the company opening the mega resort will move the Yapese onto a "native" reserve. (Ben Bohane)
Plans to build a Chinese "mega resort" on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and "reduced to just doing cultural dances" for tourists.
Key points:
Chinese company has plans to build 1500-room hotel on Yap
Local politicians divided over proposal
Yap depends on US funding, which is stalling
Chinese company has made promises for hotel, roads
Yap, one of four main islands that make up the Federated States of Micronesia (FSM), is the next regional island being targeted for a big surge in Chinese tourism investment.
The FSM are eastern neighbours of the Philippines, which along with other countries bordering the South China Sea, have witnessed the aggressive territorial expansion of China as Beijing attempts to limit the military presence of the US and other nations.
But Yap is in for a different type of incursion, with plans for a mega resort of up to 1,500 rooms - a big footprint on the pristine sands of the small island.
Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts.
Senator Nick Fajir
Yap and its atolls are populated by 7,000 people and the island has a land area of only 100 square kilometres. There are around 5,000 visitors a year.
Originally, Chinese company Entertainment and Travel Group (ECG) planned to build a 10,000-room complex but it was scaled back significantly.
But even the abridged proposal has divided the island's chiefs and legislators.
Media player: "Space" to play, "M" to mute, "left" and "right" to seek.
VIDEO: The tiny Micronesian island that's about to get a whole lot busier (Lateline)
"It seems to me that the plan is to move all us Yapese onto a "native" reservation somewhere on our island and we will be reduced to just doing cultural dances for their tourists," said local Senator Clement Mulalap.
Senator Nick Fajir is also concerned and said nearly a quarter of Yap's main island has now been leased to ETG.
"Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts," Senator Fajir said.
Yap's Governor Tony Ganngiyan said he supports anyone who wants to develop the island's economy.
"One of the big problems that we have for development is that we need accommodation facilities and we expect that to happen first before we improve air services to this area," he said.
"So anybody who would propose to support us or work as a development partner, especially the high end tourist facilities, that's what we would like to see happening in Yap."
MAP: Federated States of Micronesia.
Yapese look to China as US relationship stalls
The FSM is the only Micronesian nation that recognises China instead of Taiwan.
Despite the diplomatic link with Beijing, the nation has a long-standing Compact of Free Association with the US, which provides funding and looks after all defence matters.
But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the US Congress.
Village View Hotel, Yap
PHOTO: The owners of the Village View hotel say the Chinese were very sympathetic and offered them a deal. (ABC News: Ben Bohane)
Additionally, Washington's money cannot be used for economic development, only basics such as health, education and government salaries.
Transport also remains an issue, with United Airlines holding a virtual monopoly in the region. Yap only has two very expensive inbound flights per week.
So when ETG came calling with offers to start a regular, direct airline service from China, hoteliers Al Ganang and his brother Bruno signed land leases with the Chinese.
Their Village View hotel on the north-east coast of Yap is a lovely strip of wooden bungalows, white sand beach and old canoes heaved on shore.
Governor of Yap, Tony Ganngiyan.
PHOTO: Yap's Governor Tony Ganngiyan is in favour of Chinese development on the island. (ABC News: Ben Bohane)
But with so few tourists around, the brothers have battled to repay a bank loan advanced to them after the resort was devastated by a cyclone.
"They were threatening to foreclose on us," Al said.
"When the Chinese came they were very friendly, very sympathetic and they offered to pay off the loan for us and do a deal."
Governor Ganngiyan said if the US was unwilling to help develop Yap then he is open to China, confirming that $12 million from the Chinese Government is coming to Yap for infrastructure projects.
He is also hoping for a further share of the $US150 million being offered to the FSM as part of China's regional fund of $2 billion for Pacific nations that recognise Beijing instead of Taiwan.
Who are the Entertainment and Travel Group?
The ETG have already constructed the world's largest building, the New Century Global Centre in China's Chengdu province.
New Century Global Centre in Chengdu, China
PHOTO: ETG have already constructed the world's largest building on the Chinese mainland. (AFP)
Planning for Yap's mega resort has been underway for some years, with ETG now installing a local representative, Yang Gang, to advance the case for the development.
Mr Gang said the company wanted to build hotels, conference and sports facilities as well as infrastructure projects like roads.
He said ETG has no links to the Chinese Government or military.
"Any Chinese company or enterprise that invests overseas, there is a certain procedure the Chinese Government has to approve," he said.
"This is the only connection with the Chinese Government, we don't have any extra connection with the Chinese Government. And also, no contacts with the military."
Concerns island will be overrun by tourists
Don Evans, an American who has lived on Yap for 40 years and owns O'Keefe's Waterfront Inn, is general manager of the island's visitors' bureau.
Waterfront Inn, Yap
PHOTO: Don Evans, who owns the Waterfront Inn, fears the quality of life of the Yapese will be 'ruined'. (ABC News: Ben Bohane)
"Nothing has been given to the bureau in terms of their plans or how we can assist them at all," he said.
"I think we have to be careful that we don't ruin the quality of life for the Yapese who live here."
Mr Evans said what has happened in neighbouring Palau, visited by 87,000 Chinese tourists last year, should be a warning. Palau also has a compact with the US.
"The Chinese have really sort of taken over Palau. I guess the word is 'economic neo-colonialism'," he said.
"They have purchased a lot of the hotels, if not most of them, and apartments, so now Palauans are having a difficult time finding places to stay on Koror (Palau's main island).
"And locals are having a difficult time finding jobs because even the boat drivers and people in the tourist industry are from China because they speak the language."
http://www.abc.net.au/news/2016-05-02/chinese-company-seeks-to-build-mega-resort-on-island-of-yap/7300588
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The tiny Micronesian island that's about to get a whole lot busier
Australian Broadcasting Corporation
Broadcast: 02/05/2016
Reporter: Emma Alberici
The island of Yap is a speck in the ocean with a population of just 7,000 and it's about to undergo a radical change with plans by a Chinese developer to build a massive resort.
Transcript
EMMA ALBERICI, PRESENTER: The Micronesian island of Yap is a speck in the ocean, with a population of only 7,000. It's remote and largely untouched - so remote in fact that flying in and out of Yap is no easy feat. So why would Chinese tourism developers want to invest millions in the hard-to-reach island. One giant group is already proposing to build a mega resort on the 100 square kilometre atoll. The plan is dividing the population as the Yapese feel drawn into the strategic and economic rivalry between the US and China in the nearby South China Sea. Ben Bohane reports from Yap.
BEN BOHANE, REPORTER: It's the annual cultural day on Yap, the westernmost island state of the Federated States of Micronesia in the North Pacific. Watching on are diplomatic representatives from America and China.
In the nearby South China seas, they are both displaying military might, but here in Micronesia, the competition is more economic, yet just as strategic.
At a time when US funding is dwindling, China is stepping in with major investments.
The Chinese have big plans for little Yap.
China's Entertainment and Travel Group, known as the ETG, is proposing to build a mega resort on the island.
YANG GANG, ENT. & TRAVEL GROUP REPRESENTATIVE: ETG's plan is just to want to develop some tourism facilities like hotel rooms and resorts and also include some supporting infrastructure projects, such as some road and also some sports facilities.
BEN BOHANE: The original plan was for 10,000 hotel rooms, golf courses and casinos for this island of just 7,000 people. Local concern has forced the company to scale plans back to 1,500 rooms and no casino.
NICK FAJIR, YAP SENATOR: So far it's like a quarter of the whole state of Yap or less than that is taken by them. When the ETG first came in, they had the plan for the whole state. But they face some resistance 'cause the people are wondering what's - it's like turning Yap into Shanghai.
BEN BOHANE: Many on this island have welcomed the prospect of such investment, potentially running into hundreds of millions of dollars.
Al Ganang and his brother Bruno own the Village View Hotel on the north-east coast of Yap. In 200,2 a devastating cyclone damaged their resort and they've struggled to repay the bank loan, so they've decided to sign land leases with ETG.
AL GANANG, LOCAL HOTELIER: We have signed I think the agreement. We've looked at other proposed - proposal. We thought this one was the best one.
NICK FAJIR: My concern is the fact that our government is sort of, like, opening the door to the outside investors and we have not prepared our people within. Nobody advising the landowner, so that's my - my concern.
BEN BOHANE: But as tensions rise in the nearby South China Sea, some suggest there may be more to the mega resort than meets the eye.
CLEMENT MULALAP, YAP SENATOR: Why would China be interested in Yap? And so you begin to wonder if there is any other ulterior motive. I know and I think Deng Hong, the gentleman of the ETG, has public stated that the Chinese Government is also behind this project. And so, you know, on that basis you can draw your conclusions.
BEN BOHANE: Yang Gang denies ETG has any links to the Chinese Government or military.
YANG GANG: No. No any connection with the Chinese military.
BEN BOHANE: Don Evans is a long-term resident of Yap. He's worried by what he sees in neighbouring Palau.
DON EVANS, GM, YAP VISITORS BUREAU: If we get massive tourism, which I understand is happening in Palau now, then it's gonna really hurt the social environment and the natural environment as well. So, our goal is to increase tourism, but we would really like to perhaps go in such a way that it would mean development for the Yapese people themselves. We're trying to encourage local ownership of small boutique hotels and things like that.
BEN BOHANE: Yap is considered the most traditional of all the Micronesian islands and some fear their culture may be at stake with such huge developments.
CLEMENT MULALAP: They want to create a village - what they call native villages, so where natives will stay. I mean, when you look at those, we are prostituting our culture and tradition.
http://www.abc.net.au/lateline/content/2015/s4454457.htm
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Think Big Palau - news feed
May 3 at 11:32am ·
Plans to build a Chinese "mega resort" on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and "reduced to just doing cultural dances" for tourists.
Key points:
Chinese company has plans to build 1500-room hotel on Yap
Local politicians divided over proposal
Yap depends on US funding, which is stalling
Chinese company has made promises for hotel, roads
Yap, one of four main islands that make up the Federated States of Micronesia (FSM), is the next regional island being targeted for a big surge in Chinese tourism investment.
The FSM are eastern neighbours of the Philippines, which along with other countries bordering the South China Sea, have witnessed the aggressive territorial expansion of China as Beijing attempts to limit the military presence of the US and other nations.
But Yap is in for a different type of incursion, with plans for a mega resort of up to 1,500 rooms - a big footprint on the pristine sands of the small island.
Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts.
Yap and its atolls are populated by 7,000 people and the island has a land area of only 100 square kilometres. There are around 5,000 visitors a year.
Originally, Chinese company Entertainment and Travel Group (ECG) planned to build a 10,000-room complex but it was scaled back significantly.
But even the abridged proposal has divided the island's chiefs and legislators.
"It seems to me that the plan is to move all us Yapese onto a "native" reservation somewhere on our island and we will be reduced to just doing cultural dances for their tourists," said local Senator Clement Mulalap.
Senator Nick Fajir is also concerned and said nearly a quarter of Yap's main island has now been leased to ETG.
"Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts," Senator Fajir said.
Yap's Governor Tony Ganngiyan said he supports anyone who wants to develop the island's economy.
"One of the big problems that we have for development is that we need accommodation facilities and we expect that to happen first before we improve air services to this area," he said.
"So anybody who would propose to support us or work as a development partner, especially the high end tourist facilities, that's what we would like to see happening in Yap."
The FSM is the only Micronesian nation that recognises China instead of Taiwan.
Despite the diplomatic link with Beijing, the nation has a long-standing Compact of Free Association with the US, which provides funding and looks after all defence matters.
But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the US Congress.
Additionally, Washington's money cannot be used for economic development, only basics such as health, education and government salaries.
Transport also remains an issue, with United Airlines holding a virtual monopoly in the region. Yap only has two very expensive inbound flights per week.
So when ETG came calling with offers to start a regular, direct airline service from China, hoteliers Al Ganang and his brother Bruno signed land leases with the Chinese.
Their Village View hotel on the north-east coast of Yap is a lovely strip of wooden bungalows, white sand beach and old canoes heaved on shore.
But with so few tourists around, the brothers have battled to repay a bank loan advanced to them after the resort was devastated by a cyclone.
"They were threatening to foreclose on us," Al said.
"When the Chinese came they were very friendly, very sympathetic and they offered to pay off the loan for us and do a deal."
Governor Ganngiyan said if the US was unwilling to help develop Yap then he is open to China, confirming that $12 million from the Chinese Government is coming to Yap for infrastructure projects.
He is also hoping for a further share of the $US150 million being offered to the FSM as part of China's regional fund of $2 billion for Pacific nations that recognise Beijing instead of Taiwan.
Who are the Entertainment and Travel Group?
The ETG have already constructed the world's largest building, the New Century Global Centre in China's Chengdu province.
Planning for Yap's mega resort has been underway for some years, with ETG now installing a local representative, Yang Gang, to advance the case for the development.
Mr Gang said the company wanted to build hotels, conference and sports facilities as well as infrastructure projects like roads.
He said ETG has no links to the Chinese Government or military.
"Any Chinese company or enterprise that invests overseas, there is a certain procedure the Chinese Government has to approve," he said.
"This is the only connection with the Chinese Government, we don't have any extra connection with the Chinese Government. And also, no contacts with the military."
Concerns island will be overrun by tourists
Don Evans, an American who has lived on Yap for 40 years and owns O'Keefe's Waterfront Inn, is general manager of the island's visitors' bureau.
"Nothing has been given to the bureau in terms of their plans or how we can assist them at all," he said.
"I think we have to be careful that we don't ruin the quality of life for the Yapese who live here."
Mr Evans said what has happened in neighbouring Palau, visited by 87,000 Chinese tourists last year, should be a warning. Palau also has a compact with the US.
"The Chinese have really sort of taken over Palau. I guess the word is 'economic neo-colonialism'," he said.
"They have purchased a lot of the hotels, if not most of them, and apartments, so now Palauans are having a difficult time finding places to stay on Koror (Palau's main island).
"And locals are having a difficult time finding jobs because even the boat drivers and people in the tourist industry are from China because they speak the language."
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Chinese ‘Mega Resort’ For Yap?
Local leaders fear that residents will be “shunted from their homes” and “reduced to just doing cultural dances” for tourists.
MAY 2, 2016 · By Chad Blair
THE BEAT
Ian Lind: Time For Native Sovereignty Running Out, Abercrombie Says
Yap, one of four main islands that make up the Federated States of Micronesia, is the next regional island “being targeted for a big surge in Chinese tourism investment,” says a news report.
And some locals are not happy.
“Plans to build a Chinese ‘mega resort’ on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and ‘reduced to just doing cultural dances’ for tourists,” according to ABC Online. The Chinese company Entertainment and Travel Group planned to build a 10,000-room complex until it was dramatically scaled back. “But even the abridged proposal has divided the island’s chiefs and legislators,” says the report.
Yap Visitors Bureau
Yap and its atolls have 7,000 people.
The FSM is one of three nations that are party to the Compact of Free Association treaty with the United States. “But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the U.S. Congress,” explains.
http://www.civilbeat.com/2016/05/chinese-mega-resort-for-yap/#.VymLp8-chIo.twitter
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Yap: Island of stone money, Micronesian song and just a trickle of tourists
By freelance correspondent Ben Bohane on the island of Yap
Updated 30 Mar 2016, 7:50pm
For most of us, money is paper and metal, but life is trickier for the people of Yap who often use coins made of stone - the largest physical currency in the world.
Yap's large, round "coins" with a central hole were originally quarried from the "rock islands" of southern Palau and towed to Yap on canoes and rafts.
Yap man sits in front of large coin
PHOTO: Yap elders sit in the men's house talking, smoking and chewing betel nut as they watch festival performances. In the foreground is one of the old stone "coins", still used for transactions on the Pacific island. (ABC: Ben Bohane)
Considered the most traditional of all the Micronesian islands in the north Pacific, Yap lies east of Palau and west of the other three main islands which together make up the Federated States of Micronesia (FSM).
The stone gathering expeditions were dangerous, claiming many men and vessels. The currency's value today is based in equal measure on their size and history.
They range from 3.5 centimetres in diameter to just under four metres. One site on Yap, where old pathways cross sacred ground that once hosted meeting houses for chiefs and is surrounded by dozens of large stones, is being considered for World Heritage listing.
Yap's large stone coins
PHOTO: Yap's ancient stone currency near a traditional meeting house platform at the Yap festival parade grounds in the north of the island. The stones are physically the largest currency in the world. (ABC: Ben Bohane)
Some of the larger stones are never moved, even though they have changed hands in transactions such as land sales, marriages and compensation for personal damages. American dollars are used for everyday activities.
In March, the island celebrated its culture in a vivid annual display of dance, song and costume. Women wore colourful grass skirts and rubbed their bodies in a mixture of coconut oil and turmeric. The men wore red loincloths and carried their woven handbags, usually containing their betel nut mix - a narcotic chewed with lime.
Yapese men perform at annual Yap day festival
PHOTO: Yapese men perform as part of the celebrations at the annual Yap day festival. Yap, in the northern Pacific, is one of the main islands of the Federated States of Micronesia. (ABC: Ben Bohane)
Deep in history, Yap was originally settled by migrants from the most southern point of the Asian mainland, the Malay Peninsula, and also the Indonesian Archipelago, Papua New Guinea and some of the Solomon Islands.
In more recent years, Yap has changed hands four times. First came the Spanish in the 1500s, before the Germans ruled in the 1800s and the Japanese took over after World War 1. Following Japan's defeat in World War 2, the Americans took control and although Yap and the FSM are nominally independent under a Compact of Free Association (COFA), the US controls its foreign policy and defence.
Children prepare to perform at Yap festival
PHOTO: At the biggest cultural event on the Yap calendar, girls in costume wait under a pandanus-leaf hut in an attempt to stay cool before their turn to perform their traditional dances. (ABC: Ben Bohane)
Through various colonial eras, the Yapese have held onto their vibrant culture and ocean going traditions.
Men still navigate by the stars and make occasional trips in their large outriggers to Palau and Guam. Among the most renowned navigators in the Pacific, some of their old seamen helped re-educate a generation of Polynesians in Hawaii in the 1960s who had lost the skills of deep sea canoe navigation.
Yap men perform traditional dance
PHOTO: Men perform a traditional dance at night during the Yap festival. It was once forbidden for women to observe this dance, which has erotic overtones. (ABC: Ben Bohane)
When asked about their knowledge, the old men of Yap today chuckle and say their wisdom is "in the basket" - a reference to the way they deal with important issues by delving into their woven pandanus baskets and pulling out some betel nut to chew things over, before decisions are made. Everything happens on "island time" here.
Because of its isolation and limited flight connections, Yap sees only a trickle of tourists each year - around 5,000. Most locals want more tourism to support the economy but are divided over proposals for a new Chinese mega resort after concerns in neighbouring Palau, which has seen a huge spike in Chinese visitors and ownership of hotels and dive businesses.
Tourists visit Yap festival
PHOTO: Young Japanese men wearing traditional attire pose for pictures during the Yap festival. Yap was a Japanese possession from 1915 to 1945 before its defeat in WW2. Most tourists visiting the island come from Japan and the US. (ABC: Ben Bohane)
Yapese want to maintain their living culture and show it off, but the challenge they face is how to develop their tourism industry without losing control of that development - and what makes their island unique.
http://www.abc.net.au/news/2016-03-30/yap-balances-traditional-micronesian-values-with-tourism-push/7285664
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Jobs And The Economy: It’s Only Going To Get Worse
The U.S. has been funneling billions of dollars to Micronesian nations since 1986. That money is very likely going to dry up in just eight years. Then what?
OCTOBER 27, 2015 · BY CHAD BLAIR
A typical store on Chuuk. Photo by Mark Edward Harris
Jobs And The Economy: It’s Only Going To Get Worse
SECTIONS
1. Rocky Road Ahead
2. Lots Of Jobs In America
3. Weak And Getting Weaker
4. Tourism Is Just Not Enough
5. Besides Tourism, What Else?
6. The Secret Of Palau
7. ‘Neglected By The Federal Government’
8. ‘Island Style’
Pete Mesley runs a diving operation on Weno Island, one of the islands that make up Chuuk which, thanks to a U.S. Navy attack in February 1944 on Japan’s Imperial troops, has gained an international reputation as the “wreck-diving capital of the world.”
Operation Hailstorm destroyed some 300 Japanese aircraft and ships, many of them in Chuuk Lagoon, then known as Truk. Today, more than 60 of the wrecks remain at the bottom of the lagoon, including a submarine that participated in the 1941 Japanese attack on Pearl Harbor.
Mesley is happily staying afloat taking visitors to the graveyard of sunken ships. But the diving business is a lonely bright spot in an otherwise gloomy economic picture.
Rocky Road Ahead
The waters are calm and warm, and the most popular dive sites are a short boat ride from the Blue Lagoon Resort, which sits in a gated compound at the southern tip of Weno Island.
Tourists from Europe, Australia, New Zealand, Japan and North America are willing to endure sometimes long and expensive plane rides to witness history up close and underwater. Afterward, they can enjoy a meal of fish and chips and a cold bottle of Victoria Bitters in the air-conditioned hotel restaurant, which, like all 54 rooms at the resort, has an ocean view. Well-heeled guests over the years have included “Titanic” actor Bill Paxton and director James Cameron, John F. Kennedy Jr. and Shawn Weatherly, Miss Universe in 1980.
Diving and tour boats are about the only kind of business that is doing well in most of Micronesia.
An employee at the Blue Lagoon Resort’s dive shop knows how to greet a visitor from Hawaii.
Chad Blair/Civil Beat
Diving and tour boats are among the only businesses doing well in much of Micronesia.
But there is little else that most tourists to Chuuk are likely to enjoy.
“Despite its dive charms, Chuuk is not among Micronesia’s safe islands,” the tour guidebook Lonely Planet warns potential visitors. “A high unemployment rate, combined with general languor and plenty of black market alcohol, means that young men idle on the streets all day - and making catcalls is one of their tamer diversions. Male and female travelers alike should under no circumstances venture out after dark, even in a car.”
Take a drive along the main road on Weno island, a rough ride that locals say terrifies tourists. Video by Mark Edward Harris
It’s not like cars make things easier in Weno. The condition of Weno’s main road, which connects the resort to the town and the airport, has been so bad at times that a car ride that should only take a few minutes typically took 30. Cars can travel only a few miles an hour in order to navigate giant potholes that are often filled with rainwater.
“You could imagine the first impression coming in,” says Mesley. “Everyone knows it’s a Third World out here, but that road just scares the bejesus out of them.”
Gradvin Aisek and his son, Tryfin Aisek, at the Blue Lagoon Resort dive shop museum.
Mark Edward Harris/Civil Beat
The Blue Lagoon resort opened in the 1970s by Kimiuo Aisek, a Chuukese who witnessed the U.S. attack on Japanese-occupied Chuuk in 1942. The resort is also doing relatively well, and with more than 100 employees, it’s one of the largest businesses in Chuuk. But Tryfin Aisek, who now helps with the family business, says tourism hasn’t picked up as a form of economic industry in Chuuk, hastening the out-migration to America.
“People leave, and I understand why they leave,” says Aisek, who went to college in Hawaii and worked double jobs to pay for expenses there. “They try to find better living for family and themselves.”
That’s why some 6,000 miles away near Portland, Oregon, about two dozen young people from Micronesia cheered on their new home team, the University of Oregon Ducks, at the Pub 181 sports bar last January.
This particular group is from Pingelap, which is part of Pohnpei and also in the Federated States of Micronesia, but they are right at home amidst the Pacific Northwest crowd that has gathered for the college football championship game against the Ohio State Buckeyes.
“Ohio suck-eyes,” one Pingelapese shouts during a big play.
Immigrants from Pingelap in Pohnpei have found jobs and a favorite football team near Portland, Oregon. From left: Doreen Iehsi Clark, Thelma Solomon, Merlyn Yens, Yoko Ezikiel and Nihna Fred.
Mark Edward Harris/Civil Beat
Lots Of Jobs In America
Smyther Clark says nearly 300 of his fellow islanders live and work in the area, including at printing and microchip companies in Portland. Clark works at another Portland business, Simplex Aerospace, where he is an electronics and avionics engineer who works on helicopters. The wages are decent enough, he says, that he can pay his bills.
Like Clark, the Pingalepese have come to the mainland U.S. because there are no jobs back home. Here in Oregon, Micronesians work for the state government and at the universities, in big box stores like Costco and Wal-Mart, at NORPAC Foods, which packs and sells frozen foods, and in fishing canneries. Many work in the health care industry, including as home caregivers. And some also go to work in Alaska during commercial fishing seasons.
“Some people came for a better life,” says Clark, who guesses that there are only about 100 people still living on his home atoll. “Living in America, it’s not bad, but I would rather live in Pingalap where the lifestyle is easy. You don’t have to wake up and go to work. Here, everyone just keeps on going.”
Cory Lum/Civil Beat
"When we come here, it’s not just that we’re going to a foreign place, we’re actually going to our friends’ place."
- Dr. Sheldon Riklon
Contributing to America
Sheldon Riklon, a Marshallese doctor at the University of Hawaii medical school.
Listen to Audio
But that idyllic island life isn’t easy for everyone. Micronesia is home to extreme poverty, significant substance and alcohol abuse, high rates of diabetes and other serious medical problems that can’t be alleviated because medical facilities are lacking or inadequate.
For Giff Johnson, the editor of the newspaper in Majuro, the subject of looming social and economic disaster is a frequent topic. For him, the exodus from Micronesia is undermining any chance the islands have of saving themselves.
Not only is a serious brain-drain happening - he says the out-migration is as high as 40 percent of the Federated States and Marshall Islands - but, increasingly, crowded urban centers like Majuro are facing numerous challenges including access to basic services such as education, health care and clean water.
Majuro, the capital of the Republic of the Marshall Islands, has enjoyed pockets of significant economic growth, but abandoned structures still dot the landscape and drainage problems from so-called “king tides” have inundated streets.
Although the U.S. gives millions of dollars to the COFA nations every year, most of the aid is slated to end in 2023, making the problems cited by Johnson and others worse. In the next eight years, more islanders are predicted to follow Clark and his fellow Ducks fans to the U.S., where life often offers more of a future than what they’ve left behind.
A Chuukese child in Pohnpei. Poverty is pervasive throughout the region and it’s hard to see what billions of dollars in federal aid has accomplished.
Mark Edward Harris/Civil Beat
But the exodus is already having serious financial consequences far beyond the region’s borders.
Hawaii and Guam have taken the brunt of the new residents and public officials are seriously worried that their budgets will be stretched even more.
Already, Hawaii spends $163 million annually on its COFA residents, most of it for education, health care and social services. Guam alone - where about 20,000 Micronesians have re-located - has spent more than $1 billion in the past 30 years on immigrants from the islands. In 2014 alone the cost to the Guam treasury was $144 million.
Weak And Getting Weaker
Under the 1986 Compact of Free Association, Micronesians are free to emigrate to the United States and its territories. In exchange, the U.S. gets control over more than 2 million square miles of Micronesia and surrounding ocean.
All COFA nations use the U.S. dollar as their currency, an indication of how closely tied each economy is to America. The Federated States and the Marshall Islands economies are weaker, however, making them especially dependent on U.S. financial assistance.
Both countries may be especially vulnerable to a dramatic downturn if and when the federal funnel runs dry.
The Federated States receive more than $107 million annually in direct assistance - or about half of the $214 million in revenue it posted in 2013.
For the Marshalls, U.S. direct assistance is about $70 million each year through COFA - or about 60 percent of the $117 million it reported in revenue in 2013.
FY 2016 Budget at a Glance for the COFA Nations
Compact of Free Association 2014 Actual 2015 Enacted 2016 Request
Marshall Islands $71,526,000 $74,336,000 $76,536,000
Federated States of Micronesia $107,950,000 $107,710,000 $110,902,000
Palau $0 $0 $40,829,000
Hawaii, Guam, Territories $30,000,000 $30,000,000 $30,000,000
Source: U.S. Department of the Interior, 2015.
The U.S. Office of Insular Affairs’ latest budget requests $111 million for the Federated States, $76.5 million for the Marshall Islands and $41 million for the Republic of Palau.
In 2023, COFA trust funds - which the U.S. established in 2003 and which the COFA nations themselves make contributions to - are supposed to supplant U.S. direct aid. But the funds took a hit during the global financial crisis of 2007 and 2008, and current projections are that they will be woefully short by 2023.
The government of the Marshall Islands announced last week it had just dumped another $650,000 into its trust fund. That along with a U.S. government contribution in 2015 of $14.5 million and another $2.4 million from Taiwan brings the total in the Marshall Islands fund to more than $240 million, the Marshalls government reported.
The Federated States’ trust fund is currently valued at $280 million.
Charles Paul, the ambassador to the U.S. from the Marshall Islands doesn’t believe his nation can survive without American aid.
Without more help from the U.S., Charles Paul, the Marshall Islands’ ambassador in Washington, D.C., has little expectation that his country can survive on its own.
Paul wants the U.S. government to beef up the money it is putting into the trust funds. While the Micronesian nations also contribute funds, the U.S. already puts in the lion’s share. In the Marshall Islands’ fund, 73 percent of contributions are from the U.S. In the Federated States, the U.S. share is 90 percent.
It’s unlikely, Paul acknowledges, that the U.S. will do more. “They say pretty much that we are on our own,” he says.
What, then, can Micronesia do to stand on its own economically? The answer, it would seem, is: Not much.
Tourism Is Just Not Enough
On the edge of a dense jungle in Pohnpei, a collection of private thatched huts used to attract hundreds, even thousands of “eco-tourists” every year to a picture-perfect beach and colorful birds and wildlife. The Village Hotel was the very definition of tropical rustic, many of its rooms open to the elements, the beds draped elegantly with white mosquito netting.
But after 40 years, the venerable resort was shuttered in 2013, putting about 50 people out of work. The business, run by Southern Californians Bob and Patti Arthur, closed after negotiations for the land lease became too complicated.
“We started off with four landowners to start with and the second time around we had 26,” Bob Arthur told Radio New Zealand International at the time, “and if you have ever tried to negotiate with people in one setting or one instance, it can’t be done.”
Gorgeous scenery and warm blue-water beaches attract tourists to Pohnpei in search of an off-the-beaten path experience. But tourism hasn't caught on and experts don't think it will ever be economic salvation.
Mark Edward Harris/Civil Beat
The Arthurs, who retired to California, had experienced “bumps” over the years in running their business. Those included being placed under house arrest by a Federated States court in 2009 for non-payment of a loan from Pohnpei to a corporation that produced gourmet black pepper and buttons. The Arthurs alleged that the Pohnpei government destroyed that business.
Still, the Village brought significant eco-tourism to Micronesia, enough that officials improved the infrastructure of Pohnpei to accommodate the visitors. The airport was substantially upgraded and “what used to be a rough track to a few communities on the coast has been transformed into a paved road that goes around the island,” a 2012 profile in the Marianas Business Journal explains.
Guests at The Village could take a boat ride along the coast to Nan Madol, a large ancient ruin built on a coral reef on the southeastern side of Pohnpei. The stones and columns are so heavy, a recent visitor wrote in Smithsonian Magazine, that no one knows how they were constructed.
Nan Madol is on the U.S. National Historic Landmark and has been nominated to the World Heritage list of UNESCO’s World Heritage Committee.
But it is far less known than comparable archeological sites around the world, such as Easter Island. If Nan Madol had a higher profile, and if the grounds were tended to and made more accessible to visitors - there is no signage and the site is covered by mangrove - it might well be a top attraction, helping bolster the island’s economy.
The ruins of Nan Modal on Pohnpei are famous, but not enough to draw the large numbers of tourists the region needs.
The ruins of Nan Madol on Pohnpei are famous, but not enough to draw the large numbers of tourists the region needs.
Mark Edward Harris/Civil Beat
John Ehsa, Pohnpei’s governor, says that efforts to restore Nan Madol have been stymied by “misunderstandings” between the state government and the Nahnmwarki, the traditional title given to the rulers of five districts on Pohnpei.
“It’s not a new concern,” says Ehsa, but he’s disappointed that a solution has yet to be reached.
Nan Madol might also benefit from cruise ship businesses, which have expressed interest in remote Micronesia locations, helped by their relatively close proximity to Asia.
One Chinese real-estate developer, for example, sees promise in Yap as a tourist destination, with plans to build a $1 billion, 4,000-room casino and golf resort on the island, which has a population of 11,000. Yap would be about a three-hour flight from Shanghai and is a close tropical paradise for Chinese tourists.
According to a 2013 Wall Street Journal report, Deng Hong, the developer, was moving forward with the project that he predicted would vastly increase the island’s annual economic output. He signed a development agreement with the governor of Yap, but locals were not as sold on the idea, raising concerns about gambling as well as what the influx of an estimated 1 million visitors would do to their simple lifestyle.
Many remain unconvinced even though Hong, according to the Journal report, promised to pay every Yapese $400 a year.
Besides Tourism, What Else?
With tourism so far failing to take hold, Micronesians are struggling to develop other industries that could provide jobs and economic ripples throughout the small communities.
In the mid-1990s there was even debate in the Marshall Islands over whether they should offer one island as an international dumpsite for nuclear waste and warheads. Government leaders believed revenue generated from charging for disposal would pay for the rehabilitation of other radioactive islands, which could then be resettled by their former owners. Strong opposition ultimately killed that idea.
Gas station in Sansrik, Kosrae.
This gas station in Sansrik, Kosrae, illustrates the rural character of many islands in Micronesia.
Nathan Fitch/Civil Beat
Today, commercial ocean fishing is perhaps Micronesia’s best hope for economic development. As the world’s stock of tuna and other kinds of fish are depleted, Micronesia’s relatively untapped marine resources are only increasing in value. More than 60 percent of the world’s tuna is caught in the Pacific by boats from Asia and North and South America, and tuna licenses have become a potentially lucrative source of revenue.
Agriculture also is being looked at for economic salvation. Breadfruit, for example, is a staple in much of Micronesia and is being developed as a gluten-free flour for local use, food security and export to the U.S., Asia and Europe. “And it seems the stars are aligned since the market in the U.S. for gluten-free products - especially products made from gluten-free flour - has skyrocketed,” a recent report in The Samoa News gushed. “It is currently $3 billion in 2013 and is projected to double by 2017.”
In the Federated States, more than a quarter of the gross domestic production comes from agriculture, but in the Marshall Island, the economic impact is small, just 4 percent of the GDP.
store in Chuuk
A store along the central road of Weno, the main island in Chuuk, displays limited offerings typical of many small shops.
Mark Edward Harris/Civil Beat
Micronesia experts don’t believe breadfruit alone could save the economy any more than tourism or fishing.
Indeed, Francis X. Hezel, the Jesuit priest who has written extensively on the COFA nation economies, says there is little expectation that the Federated States and the Marshall Islands will develop self-sustaining economies by the time U.S. funding ends.
Nor does he believe the trust funds for the two nations will be sufficient to meet the needs of the two countries.
Hezel points out that tourism has stayed at about the same level for 35 years and it’s unlikely to grow significantly stronger.
“I think the U.S. and financial institutions hoped that there would be some sort of starter to the economy that would kick in before the end of the Compact funding period, but that’s fantasy,” he says. “What sort of thing would kick in? I mean, offshore banking? Come on.”
Father Francis X. Hezel giving communion at a Chuukese service, Parish of Santa Barbara, Guam.
Mark Edward Harris/Civil Beat
The Secret Of Palau
The Republic of Palau is a different story. But the lessons to be learned from Palau simply may not apply to its COFA neighbors for simple geographic and political reasons.
On the far western edge of the Micronesian islands, Palau has a thriving tourism industry, in no small part due to its proximity to Japan, China, Taiwan and South Korea. Its government also actively supports tourism.
Palau’s gorgeous tropical islands and blue waters are perfect for diving and snorkeling. It’s famous for its jellyfish lake, which hold jellyfish that have no stingers. It also has lots of remnants from World War II, when it was occupied by the Japanese. One tourism guide calls Palau “inimitable.”
The Rock Islands in Palau, Micronesia.
The Rock Islands in Palau, which is enjoying a thriving tourism industry.
Courtesy of LuxTonnerre via Flickr
The unemployment rate in Palau is just 4.2 percent and it ranks with Barbados, Costa Rica and the Virgin Islands in terms of its economic measures. Its per capita income is roughly double that of the Philippines and much of the rest of Micronesia.
It’s no wonder then, that out-migration from Palau is just a fraction of what it is in the Federated States and the Marshall Islands.
Palau, the least-populated of the COFA nations, receives the least amount of direct aid from Washington, D.C., and Congress has not renewed its funding since 2011.
Asterio Takesy, the Federated States ambassador to the U.S., sees Palau as a model for self-sustainability, making good use of the resources it has.
“It’s a matter of doing it right, it’s a matter of leadership, it’s a matter of taking responsibility,” he said in an interview. “I think the Palauans have done a fantastic job in pointing us in the right direction, not just for the COFA countries but the Pacific countries - and I might say globally.”
Yet even Palau can’t keep “mining the taro patch without replanting,” Takesy said, implying that tourism alone can’t be the only industry.
‘Neglected By The Federal Government’
Bob Jones is worried about how increased out-migration from Micronesia is going to hurt his retail and wholesale stores on Majuro, Ebeye and other islands. His company, Triple J Enterprises, employs 665 people on Guam, Saipan and what he calls “greater Micronesia.”
“It’s been tougher now than it used to be to make a dollar,” he says over coffee at his department store on Ebeye, lamenting that his revenue is down about 20 percent over the past few years. “It’s probably more, because it cost more for a bag of rice when I started 29 years ago.”
A supermarket on Majuro. Republic of the Marshall Islands
North Carolina transplant Bob Jones, who owns the Payless Supermarket on Majuro, says it’s harder now to keep the business running. He worries about what will happen when federal aid runs out in eight years.
Chad Blair/Civil Beat
Jones, a North Carolinian who now lives in Saipan, calls Micronesia “a beautiful part of the world that has been neglected by the federal government. We were a U.S. trustee for the islands and given the responsibility to help them develop, and we didn’t do it. And it still needs developing and it still needs the help.”
Jones’s stores on Ebeye, the Payless Supermarket and the Triple J general supply store, restaurant and bakery across the street, are clean, well-stocked stores that are just about the only options for island residents. The selection is limited - there are just a handful of wines and beers, for example - but the stores have basic consumer goods like lamps, comforters, and the colorful backpacks that are ubiquitous among the 2,000 school kids on Ebeye.
Despite an economy in trouble, families still need the basics of life, including backpacks that appeal to kids.
Mark Edward Harris/Civil Beat
The stores have made Ebeye a nicer place to live than it was just 25 years ago, but should out-migration continue or should the military base on Kwajalein three miles away shut down, Jones say everyone on Ebeye will be vulnerable.
Hezel, the Jesuit priest, has analyzed the economic potential of the Federated States and the Marshalls. In many ways, the title of his 2006 study captures his conclusion: “Is That the Best You Can Do? A Tale of Two Micronesian Economies.”
In the study, Hezel worried that Compact funds during the first 15 years of the agreement had been “poorly spent, if not wasted outright, and the attempt to promote economic self-reliance as a failed enterprise.”
In an interview earlier this year, Hezel said the U.S. hasn’t come to terms with the fact that the COFA trust funds won’t be sufficient to meet the needs of the islanders.
“I don’t think that the U.S. appreciates how worried the Federated States and the Marshalls are about the money situation,” he says. “I think even people who come out all the time don’t seem to be conscious of that.”
Even the money flowing back to Micronesia from family members who have migrated to the U.S. has begun to taper off significantly, particularly in the Federated States.
Hezel is mystified as to what has caused the drop-off in so-called “remittance” money, but says, “I honestly think that people are running out of family members to send it to. I think a lot of the people who are worse off have followed the flow out.”
Lack of financial support has led some Chuukese to start a movement to secede from the Federated States. A ballot question in March even asked if Chuuk should secede from the Federated States, but an executive order from Chuuk’s governor removed it from voter consideration.
Takesy, the Federated States’ ambassador, downplays the secessionist movement’s strength. “Always in a legislative body, some feel they are not getting the fair share of the booty,” he says.
Takesy also says that, should the Federated States not be up to speed economically by 2023, the country might approach Congress to revisit COFA and amend the original treaty.
This store in Majuro, the capital of Chuuk, is typical of the small shops that cater to casual customers.
This store on Majuro sells the kind of processed American foods that have contributed to high rates of diabetes.
Mark Edward Harris/Civil Beat
For its part, the Federated States plans to examine where budget cuts can be made, Takesy says, as well as where more revenue can be generated, and where foreign investment might help. The World Bank, for example, recently contributed $50 million to install a marine fiber optic telecommunications cable to connect the major states.
Hawaii Sen. Brian Schatz says Congress needs to be educated on the problems and needs of Micronesia.
Cory Lum/Civil Beat
But many are skeptical that Congress will be receptive to Micronesian efforts. Most members, with the exception of delegations like the one from Hawaii, have little understanding of Micronesia and its needs. Nor do the COFA nations have the resources to lobby Congress effectively to change that.
“Nobody knows anything about this in the Congress, other than our delegation and a few others,” says U.S. Sen. Brian Schatz, a Democrat from Hawaii. “We have to undertake an education process with other members.”
He’s referring specifically to the federal funding for health care. But he could just as well be talking about Micronesian immigrants as a whole.
‘Island Style’
The Micronesians might also have created their own problems when it comes to convincing Congress to send more cash their way.
Misspending and even corruption have been rampant in the islands since the COFA payments started. At the very least, it’s hard to see what hundreds of millions of dollars in U.S. aid has gone for - abandoned buildings, rusting vehicles, crumbling roads and substandard school facilities are among the most obvious signs that the infusion of American dollars hasn’t helped as much as expected.
Alcoholism and substance abuse plagues many on the islands. This man was passed out along a street in Pohnpei.
Alcoholism and substance abuse plague many on the islands. This man was photographed along a street in Pohnpei.
Mark Edward Harris/Civil Beat
Esther Kiaaina, the assistant Secretary of the Interior for Insular Affairs, says the very problems detailed in government reports “will raise red flags all across Washington, D.C., both within Congress as well as with the federal government.”
She’s primarily referring to audits by the General Accounting Office that have identified significant fraud, waste and abuse of the Compact monies. GAO reports paint a dismal picture of government accountability throughout the COFA nations, citing concerns that public facilities are only marginally improving.
Bob Jones, businessman, Ebeye, Marshall Islands. December 2014
Bob Jones, a businessman on Ebeye has seen a big drop in customers due to out-migration..
Mark Edward Harris/Civil Beat
Beyond infrastructure, the GAO has also raised questions about how the island governments track and report on other programs that are funded by taxpayer dollars.
From 2007 through 2011, for example, the GAO noted that there were discrepancies in reporting in diabetes-related hospitalizations, unreliable inventory records on essential drugs, untrustworthy data on immunization coverage of 2-year-olds and an underreported infant mortality rate.
The GAO did credit schools in the Marshall Islands with having good levels of student enrollment and appropriate education levels for staff. But there was a lack of data on the dropout rates on the outer islands, student proficiency levels on standardized tests were inconsistent or unknown and data on completion and graduation rates were undependable.
John Ehsa, the governor of Pohnpei, says the U.S. makes it too difficult to spend the money coming in for direct aid.
Mark Edward Harris/Civil Beat
But John Ehsa, the governor of Pohnpei, says it’s sometimes difficult to use the COFA funds because of “all the strings attached.”
“I want to change the way the U.S. looks at the (Federated States), as a nation mature enough to take care of its own accounting,” he says one evening over dinner at the 7 Stars Inn and Riverside Restaurant in Kolonia. “They look down on us. We did not know accounting before, but now we have good audit reports. There is mistrust. … we have come a long way as a nation, we have been educated and experienced, yet some folks in Hawaii control all these details.”
Ehsa was involved in the discussions that led to the creation of COFA. He says today that, in some ways, he wishes the Compact were no longer necessary, as it impedes Pohnpei’s ability to grow its potential economically, politically and internationally.
“It is unfortunate that the relationship is all about money, and sometimes we feel like they are spoon-feeding us too much to make us more dependent, rather than seriously saying, ‘Develop this place,’” he says.
Ehsa says they have come a long way as a nation, which is why it can be frustrating that American officials still control all the details.
Esther Kiaaina, Assistant Secretary, Office of Insular Affairs, US Dept of the Interior talks to Rachael Wong, Dept of Human Services after short presentation at the Hawaii Advisory Committee to US Commission on Civil Rights, public meeting on Micronesian immigration issues. 20 aug 2015. photograph by Cory Lum/Civil Beat
Esther Kiaaina of the U.S. Department of the Interior says critical reports about fraud and waste will hurt chances of extending aid to the COFA nations.
Cory Lum/Civil Beat
For her part, Kiaaina, whose agency is tasked with administering federal assistance to the COFA nations, says she witnessed the Micronesian out-migration firsthand. She is a Native Hawaiian who was born on Guam, and her parents ran a landscaping company on Guam that often hired Chuukese workers.
She later served as chief of staff and legislative director for Robert Underwood, the former U.S. representative from Guam.
Kiaaina says the unrelenting flow has been a surprise to the U.S., making it increasingly important to foster economic activity and improve the quality of life in Micronesia to slow down the exodus.
“If we do not address health and education, we will have continued migration,” she says.
Kiaaina recognizes that the $30 million Hawaii and Guam receive in Compact impact money is simply not enough, but she says it’s unlikely Congress will amend COFA to provide more assistance. Congress also limits her office to just $1.3 million in discretionary funding for Compact migration.
With Republicans in control of both houses of Congress, the chances that they’ll restore Medicaid eligibility for COFA citizens in the U.S. - a relatively easy solution to alleviate health care costs for both COFA immigrants and for the states they flock to - appears slim.
But “island style,” Kiaaina says, “is to take care of your family members, and we need to do better.”
http://www.civilbeat.com/2015/10/jobs-and-the-economy-its-only-going-to-get-worse-2/?cbk=561e1bad42ab7&cbs=1
By freelance correspondent Ben Bohane on the island of Yap
Updated Mon at 9:22pm
A traditional dance takes place on the island of Yap.
PHOTO: There are concerns the company opening the mega resort will move the Yapese onto a "native" reserve. (Ben Bohane)
Plans to build a Chinese "mega resort" on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and "reduced to just doing cultural dances" for tourists.
Key points:
Chinese company has plans to build 1500-room hotel on Yap
Local politicians divided over proposal
Yap depends on US funding, which is stalling
Chinese company has made promises for hotel, roads
Yap, one of four main islands that make up the Federated States of Micronesia (FSM), is the next regional island being targeted for a big surge in Chinese tourism investment.
The FSM are eastern neighbours of the Philippines, which along with other countries bordering the South China Sea, have witnessed the aggressive territorial expansion of China as Beijing attempts to limit the military presence of the US and other nations.
But Yap is in for a different type of incursion, with plans for a mega resort of up to 1,500 rooms - a big footprint on the pristine sands of the small island.
Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts.
Senator Nick Fajir
Yap and its atolls are populated by 7,000 people and the island has a land area of only 100 square kilometres. There are around 5,000 visitors a year.
Originally, Chinese company Entertainment and Travel Group (ECG) planned to build a 10,000-room complex but it was scaled back significantly.
But even the abridged proposal has divided the island's chiefs and legislators.
Media player: "Space" to play, "M" to mute, "left" and "right" to seek.
VIDEO: The tiny Micronesian island that's about to get a whole lot busier (Lateline)
"It seems to me that the plan is to move all us Yapese onto a "native" reservation somewhere on our island and we will be reduced to just doing cultural dances for their tourists," said local Senator Clement Mulalap.
Senator Nick Fajir is also concerned and said nearly a quarter of Yap's main island has now been leased to ETG.
"Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts," Senator Fajir said.
Yap's Governor Tony Ganngiyan said he supports anyone who wants to develop the island's economy.
"One of the big problems that we have for development is that we need accommodation facilities and we expect that to happen first before we improve air services to this area," he said.
"So anybody who would propose to support us or work as a development partner, especially the high end tourist facilities, that's what we would like to see happening in Yap."
MAP: Federated States of Micronesia.
Yapese look to China as US relationship stalls
The FSM is the only Micronesian nation that recognises China instead of Taiwan.
Despite the diplomatic link with Beijing, the nation has a long-standing Compact of Free Association with the US, which provides funding and looks after all defence matters.
But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the US Congress.
Village View Hotel, Yap
PHOTO: The owners of the Village View hotel say the Chinese were very sympathetic and offered them a deal. (ABC News: Ben Bohane)
Additionally, Washington's money cannot be used for economic development, only basics such as health, education and government salaries.
Transport also remains an issue, with United Airlines holding a virtual monopoly in the region. Yap only has two very expensive inbound flights per week.
So when ETG came calling with offers to start a regular, direct airline service from China, hoteliers Al Ganang and his brother Bruno signed land leases with the Chinese.
Their Village View hotel on the north-east coast of Yap is a lovely strip of wooden bungalows, white sand beach and old canoes heaved on shore.
Governor of Yap, Tony Ganngiyan.
PHOTO: Yap's Governor Tony Ganngiyan is in favour of Chinese development on the island. (ABC News: Ben Bohane)
But with so few tourists around, the brothers have battled to repay a bank loan advanced to them after the resort was devastated by a cyclone.
"They were threatening to foreclose on us," Al said.
"When the Chinese came they were very friendly, very sympathetic and they offered to pay off the loan for us and do a deal."
Governor Ganngiyan said if the US was unwilling to help develop Yap then he is open to China, confirming that $12 million from the Chinese Government is coming to Yap for infrastructure projects.
He is also hoping for a further share of the $US150 million being offered to the FSM as part of China's regional fund of $2 billion for Pacific nations that recognise Beijing instead of Taiwan.
Who are the Entertainment and Travel Group?
The ETG have already constructed the world's largest building, the New Century Global Centre in China's Chengdu province.
New Century Global Centre in Chengdu, China
PHOTO: ETG have already constructed the world's largest building on the Chinese mainland. (AFP)
Planning for Yap's mega resort has been underway for some years, with ETG now installing a local representative, Yang Gang, to advance the case for the development.
Mr Gang said the company wanted to build hotels, conference and sports facilities as well as infrastructure projects like roads.
He said ETG has no links to the Chinese Government or military.
"Any Chinese company or enterprise that invests overseas, there is a certain procedure the Chinese Government has to approve," he said.
"This is the only connection with the Chinese Government, we don't have any extra connection with the Chinese Government. And also, no contacts with the military."
Concerns island will be overrun by tourists
Don Evans, an American who has lived on Yap for 40 years and owns O'Keefe's Waterfront Inn, is general manager of the island's visitors' bureau.
Waterfront Inn, Yap
PHOTO: Don Evans, who owns the Waterfront Inn, fears the quality of life of the Yapese will be 'ruined'. (ABC News: Ben Bohane)
"Nothing has been given to the bureau in terms of their plans or how we can assist them at all," he said.
"I think we have to be careful that we don't ruin the quality of life for the Yapese who live here."
Mr Evans said what has happened in neighbouring Palau, visited by 87,000 Chinese tourists last year, should be a warning. Palau also has a compact with the US.
"The Chinese have really sort of taken over Palau. I guess the word is 'economic neo-colonialism'," he said.
"They have purchased a lot of the hotels, if not most of them, and apartments, so now Palauans are having a difficult time finding places to stay on Koror (Palau's main island).
"And locals are having a difficult time finding jobs because even the boat drivers and people in the tourist industry are from China because they speak the language."
http://www.abc.net.au/news/2016-05-02/chinese-company-seeks-to-build-mega-resort-on-island-of-yap/7300588
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The tiny Micronesian island that's about to get a whole lot busier
Australian Broadcasting Corporation
Broadcast: 02/05/2016
Reporter: Emma Alberici
The island of Yap is a speck in the ocean with a population of just 7,000 and it's about to undergo a radical change with plans by a Chinese developer to build a massive resort.
Transcript
EMMA ALBERICI, PRESENTER: The Micronesian island of Yap is a speck in the ocean, with a population of only 7,000. It's remote and largely untouched - so remote in fact that flying in and out of Yap is no easy feat. So why would Chinese tourism developers want to invest millions in the hard-to-reach island. One giant group is already proposing to build a mega resort on the 100 square kilometre atoll. The plan is dividing the population as the Yapese feel drawn into the strategic and economic rivalry between the US and China in the nearby South China Sea. Ben Bohane reports from Yap.
BEN BOHANE, REPORTER: It's the annual cultural day on Yap, the westernmost island state of the Federated States of Micronesia in the North Pacific. Watching on are diplomatic representatives from America and China.
In the nearby South China seas, they are both displaying military might, but here in Micronesia, the competition is more economic, yet just as strategic.
At a time when US funding is dwindling, China is stepping in with major investments.
The Chinese have big plans for little Yap.
China's Entertainment and Travel Group, known as the ETG, is proposing to build a mega resort on the island.
YANG GANG, ENT. & TRAVEL GROUP REPRESENTATIVE: ETG's plan is just to want to develop some tourism facilities like hotel rooms and resorts and also include some supporting infrastructure projects, such as some road and also some sports facilities.
BEN BOHANE: The original plan was for 10,000 hotel rooms, golf courses and casinos for this island of just 7,000 people. Local concern has forced the company to scale plans back to 1,500 rooms and no casino.
NICK FAJIR, YAP SENATOR: So far it's like a quarter of the whole state of Yap or less than that is taken by them. When the ETG first came in, they had the plan for the whole state. But they face some resistance 'cause the people are wondering what's - it's like turning Yap into Shanghai.
BEN BOHANE: Many on this island have welcomed the prospect of such investment, potentially running into hundreds of millions of dollars.
Al Ganang and his brother Bruno own the Village View Hotel on the north-east coast of Yap. In 200,2 a devastating cyclone damaged their resort and they've struggled to repay the bank loan, so they've decided to sign land leases with ETG.
AL GANANG, LOCAL HOTELIER: We have signed I think the agreement. We've looked at other proposed - proposal. We thought this one was the best one.
NICK FAJIR: My concern is the fact that our government is sort of, like, opening the door to the outside investors and we have not prepared our people within. Nobody advising the landowner, so that's my - my concern.
BEN BOHANE: But as tensions rise in the nearby South China Sea, some suggest there may be more to the mega resort than meets the eye.
CLEMENT MULALAP, YAP SENATOR: Why would China be interested in Yap? And so you begin to wonder if there is any other ulterior motive. I know and I think Deng Hong, the gentleman of the ETG, has public stated that the Chinese Government is also behind this project. And so, you know, on that basis you can draw your conclusions.
BEN BOHANE: Yang Gang denies ETG has any links to the Chinese Government or military.
YANG GANG: No. No any connection with the Chinese military.
BEN BOHANE: Don Evans is a long-term resident of Yap. He's worried by what he sees in neighbouring Palau.
DON EVANS, GM, YAP VISITORS BUREAU: If we get massive tourism, which I understand is happening in Palau now, then it's gonna really hurt the social environment and the natural environment as well. So, our goal is to increase tourism, but we would really like to perhaps go in such a way that it would mean development for the Yapese people themselves. We're trying to encourage local ownership of small boutique hotels and things like that.
BEN BOHANE: Yap is considered the most traditional of all the Micronesian islands and some fear their culture may be at stake with such huge developments.
CLEMENT MULALAP: They want to create a village - what they call native villages, so where natives will stay. I mean, when you look at those, we are prostituting our culture and tradition.
http://www.abc.net.au/lateline/content/2015/s4454457.htm
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Think Big Palau - news feed
May 3 at 11:32am ·
Plans to build a Chinese "mega resort" on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and "reduced to just doing cultural dances" for tourists.
Key points:
Chinese company has plans to build 1500-room hotel on Yap
Local politicians divided over proposal
Yap depends on US funding, which is stalling
Chinese company has made promises for hotel, roads
Yap, one of four main islands that make up the Federated States of Micronesia (FSM), is the next regional island being targeted for a big surge in Chinese tourism investment.
The FSM are eastern neighbours of the Philippines, which along with other countries bordering the South China Sea, have witnessed the aggressive territorial expansion of China as Beijing attempts to limit the military presence of the US and other nations.
But Yap is in for a different type of incursion, with plans for a mega resort of up to 1,500 rooms - a big footprint on the pristine sands of the small island.
Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts.
Yap and its atolls are populated by 7,000 people and the island has a land area of only 100 square kilometres. There are around 5,000 visitors a year.
Originally, Chinese company Entertainment and Travel Group (ECG) planned to build a 10,000-room complex but it was scaled back significantly.
But even the abridged proposal has divided the island's chiefs and legislators.
"It seems to me that the plan is to move all us Yapese onto a "native" reservation somewhere on our island and we will be reduced to just doing cultural dances for their tourists," said local Senator Clement Mulalap.
Senator Nick Fajir is also concerned and said nearly a quarter of Yap's main island has now been leased to ETG.
"Our local people have had no access to lawyers or land valuers and they don't know what they are signing in these contracts," Senator Fajir said.
Yap's Governor Tony Ganngiyan said he supports anyone who wants to develop the island's economy.
"One of the big problems that we have for development is that we need accommodation facilities and we expect that to happen first before we improve air services to this area," he said.
"So anybody who would propose to support us or work as a development partner, especially the high end tourist facilities, that's what we would like to see happening in Yap."
The FSM is the only Micronesian nation that recognises China instead of Taiwan.
Despite the diplomatic link with Beijing, the nation has a long-standing Compact of Free Association with the US, which provides funding and looks after all defence matters.
But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the US Congress.
Additionally, Washington's money cannot be used for economic development, only basics such as health, education and government salaries.
Transport also remains an issue, with United Airlines holding a virtual monopoly in the region. Yap only has two very expensive inbound flights per week.
So when ETG came calling with offers to start a regular, direct airline service from China, hoteliers Al Ganang and his brother Bruno signed land leases with the Chinese.
Their Village View hotel on the north-east coast of Yap is a lovely strip of wooden bungalows, white sand beach and old canoes heaved on shore.
But with so few tourists around, the brothers have battled to repay a bank loan advanced to them after the resort was devastated by a cyclone.
"They were threatening to foreclose on us," Al said.
"When the Chinese came they were very friendly, very sympathetic and they offered to pay off the loan for us and do a deal."
Governor Ganngiyan said if the US was unwilling to help develop Yap then he is open to China, confirming that $12 million from the Chinese Government is coming to Yap for infrastructure projects.
He is also hoping for a further share of the $US150 million being offered to the FSM as part of China's regional fund of $2 billion for Pacific nations that recognise Beijing instead of Taiwan.
Who are the Entertainment and Travel Group?
The ETG have already constructed the world's largest building, the New Century Global Centre in China's Chengdu province.
Planning for Yap's mega resort has been underway for some years, with ETG now installing a local representative, Yang Gang, to advance the case for the development.
Mr Gang said the company wanted to build hotels, conference and sports facilities as well as infrastructure projects like roads.
He said ETG has no links to the Chinese Government or military.
"Any Chinese company or enterprise that invests overseas, there is a certain procedure the Chinese Government has to approve," he said.
"This is the only connection with the Chinese Government, we don't have any extra connection with the Chinese Government. And also, no contacts with the military."
Concerns island will be overrun by tourists
Don Evans, an American who has lived on Yap for 40 years and owns O'Keefe's Waterfront Inn, is general manager of the island's visitors' bureau.
"Nothing has been given to the bureau in terms of their plans or how we can assist them at all," he said.
"I think we have to be careful that we don't ruin the quality of life for the Yapese who live here."
Mr Evans said what has happened in neighbouring Palau, visited by 87,000 Chinese tourists last year, should be a warning. Palau also has a compact with the US.
"The Chinese have really sort of taken over Palau. I guess the word is 'economic neo-colonialism'," he said.
"They have purchased a lot of the hotels, if not most of them, and apartments, so now Palauans are having a difficult time finding places to stay on Koror (Palau's main island).
"And locals are having a difficult time finding jobs because even the boat drivers and people in the tourist industry are from China because they speak the language."
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Chinese ‘Mega Resort’ For Yap?
Local leaders fear that residents will be “shunted from their homes” and “reduced to just doing cultural dances” for tourists.
MAY 2, 2016 · By Chad Blair
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Yap, one of four main islands that make up the Federated States of Micronesia, is the next regional island “being targeted for a big surge in Chinese tourism investment,” says a news report.
And some locals are not happy.
“Plans to build a Chinese ‘mega resort’ on a remote Micronesian island have local politicians fearing residents will be shunted from their homes and ‘reduced to just doing cultural dances’ for tourists,” according to ABC Online. The Chinese company Entertainment and Travel Group planned to build a 10,000-room complex until it was dramatically scaled back. “But even the abridged proposal has divided the island’s chiefs and legislators,” says the report.
Yap Visitors Bureau
Yap and its atolls have 7,000 people.
The FSM is one of three nations that are party to the Compact of Free Association treaty with the United States. “But Yap is reliant on tourism and now there is frustration over delayed compact payments, stalled by wrangling in the U.S. Congress,” explains.
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Yap: Island of stone money, Micronesian song and just a trickle of tourists
By freelance correspondent Ben Bohane on the island of Yap
Updated 30 Mar 2016, 7:50pm
For most of us, money is paper and metal, but life is trickier for the people of Yap who often use coins made of stone - the largest physical currency in the world.
Yap's large, round "coins" with a central hole were originally quarried from the "rock islands" of southern Palau and towed to Yap on canoes and rafts.
Yap man sits in front of large coin
PHOTO: Yap elders sit in the men's house talking, smoking and chewing betel nut as they watch festival performances. In the foreground is one of the old stone "coins", still used for transactions on the Pacific island. (ABC: Ben Bohane)
Considered the most traditional of all the Micronesian islands in the north Pacific, Yap lies east of Palau and west of the other three main islands which together make up the Federated States of Micronesia (FSM).
The stone gathering expeditions were dangerous, claiming many men and vessels. The currency's value today is based in equal measure on their size and history.
They range from 3.5 centimetres in diameter to just under four metres. One site on Yap, where old pathways cross sacred ground that once hosted meeting houses for chiefs and is surrounded by dozens of large stones, is being considered for World Heritage listing.
Yap's large stone coins
PHOTO: Yap's ancient stone currency near a traditional meeting house platform at the Yap festival parade grounds in the north of the island. The stones are physically the largest currency in the world. (ABC: Ben Bohane)
Some of the larger stones are never moved, even though they have changed hands in transactions such as land sales, marriages and compensation for personal damages. American dollars are used for everyday activities.
In March, the island celebrated its culture in a vivid annual display of dance, song and costume. Women wore colourful grass skirts and rubbed their bodies in a mixture of coconut oil and turmeric. The men wore red loincloths and carried their woven handbags, usually containing their betel nut mix - a narcotic chewed with lime.
Yapese men perform at annual Yap day festival
PHOTO: Yapese men perform as part of the celebrations at the annual Yap day festival. Yap, in the northern Pacific, is one of the main islands of the Federated States of Micronesia. (ABC: Ben Bohane)
Deep in history, Yap was originally settled by migrants from the most southern point of the Asian mainland, the Malay Peninsula, and also the Indonesian Archipelago, Papua New Guinea and some of the Solomon Islands.
In more recent years, Yap has changed hands four times. First came the Spanish in the 1500s, before the Germans ruled in the 1800s and the Japanese took over after World War 1. Following Japan's defeat in World War 2, the Americans took control and although Yap and the FSM are nominally independent under a Compact of Free Association (COFA), the US controls its foreign policy and defence.
Children prepare to perform at Yap festival
PHOTO: At the biggest cultural event on the Yap calendar, girls in costume wait under a pandanus-leaf hut in an attempt to stay cool before their turn to perform their traditional dances. (ABC: Ben Bohane)
Through various colonial eras, the Yapese have held onto their vibrant culture and ocean going traditions.
Men still navigate by the stars and make occasional trips in their large outriggers to Palau and Guam. Among the most renowned navigators in the Pacific, some of their old seamen helped re-educate a generation of Polynesians in Hawaii in the 1960s who had lost the skills of deep sea canoe navigation.
Yap men perform traditional dance
PHOTO: Men perform a traditional dance at night during the Yap festival. It was once forbidden for women to observe this dance, which has erotic overtones. (ABC: Ben Bohane)
When asked about their knowledge, the old men of Yap today chuckle and say their wisdom is "in the basket" - a reference to the way they deal with important issues by delving into their woven pandanus baskets and pulling out some betel nut to chew things over, before decisions are made. Everything happens on "island time" here.
Because of its isolation and limited flight connections, Yap sees only a trickle of tourists each year - around 5,000. Most locals want more tourism to support the economy but are divided over proposals for a new Chinese mega resort after concerns in neighbouring Palau, which has seen a huge spike in Chinese visitors and ownership of hotels and dive businesses.
Tourists visit Yap festival
PHOTO: Young Japanese men wearing traditional attire pose for pictures during the Yap festival. Yap was a Japanese possession from 1915 to 1945 before its defeat in WW2. Most tourists visiting the island come from Japan and the US. (ABC: Ben Bohane)
Yapese want to maintain their living culture and show it off, but the challenge they face is how to develop their tourism industry without losing control of that development - and what makes their island unique.
http://www.abc.net.au/news/2016-03-30/yap-balances-traditional-micronesian-values-with-tourism-push/7285664
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Jobs And The Economy: It’s Only Going To Get Worse
The U.S. has been funneling billions of dollars to Micronesian nations since 1986. That money is very likely going to dry up in just eight years. Then what?
OCTOBER 27, 2015 · BY CHAD BLAIR
A typical store on Chuuk. Photo by Mark Edward Harris
Jobs And The Economy: It’s Only Going To Get Worse
SECTIONS
1. Rocky Road Ahead
2. Lots Of Jobs In America
3. Weak And Getting Weaker
4. Tourism Is Just Not Enough
5. Besides Tourism, What Else?
6. The Secret Of Palau
7. ‘Neglected By The Federal Government’
8. ‘Island Style’
Pete Mesley runs a diving operation on Weno Island, one of the islands that make up Chuuk which, thanks to a U.S. Navy attack in February 1944 on Japan’s Imperial troops, has gained an international reputation as the “wreck-diving capital of the world.”
Operation Hailstorm destroyed some 300 Japanese aircraft and ships, many of them in Chuuk Lagoon, then known as Truk. Today, more than 60 of the wrecks remain at the bottom of the lagoon, including a submarine that participated in the 1941 Japanese attack on Pearl Harbor.
Mesley is happily staying afloat taking visitors to the graveyard of sunken ships. But the diving business is a lonely bright spot in an otherwise gloomy economic picture.
Rocky Road Ahead
The waters are calm and warm, and the most popular dive sites are a short boat ride from the Blue Lagoon Resort, which sits in a gated compound at the southern tip of Weno Island.
Tourists from Europe, Australia, New Zealand, Japan and North America are willing to endure sometimes long and expensive plane rides to witness history up close and underwater. Afterward, they can enjoy a meal of fish and chips and a cold bottle of Victoria Bitters in the air-conditioned hotel restaurant, which, like all 54 rooms at the resort, has an ocean view. Well-heeled guests over the years have included “Titanic” actor Bill Paxton and director James Cameron, John F. Kennedy Jr. and Shawn Weatherly, Miss Universe in 1980.
Diving and tour boats are about the only kind of business that is doing well in most of Micronesia.
An employee at the Blue Lagoon Resort’s dive shop knows how to greet a visitor from Hawaii.
Chad Blair/Civil Beat
Diving and tour boats are among the only businesses doing well in much of Micronesia.
But there is little else that most tourists to Chuuk are likely to enjoy.
“Despite its dive charms, Chuuk is not among Micronesia’s safe islands,” the tour guidebook Lonely Planet warns potential visitors. “A high unemployment rate, combined with general languor and plenty of black market alcohol, means that young men idle on the streets all day - and making catcalls is one of their tamer diversions. Male and female travelers alike should under no circumstances venture out after dark, even in a car.”
Take a drive along the main road on Weno island, a rough ride that locals say terrifies tourists. Video by Mark Edward Harris
It’s not like cars make things easier in Weno. The condition of Weno’s main road, which connects the resort to the town and the airport, has been so bad at times that a car ride that should only take a few minutes typically took 30. Cars can travel only a few miles an hour in order to navigate giant potholes that are often filled with rainwater.
“You could imagine the first impression coming in,” says Mesley. “Everyone knows it’s a Third World out here, but that road just scares the bejesus out of them.”
Gradvin Aisek and his son, Tryfin Aisek, at the Blue Lagoon Resort dive shop museum.
Mark Edward Harris/Civil Beat
The Blue Lagoon resort opened in the 1970s by Kimiuo Aisek, a Chuukese who witnessed the U.S. attack on Japanese-occupied Chuuk in 1942. The resort is also doing relatively well, and with more than 100 employees, it’s one of the largest businesses in Chuuk. But Tryfin Aisek, who now helps with the family business, says tourism hasn’t picked up as a form of economic industry in Chuuk, hastening the out-migration to America.
“People leave, and I understand why they leave,” says Aisek, who went to college in Hawaii and worked double jobs to pay for expenses there. “They try to find better living for family and themselves.”
That’s why some 6,000 miles away near Portland, Oregon, about two dozen young people from Micronesia cheered on their new home team, the University of Oregon Ducks, at the Pub 181 sports bar last January.
This particular group is from Pingelap, which is part of Pohnpei and also in the Federated States of Micronesia, but they are right at home amidst the Pacific Northwest crowd that has gathered for the college football championship game against the Ohio State Buckeyes.
“Ohio suck-eyes,” one Pingelapese shouts during a big play.
Immigrants from Pingelap in Pohnpei have found jobs and a favorite football team near Portland, Oregon. From left: Doreen Iehsi Clark, Thelma Solomon, Merlyn Yens, Yoko Ezikiel and Nihna Fred.
Mark Edward Harris/Civil Beat
Lots Of Jobs In America
Smyther Clark says nearly 300 of his fellow islanders live and work in the area, including at printing and microchip companies in Portland. Clark works at another Portland business, Simplex Aerospace, where he is an electronics and avionics engineer who works on helicopters. The wages are decent enough, he says, that he can pay his bills.
Like Clark, the Pingalepese have come to the mainland U.S. because there are no jobs back home. Here in Oregon, Micronesians work for the state government and at the universities, in big box stores like Costco and Wal-Mart, at NORPAC Foods, which packs and sells frozen foods, and in fishing canneries. Many work in the health care industry, including as home caregivers. And some also go to work in Alaska during commercial fishing seasons.
“Some people came for a better life,” says Clark, who guesses that there are only about 100 people still living on his home atoll. “Living in America, it’s not bad, but I would rather live in Pingalap where the lifestyle is easy. You don’t have to wake up and go to work. Here, everyone just keeps on going.”
Cory Lum/Civil Beat
"When we come here, it’s not just that we’re going to a foreign place, we’re actually going to our friends’ place."
- Dr. Sheldon Riklon
Contributing to America
Sheldon Riklon, a Marshallese doctor at the University of Hawaii medical school.
Listen to Audio
But that idyllic island life isn’t easy for everyone. Micronesia is home to extreme poverty, significant substance and alcohol abuse, high rates of diabetes and other serious medical problems that can’t be alleviated because medical facilities are lacking or inadequate.
For Giff Johnson, the editor of the newspaper in Majuro, the subject of looming social and economic disaster is a frequent topic. For him, the exodus from Micronesia is undermining any chance the islands have of saving themselves.
Not only is a serious brain-drain happening - he says the out-migration is as high as 40 percent of the Federated States and Marshall Islands - but, increasingly, crowded urban centers like Majuro are facing numerous challenges including access to basic services such as education, health care and clean water.
Majuro, the capital of the Republic of the Marshall Islands, has enjoyed pockets of significant economic growth, but abandoned structures still dot the landscape and drainage problems from so-called “king tides” have inundated streets.
Although the U.S. gives millions of dollars to the COFA nations every year, most of the aid is slated to end in 2023, making the problems cited by Johnson and others worse. In the next eight years, more islanders are predicted to follow Clark and his fellow Ducks fans to the U.S., where life often offers more of a future than what they’ve left behind.
A Chuukese child in Pohnpei. Poverty is pervasive throughout the region and it’s hard to see what billions of dollars in federal aid has accomplished.
Mark Edward Harris/Civil Beat
But the exodus is already having serious financial consequences far beyond the region’s borders.
Hawaii and Guam have taken the brunt of the new residents and public officials are seriously worried that their budgets will be stretched even more.
Already, Hawaii spends $163 million annually on its COFA residents, most of it for education, health care and social services. Guam alone - where about 20,000 Micronesians have re-located - has spent more than $1 billion in the past 30 years on immigrants from the islands. In 2014 alone the cost to the Guam treasury was $144 million.
Weak And Getting Weaker
Under the 1986 Compact of Free Association, Micronesians are free to emigrate to the United States and its territories. In exchange, the U.S. gets control over more than 2 million square miles of Micronesia and surrounding ocean.
All COFA nations use the U.S. dollar as their currency, an indication of how closely tied each economy is to America. The Federated States and the Marshall Islands economies are weaker, however, making them especially dependent on U.S. financial assistance.
Both countries may be especially vulnerable to a dramatic downturn if and when the federal funnel runs dry.
The Federated States receive more than $107 million annually in direct assistance - or about half of the $214 million in revenue it posted in 2013.
For the Marshalls, U.S. direct assistance is about $70 million each year through COFA - or about 60 percent of the $117 million it reported in revenue in 2013.
FY 2016 Budget at a Glance for the COFA Nations
Compact of Free Association 2014 Actual 2015 Enacted 2016 Request
Marshall Islands $71,526,000 $74,336,000 $76,536,000
Federated States of Micronesia $107,950,000 $107,710,000 $110,902,000
Palau $0 $0 $40,829,000
Hawaii, Guam, Territories $30,000,000 $30,000,000 $30,000,000
Source: U.S. Department of the Interior, 2015.
The U.S. Office of Insular Affairs’ latest budget requests $111 million for the Federated States, $76.5 million for the Marshall Islands and $41 million for the Republic of Palau.
In 2023, COFA trust funds - which the U.S. established in 2003 and which the COFA nations themselves make contributions to - are supposed to supplant U.S. direct aid. But the funds took a hit during the global financial crisis of 2007 and 2008, and current projections are that they will be woefully short by 2023.
The government of the Marshall Islands announced last week it had just dumped another $650,000 into its trust fund. That along with a U.S. government contribution in 2015 of $14.5 million and another $2.4 million from Taiwan brings the total in the Marshall Islands fund to more than $240 million, the Marshalls government reported.
The Federated States’ trust fund is currently valued at $280 million.
Charles Paul, the ambassador to the U.S. from the Marshall Islands doesn’t believe his nation can survive without American aid.
Without more help from the U.S., Charles Paul, the Marshall Islands’ ambassador in Washington, D.C., has little expectation that his country can survive on its own.
Paul wants the U.S. government to beef up the money it is putting into the trust funds. While the Micronesian nations also contribute funds, the U.S. already puts in the lion’s share. In the Marshall Islands’ fund, 73 percent of contributions are from the U.S. In the Federated States, the U.S. share is 90 percent.
It’s unlikely, Paul acknowledges, that the U.S. will do more. “They say pretty much that we are on our own,” he says.
What, then, can Micronesia do to stand on its own economically? The answer, it would seem, is: Not much.
Tourism Is Just Not Enough
On the edge of a dense jungle in Pohnpei, a collection of private thatched huts used to attract hundreds, even thousands of “eco-tourists” every year to a picture-perfect beach and colorful birds and wildlife. The Village Hotel was the very definition of tropical rustic, many of its rooms open to the elements, the beds draped elegantly with white mosquito netting.
But after 40 years, the venerable resort was shuttered in 2013, putting about 50 people out of work. The business, run by Southern Californians Bob and Patti Arthur, closed after negotiations for the land lease became too complicated.
“We started off with four landowners to start with and the second time around we had 26,” Bob Arthur told Radio New Zealand International at the time, “and if you have ever tried to negotiate with people in one setting or one instance, it can’t be done.”
Gorgeous scenery and warm blue-water beaches attract tourists to Pohnpei in search of an off-the-beaten path experience. But tourism hasn't caught on and experts don't think it will ever be economic salvation.
Mark Edward Harris/Civil Beat
The Arthurs, who retired to California, had experienced “bumps” over the years in running their business. Those included being placed under house arrest by a Federated States court in 2009 for non-payment of a loan from Pohnpei to a corporation that produced gourmet black pepper and buttons. The Arthurs alleged that the Pohnpei government destroyed that business.
Still, the Village brought significant eco-tourism to Micronesia, enough that officials improved the infrastructure of Pohnpei to accommodate the visitors. The airport was substantially upgraded and “what used to be a rough track to a few communities on the coast has been transformed into a paved road that goes around the island,” a 2012 profile in the Marianas Business Journal explains.
Guests at The Village could take a boat ride along the coast to Nan Madol, a large ancient ruin built on a coral reef on the southeastern side of Pohnpei. The stones and columns are so heavy, a recent visitor wrote in Smithsonian Magazine, that no one knows how they were constructed.
Nan Madol is on the U.S. National Historic Landmark and has been nominated to the World Heritage list of UNESCO’s World Heritage Committee.
But it is far less known than comparable archeological sites around the world, such as Easter Island. If Nan Madol had a higher profile, and if the grounds were tended to and made more accessible to visitors - there is no signage and the site is covered by mangrove - it might well be a top attraction, helping bolster the island’s economy.
The ruins of Nan Modal on Pohnpei are famous, but not enough to draw the large numbers of tourists the region needs.
The ruins of Nan Madol on Pohnpei are famous, but not enough to draw the large numbers of tourists the region needs.
Mark Edward Harris/Civil Beat
John Ehsa, Pohnpei’s governor, says that efforts to restore Nan Madol have been stymied by “misunderstandings” between the state government and the Nahnmwarki, the traditional title given to the rulers of five districts on Pohnpei.
“It’s not a new concern,” says Ehsa, but he’s disappointed that a solution has yet to be reached.
Nan Madol might also benefit from cruise ship businesses, which have expressed interest in remote Micronesia locations, helped by their relatively close proximity to Asia.
One Chinese real-estate developer, for example, sees promise in Yap as a tourist destination, with plans to build a $1 billion, 4,000-room casino and golf resort on the island, which has a population of 11,000. Yap would be about a three-hour flight from Shanghai and is a close tropical paradise for Chinese tourists.
According to a 2013 Wall Street Journal report, Deng Hong, the developer, was moving forward with the project that he predicted would vastly increase the island’s annual economic output. He signed a development agreement with the governor of Yap, but locals were not as sold on the idea, raising concerns about gambling as well as what the influx of an estimated 1 million visitors would do to their simple lifestyle.
Many remain unconvinced even though Hong, according to the Journal report, promised to pay every Yapese $400 a year.
Besides Tourism, What Else?
With tourism so far failing to take hold, Micronesians are struggling to develop other industries that could provide jobs and economic ripples throughout the small communities.
In the mid-1990s there was even debate in the Marshall Islands over whether they should offer one island as an international dumpsite for nuclear waste and warheads. Government leaders believed revenue generated from charging for disposal would pay for the rehabilitation of other radioactive islands, which could then be resettled by their former owners. Strong opposition ultimately killed that idea.
Gas station in Sansrik, Kosrae.
This gas station in Sansrik, Kosrae, illustrates the rural character of many islands in Micronesia.
Nathan Fitch/Civil Beat
Today, commercial ocean fishing is perhaps Micronesia’s best hope for economic development. As the world’s stock of tuna and other kinds of fish are depleted, Micronesia’s relatively untapped marine resources are only increasing in value. More than 60 percent of the world’s tuna is caught in the Pacific by boats from Asia and North and South America, and tuna licenses have become a potentially lucrative source of revenue.
Agriculture also is being looked at for economic salvation. Breadfruit, for example, is a staple in much of Micronesia and is being developed as a gluten-free flour for local use, food security and export to the U.S., Asia and Europe. “And it seems the stars are aligned since the market in the U.S. for gluten-free products - especially products made from gluten-free flour - has skyrocketed,” a recent report in The Samoa News gushed. “It is currently $3 billion in 2013 and is projected to double by 2017.”
In the Federated States, more than a quarter of the gross domestic production comes from agriculture, but in the Marshall Island, the economic impact is small, just 4 percent of the GDP.
store in Chuuk
A store along the central road of Weno, the main island in Chuuk, displays limited offerings typical of many small shops.
Mark Edward Harris/Civil Beat
Micronesia experts don’t believe breadfruit alone could save the economy any more than tourism or fishing.
Indeed, Francis X. Hezel, the Jesuit priest who has written extensively on the COFA nation economies, says there is little expectation that the Federated States and the Marshall Islands will develop self-sustaining economies by the time U.S. funding ends.
Nor does he believe the trust funds for the two nations will be sufficient to meet the needs of the two countries.
Hezel points out that tourism has stayed at about the same level for 35 years and it’s unlikely to grow significantly stronger.
“I think the U.S. and financial institutions hoped that there would be some sort of starter to the economy that would kick in before the end of the Compact funding period, but that’s fantasy,” he says. “What sort of thing would kick in? I mean, offshore banking? Come on.”
Father Francis X. Hezel giving communion at a Chuukese service, Parish of Santa Barbara, Guam.
Mark Edward Harris/Civil Beat
The Secret Of Palau
The Republic of Palau is a different story. But the lessons to be learned from Palau simply may not apply to its COFA neighbors for simple geographic and political reasons.
On the far western edge of the Micronesian islands, Palau has a thriving tourism industry, in no small part due to its proximity to Japan, China, Taiwan and South Korea. Its government also actively supports tourism.
Palau’s gorgeous tropical islands and blue waters are perfect for diving and snorkeling. It’s famous for its jellyfish lake, which hold jellyfish that have no stingers. It also has lots of remnants from World War II, when it was occupied by the Japanese. One tourism guide calls Palau “inimitable.”
The Rock Islands in Palau, Micronesia.
The Rock Islands in Palau, which is enjoying a thriving tourism industry.
Courtesy of LuxTonnerre via Flickr
The unemployment rate in Palau is just 4.2 percent and it ranks with Barbados, Costa Rica and the Virgin Islands in terms of its economic measures. Its per capita income is roughly double that of the Philippines and much of the rest of Micronesia.
It’s no wonder then, that out-migration from Palau is just a fraction of what it is in the Federated States and the Marshall Islands.
Palau, the least-populated of the COFA nations, receives the least amount of direct aid from Washington, D.C., and Congress has not renewed its funding since 2011.
Asterio Takesy, the Federated States ambassador to the U.S., sees Palau as a model for self-sustainability, making good use of the resources it has.
“It’s a matter of doing it right, it’s a matter of leadership, it’s a matter of taking responsibility,” he said in an interview. “I think the Palauans have done a fantastic job in pointing us in the right direction, not just for the COFA countries but the Pacific countries - and I might say globally.”
Yet even Palau can’t keep “mining the taro patch without replanting,” Takesy said, implying that tourism alone can’t be the only industry.
‘Neglected By The Federal Government’
Bob Jones is worried about how increased out-migration from Micronesia is going to hurt his retail and wholesale stores on Majuro, Ebeye and other islands. His company, Triple J Enterprises, employs 665 people on Guam, Saipan and what he calls “greater Micronesia.”
“It’s been tougher now than it used to be to make a dollar,” he says over coffee at his department store on Ebeye, lamenting that his revenue is down about 20 percent over the past few years. “It’s probably more, because it cost more for a bag of rice when I started 29 years ago.”
A supermarket on Majuro. Republic of the Marshall Islands
North Carolina transplant Bob Jones, who owns the Payless Supermarket on Majuro, says it’s harder now to keep the business running. He worries about what will happen when federal aid runs out in eight years.
Chad Blair/Civil Beat
Jones, a North Carolinian who now lives in Saipan, calls Micronesia “a beautiful part of the world that has been neglected by the federal government. We were a U.S. trustee for the islands and given the responsibility to help them develop, and we didn’t do it. And it still needs developing and it still needs the help.”
Jones’s stores on Ebeye, the Payless Supermarket and the Triple J general supply store, restaurant and bakery across the street, are clean, well-stocked stores that are just about the only options for island residents. The selection is limited - there are just a handful of wines and beers, for example - but the stores have basic consumer goods like lamps, comforters, and the colorful backpacks that are ubiquitous among the 2,000 school kids on Ebeye.
Despite an economy in trouble, families still need the basics of life, including backpacks that appeal to kids.
Mark Edward Harris/Civil Beat
The stores have made Ebeye a nicer place to live than it was just 25 years ago, but should out-migration continue or should the military base on Kwajalein three miles away shut down, Jones say everyone on Ebeye will be vulnerable.
Hezel, the Jesuit priest, has analyzed the economic potential of the Federated States and the Marshalls. In many ways, the title of his 2006 study captures his conclusion: “Is That the Best You Can Do? A Tale of Two Micronesian Economies.”
In the study, Hezel worried that Compact funds during the first 15 years of the agreement had been “poorly spent, if not wasted outright, and the attempt to promote economic self-reliance as a failed enterprise.”
In an interview earlier this year, Hezel said the U.S. hasn’t come to terms with the fact that the COFA trust funds won’t be sufficient to meet the needs of the islanders.
“I don’t think that the U.S. appreciates how worried the Federated States and the Marshalls are about the money situation,” he says. “I think even people who come out all the time don’t seem to be conscious of that.”
Even the money flowing back to Micronesia from family members who have migrated to the U.S. has begun to taper off significantly, particularly in the Federated States.
Hezel is mystified as to what has caused the drop-off in so-called “remittance” money, but says, “I honestly think that people are running out of family members to send it to. I think a lot of the people who are worse off have followed the flow out.”
Lack of financial support has led some Chuukese to start a movement to secede from the Federated States. A ballot question in March even asked if Chuuk should secede from the Federated States, but an executive order from Chuuk’s governor removed it from voter consideration.
Takesy, the Federated States’ ambassador, downplays the secessionist movement’s strength. “Always in a legislative body, some feel they are not getting the fair share of the booty,” he says.
Takesy also says that, should the Federated States not be up to speed economically by 2023, the country might approach Congress to revisit COFA and amend the original treaty.
This store in Majuro, the capital of Chuuk, is typical of the small shops that cater to casual customers.
This store on Majuro sells the kind of processed American foods that have contributed to high rates of diabetes.
Mark Edward Harris/Civil Beat
For its part, the Federated States plans to examine where budget cuts can be made, Takesy says, as well as where more revenue can be generated, and where foreign investment might help. The World Bank, for example, recently contributed $50 million to install a marine fiber optic telecommunications cable to connect the major states.
Hawaii Sen. Brian Schatz says Congress needs to be educated on the problems and needs of Micronesia.
Cory Lum/Civil Beat
But many are skeptical that Congress will be receptive to Micronesian efforts. Most members, with the exception of delegations like the one from Hawaii, have little understanding of Micronesia and its needs. Nor do the COFA nations have the resources to lobby Congress effectively to change that.
“Nobody knows anything about this in the Congress, other than our delegation and a few others,” says U.S. Sen. Brian Schatz, a Democrat from Hawaii. “We have to undertake an education process with other members.”
He’s referring specifically to the federal funding for health care. But he could just as well be talking about Micronesian immigrants as a whole.
‘Island Style’
The Micronesians might also have created their own problems when it comes to convincing Congress to send more cash their way.
Misspending and even corruption have been rampant in the islands since the COFA payments started. At the very least, it’s hard to see what hundreds of millions of dollars in U.S. aid has gone for - abandoned buildings, rusting vehicles, crumbling roads and substandard school facilities are among the most obvious signs that the infusion of American dollars hasn’t helped as much as expected.
Alcoholism and substance abuse plagues many on the islands. This man was passed out along a street in Pohnpei.
Alcoholism and substance abuse plague many on the islands. This man was photographed along a street in Pohnpei.
Mark Edward Harris/Civil Beat
Esther Kiaaina, the assistant Secretary of the Interior for Insular Affairs, says the very problems detailed in government reports “will raise red flags all across Washington, D.C., both within Congress as well as with the federal government.”
She’s primarily referring to audits by the General Accounting Office that have identified significant fraud, waste and abuse of the Compact monies. GAO reports paint a dismal picture of government accountability throughout the COFA nations, citing concerns that public facilities are only marginally improving.
Bob Jones, businessman, Ebeye, Marshall Islands. December 2014
Bob Jones, a businessman on Ebeye has seen a big drop in customers due to out-migration..
Mark Edward Harris/Civil Beat
Beyond infrastructure, the GAO has also raised questions about how the island governments track and report on other programs that are funded by taxpayer dollars.
From 2007 through 2011, for example, the GAO noted that there were discrepancies in reporting in diabetes-related hospitalizations, unreliable inventory records on essential drugs, untrustworthy data on immunization coverage of 2-year-olds and an underreported infant mortality rate.
The GAO did credit schools in the Marshall Islands with having good levels of student enrollment and appropriate education levels for staff. But there was a lack of data on the dropout rates on the outer islands, student proficiency levels on standardized tests were inconsistent or unknown and data on completion and graduation rates were undependable.
John Ehsa, the governor of Pohnpei, says the U.S. makes it too difficult to spend the money coming in for direct aid.
Mark Edward Harris/Civil Beat
But John Ehsa, the governor of Pohnpei, says it’s sometimes difficult to use the COFA funds because of “all the strings attached.”
“I want to change the way the U.S. looks at the (Federated States), as a nation mature enough to take care of its own accounting,” he says one evening over dinner at the 7 Stars Inn and Riverside Restaurant in Kolonia. “They look down on us. We did not know accounting before, but now we have good audit reports. There is mistrust. … we have come a long way as a nation, we have been educated and experienced, yet some folks in Hawaii control all these details.”
Ehsa was involved in the discussions that led to the creation of COFA. He says today that, in some ways, he wishes the Compact were no longer necessary, as it impedes Pohnpei’s ability to grow its potential economically, politically and internationally.
“It is unfortunate that the relationship is all about money, and sometimes we feel like they are spoon-feeding us too much to make us more dependent, rather than seriously saying, ‘Develop this place,’” he says.
Ehsa says they have come a long way as a nation, which is why it can be frustrating that American officials still control all the details.
Esther Kiaaina, Assistant Secretary, Office of Insular Affairs, US Dept of the Interior talks to Rachael Wong, Dept of Human Services after short presentation at the Hawaii Advisory Committee to US Commission on Civil Rights, public meeting on Micronesian immigration issues. 20 aug 2015. photograph by Cory Lum/Civil Beat
Esther Kiaaina of the U.S. Department of the Interior says critical reports about fraud and waste will hurt chances of extending aid to the COFA nations.
Cory Lum/Civil Beat
For her part, Kiaaina, whose agency is tasked with administering federal assistance to the COFA nations, says she witnessed the Micronesian out-migration firsthand. She is a Native Hawaiian who was born on Guam, and her parents ran a landscaping company on Guam that often hired Chuukese workers.
She later served as chief of staff and legislative director for Robert Underwood, the former U.S. representative from Guam.
Kiaaina says the unrelenting flow has been a surprise to the U.S., making it increasingly important to foster economic activity and improve the quality of life in Micronesia to slow down the exodus.
“If we do not address health and education, we will have continued migration,” she says.
Kiaaina recognizes that the $30 million Hawaii and Guam receive in Compact impact money is simply not enough, but she says it’s unlikely Congress will amend COFA to provide more assistance. Congress also limits her office to just $1.3 million in discretionary funding for Compact migration.
With Republicans in control of both houses of Congress, the chances that they’ll restore Medicaid eligibility for COFA citizens in the U.S. - a relatively easy solution to alleviate health care costs for both COFA immigrants and for the states they flock to - appears slim.
But “island style,” Kiaaina says, “is to take care of your family members, and we need to do better.”
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