FREELY ASSOCIATED STATES COMPACTS GENERALLY FAILURE: AMBASSADOR BODDE

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By Al Hulsen

HONOLULU, Hawaii (August 17, 1998 - PIDP/CPIS/Hulsen)---"By most measures," said retired Ambassador Bill Bodde, Jr., speaking about the 15-year U.S. Compacts of Free Association with the Federated States of Micronesia, the Marshall Islands and Palau, "they have been a failure."

"There are only two real pluses," he added. For the United States, there has been "unencumbered access to the U.S. Army Missile Range on Kwajalein and denial of access to the region by U.S. adversaries," and the three Freely Associated States, formerly units of the Trust Territory of the Pacific Islands, now have "international status."

The Compact with Palau, providing $478 million in assistance over 15 years, became effective only in 1994. But the FSM and Marshalls Compacts, at a cost of some $3 billion more, were implemented in 1986 and will expire in 2001. Negotiations to consider renewal of the two older aid agreements are scheduled to begin next year.

In an interview, Bodde said the money spent since 1986 has resulted in "very little economic development" in the newly-independent Micronesian nations, and improvements in the condition and quality of life "have been marginal in terms of the money received" by the three governments.

Bodde, a former resident Ambassador to both the Marshall Islands and Fiji, with diplomatic responsibility for several other Pacific nations, said exactly how Compact assistance dollar amounts were arrived at is "clouded in the past," although some 40 percent originally was scheduled to be used for capital improvements -- for which, he said, there is little to show -- and the remainder to pay for government salaries and other expenses.

"A fatal flaw," he said, was that the financial assistance was not used to create a market economy and economic wealth.

"Foreign aid can be a trap. You've got to get off foreign aid, and need to create wealth, " the veteran diplomat stressed.

"It's a legitimate question whether these islands can become self sufficient, at least in Hawaii or Guam terms," Bodde suggested.

"Hindsight says one thing we should have done was to demand and practice oversight in the use of U.S. funding. It never was done. We did not demand accountability," although, he admitted, "accountability doesn't assure economic development.

Any Compact renegotiations, Bodde stressed, should offer less money. "The U.S. must not be that generous anymore. There should be no money for government operational expenses, with funding only for projects that have a development component."

The main development opportunities, according to Ambassador Bodde are fisheries, niche agriculture, tourism and land and facilities rental, such as Kwajalein. In the future, when it is feasible to access seabed minerals, he said, significant economic wealth is a possibility.

Any future Compact agreements, Bodde stressed, must continue to provide the current "safety valve" of unencumbered migration to the United States for Marshallese, Micronesians and Palauans. Should economic conditions worsen, as a result of what he believes will be significantly reduced U.S. support for the North Pacific countries in the future, the Freely Associated States citizens must still have the option of migrating to Hawaii and the U.S. mainland.

In summary, the Ambassador's primary recommendations for the United States during the upcoming Compact renegotiations, are to continue to provide aid, although as much as 50 percent less, demand detailed planning and accountability in use of the funds for specific private sector development projects, permit migration to the U.S. and negotiate fair land lease agreements.

Bodde also believes some U.S. federal programs should continue to remain available, including those related to weather, aviation and postal services.

He also wants Washington to appoint a "prominent and respected public figure with knowledge of the region" to head the U.S. inter-agency Compact negotiating team.

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