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HONOLULU (East-West Wire, Jan. 22) – Back in the day when the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) were part of the United States-administered Trust Territory of the Pacific Islands, it was simply assumed by many that the U.S. would lead the islands to greater economic prosperity as it paved the way for political independence. Fast forward to today, according to long-time Micronesian scholar and Jesuit priest Francis X. Hezel, and it is clear that simple assumption was wrong.

In "Is That the Best You Can Do? A Tale of Two Micronesian Economies," the first publication in the East-West Center’s new Pacific Islands Policy series, Hezel points out that as economic policies toward the islands changed over the years the results did not. "The lack of self-reliance in Micronesian economies is being decried today, as it has been for years."

So what is the problem? As Hezel traces the islands’ history of economic development from Trust Territory to independence within a "free association" agreement with the U.S., it becomes clear that the problems of economic development are extremely complex. Most of them maladies of mismanagement, misconceptions, misplaced good intentions and rising expectations based on a culture of Washington-nurtured dependency.

In the early postwar period, Hezel notes, "There was widespread optimism … that self-sufficiency was a realistic goal." The belief was based in large part on "the impressive record of Japanese accomplishments in the islands prior to World War II … the Japanese had succeeded in making Micronesia an entirely self-supporting colony with a favorable balance of trade."

But by the early-1960s it was apparent that earlier Japanese economic achievements in the islands were not being duplicated by the steady-as-you-go approach to development taken by the U.S. During the Kennedy administration, Hezel says, "The United States reversed its policy of the previous 15 years in favor of a fast-track approach …" The new battle cry was "investment in man … as opposed to the mere accumulation of savings that could be used as investment capital." The guiding assumption being, according to Hezel, "Educate people and give them a taste of the good life, and they will find ways to sustain themselves and their economy in years to come."

The Washington money spigot was opened wide. Hezel recalls the U.S. "doubled its annual budget (for aid to the islands) in 1963, then doubled it again the following year, increasing it tenfold by the end of the decade."

"The effect of this policy shift was an immediate improvement in the quality of educational and health facilities, greater availability of supplies, and the hiring of new trained personnel to work in the schools and hospitals," Hezel notes. Government grew but not the overall economy. All of the "investment in man" did little in terms of classic economic development resulting in "a growing distance between sharply rising imports and flat-line exports, leading to the trade imbalance that is today the subject of frequent admonitions."

In the 1970s officials in Washington and Micronesia were engaged in negotiations regarding the ending of the trusteeship and a permanent political status, political self-determination and some degree of self-government. Lost in the talks, however, was the insistence on budgetary restraint that had guided the development pattern of the territory during its early postwar years. By the mid-1970s the United States had extended its domestic War on Poverty to the islands, creating an even higher level of dependency at a time the official line was more self-reliance.

"The net effect of such well-intentioned but misguided efforts," Hezel wrote at the time, only made the islands "more dependent than formerly. With each Federal program dollar, even if given in the name of humanity … (the islands) move further away from the stated goal of self-reliance and political autonomy …" seducing "them from a more austere, but sounder path of economic growth that is to their best interests in the long run."

Hezel observes, "By the time the United States got around to formulating a single consistent position calling for modest government spending in line with the avowed goal of self-reliance, the very Micronesians who once spoke eloquently of keeping cost under control had become the main proponents of large government and high budgets." The creed became, "Eat, drink and enjoy your ample government services, for a in a couple of years we’ll all become fully self-governing anyway."

Twenty years after the FSM and RMI became self-governing under the provisions of the Compacts of Free Association with the United States, Washington is still funneling substantial budget assistance to the two island nations albeit in diminishing amounts. But the more things change the more they stay the same. Hezel is skeptical that conventional approaches to development will ever free the islands from worry about "how they will pay the bills at the close of the fiscal year" without their American subsidies. He concludes that the migration of substantial numbers of Micronesians to the U.S. offers the prospect for the island governments to encourage the flow of remittances to relatives back home. This may be a more realistic and sustainable approach to advancing greater self-reliance.

"Is That the Best You Can Do? A Tale of Two Micronesian Economies", the first in the East-West Center’s new Pacific Islands Policy series, can be downloaded for free in PDF format from the East-West Center’s website ( Hard copies can be ordered through the Center’s Publication Sales Office via email at; by fax at (808) 944-7376; or by telephone at (808) 944-7145. You may write the Publications Sales Office at: East-West Center, 1601 East West Road, Honolulu, Hawaii, 98848-1601 U.S.A.

Francis X. Hezel, S.J., arrived in Micronesia in 1963 to teach high school in what was then Truk District, the U.S. Trust Territory of the Pacific Islands. In 1969, he was ordained a priest in the Jesuit order, and in 1992 became the Regional Superior of the Jesuits in Micronesia. In 1972, Hezel became director of the Micronesian Seminar, a nonprofit organization that serves the people of the four Micronesian political entities that emerged with the dissolution of the former trust territory. He has published widely on Micronesia and serves as a consultant to government officials, educators, researchers, and development specialists. Hezel has received honorary doctorate degrees from the University of Guam and Fordham University.

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