The Federated States of Micronesia (FSM) consists of 607 islands, of which 65 are inhabited, spread over an ocean area the size of Western Australia. The islands are in four main groups, which form the basis of FSM's four states: Yap, Chuuk, Pohnpei and Kosrae. The capital, Palikir, is located on the island of Pohnpei. FSM has a population of 106,000.
FSM is an independent country in a Compact of Free Association with the United States. FSM has an American-style constitution adopted in 1978 which provides for a government composed of an executive branch, a legislative branch and a judicial branch. Each of the four states has its own constitution, an elected governor and a lieutenant governor. The National Congress is unicameral and consists of 14 members. Four senators, each known as “senator-at-large” – one from each state – serve four-year terms. The remaining 10 members represent single member districts based on population and serve two-year terms. Both the President and the Vice-President are elected by the Congress from among its four-year members and both serve a four-year term. The senator-at-large seats vacated by the President and Vice-President are filled by a representative from their state. An appointed cabinet supports the President and Vice President. There are no formal political parties.
The President of FSM, currently Mr Peter Christian, is both Head of State and Head of Government. He is from Pohnpei. Mr Yosiwo George is Vice President and is from Kosrae. Both were elected to the Congress in the general election on 3 March 2015.
Compact of Free Association with the United States
Under the Compact of Free Association, FSM controls domestic and foreign policy but not defence and security, for which the United States is responsible. The original compact provided US$1.3 billion from 1986 to 2001 and included direct financial assistance from the United States for the development of FSM. The amended compact, which entered into force in June 2004, provides the equivalent of US$2 billion over the subsequent 20 years. That amount includes contributions to a trust fund which, from 2024, will replace direct financial assistance. From 2007, annual grants from the United States to the FSM government decrease each year, while contributions to the trust fund increase accordingly. In addition to this, the compact grants FSM citizens access to US federal programs and favourable provisions for travelling to and working in the United States. The compact and its subsidiary agreements commit the United States to continue to provide, at no cost to FSM, many services including air safety, weather prediction, health services and assistance in the event of natural disasters until the end of the compact. Under the compact, more than 40 US government agencies such as the Federal Aviation Administration, US Postal Service, the Small Business Administration operate programs or render assistance to FSM.
Australia established diplomatic relations with FSM in July 1987 and the Australian Embassy in Pohnpei was opened in November 1989. Australia enjoys a close and friendly relationship with FSM.
More information on development assistance to the Federated States of Micronesia.
Australia Awards delivered under the Australian aid program are an important component of the Australian government's overseas aid program. Australia Awards Pacific Scholarships provide opportunities to study at selected education institutions in the Pacific region. Since 2007 there have been 146 Australia Awards provided to the FSM. Nine of these awards were offered in 2017.
More information on Australia Awards.
The Australian Volunteers for International Development (AVID) program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations to deliver effective and sustainable development outcomes. See the AVID website for further information.
Direct Aid Program (DAP)
The DAP supports projects which directly contribute to the welfare and the income-generating capacity of poor or disadvantaged groups, or enhance the long-term productivity and sustainability of the physical environment.
Visit the Australian Embassy website for further information on DAP.
The economy is dominated by government services and largely reliant on external grants, with only a modest private sector. The fisheries sector is regarded as having the greatest development potential. With an EEZ of 2.7 million square kilometres, FSM bestrides major equatorial tuna migratory paths and the fishing industry has been boosted by the construction of cold storage facilities and processing plants. Fishery licensing fees account for nearly half of domestic budgetary revenue.
The tourism industry is another area of potential for FSM, particularly diving and eco-tourism. Some 21,000 tourists visit the islands each year. Tourism development is, however, constrained by limited airline links, availability of infrastructure, including roads, power and water, and by geographical isolation.
Trade and investment
Australia is one of FSM's main sources of imports after the US and Japan. Australian merchandise exports to FSM in 2016 totalled $11 million (principally specialized machinery and parts; prepared or preserved meat; wheat flour; and animal feed).
High level visits
September 2016: Prime Minister Malcolm Turnbull and the Minister for International Development and the Pacific, the Hon. Concetta Fierravanti-Wells, visited Pohnpei, to attend the 47th Pacific Islands Forum.