Reform agenda grows long in the north Pacific
Signs of the times: twenty-five years ago, a nighttime drive around Majuro in December revealed the shining splendor of Christmas: house after house was covered in glittering, blinking lights. The Christmas Day celebration too was one of enjoyable and extravagant celebration: dozens of groups performing dances and songs in churches throughout the country. The performances invariably concluded with the dancers tossing literally hundreds of pounds of candy, sweets and other gifts to a wildly scrambling audience.
How times have changed. Christmas just past offered a clear barometer of economic conditions—better than any written report could. Perhaps one in 50 Majuro homes strung Christmas lights outside and most of the businesses that did have holiday light displays put up the obligatory minimum to mark the season. And candy tossing during the Christmas celebration was the exception, not the rule, at this year’s Christmas. As the cost of mounting a Christmas group, known as ‘jepta’ in the Marshall Islands, has escalated, fewer non-church community-based groups perform in recent years. The costs of uniforms, feeding jepta members who practice on a nightly basis for six-to-eight-weeks, the cost of transport to move everyone to and from practice and performances, and finally, the donation of food and other gifts to the different churches where jeptas perform has put the job of mounting a jepta out of financial reach of people who a generation ago eagerly joined in by organizing a group for the Christmas celebration in the Marshall Islands. The 2013 Christmas celebration did not lack for spirit. But for anyone watching and participating in jeptas since the 1980s, the change is obvious, and clearly driven by economics.
The government, in contrast, deployed a new and elaborate light display at its capital building to mark the 2013 holiday season. Superficially, at least, it suggests an underlying disconnect on the part of political leaders from the significant change that has altered life for the worse for many in the population. It may also be a metaphor for the lack of initiative on clearly needed reforms in government operations by successive governments in the Marshall Islands. It is possible that people in government with access to numerous financial resources have yet to come to terms with the poverty and hardship affecting various sectors of society.
This situation is understandable in light of how government bureaucracies grew in the Marshall Islands as well as the Federated States of Micronesia and Palau. Government employment was a way to distribute aid, and developed during a time of considerable US economic largesse in the 1980s and 1990s. Government workers generally didn’t have to meet performance goals or even show up to work regularly to get their paychecks. Times have changed. Today, donors have ratcheted up aid requirements as they demand performance results for money provided, while cutting back on grants for personnel.
Looking ahead to 2014 and beyond—and particularly for the Marshalls and FSM, whose 20-year financial packages in their Compacts of Free Association with the U.S. expire in 2023— the question of increasing significance is will the governments engage in meaningful reform to improve government work performance, economic conditions, and health, education and social indicators?
Some precedents
Palau has been a leader in the region in political reform measures. More than a decade ago, it created a Special Prosecutor office as a watchdog on government spending. While it had its limitations and in recent years was largely dysfunctional, in its early days the special prosecutor took the first enforcement actions against elected leaders, forcing reimbursements of hundreds of thousands of dollars in public money misused for travel by government leaders. More recently, Palau enacted term limits for the National Congress, a move that has forced long-term members to retire. Whether this has improved legislative governance may be open to debate, but it does mandate regular turnover of membership.
During 2012 and 2013, the FSM launched a series of state-level consultations to get participation in developing plans for reducing government spending as part of a Long-Term Fiscal Framework to address the decline in U.S. grant funding. ‘The process,’ reported the Graduate School USA in its recently released FY2012 FSM Economic Review, ‘did provide a participatory approach to prioritize expenditures in a comprehensive way.’ President Emanuel Mori has also established a 2023 Committee to focus on actions needed by government to improve its financial situation in the lead up to the end of U.S. grants, that now underwrite over half of the government’s budget.
In the Marshall Islands, reform has been harder to come by. A Comprehensive Adjustment Program (CAP) task force appointed by the President issued a report to Cabinet in 2009 outlining numerous measures that could be taken to reduce government spending and improve the national government budget process. The FY2012 Economic Review of the Marshall Islands, issued late in 2013 by the Graduate School USA, noted that: ‘None of the last four budgets has been consistent with the CAP recommendations.’ Plans for major tax reform, overhaul of state owned enterprise operations, changes to the retirement law to stave off bankruptcy of the social security system, and other public sector reforms have been in the planning stages for several years without moving to implementation.
While Jaluit representative Alvin Jacklick was Speaker of parliament from 2009-2011, he formulated a Nitijela Corporate Plan that called for numerous government reforms, including reducing the 33-member parliament to 20 members. The report was largely ignored. The Marshalls has gained help from the Asian Development Bank, Pacific Islands Forum Secretariat and other donors to engage consultants to write various national development strategies, but the lack of ownership of these plans leads to the obvious question: If government has not implemented recommendations of the CAP task force, which was a largely homegrown effort, what level of implementation will result from strategies produced by expatriates?
The parliament is now under public pressure to sponsor the first constitutional convention in nearly 20 years. Speaker Donald Capelle established a special committee to review the need for a constitutional convention, and the committee’s report could not be clearer: the public is clamoring for constitutional reform, everything from rewriting the parliamentary style of government in favor of direct election of the president and a halt on selling land, to establishment of a special prosecutor and ombudsman to combat corruption. Despite calls for a con-con in recent years, successive governments have avoided doing so. This will be a major issue for the Marshall Islands parliament in 2014—whether or not to accede to the expressed wishes of the public for a con-con. If the parliament adopts legislation to sponsor a constitutional convention, it will mark the first major national consultation in over a decade. If it doesn’t happen in 2014, it appears unlikely it will happen in 2015, an election year.
On the agenda
Whether governments in Majuro, Pohnpei and Koror implement significant reforms, the problems will only worsen each year in the absence of government policy action. Each year of delay raises the specter of more difficult choices to come.
Palau’s booming tourist industry, with over 100,000 arrivals annually the past several years, coupled with its regional environmental leadership has opened the door to economic opportunities that have eluded the FSM and Marshall Islands, and gives Palau some options unavailable to its Micronesian neighbors. In addition, despite U.S. assistance accounting for more than 60 percent of their annual budgets, and most of it focused in health and education, the FSM and Marshall Islands are on track to meet just two of the eight Millennium Development Goals—in contrast to Palau, which is on track to implement seven of the eight.
Although health and education have been the focus of US grant funding the past 10 years, neither the FSM nor Marshall Islands have made significant strides in producing results, with communicable diseases such as tuberculosis and Hansen’s Disease major problems, and an epidemic of non-communicable diseases battering island populations and government finances. This impacts both nations, and also plays out in relations with the USA with about 30 percent of Marshall Islanders and Micronesians now living in the USA. Some American states as well as Guam and the federal government are raising concern over costs to provide health care, education and social services and this, in turn, is causing some friction in relations between Washington and Pohnpei and Majuro.
Another key question for the Marshall Islands and FSM is whether trust funds established by their Compacts will be able to match U.S. grants that end in 2023. Both trust funds are below benchmarks. The current sufficiency estimate for the FSM trust fund at the end of FY2023 is $1.68 billion. But based on its current value, the FSM trust fund is expected to be nearly half a billion dollars short of this mark in 2023. The Marshall Islands trust fund is closer to being on the mark. The sufficiency estimate for the Marshall Islands trust fund is $745 million, but is projected to fall short by about $40 million in 2023.
Initiatives in motion
Chuuk state in the FSM faces numerous fiscal problems undermining public services, with budget deficits the norm for many years. In the past year, Chuuk established an Advisory Group on Education Reform to navigate a system that has stymied public school improvements. It includes U.S. and island government officials, as well as educators from Palau and elsewhere, bringing high-profile attention to the education sector. Since its formation, the group has broken ground by reviving an education reform agenda. ‘We feel we have moved significantly forward in our efforts to overcome a variety of obstacles to building and improving schools here in Chuuk,’ said U.S. Interior Department official Tom Bussanich, a member of the group. ‘It is our hope that these efforts will result in the construction of numerous schools (in 2014) to the benefit of students, teachers and the broader community.’
Palau President Tommy Remengesau, Jr. wants Palau’s 200-mile exclusive economic zone turned into a ‘total marine sanctuary’ by halting commercial tuna fishing. Meanwhile, one bright light is fisheries. The membership of these three north Pacific nations in the Parties to the Nauru Agreement (PNA) has seen fisheries revenue skyrocket in four years, a boon to the island nations and their stressed national budgets.
The challenge facing political leaders in these north Pacific countries, leaders who for the most part are on four-year election cycles so generally have a short-term outlook, is starting or continuing to implement minimum reforms and building momentum for ‘good governance’ that can help improve delivery of health and social services, while increasing the quality of life for citizens in these nations.
