Government of the Federated States of Micronesia

First Compact JEMCO Meeting Concludes

Honolulu, HAWAI'I (FSMIS): August 13, 2004 - Representatives of the Federated States of Micronesia and the United States gathered here on Wednesday for the first regular meeting of the Joint Economic Management Committee (JEMCO).

The JEMCO was established under the amendments to the Compact of Free Association of 2003.

In the opening statement, Head of the FSM Delegation, Secretary of Foreign Affairs Sebastian Anefal, stated his view that the process should constitute an opportunity for a truly cooperative mechanism designed to improve efficiency of Compact assistance. It was in this spirit, he stated, that the JEMCO was first proposed by the FSM during the amended Compact negotiations, and he expressed a desire for that atmosphere to mark the work of the first meeting.

Deputy Assistant Secretary of the Interior for Insular Affairs, David Cohen, selected as Chairman for the meeting, stated that the US wanted to make clear that the session should be viewed as the first opportunity for the US to "protect its investment" in Micronesia under the Compact. He stated that there would inevitably be "growing pains" under the new agreement, but insisted that the US needs to send a clear signal of the need for full accountability and that it intended to exercise its full oversight authority under the amended Compact.

From the outset of the substantive deliberations on Wednesday, it was clear that the US was intent on maintaining a very rigorous interpretation of the Compact's Fiscal Procedures Agreement. The FSM also stressed the need for adherence to the FPA, but expressed the need for flexibility in interpretation during the early years of the amended Agreement.

It is not surprising, therefore, that many of the Committee's decisions were subject to the exercise of the US majority on the committee in recorded votes.

The primary task of the JEMCO is to review and approve compact-funded portions of the FSM budgets and specific project requests. In this request, the FSM proposals for FY 2005 were adopted. While, a number of requests were either declined or modified by US member of the Committee, most of the FSM funding proposals were successfully adopted to enable Compact funding for FY 2005 to flow at levels negotiated in the Compact.

A number of issues proved to be particularly contentious, such as land acquisition for infrastructure projects, use of the Compact's capacity building assistance, and US insistence on strict adherence to the US Congress' recommendation to establish infrastructure spending at a level of thirty percent of total Compact assistance.

In addition to Anefal, the FSM was represented on the JEMCO by Secretary of Finance and Administration Nick Andon. For the US, Cohen served along with William Steiger, Special Assistant to the Secretary for International Affairs of the Department of Health and Human Services, and Randall Schriver, Deputy Assistant Secretary of State for East Asian and Pacific Affairs.

Due to the size of the meeting facilities, attendance as observers was limited to four representatives from each of the FSM state governments and four from the national government. Other members of delegations served as alternates and participated in internal meetings of the FSM delegation. The US was also allowed twenty observers in total, with the Office of Insular Affairs staff designated to serve the Chairman.

Originally planned for two full days of meetings, the start of the formal session was delayed for one day at the request of the US to allow for arrival of one of their members. The sides did meet for informal consultations in advance, however.

The US will meet with the Republic of the Marshall Islands from August 12-13 in the counterpart institution established under their amended Compact package. The FSM JEMCO Members will have the opportunity to brief President Urusemal today, who stopped in Honolulu on his return to Palikir from the Forum Meeting in Apia.

Meetings of the JEMCO will be held periodically at request of members, but are mandated under the Compact to take place no less than once annually. Under rules of procedures adopted at this first meeting, the Committee also has the ability to hold intersessional "electronic meetings" as requested by members.


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