but, then again,

Micronesia

It could be heaven but, then again, it could be hell

Micronesia enters 1984 on the verge of either the biggest economic boom in its history, or a quick slide into a cesspit of corruption and fraud. Just when the islands will stand on the brink of this precipice depends on the Congress of the United States.

Approval this year of the Compact of Free Association seems likely for the Marshall Islands and the Federated States of Micronesia (comprising Kos rae, Ponape, Truk and Yap). The Congress nearly a decade ago approved US commonwealth status for the Northern Mariana Islands, a relationship which will go into full force when the 37year-old trusteeship is terminated.

What happens in Palau is another matter (see “Notes from the North” column, this issue). If that group does not soon agree upon its future political status, it could remain under the American flag.

Implementation of free associ ation will open the fiscal flood gates for Micronesia. Billions of dollars worth of aid will pour into the islands, some of it dedi cated to specific projects (par ticularly construction and related efforts), but a considerable amount will be left to the discre tion of national governments.

In addition, there will be the potential to raise other funds.

Palau already has printed its own stamps, and raised a reported SUSI million through its efforts.

The Marshall Islands has talked of the possibility, but so far plans

are on hold. The FSM held talks in Honolulu last December, and appears ready this year to com mit itself to a philatelic venture.

Last year’s drought hit Mic ronesia hard. But the rains have returned, and in that respect 1984 may be a “normal” year. Since there is no commercial agricul ture to speak of, the greatest damage was to subsistence crops, and local productivity, which was disrupted by limited water hours.

Indeed, the greatest influence on Micronesia’s economic out look for this year is political.

Potential investors, local business executives, and foreign governments ready to provide additional developmental assist ance, all await the passage of the free association compacts in the US Congress.

When that happens and it is only a matter of when, and not if Micronesians will have the potential to build nations with financial resources that would make their South Pacific collea gues stare in envy.

Still, the key to economic suc cess in Micronesia this year and in coming years will be the de velopment of adequate account ing practices. Without them, Micronesia could too easily be come the scene of corruption and graft on a scale unprecedented in the Pacific. If that happens, what is now a hopeful future could turn into an economic nightmare.

Floyd K. Takeuchi.