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Our Island Friends: Do We Still Care? The Compacts of Free Association with the Marshall Islands and Micronesia

51 Pages Posted: 20 Sep 2007  

Stanley K. Laughlin

Ohio State University (OSU) - Michael E. Moritz College of Law

Date Written: September 2007


This article is about the international compacts that bind the United States to the Republic of the Marshall Islands, the Federated States of Micronesia (FSM) and the Republic of Palau in the status of “free association.” The article focuses on the recently revised Compacts of Free Association with FSM and the Marshall Islands. “Free association” is one political status, among several, recognized by the United Nations Charter as a satisfactory resolution of a trusteeship. After World War II, the United Nations created a trusteeship program to help certain geographic areas (many formerly occupied by the enemy) prepare for self-government. The Marshall Islands, the Caroline Islands and the Mariana Islands (exclusive of Guam) were among such territories. Those islands were occupied by the Empire of Japan before and during part of the Second World War, and were liberated by the United States, after fierce fighting. In 1947, the UN designated those islands “The Trust Territory of the Pacific Islands” (TTPI) and the United States was made trustee. The TTPI was unique among trust territories in that it was designated a strategic trust. That meant, inter alia, that the U.S. could use the area for military purposes and could exclude others from a military presence there.

The UN Charter requires a trustee to prepare the people of a trust territory to exercise their right of self-determination and practice self-government, which can be obtained either through independence, assimilation (becoming part of the trustee nation) or free association. In the 1970s and '80s, the people of the TTPI exercised their choices. The Northern Mariana Islands chose assimilation and became a commonwealth of U.S.. The rest of the trust territory chose free association, but as three separate entities: the Federated States of Micronesia (the eastern and central part of the Caroline Islands), the Republic of the Marshall Islands and Republic of Palau (the western end of the Caroline Islands.) These incipient nations formalized the relationship by entering into Compacts of Free Association with the United States. These compacts are international obligations, which from the perspective of the United States are legislative-executive agreements. A crucial part of each agreement is the requirement that the United States defend the freely associated state (FAS) as if it were part of United States. Unlike many mutual defense treaties, this commitment contains no escape clauses and no loopholes. For this reason, the FASs maintain no military and rely entirely upon the United States to defend them. Reciprocally, the United States has the right to bring military forces and equipment into the FASs and to exclude other militaries from the islands and surrounding waters.

Other important portions of the Compacts deal with the aid which the U.S. gives the free association states. By their terms, the original aid packages were to be reviewed and revised after 15 years. The original compacts with the FSM and the Marshall Islands were ratified and went into effect in 1986, and thus the aid packages were set to expire in 2001. (Because of problems explained in this article the effective date of the Palau compact was delayed and hence Palau is on a different schedule.) However, the original compacts provided that the aid packages would remain in effect for two more years if no agreement on revision was reached by expiration time. None was, but new, revised compacts were ratified and went into effect in 2003.

A major change in emphasis in the “new” compacts involves the emphasis on accountability. At the urging of some members of the U.S. Congress, the U.S. negotiators insisted upon and obtained the creation of accountability mechanisms as part of the Compact revisions. The principal ones were, with respect to FSM, the Joint Economic Management Committee (JEMCO) and, with respect to the Marshall Islands, the Joint Economic Management and Financial Accountability Committee (JEMFAC). This article examines these new mechanisms in some detail.

The article also examines the first several years of experience under the revised compacts. The new accountability mechanisms have generated considerable friction between the U.S. and the FASs, because in some cases the FASs believe the fiscal committees have encroached upon their sovereignty. There is also concern that the process may have blocked some necessary expenditures (e.g. for school construction) because of U.S. insistence upon an unreasonable assurance of financial soundness.

Several other important issues are also discussed. First, is the U.S. missile test range at Kwajalein Atoll in the Marshall Islands (RMI), for which the U.S. at present pays approximately $16 million a year in rent. There is an ongoing debate about what the future rent should be and who should get it, the RMI government or traditional landholders (loosely, chiefs). Another issue involves reparations for damages sustained by the Marshall Islands and Marshall Islanders as result of the “Bravo” tests (first tests of the hydrogen bomb) and other nuclear tests conducted in the Marshall Islands by the United States in the 1940s and '50s. The United States has paid about a half billion dollars in damages and entered into what it thought to be a final settlement. However, the Marshall Islands is seeking about 3.5 billion dollars more.

JEL Classification: K30, K39

Suggested Citation

Laughlin, Stanley K., Our Island Friends: Do We Still Care? The Compacts of Free Association with the Marshall Islands and Micronesia (September 2007). Ohio State Public Law Working Paper No. 100. Available at SSRN: or

Stanley K. Laughlin (Contact Author)

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

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