Identifier
Created
Classification
Origin
09KOLONIA17
2009-02-09 01:01:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kolonia
Cable title:  

FSM STATES/NATIONAL LEADERSHIP CONFERENCE URGES MOVEMENT OF

Tags:  PREL ECON PGOV EAID FM 
pdf how-to read a cable
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ZNR UUUUU ZZH
P R 090101Z FEB 09
FM AMEMBASSY KOLONIA
TO RUEHC/SECSTATE WASHDC PRIORITY 2196
RUEHC/DEPT OF INTERIOR WASHINGTON DC
INFO RHHJJPI/PACOM IDHS HONOLULU HI
RUEHKR/AMEMBASSY KOROR 0304
RUEHMJ/AMEMBASSY MAJURO 0400
RUEHKN/AMEMBASSY KOLONIA 2557
UNCLAS SECTION 01 OF 02 KOLONIA 000017 

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL ECON PGOV EAID FM
SUBJECT: FSM STATES/NATIONAL LEADERSHIP CONFERENCE URGES MOVEMENT OF
ALLOCATED COMPACT FUNDS TO ACTUAL PROJECTS

REF: 02/06/09 E-MAIL WEMHOENER-CUITECJ-NEVILLEPW

UNCLAS SECTION 01 OF 02 KOLONIA 000017

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL ECON PGOV EAID FM
SUBJECT: FSM STATES/NATIONAL LEADERSHIP CONFERENCE URGES MOVEMENT OF
ALLOCATED COMPACT FUNDS TO ACTUAL PROJECTS

REF: 02/06/09 E-MAIL WEMHOENER-CUITECJ-NEVILLEPW


1. (SBU) SUMMARY: On January 29 the FSM National Congress
requested the President convene a leadership conference to
consider the public infrastructure sector grant. Allocated
funds were not moving to actual projects. During the February
4-6 conference, President Mori suspended debate on
infrastructure funding and called for a smaller working group to
draft legislation which would expedite funding. With the
support of conference participants, the President passed the
draft legislation to Congress by the morning of February 6.
Although immediate tensions on infrastructure related spending
appears to have eased, the conference did not address reasons
for the initial delays. END SUMMARY.

Congress Calls on President to Host Conference
-------------- -


2. (U) Highlighting more than $100 million in infrastructure
grant funds currently available through Compact Funding, but not
yet utilized, the FSM National Congress passed a resolution on
January 29 requesting the President to host a State/National
Leadership Conference by February 4 (Ref). The resolution noted
that Congress was concerned about implementation procedures for
public infrastructure grants and stated that the purpose of the
meeting was to discuss the public infrastructure sector grant
and other relevant matters.


3. (U) Per the resolution, President Emanuel Mori convened the
leadership conference on February 4. Approximately 80 people
attended. He invited representatives from the national
legislature, the governors of each state, and representatives
from the Department of Interior and Department of State.


Discussion Starts
--------------


4. (U) The four Governors, President, Speaker and others agreed
that Infrastructure spending was more than just putting up roads
or buildings; rather it was the means towards sustainable
economic development through secondary benefits. Pohnpei
Governor John Ehsa complained that of $131 million of public
infrastructure related funds available since 2004, only $51
million was obligated to date and only $15 million spent. Ehsa
argued that if the Conference was able to find a way to expedite

the funding process, using those numbers, the FSM will be able
to support $260 million in infrastructure projects by 2014.
Getting the money moving would be an economic stimulus.


5. (U) Ehsa quickly moved to his primary complaint: the process
is too slow and cuts out the States. The States want to share
in the responsibility of making sure the funds get to the
projects in a timely manner. Ehsa added that under legislation
currently before the National Congress, Pohnpei would receive
$15 million. That does not cover the full amount for proposed
projects, however, and without full funding the State cannot
award contracts. The money will continue to languish and
projects will not start.


6. (U) Chuuk Governor Wesley Simina added that the current
funding process is too convoluted. He stressed that it was
important to discuss the means to permanently expedite the
process and suggested the leaders use a January 5, 2009 letter
from Speaker of Congress Isaac Fagir to the President that
itemized concerns as a point of reference for discussions.
(Note: Post does not have a copy of the letter and is not aware
of its contents. End Note.)

Working Group Is Formed
--------------


7. (U) Noting some of the concerns raised, Mori commented that
it was not time to discuss the implementation problems of the
past because "we all know what they are." He then stated that
the focus must be on moving the money that is currently
available to the projects already approved. Mori finally
suggested, and everyone concurred, that a small working group
draft legislation he could submit to Congress. The group was
composed of members of the larger meeting, including
representatives from the States and the Executive Branch. The
legislation should immediately release funds that are already
available.


8. (U) The working group presented a draft bill to the
conference during the opening session on February 5 (Ref). Upon
reading the draft bill, each governor immediately raised
questions on implementation. Yap Governor Sebastian Anafel
summarized his concern by asking that once Congress approves the

KOLONIA 00000017 002 OF 002


funding, "Then what?" Previous bills have also approved funding
and projects still did not move forward. Chuuk Lt. Governor
Johnson Elimo questioned the validity of the dollar amounts
given in the bill, to which the President replied that the
Congress can review the numbers. Despite the concerns raised,
each governor voted to have the President submit the bill to
Congress. Ehsa opined that the bill permits the states to act
as contracting officers, which will let them work directly to
release funds.


9. (SBU) Post has also received anecdotal reports that during a
scheduled February 6 private breakfast between President Mori
and the four governors, each of the governors complained about
the working group's proposed legislation. Although Post does
not have details of the private meeting, other participants at
the conference, including Program Management Unit Special
Project Manager for Legal Affairs Dana Smith, questioned the
legality of the bill. Legislative Counsel Lam Dang raised
concerns about the use of a funding formula, which the United
States has rejected, putatively designed to divide funding
fairly between the states on an annual basis. Despite the
concerns raised, Congress passed the bill on February 7.

Other Agenda Items
--------------


10. (U) In addition to discussion on infrastructure issues,
Mori drafted an agenda which included the Government of Japan
Non-Project Scheme; Airport Improvement Projects; Air/Sea
Transportation Issues; Five-Year Compact Review; and other
issues. Various representatives from the Department of
Transportation, Communications & Infrastructure (TC&I),led by
Secretary Francis Itamai, spoke on transportation issues.
Regarding airport improvements and the Japan Non-Project Scheme,
TC&I described in detail the expected benefits from the outside
funding, but noted that the FSM must provide some matching
funds. All participants agreed that the FSM (or the individual
State governments if appropriate) should make the funds
available as quickly as possible.


11. (U) Regarding air transportation, the President tasked the
Department of Foreign Affairs with trying to entice other
airlines to the FSM. TC&I then described the lack of reliable
sea transportation through the islands, particularly due to the
age and disrepair of the State and federally owned ships. The
FSM has only one ship operational for inter-island travel.
Following a brief discussion the President tasked the DFA to
approach donors with a request to replace or repair FSM's ships.
Due to time limitations, the President dropped all other agenda
items.

COMMENT
--------------


12. (SBU) Towards the end of the Conference Mori noted that the
government "got the message" that the money needs to get moving.
In that regard, the national government is likely to release
some of the backlogged funds to individual high profile projects
such as Phase I of the Chuuk road project. The stated goal of
the conference, however, was to discuss implementation
procedures for infrastructure grants. On only a few isolated
occasions did the Governors appear to raise questions directly
related to funding procedures, but when the questions were
deflected the Governors did not press further. The bill
Congress eventually passed to address immediate funding concerns
does nothing to prevent the same problem from arising again.
Summarizing the conference's outcomes, Yap Senator Joseph
Urusemal stated he feels likes Pontus Pilot. We are "washing
our hands and letting others decide." His assessment, though
colorful, may be accurate. END COMMENT.
DOUGLASSWD