PRESIDENT REITERATES IMPORTANCE OF COMPACT FIVE YEAR REVIEW,

UNCLAS SECTION 01 OF 02 KOLONIA 000022

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL ECON PGOV EAID CPAS FM
SUBJECT: PRESIDENT REITERATES IMPORTANCE OF COMPACT FIVE YEAR REVIEW,
SEEKS SUPPORT ON PASSPORTS ISSUANCE PROCESS

REF: E-MAIL WEMHOENER-CUITE/KORFF 1-26-09 AND PREVIOUS


1. (SBU) SUMMARY: President Emanuel Mori used a February 23
meeting with Ambassador Hughes to reiterate the importance he
places in the Compact of Free Association's upcoming five year
review, saying all aspects of the Compact are on the table.
Mori also sought assistance in passport processing and school
repairs. The Ambassador, meanwhile, opened her comments by
expressing her condolences for the death of a Micronesian
soldier in Kuwait and described the efforts by the U.S. Coast
Guard to find two boys lost at sea. She protested judicial
treatment of an American couple ensnared in a ten-year business
dispute, and urged the President to assist in a satisfactory
resolution of this case. END SUMMARY.

Ambassador Expresses Condolences
--------------


2. (U) President Emanuel Mori opened a February 23 meeting with
Ambassador Hughes by thanking her for coming to Palikir to meet
with him and then asked that she open discussions. The
Ambassador used the opportunity to express condolences on behalf
of the U.S. Government on the death of an FSM citizen serving
with the Hawaii National Guard in Kuwait. The Ambassador
further stressed that the Department of Defense had contacted
the Honolulu based family of 19 year-old Cwislyn Walter and were
making burial arrangements. Although the soldiers' parents are
from Tol and Fefen Islands in Chuuk State, they have requested a
memorial service in Honolulu and a burial ceremony in Pohnpei,
with which DOD is assisting. DOD has launched a full
investigation into the military vehicle accident that was the
cause of death. Mori asked to be kept fully informed.


3. (U) On February 18, the U.S. Coast Guard received
information that two Chuukese boys, a seventh grader and an
eighth grader, were lost at sea beyond the Chuuk Lagoon and
immediately began search and rescue operations in the vicinity
of Satawal. The Ambassador highlighted that the USCG found
their canoe and spotted one of the boys for a brief time.
Efforts to rescue the boys were still continuing at the time of
Ambassador's conversation with the President, although they have
since been concluded and the boys are presumed drowned. Mori
responded that both pieces of news came as a surprise to him as
he learned only that morning of Walter's death. Looking around
at his staff, he then stated that he hoped communication could
be better in the future. (Note: The Ambassador contacted the
Foreign Secretary immediately over the weekend, thus the delay
in getting the information to the President was internal to the
FSMNG. End Note.)

American Citizen Legal Dispute
--------------


4. (SBU) The Ambassador also used the opportunity to highlight
strong U.S. concern regarding the treatment of two American
investors in the FSM, Bob and Patti Arthur. Staff members from
the U.S. Congress have contacted the Ambassador expressing
concern about how the FSM is proceeding against the Arthurs.
The Ambassador then reviewed some of the difficulties the
Arthurs are facing (Ref),including intrusive questioning by
court officials required to temporarily regain their U.S.
passports and permission to travel for medical care. The
President generally agreed with the Ambassador's assessment,
commenting, "We would like the case to disappear, it is bad for
everyone." He emphasized, however, that he could not interfere
with the courts. He added, that it might be possible to sit the
lawyers down and find a resolution, or that the Board of
Directors of the FSM Development Bank overseeing a contested
loan could meet and review the need for repayment considering
the role of a former Pohnpei State Governor in undermining the
Arthurs' businesses. In the end, Mori promised to assemble a
meeting, including with the FSM Attorney General, Foreign
Secretary and the current Pohnpei Governor, among others.
However, he was not very hopeful, opining, "Banks are
inflexible."

Mori on the Compact
--------------


5. (SBU) Following a brief, general discussion on American
investors in the FSM, Mori steered the conversation to the five
year review of the Compact of Free Association. Mori wanted to
assure the Ambassador that the FSMNG was reviewing all options
available and was actively planning for the review. He added
that, in his opinion, all aspects of the Compact were on the
table and open for discussion. In preparation for discussions,
Mori commented that he had sent Office of Statistics, Budget and
Economic Management, Overseas Development Assistance and Compact

KOLONIA 00000022 002 OF 002


Management (SBOC) Director Fabian Nimea to Washington D.C. to
consult on expectations for the five year Compact review.


6. (SBU) While discussing the Compact, the Ambassador commented
that Pohnpei legislators had complained that the recent
appropriation of Compact infrastructure funds by the FSM
Congress appeared to have taken $2 million from Pohnpei's funds
and transferred the money to Chuuk. The national law upon which
the accusation was based gives each state a specific percentage
of infrastructure related funds allocated by the FSM. Mori
replied that the Pohnpei legislators' interpretation of funding
disbursement was incorrect. In the final accounting for
infrastructure allocations, the national distribution formula
would be accurately reflected, he said. A brief discussion
followed on other possible means of allocating the backlog of
Compact infrastructure funds that might avoid future
misunderstandings and disputes with the FSM Congress.


7. (SBU) During last week's Joint Committee Meeting (JCM, which
focuses on DOD and security related issues),the Ambassador
informed Mori that she had raised the possibility of the
military restarting the Humanitarian Assistance, FSM (HAFSM)
with the DOD representatives. The last HAFSM project centered
on water wells in Pohnpei, but the Ambassador recommended
looking at other engineering repair and maintenance projects
that could have an immediate impact within the FSM. The DOD was
willing to support HAFSM deployment, but all parties would still
have to address funding issues. Representatives from the Office
of Insular Affairs (OIA) told the Ambassador they were willing
to look at the possibility of using Infrastructure Maintenance
Funds (IMF) to support such HAFSM projects, but that one
difficulty for the FSM may be that the IMF requires matching
funds.


8. (SBU) Mori was appreciative of the idea, stressing that the
Seabees do a great job and they do it quickly. One particular
area where the FSM could experience immediate results was if
such a team could do basic maintenance and repairs at the public
schools. While acknowledging that a renewed DOD HAFSM presence
was still only a possibility, the Ambassador promised to keep
Mori updated as information became available.

Passport Issuances
--------------


9. (SBU) On FSM passport processing, Mori opened the
conversation by saying, "This is very important to me." Mori
then thanked the Ambassador for the visit by Assistant Regional
Director of the Honolulu Passport Agency Steven Mullen to review
FSM's passport issuance procedures (Septel). The FSM looks
forward to his report. The Ambassador agreed with the
President's assessment, that Mullen was able to witness many
positive aspects of the FSM process and that she anticipated his
report to reflect those observations.


10. (SBU) In the meantime, Mori complained, the current process
requiring applicants deliver applications from remote sites by
mail or hand to Palikir for adjudication is too time consuming
and unreliable. Mori asked for assistance in acquiring at least
three scanners that would permit remote application acceptance.
Adjudication and printing authority would remain in Palikir. He
confirmed that the FSM was no longer looking to store blank
passports for printing in remote locations. Mori concluded the
meeting by asking to meet with the Ambassador again in
approximately two weeks to review passport issuance and other
issues.
HUGHESMK