RIFT OVER FSM SOCIAL SECURITY LAW HIGHLIGHTS POHNPEI'S

UNCLAS KOLONIA 000047


DEPT FOR EAP/ANP

E.O. 12958: N/A
TAGS: PGOV SOCI FM
SUBJECT: RIFT OVER FSM SOCIAL SECURITY LAW HIGHLIGHTS POHNPEI'S
SECESSIONIST MOVEMENT


1. President Mori's proposed amendments to the Federated States
of Micronesia's (FSM) Social Security law ignited criticism from
politicians and the public alike, particularly in Pohnpei State.
The proposal gave more ammunition to those calling for
secession ahead of Pohnpei's upcoming constitutional convention.
End Summary.


2. On September 5, 2007, President Mori submitted seven
amendments to the Social Security and Prior Service Benefit Act
(Title 53 of the FSM Code) for congressional consideration. The
most controversial amendments included raising the retirement
age from 60 to 65 and increasing Social Security payroll taxes
from six to seven per cent. President Mori claimed the changes
were necessary to keep the system viable.


3. Seventeen months later, the FSM Congress voted on the measure
during its February 2009 Special Session. The vote was thirteen
in favor, one against. Pohnpei State Congressman Resio Moses
cast the sole "no" vote. On February 10 the bill arrived on
President Mori's desk, but the President refused to sign the
bill. Instead, he wrote a lengthy letter to FSM Congress
Speaker Isaac Figir, stating that after much deliberation he
would "wash his hands" of the bill and allow it to come into
effect without his signature. The bill officially became law on
March 6.


4. Criticism soon arose in every corner of the FSM. In Pohnpei
State in particular, the reaction went beyond the normal rancor
over a lost government benefit. Politicians, business leaders
and private citizens alike argued that the Pohnpei State
government and private sector faithfully contributed their
required share into the Social Security system while other
states (mainly Chuuk) did not.


5. The FSM Social Security Administration lends credence to
these complaints. The SSA Deputy Director told Pol/Mil
Assistant that Pohnpei has always been current with their
payment, while Yap pays up eventually but not always on time.
Kosrae and Chuuk, on the other hand, did not pay for three years
due to each state's insolvency. Those two states eventually
became current thanks to a donation from the People's Republic
of China (PRC).


6. The PRC gave the FSM national government US$4 million in
November 2007. The national government used part of this money
to bail out Chuuk and Kosrae's Social Security obligations.
While the two states became up-to-date in January 2008 and have
remained out of delinquency ever since, many in Pohnpei viewed
the bailout as unconstitutional. Article 12, Section 1(b) of
the FSM Constitution states that "each state shall receive a
share [of all foreign financial assistance] equal . . . to the
share of every other state." When Chuuk and Kosrae took the
lion's share of the Chinese aid, Pohnpei argued it was a
violation of the "formula" for assistance distribution.


8. This incident simmered in the minds of Pohnpeans for more
than a year before the Social Security amendments passed.
Passage brought their resentment to a head. Many in Pohnpei
believed that not only did the state lose its share of the
Chinese money it was basically penalized for paying its Social
Security taxes on time. Moreover, many Pohnpeans noted that a
majority of Social Security retirement and disability benefits
are paid to the citizens of Chuuk State (Chuuk has more than 50%
of the FSM's total population.)


9. On February 24, the Pohnpei State Legislature wrote to the
FSM Congress expressing their disappointment. Their resolution
claimed that the FSM National Government is not fairly
representing the interest of all the people and is jeopardizing
the continued existence of the Federation.


10. On March 16, Pohnpei State Senator Dohsis Halbert attempted
to repeal the amendments by introducing a bill to restore the
status quo. However, the FSM Congress did not act on his bill.
On March 24, Senator Halbert introduced a resolution to study
Social Security programs in various jurisdictions in the Pacific
Region and come up with options that may improve the FSM
program. The FSM Congress adopted Senator Halbert's resolution
the next day, the last day of the special session.


11. The adopted resolution now awaits President Mori's
implementation. The 16th FSM Congress will convene on May 11.
Further congressional action may depend on the progress of
President Mori's efforts.

CONCLUSION


12. Ten years ago only traditional leaders and a handful of
native-born Pohnpeians expressed their desire to secede from the
Federation. Now, however, the voices of secession appear much
more numerous. In the past decade the national government
bailed out Chuuk State twice after the local government went
broke. Yet with all that extra attention, Chuuk State still
lacks basic infrastructure such as a reliable water supply, a
working sewer system, a consistent power supply, decent roads,
and basic medical and pharmaceutical supplies. Even many of the
state's schools lack chairs, desks, and textbooks. Many
Pohnpeans feel that the Federation adds no value when the most
populous state of the FSM, Chuuk, seems to be dragging everyone
else down.


13. Pohnpei State's Constitution requires a new constitutional
convention every ten years to review constitutional provisions.
Another review is scheduled for this year, and on March 3 the
citizens of Pohnpei State elected 29 convention delegates. In
recent town hall meetings many of the delegates expressed their
wish for a constitutional amendment that would allow Pohnpei to
secede. The convention is scheduled to convene April 27. Post
will report on its deliberations septel.


DOUGLASSWD