FSM PRESIDENT SEEKS U.S. HELP TO REFORM COMPACT

C O N F I D E N T I A L SECTION 01 OF 03 KOLONIA 000053

SIPDIS

E.O. 12958: DECL: 4/17/2019
TAGS: PGOV EAID FM
SUBJECT: FSM PRESIDENT SEEKS U.S. HELP TO REFORM COMPACT
INFRASTRUCTURE AND FISCAL REQUIRMENTS

REF: A) HUGHES-PULA TELCON OF APRIL 17; B) KOLONIA 29; C) KOLONIA 17

CLASSIFIED BY: Miriam K. Hughes, Ambassador, Amembassy Kolonia,
State.
REASON: 1.4 (d)
1.(C) SUMMARY. President of the Federated States of Micronesia
(FSM) Emanuel Mori invited Ambassador Hughes to his office on
April 15 for a rare one-on-one meeting. He said he had just
fired an American contract employee of the U.S. Department of
the Interior (DOI) whom the President believed had mismanaged
Compact infrastructure projects and complicated communication
with the FSM Congress and the four FSM States. The President
further confided that he felt overwhelmed by the complexity of
Compact requirements. He asked the Ambassador for help. End
Summary.



PRESIDENT DISMISSES KEY U.S. COMPACT CONTRACTOR




2. (C) On short notice, FSM President Mori invited Ambassador
Hughes to meet in his conference room on April 15. He dismissed
an aide who tried to come in. In a rare one-on-one meeting that
lasted nearly an hour and a half, the President said he had just
fired an American contract employee of the U.S. Department of
the Interior's Office of Insular Affairs (DOI/OIA),Robert
Westerfield, who managed the Compact infrastructure projects.
The President said he had considered this move for many months,
and finally concluded he had to take action.




3. (C) Complaints from the Congress and FSM states included
unsatisfactory communication with this manager, incidents of
explosive anger, lack of transparency, inordinate delays, and
poor prioritization of projects, among other charges. Mori said
he had seen evidence of these problems. He claimed that
Westerfield had additionally ordered new cars for the PMU and
for contract engineers in the four states, expressly against the
President's orders. He feared that this employee, who
controlled access to all the contracts, might abscond with
valuable information. Mori said he recently discussed these and
other charges with Westerfield, demanded copies of all
documents, and offered him a less central position in the State
of Yap. It is unclear whether the American accepted the offer
of alternate employment. Mori said Westerfield remained angry.





4. (C) The President asked Ambassador Hughes for help to find a
better qualified candidate to manage contracts and Compact
construction projects within the FSM National Government (FSMNG)
Project Management Unit (PMU),which oversees all Compact
infrastructure projects and is funded entirely by DOI's Compact
infrastructure grants. He said the PMU required a construction
engineer with solid technical background and program management
expertise. This person would need to communicate sensitively
and responsively with Micronesians, particularly with the FSM
Congress and officials in the four states. The President said
he would welcome a qualified Department of Defense (DOD)
representative from the U.S. Army Corps of Engineers or from a
DOD Civic Action Team, for example. The Ambassador agreed to
follow up with DOI and DOD. (Note: Ambassador subsequently
called OIA Director Nik Pula (Ref A),Admiral French of
COMNAVMAR in Guam and the U.S. Charge in Palau. Pula was aware
of the President's decision. He concurred with engagement of
DOD and others to try to find a qualified replacement as soon as
the FSMNG released a vacancy announcement.)



COMPACT INFRASTRUCTURE MANAGEMENT NEEDS MORE INFORMATION SHARING




5. (C) President Mori appeared tired and thin. He alluded to
hurtful attacks by the FSM Congress, which recently passed a
bill to transfer the PMU from the President's office back to the
Department of Transportation, Communication and Infrastructure
(TC&I),where the PMU had previously resided. Shortly after
Mori vetoed this bill, the Congress voted unanimously to
override the veto - one of many recent defeats for the President
in the FSM Congress. "I only attached the PMU to my office to
get it working better," Mori explained wearily.




6. (C) The Ambassador recalled Mori's initiative of over a year
ago. She said both nations had hoped to make a major push to
start up Compact infrastructure projects, which had been snarled
for the past five years in management disputes and law suits.
Now that some of the projects were moving, Mori said the FSM

KOLONIA 00000053 002 OF 003


could not afford to lose any momentum. Ambassador responded
that relocating the PMU under the Department of TC&I might
actually facilitate communication and progress. TC&I Secretary
Francis Itimai had already commenced meetings to analyze delays
in projects, starting with a five-year wait for an early
childhood education center in Yap, which Yap's Governor Anefal
had protested vigorously to the Ambassador and others. She
noted that the TC&I Secretary had responded immediately to these
concerns. Itimai and members of the FSM Congress had
additionally begun to consider opening small TC&I branch offices
in each state to enhance coordination, as called for in the FSM
Strategic Development Plan. Mori agreed that these were useful
initiatives and that he could still retain close oversight of
the PMU through his TC&I Secretary.




7. (C) Ambassador noted that better communication with the
Embassy and others was vital to dispel charges of lack of
transparency, favoritism and cost overruns. FSM Congressional
and state officials had expressed strong concerns about their
perceptions of secrecy, inequities among the state projects, and
decisions on expensive construction material and elaborate
project designs (Ref C). Many Micronesians blamed OIA and the
PMU for ruling out the option of prefabricated buildings, which
had supposedly worked well in the Republic of the Marshall
Islands. Officials of New Zealand, Australia and China
complained that they did not have early access to information on
projects that might interest companies of their nations.




8. (C) Ambassador suggested that the PMU could launch its own
easily accessible website to preview projects, explain bid
procedures, and post budgets. Mori responded, "What a good
idea. I will do that at once with the public information
officer." Ambassador added that the Embassy must be advised in
advance and invited to groundbreaking ceremonies for projects
that are funded with U.S. taxpayers' money. She questioned why
a big groundbreaking ceremony for the Chuuk road project had
been scheduled in the dead heat of a very competitive
gubernatorial election. Mori said he had also questioned the
timing, admitting he was disgusted and had declined to attend.
He acknowledged that the incumbent governor (who recently
emerged victorious in a close runoff vote) had helped stage an
elaborate ceremony in Chuuk, which enabled the Governor to
publicly claim credit for securing the biggest infrastructure
project in FSM history. Mori explained that the PMU advised him
that the groundbreaking had to proceed owing to demands of the
construction company, which would otherwise lose time and money.
Mori concurred with the Ambassador that in the future, a clear
chain of command for infrastructure decisions needed to be
established.



COMPACT PROBLEMS DRAIN THE PRESIDENT




9. (SBU) Finally, President Mori asked if the Ambassador had
ever read the amended Compact? Ambassador Hughes responded that
no one should attempt to read from cover to cover over 300 pages
of such a comprehensive agreement. Rather, she used the Compact
as a reference resource whenever questions arose, which happened
frequently. The President was pensive and unusually candid,
remarking, "Well I have tried and tried to read the Compact, and
I just don't understand it. It is too hard for me." Mori, who
is a former banker and graduate of business administration from
Guam University, asked, "What do you call all those financial
rules at the end?" The Ambassador acknowledged that the Fiscal
Procedures Agreement, which reflected U.S. federal grant
requirements, seemed to be widely misunderstood in the FSM.




10. (SBU) Mori confided that he feared the FSM would never be
able to implement the amended Compact effectively. He suggested
that the Five Year Review of the Compact needed to be a joint,
substantive exercise in which specific provisions are revisited.
He indicated that the FSM was also prepared to work with
sympathetic members of the U.S. Congress and noted in particular
the boost the FSM had received from the recent visit and
friendship of Congressman Eni Faleomavaega (Ref B).




11. (SBU) On the margins of DOI's recent Pacific island
business conference in Honolulu, Mori said he had met with U.S.
Senators Inouye and Akaka, Representatives Faleomavaega and
Bordallo, the Governor of Hawaii and some state senators, among

KOLONIA 00000053 003 OF 003


others. He claimed that all these officials agreed that the
Compact was very complicated and reforms needed to be
considered, including for Compact implementation and fiscal
requirements and procedures. At the same time, the President
said representatives from Hawaii and Guam complained that a
rising influx of destitute Micronesians was taxing their budgets
and creating "a huge public expense," particularly in health
care. "I am caught in a very awkward position," Mori concluded.
He asked for innovative guidance and understanding from the
United States Government.
HUGHES