REACTION TO PRESIDENT MORI'S STATE OF THE NATION SPEECH

C O N F I D E N T I A L SECTION 01 OF 02 KOLONIA 000084

SENSITIVE NOFORN
SIPDIS

DEPT FOR EAP/ANP
INTERIOR FOR OIA

E.O. 12958: DECL: 6/1/2019
TAGS: PGOV PREL EAID FM
SUBJECT: REACTION TO PRESIDENT MORI'S STATE OF THE NATION SPEECH
INDICATIVE OF SLIPPING SUPPORT

REF: KOLONIA 47

CLASSIFIED BY: William Douglass, Deputy Chief of Mission,
AmEmbassy - Kolona, State.
REASON: 1.4 (b)

1. (SBU) Summary. In his second State of the Nation Address,
Federated States of Micronesia (FSM) President Emanuel Mori
identified many of the challenges that face his government.
However, FSM national and state leaders criticized the President
for not providing direction or guidance to resolve the issues he
identified. The lukewarm reaction may indicate that the
President's support continues to slip among congressional
members. End summary.




2. (U) On May 14, FSM President Emanuel Mori gave his second
State of the Nation Address before the National Congress (Mori
became President in 2007). The President outlined many of the
problems the country is facing. Mori noted that the FSM's
average income has declined from $1,934 per person in 2005 to
$1,832 in 2007. He indicated that social services remain
underfunded; the FSM Health Insurance program continues to
operate in deficit. Mori also noted that the FSM Trust Fund
established under the Amended Compact lost $22.8 million in

2008. Finally, the President stated that problems exist within
the banking sector: consumer loans decreased by $1.3 million and
development bank loans decreased by $1.5 million in the past
year.




3. (U) However, Mori said that despite the impact of the global
economic crisis his administration accomplished a great deal in
the last two years. He took credit for obtaining $144 million
in infrastructure sector grants under the Amended Compact, funds
that had not been used since 2004. That money will go to
improve schools, roads, sewer systems, water systems, and health
facilities. He also predicted that more than 1,000 new jobs
will be created thanks to an additional $8 million in new
infrastructure grants procured by his administration. President
Mori mentioned that new US Federal Aviation Administration
Improvement Projects are under way in all four states, including
the Japanese government's plans to lengthen the runway at
Pohnpei International Airport. The President claimed these
projects will increase the opportunities for tourism. The
President also took credit for creating the FSM Petroleum
Company and bringing lower fuel costs to the country. [NOTE:
Fuel costs in the FSM are still significantly higher than those
of their island neighbors. End note.)




4. (U) President Mori then listed the issues that require the
government's attention, including:

-Downsizing the government, something that must be done in order
to free up funds for priority programs;

-Develop the private sector to create jobs;

-Expand the two-year College of Micronesia to a four-year
institution to improve educational services;

-Encourage the states of Chuuk and Kosrae to complete necessary
budgetary reforms within the next year;

-Continue investment in affordable, renewable energy and develop
a new national energy policy;

-Upon completion of the submarine fiber optic cable connection
in March 2010, utilize the increased communications to bring
additional economic opportunities to all four FSM states;

-Finalize the country's proposed tax reform and improve tax
collection;

-Improve the foreign investment climate; and

-Increase cooperation between the four states and his government
to implement the Micronesia Challenge, a regional initiative to
conserve and protect the environment.




5. (U) In an aside, President Mori noted that the FSM has many
development partners, but he especially wanted to thank the
United States government for its support since the country
gained independence in 1986. He also called for universal
expressions of gratitude for the young FSM citizens currently
serving in the United States armed forces. [NOTE: Both
President Mori's daughter and Vice President Alik's son are

KOLONIA 00000084 002 OF 002


serving the US military. End note.]




6. (U) In closing, President Mori reported that the FSM will
soon meet with its US counterparts for the Amended Compact's
five-year review. He expressed hope that this will be an
opportunity to discuss improvements in the agreement.




7. (C) COMMENT: President Mori's address was not universally
well-received. Many national and local leaders thought that
while the speech spelled out many of the challenges the country
is facing, it offered little in the way of solutions. Lt.
Governor Johnny Elimo of the President's home state of Chuuk
told Pol/Mil Assistant that President Mori did not provide any
guidance or direction to the nation. Other government leaders,
including Director of Yap State Civic Affairs Larry Raigetal and
Chuuk State Attorney General Joses Gallen, said the same.




8. (C) More than likely, congressional representatives were
predisposed to criticize the speech even before the President
approached the podium. FSM Congress Senior Chief Clerk Liwiana
Ramon confided that congressional members find it very difficult
to work with President Mori. Ramon said that Speaker of the
Congress Isaac Figir meets often with the President to find
consensus on a number of pressing issues, but Mori then ignores
those agreements in his subsequent actions. For example, Mori
asked the Congress to approve amendments to the social security
program. Congress passed the proposals, only to receive a
letter from Mori stating that he will "wash his hands" of the
bill and allow it to become law without his signature. (See
reftel.) The President created the impression that he used the
Congress to pass necessary but politically unpopular reforms
while running from the political fallout.




9. (SBU) Under the FSM political system, the President is not
directly elected by popular vote. The Congress chooses the
President from among its ranks. While Mori is eligible for
another four-year term beginning in 2011, it appears more and
more doubtful that he can maintain sufficient congressional
support for a second term. End comment.
DOUGLASSWD