Pohnpei, although the third largest island in Micronesia, is relatively small, 129 square miles. The center of the island is mountainous and forested. Vegetation in coastal areas is primarily agroforest or grassland. The shoreline is fringed by mangrove forest around almost its entire extent and there are no natural beaches along the coast. An offshore barrier reef forms a lagoon around all but the southeast quadrant of the island. Here the barrier reef is replaced by a broad fringing reef. The climate is humid tropical with annual rainfall averaging 194 inches (3090 mm). January through March, when the seasonal northeast tradewinds are at their strongest, tends to be the driest part of the year.
The island is divided into six municipalities. Five of these are legacies of pre-contact kingdoms (Pohnpeian: wehi) which were politically autonomous, each ruled by a paramount chief and a royal class under a binary system of hereditary titles. The sixth municipality, a legacy of the colonial period, is the commercial and administrative center of the island, Kolonia.
The projected 1990 population of Pohnpei island is 30,816 ( OPB&S, 1991 ). A large proportion of the population lives in the single urban center, Kolonia, and its environs. While native Pohnpeians are the dominant group on the island many islanders from outlying atolls have migrated to Pohnpei over the last 70 years. A small expatriate population, predominantly Filipinos and Americans, also live on Pohnpei. Filipinos provide skilled labor in construction and certain service industries while Americans (and a small number of expatriates of other nationalities) primarily work for the State and National governments in technical positions such as lawyers, doctors and engineers. Most wage employment, except for elementary school teachers, is in the town of Kolonia.
Archaeologists believe Pohnpei was first settled between 250 BC and 500 AD ( Irwin, 1992 , p. 126); until sustained contact with the West began in the 1820s Pohnpei had an economy mediated by the chiefs through tribute, feasting and redistribution .
In the nineteenth century, after contact with the West, Pohnpeians began to trade local commodities such as turtle shell and beche-de-mer for some useful Western goods: metal tools, firearms, pots and containers, cloth, tobacco and alcohol. However, islanders initially had little use for money as an abstract means of accumulating wealth. Trade goods were integrated into an intact political economy of " production for use. " But by the end of the century Western influence on the economy could be detected; there were Pohnpeians who achieved power through a combination of material wealth and hereditary status.
Colonial rule from 1886 to 1945 by Spanish, German, and the Japanese brought greater economic change. Export based economic development, particularly under the Japanese was primarily by and for the colonialists; Pohnpeians had no real participation in these activities.
Through military conquest, the United States assumed control of Pohnpei, along with the rest of Micronesia at the end of World War II. The legacy of Japanese occupationóroads, public works, buildings and fortifications, much of it destroyed by U.S. bombingówas left to rust and return to jungle. So began the present phase in Pohnpeian economic history, one that has brought an ever expanding money economy but limited fundamental economic development.
U.S. interest in Micronesia, perhaps another legacy of World War II, has been almost entirely strategic. Rather than investing in Micronesia to extract economic value the U.S. has sought to foster political development that would achieve ensure a permanent and close political relationship between Micronesia and the U.S. ( Peoples, 1985, 15-19). While the FSM has achieved a form of sovereignty through Free Association, its economy is almost entirely dependent on U.S. aid.
A recent assessment of the FSM economy by a commercial bank presents the results of this policy succinctly:
Since the U.S. has delivered a steady flow of economic assistance to the FSM over the last four decades, distribution of the aid and its utilization have become government's predominant business. As a result, there is no primary production economy to speak of in the FSM, at least for which reliable data exist. A subsistence production economy that was fairly self-sufficient decades ago has been almost completely replaced by one that is now almost entirely dependent on imports. In other words, U.S. funds are the only real source of income, which is then used to purchase goods and services, most of them abroad. ( Osman. 1989, p. 8)
Overt indicators demonstrate that what Peoples (1985)calls a "dependent economy" fostered by U.S. policy persists. Pohnpei state's import/export ratio was 7.8 in 1990 ( OPB&S, 1991). Peoples was concerned about a six fold increase in food imports between 1963 and 1977. Between 1977 and 1990, by value, food imports to Pohnpei have almost tripled and imports of beverages and tobacco quadrupled ( OPB&S, 1991; OPS, 1982). Peoples ( 1985, p. 11), working on the nearby island of Kosrae, was able to demonstrate an absolute fall in subsistence production as a result of a growing aid economy.
Today policy makers search with increasing desperation for export based development to replace aid. The first five years of the Compact of Free Association has seen considerable expenditure of funds with little visible improvement in trade statistics. The patterns of consumption and material expectations fostered by the dependency economy are increasingly threatened by the nature of the FSM's relationship to the U.S. As part of the Compact, annual funding is decreased in two "step-downs" over the life of the treaty In addition, Pohnpei state has borrowed roughly $30 million against future compact revenues, by issuing medium term notes to invest in various development projects. The current treaty expires in 2001; with the end of the cold war and an ever tightening U.S. federal budget one would expect that post-Compact aid will diminish significantly.
The foregoing economic history suggests that during the nineteenth century Pohnpeians were able to integrate trade goods into a complex indigenous political economy. In contrast, the aid based economy of the last thirty years is producing significant social change.
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