Compact of Free Association: Single Audits Demonstrate Accountability Problems over Compact Funds

Discusses the amended Compact of Free Assoc. between the U.S. and the Federated States of Micronesia (FSM). From 1987 through 2003, the FSM received more than $1.5 billion in economic assistance under the original Compact of Free Assoc. with the U.S. In 2003, the U.S. gov¿t. approved an amended compact with the FSM that provides an additional $2.3 billion from 2004 through 2023. The amended compact identifies the additional 20 years of grant assistance as intended to assist the FSM in its efforts to promote the economic advancement and budgetary self-reliance of its people. It also contains several new funding and accountability provisions intended to strengthen reporting and bilateral interaction. Charts and tables.

Since 1995, when the Compact of Free Assoc. between Palau and the U.S. entered into force, U.S. aid to Palau has included assistance provided for in the compact and related subsidiary agreements -- direct assistance to the Palau national gov¿t., including investment in a trust fund intended to provide $15 million annually from 2010-2044; fed. postal, weather, and aviation services; and construction of a major road. Compact direct assistance is scheduled to expire on Sept. 30, 2009. This statement examines: (1) the provision of compact and other U.S. assistance to Palau in 1995-2009; (2) Palau¿s and U.S. agencies¿ efforts to provide accountability over Palau¿s use of fed. funds; and (3) Palau¿s prospects for achieving economic self-sufficiency.