The FSM consists of 607 islands extending 1,800 miles across the archipelago of the Caroline Islands. The islands are located between the equator and 9 degrees north and 138 degrees and 168 degrees east. Traditionally the Micronesian societies have been matrilineal. Three of the four states recognize the role of the traditional leaders and customs. Kosrae has no traditional leaders.
Nearly all Micronesians are Christian. Yapese are mostly Catholic, Kosraeans mostly Protestant, and Pohnpeians and Chuukese divided. Eight languages are spoken in the FSM: Chuukese, Kosraean, Kapingamarangi, Nukuoran, Pohnpeian, Ulithian, Woleaian, and Yapese. English has become the common language.
In 1525, Portuguese navigators in search of the Spice Islands (Indonesia) came upon Yap and Ulithi. Spanish expeditions later explored the rest of the Caroline Islands. The Spanish Empire claimed sovereignty over the Carolines until 1899 when it sold all of its Pacific island territories to Germany, except Guam which became a U.S. territory.
The German administration of the Carolines encouraged development of trade and production of copra. In 1914, German administration ended when Japanese naval squadrons took over possession of the Carolines, Marshalls, and Marianas.
Japan began its formal administration under a League of Nations mandate in 1920. Through extensive settlement the Japanese population in Micronesia exceeded 100,000 (as compared to an indigenous population of about 40,000 at the time).
Following U.S. occupation of the islands in World War II, the United Nations in 1947 created the Trust Territory of the Pacific Islands (TTPI) with the U.S. as administering authority. The TTPI consisted of Kosrae, Ponape (now Pohnpei), Truk (now Chuuk), and Yap (which now are the four states of the Federated States of Micronesia), Palau, the Marshall Islands, and the Northern Mariana Islands. On November 3, 1986, the FSM became independent and entered into free association with the U.S.
The constitution separates the executive, legislative, and judicial branches. It provides for a unicameral legislature of 14 senators: ten elected every two years from districts apportioned according to population, and one elected at large from each state every four years. Two of the at-large senators are elected President and Vice-President by congress every four years. Their congressional seats are then filled by special elections. President Bailey Olter (of Pohnpei) and Vice- President Jacob Nena (of Kosrae) were re-elected to second four-year terms in March 1995.
The FSM judiciary is headed by the Supreme Court, which is divided into trial and appellate divisions. The President appoints judges with the advice and consent of the congress.
The four state governments have considerable power. Each state government has its own executive, legislature, and court systems. Governors and legislators are popularly elected.
Citizens of the FSM live with a democratic political system and a hierarchical, traditional culture. In each of the states, traditional leaders hold considerable sway over local governmental activity. There have been a number of local and national elections since the inception of the Federated States of Micronesia. Overall, democracy has functioned well in the FSM.
The economy is dependent on government spending, primarily supported by funds from the United States. Under the Compact of Free Association, the U.S. is committed to provide to the FSM over $1 billion in funds and services from 1986 to 2001. In the FSM, government (national and state) employs over half of the country's workers. Other economic activity consists of mainly subsistence-level farming and fishing.
Copra and fish account for the major portion of FSM exports. The FSM also sells fishing rights to foreign companies, including firms from Taiwan, Japan, the People's Republic of China, and the U.S. The FSM has made the development of agriculture, fisheries, and tourism its top priorities.
The Government of the Federated States of Micronesia conducts its own foreign relations. Since independence, the FSM has established diplomatic relations with a number of nations, including most of its Pacific neighbors. Regional cooperation through various multilateral organizations is a key element in its foreign policy. The FSM became a member of the United Nations in 1991.
The governments of the FSM and the U.S. signed the final version of the Compact of Free Association on October 1, 1982. On November 3, 1986 the Compact went into effect and the FSM became a sovereign nation in free association with the United States. Under the Compact, the United States has full authority and responsibility for the defense of the FSM. This security relationship can be changed or terminated by mutual agreement. The Compact provides U.S. grant funds and federal program assistance to the FSM. The basic relationship of free association continues indefinitely, but certain economic and defense provisions of the Compact expire in 2001, subject to re-negotiation.