Republic of the Marshall Islands
CAPITAL: Majuro, Majuro Atoll
FLAG: The flag, adopted in 1979, is blue, with two diagonal strips of orange over white; in the canton is a white star with 4 large rays and 20 shorter ones.
ANTHEM: Ij iokwe lok aelon eo ao ijo iaar lotak ie (I Love My Island, Where I Was Born).
MONETARY UNIT: The US dollar is the official medium of exchange.
WEIGHTS AND MEASURES: British units are used, as modified by US usage.
HOLIDAYS: The government has not legislated official holidays.
TIME: 11 pm = noon GMT.
The Marshall Islands is located in the central Pacific Ocean, just north of the equator. Isolated from major population centers, Majuro, the capital, lies 3,438 km (2,136 mi) w of Honolulu, 3,701 km (2,300 mi) se of Tokyo, and 3,241 km (2,014 mi) se of Saipan, the former trust territory capital. The country consists of 29 atolls and 1,152 islands, 5 of which are major islands, extending over a sea area exceeding 1,942,500 sq km (750,000 sq mi). The main land area is only about 181 sq km (70 sq mi).
Comparatively, the area occupied by the Marshall Islands is slightly larger than Washington, DC. The atolls and islands form two almost parallel chainlike formations: the Ratak ("Sunrise"), or Eastern, group and the Ralik ("Sunset"), or Western, group. The largest atolls in the Ratak group are Mili, Majuro, Maloelap, Wotje, Likiep, and Bikini; in the Ralik group, Jaluit, Kwajalein, Wotho, and Enewetak. The Marshall Islands have a coastline of 370.4 km (230 mi).
The capital city of the Marshall Islands, Majuro, is located on the island of Majuro.
The majority of islands are in typical atoll formations, consisting of low-lying narrow strips of land enclosing a lagoon. Soils are porous, sandy, and of low fertility. Kwajalein Atoll in the Ralik, or Western, atoll is the largest atoll in the world.
The maritime tropical climate is hot and humid, with little seasonal temperature change. Diurnal variations generally range between 21–34°c (70–93°f). Trade winds from the northeast cool the high temperatures from December through March.
Rainfall averages about 30–38 cm (12–15 in) per month, with October and November the wettest and December to April the driest. Average rainfall increases from the north to the south; the northern atolls average 178 cm (70 in) annually, compared with 432 cm (170 in) in the southern atolls.
The flora and fauna of the atolls are limited in number and variety. The flora consists of species resilient to porous soils, salt spray, and relatively strong wind force. The dominant tree species include coconut palms, pandanus, breadfruit, and citrus trees. The reef systems of the islands support about 160 coral species. Fauna include rodents and indigenous strains of pig.
Among the Marshall Islands' more significant environmental problems are water pollution due to lack of adequate sanitation facilities, inadequate supplies of drinking water, and the rise of sea levels due to global warming. Any rise in the sea level is a constant and serious threat to an island nation whose land mass is 2–3 meters (6–10 ft) above sea level.
The Marshall Islands Environmental Protection Agency, established in 1984, is concerned with programs for water quality standards, solid waste disposal, earthworks, and use of pesticides. The environments of the Bikini, Enewetak, Rongelap, and Utirik atolls were contaminated by nuclear testing. Nuclear tests were carried out in the region from 1946 to 1958. The long-term environmental effects on these atolls and their populations remain undetermined.
According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 1 type of mammal, 2 species of birds, 2 types of reptiles, 7 species of fish, and 1 type of mollusk. The hawksbill turtle and green turtle are on the endangered species list.
The population of Marshall Islands in 2005 was estimated by the United Nations (UN) at 59,000, which placed it at number 185 in population among the 193 nations of the world. In 2005, approximately 3% of the population was over 65 years of age, with another 42% of the population under 15 years of age. According to the UN, the annual population rate of change for 2005–10 was expected to be 3.0%, a rate the government viewed as too high. The growth rate has declined due to emigration, but the fertility rate stood at 5.7 births per woman. The projected population for the year 2025 was 83,000. The population density was 328 per sq km (849 per sq mi). About 60% of the total population resided on two atolls, Majuro and Ebeye. Of the 34 atolls and major islands, 24 are inhabited.
The UN estimated that 68% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 1.43%. The capital city, Majuro, Majuro Atoll, had a population of 25,000 in that year.
Population has been steadily migrating from the outer atolls to the urban concentrations on Majuro and Ebeye. As a result, outer atolls have been left with unbalanced population structures of children, females, and the aged. In 2000 the total number of migrants was 2,000.
Provisions under the Compact of Free Association with the United States permit unrestricted entry into the United States and allow high-school graduates to join the US armed forces. In 2005, the net migration rate was an estimated -5.91 a change from zero in 1999.
The Marshallese people are Micronesians, who are physically similar to the Polynesian peoples. The largest non-Marshallese ethnic group is from Kosrae in the Federated States of Micronesia. There are also small numbers of Americans and Filipinos.
English is universally spoken and is the official language. Two major Marshallese dialects are also spoken. Marshallese is a Malayo-Polynesian language and the common source of each of the atolls' dialects. Both English and Marshallese are used in official communications and in commerce. Japanese is also spoken.
The people are almost entirely Christian, primarily Protestant, as a result of the arrival of American and Hawaiian Protestant missionaries in the 1860s. The United Church of Christ is the principal denomination, representing some 55% of the population. The United Church of Christ is the successor of the Congregationalists from New England and Hawaii who converted the islanders in the latter half of the 19th century. Other religious denominations represented include Assemblies of God (26%), Roman Catholics (8%), Bukot Nan Jesus (also called Assembly of God Part Two, 3%), the Church of Jesus Christ of Latter-Day Saints (2%), Seventh Day Adventists (1%), Full Gospel (1%), and the Baha'i Faith (1%). About 1% are Muslims, Jehovah's Witnesses, and members of the Salvation Army. Certain Christian holidays are celebrated as national holidays.
There are 64.5 km (40 mi) of paved road on the Majuro atoll and on the Kwajalein atoll with less than 10% of those roads on Kwajalein in 2002. On the outer islands, roads consist primarily of cleared paths and roads surfaced with stone, coral, or laterite. There are few motor vehicles.
The many scattered atolls separated by long distances make sea and air transportation essential. Domestic sea transportation is provided by interisland ships, which service each of the outer islands about once every three months. Two commercial dock facilities in Majuro and one in Ebeye furnish port facilities for international shipping. In 2005, the merchant fleet consisted of 540 ships with a capacity of 1,000 GRT or more totaling 25,102,401 GRT.
Also in 2004, the Marshall Islands had an estimated 15 airports, only 4 of which had paved runways as of 2005. Majuro International Airport, completed in 1974, accommodates aircraft up to Boeing 707 size. The government-owned Airline of the Marshall Islands (AMI), established in 1980, provides service to all outer islands with airstrips. International airline connections are provided to Tarawa in Kiribati, Funafuti in Tuvalu, and Nadi in Fiji. Air Micronesia/Continental Airlines links Majuro with major foreign destinations, including Hawaii, Guam, Manila, and Tokyo. In 2001 (the latest year for which data was available), 18,800 passengers were carried on domestic and international airline flights.
Sighting of the islands was first recorded by the Spanish navigator Alvaro de Saavedra in 1529. The British captain John Marshall, after whom the islands are named, explored them in 1788. Throughout the late 1800s and early 1900s, foreign powers ruled the islands for such advantages as trade, religious propagation, exploitation of resources, strategic considerations, and maintenance of sea routes. Spain claimed the islands in 1874, but sold them to Germany in 1899. At the outbreak of World War I, Japanese naval squadrons took possession of the Marshalls and began formal administration under a League of Nations mandate in 1920.
In World War II, after bitter fighting between US and Japanese forces that included battles for Kwajalein and Eniwetok (now Enewetak), the islands came under US control. In 1947, the Marshalls became a district of a UN trusteeship, called the Trust Territory of the Pacific Islands, which was administered by the United States.
The United States used Bikini and Enewetak atolls as nuclear testing sites from 1946 to 1958, exploding 66 atomic and nuclear tests during this period. Radiation contamination from the nuclear testing program resulted in the displacement of the indigenous people of Bikini and Enewetak.
The Marshallese people adopted a constitution in 1978, under which the Marshalls were designated the Republic of the Marshall Islands. In 1979, the constitution went into effect and the republic became a self-governing territory, with Amata Kabua elected the Republic's first president. In 1983, a Compact of Free Association with the United States, providing for full self-government except for defense, was approved by plebiscite. Section 177 of the compact stated that the United States would provide a $150 million settlement for damages resulting from the nuclear testing. The money formed the basis of a trust fund which was to generate enough money to provide annual proceeds of $18 million through 2001, to be distributed to benefit the people on the affected atolls.
In January 1986, the compact was ratified by the United States, and on 21 October 1986 it went into effect. The people of Bikini and Enewetak, along with those exposed to radioactive fallout in the 1954 Bravo Blast, fought for compensation from the United States, which in February 1990 agreed to pay $45 million to the victims of the nuclear testing program. In October 1999, the United States, through the Majuro-based Nuclear Claims Tribunal, paid nearly $2.3 million toward the $45 million originally promised in 1990, bringing the amount paid toward the total to $39.4 million.
The UN Security Council voted in December 1990 to terminate the Marshall Islands' status as a UN Trust Territory. The Republic became an independent state and joined the UN in September 1991. Because of the US promise to care for the Islanders until they could return to their home, Bikinians made US president Bill Clinton their king and expected him to look after his people.
The Compact of Free Association with the United States expired in 2001, but the provisions of the compact were subsequently extended though September 2003, with the level of yearly assistance to continue at $37 million. US president George W. Bush signed the Amended Compact of Free Association in December 2003. The 20-year compact provided for a trust fund of more than $800 million, and granted the United States exclusive military access to the Marshall Islands, in return for which the United States would provide protection against any third parties. Marshallese concerns were raised when the trust funds lost value following the September 2001 terrorist attacks in the United States. In January 2005, the Bush administration rejected efforts on the part of the Marshall Islands to get an additional $3 billion in compensation for the tests, stating there was no legal basis for additional payments.
Fifty years after testing began, Bikini Island began to attract a few tourists; scientific surveys have declared the island habitable again, although there is still a danger in eating too many of the local coconuts. Despite the scientific assurances, the US government has yet to issue a statement saying that the island is safe to inhabit. In addition, global warming and the possibility of rising sea levels have raised concern over the long-term prospects for the islands in the middle of the Pacific Ocean. The Marshall Islands, along with Kiribati and Tuvalu, rise only a few feet above sea level. The Intergovernmental Panel on Climate Change has suggested that the sea could rise 18 inches by 2100, but that figure could be much lower or higher.
Following the passing in China of an anti-secession law which would theoretically authorize a Chinese invasion of Taiwan, the Marshall Islands aligned itself with Taiwan, sending Taiwanese president Chen Shui-bian a letter of support.
The Marshall Islands is an independent republic. The constitution effective on 1 May 1979 incorporates a blend of the British and American constitutional concepts. It provides for three main branches of government: the legislature, the executive, and the judiciary.
Legislative power is vested in the Parliament, known as the Nitijela, which consists of 33 members elected from 24 electoral districts, each corresponding roughly to an atoll. The Council of Iroij (Chiefs) has 12 members, whose main functions are to request reconsideration by the Nitijela of any bill affecting customary law, traditional practice, or land tenure, and to express an opinion to the cabinet on any matter of national concern.
Executive power is vested in the cabinet, headed by the president, who is also head of state. The president serves a four-year term. The president, a member of the Nitijela, is elected by a majority of that assembly. The constitution requires the president to nominate not more than 10 or fewer than 6 members of the Nitijela as ministers. All citizens who have attained the age of 18 are eligible to vote.
In late 1999 and early 2000, two major political changes took place. For the first time, an opposition party, the newly formed United Democratic Party (UDP), gained a majority in parliament in the November 1999 elections. Then, in January 2000, Kessai Note, the Speaker of the Nitijela, was elected to the presidency, becoming the first president of the Marshall Islands who is a commoner (not a traditional chief). He was reelected in January 2004. The next elections were to be held in 2007.
There is no tradition of organized political parties in the Marshall Islands; what has existed more closely resembles factions or interest groups because they do not have party platforms, headquarters, or party structures. However, two major groupings have competed in legislative balloting. The Kabua Party of former President Amata Kabua was in ascendance from 1979 to 1999; during that time, Kabua was elected to five 4-year terms as president. Following his death in December 1996, the newly-formed United Democratic Party (UDP), led by Litokwa Tomeing, became more powerful, gaining a majority in parliament in November 1999, and again in the November 2003 elections. Kessai Note was elected president in legislative sessions in 2000; in January 2004, he was reelected to a second 4-year term by a vote of 20 to 9.
The next legislative elections were to be held no later than November 2007.
There are 24 local governments for the inhabited atolls and islands. Typically, each is headed by a mayor, and consists of an elected council, appointed local officials, and a local police force.
The judiciary consists of the Supreme Court, the High Court, the District Court, and community courts. The Supreme Court has final appellate jurisdiction. The High Court has trial jurisdiction over almost all cases and appellate jurisdiction over all types of cases tried in subordinate courts. The District Court has limited civil and criminal jurisdiction nationwide.
Community courts in local government areas adjudicate civil and criminal cases within their communities. In 1984, a traditional rights court was established to determine questions relating to titles or land rights and other legal interests involving customary law and traditional practice.
The constitution provides for an independent judiciary. The constitution also provides for the right to a fair trial. It prohibits the arbitrary interference with privacy, family, home, or correspondence. Government authorities respect these provisions in practice.
There are no armed forces in the Marshall Islands. Under the Compact of Free Association, the United States provides defense for a minimum 15-year period and operation of the Kwajalein Missile Range for 30 years.
The Marshall Islands was admitted to the United Nations on 17 September 1991, and participates in several specialized agencies including the FAO, IAEA, the World Bank, UNCTAD, UNESCO, and the WHO. In 1992, it became a member of ESCAP. The country is also a member of the ACP Group, the Asian Development Bank, G-77, Sparteca, and the Pacific Island Forum.
In 1996 the Marshall Islands joined with 38 other nations to form the Alliance of Small Island States (AOSIS). The Alliance, concerned with global warming and rising sea levels, wants the industrialize nations to reduce greenhouse gas emissions. In other environmental cooperation, the Marshall Islands is part of the Convention on Biological Diversity, the Kyoto Protocol, the Montréal Protocol, MARPOL, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.
The Marshall Islands operates under the Compact of Free Association signed with the United States on 25 June 1983. Amendments to the CFA went into effect on 1 May 2004. These amendments provide the Islands with a promise $62 million over the 10 years and access to US programs and services. Under the compact, the United States has full authority and responsibility for security and defense of the Marshall Islands. In return, the Marshallese government must conduct foreign affairs in cooperation with US security and defense responsibilities.
The economy consists of a monetary sector and a nonmonetary subsistence sector. The monetary sector is localized in Majuro and Ebeye and is sustained largely by expenditures of the government and Kwajalein Missile Range employees. In turn the government is heavily dependent on grants from the US government provided, particularly those under the Compact of Free Association, which went into effect in 1986. These grants, averaging ranging from $40 million/year to $60 million/year, are given in exchange for furnishing military facilities and comprise roughly 60–70% of total government revenues, and 40% to over 50% of total GDP (though individual estimates are subject to statistical deficiencies due to the uncertainties in the collection of data). Copra (dried coconut meat) production provides a source of cash income for outer-atoll families engaged in subsistence activities.
The labor force has increased 160% from 1988 to 1999, to about 28,700, with the percent in industry doubling from 10% to 21%. Among the 21% engaged in agriculture and fishing, the main activities are copra (dried coconut meat) production, and the cultivation of breadfruit, taro, and pandanus. The nascent tourist industry employs less than 10% of the labor force, and efforts to capitalize on beautiful beaches enlivened with WWII relics are hampered by fears of radioactive fallout from the atomic testing done in these remote islands in the 1950s. At least half of the population still suffers from the effects of this fallout. In services, there have been attempts to develop offshore financial and ships registry services taking advantage of the time-space convergences in the computer age. In 1993, the Marshall Islands led all other countries in the passage of legislation decentralizing procedures for ship registry and mortgages so that they could be handled from distant offices, an important advantage for a country whose nearest neighbor, Hawaii, is over 2,100 miles away. By April 2001, the Marshall Islands had become the ninth-largest flag of convenience registry in the world in terms of tonnage. However, attempts to offer competitive offshore services have also put the Marshall Islands on virtually every blacklist developed during the 1990s to crack down on tax havens and regulatory avoidance, including the US Financial Action Task Force (FATF) for inadequate safeguards against money laundering and the OECD's blacklist for open registry countries with poor health and safety records.
The islands have few natural resources, and imports exceed exports by factors ranging from 11 to 18, a gap that is also financed by grants from the United States under the Compact Agreement. Negotiations to extend the terms of the agreement with the United States were initiated in 1999, although the long-term goal was to substitute grants under the Compact with returns from a Marshall Island Intergenerational Trust Fund (MIITF). In the meantime, the Compact arrangements were extended through 31 October 2003. Savings for an MIITF were expected to come out of decreased expenditures on debt servicing.
The economy underwent a recess in 2004, contracting by - 1.5%, down from positive growth figures in 2003 (2.0%), and 2002 (4.0%). The inflation rate was relatively stable, and at 2.4% in 2004 it did not pose a problem to the overall economy. There are no official numbers for the unemployment rate, but it is estimated to hover somewhere around 30%. US assistance remains the major source of income for this tiny country, and tourism is expected to play an increasingly important role in the future.
The US Central Intelligence Agency (CIA) reports that in 2005 the Marshall Islands's gross domestic product (GDP) was estimated at $115.0 million. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $1,600. The annual growth rate of GDP was estimated at 1%. The average inflation rate in 2001 was 1.8%. It was estimated that agriculture accounted for 14% of GDP; industry, 16%; and services, 70%.
The labor force numbered 28,698 in 2002. Approximately 58% of the labor force was engaged in the service sector, with 21% in industry and 21% in agriculture. In 1999, the estimated unemployment rate was estimated at around 31%.
Although the constitution provides for the freedom of association, and the government construes this to include labor organization, as of 2002, no labor unions existed. There is no statutory provision permitting strikes by workers nor is there a right to collectively bargain or organize. Generally wages are set in accordance with the minimum wage regulation and determined in part by market influence.
There is no prohibition against child labor but the law requires compulsory education until the age of 14. In practice this requirement is not effectively enforced, and many children work, especially in the fishing industry. A minimum wage of $2 per hour was in place by the government in 2002. There are no laws concerning maximum work hours or health and safety in the workplace.
The traditional interplanting of root crops and other vegetables with coconuts, which maintained self-sufficiency in food and provided the Marshallese with dietetic variety before modern times, is still widely practiced as a subsistence activity. Some 6,500 hectares (16,000 acres) of coconut palm are productive. Dried coconut meat, known as copra, is produced on almost all islands and atolls; production in 2004 amounted to about 5,000 tons. Taro, breadfruit, and pandanus are also grown.
Livestock on the islands consists of pigs and poultry. Most families raise pigs for subsistence and for family and community feasts. In 1981, pigs were imported from New Zealand to improve the strains of the local breed.
While subsistence fishing for inshore species is carried out from all atolls, there is little domestic commercial fishing in the nation's 1,942,500 sq km (750,000 sq mi) of sea. The total catch in 2003 amounted to 38,475 tons. Principal marine resources include tuna, prawns, shrimp, seaweed, sponges, black pearls, giant clams, trochus, and green mussels. Colorful baby giant clams for ornamental aquariums are grown for export to the United States.
A fisheries base with a freezer plant (200 tons capacity) and a chilling plant (50 tons capacity) was constructed in Majuro with Japanese government assistance. In 1986, the Marshall Islands Maritime Authority (MIMA) was reestablished to organize all marine resource activities, including protection, management, and development, under one agency. During the mid-1990s, about 10,500 foreign fishing vessels annually operated in the Marshall Islands' waters, about three-fourths of them Japanese.
The Marshall Islands has an exclusive economic zone of over 2,000,000 sq km (770,000 sq mi) of ocean that supports significant stocks of tuna. The government collects license revenue from other nations for access to tuna resources in the exclusive economic zone. These fees have been decreasing since 2002, due to migrating patterns of fish away from Marshall Islands waters.
Some 8,900 hectares (22,000 acres) are planted with coconut palm. Replanting has been undertaken on Arno, Lae, Maloelap, Rongelap, Ujae, Wotho, and Wotje. Pine species are under experimentation in a windbreak tree project on Ebeye. In 1984, a sawmill was purchased for processing coconut trunks and other tree species as lumber. In 2004, forest product imports totaled $1.9 million.
There was no mining of mineral resources. However, preliminary surveys have revealed the presence of phosphate and manganese nodules in the seabed within the territorial waters. Lagoon dredging of sand and coral for construction purposes was undertaken in Majuro and Ebeye.
The Marshall Islands is nearly 100% dependent on imported fossil fuels for electric power generation. In 1988, fuel imports amounted to $3.6 million, or 10% of total imports. In 1995, mineral fuels and lubricants accounted for about 25% of merchandise import expenditures. The urban centers of Majuro and Ebeye have major generating facilities. The Majuro power plant, commissioned in 1982, has an installed power capacity of 14,000 kW. A 5,200 kW power plant was commissioned in Ebeye in 1987. The low power requirements in the outer islands are met by solar-powered systems. However, as of 2003, there were still outer island residents without adequate access to electricity because they were not supplied with solar power. Electricity production was 57 million kWh in 1994.
The economy's small manufacturing sector, localized largely in Majuro, accounts for less than 4% of the gross revenues generated in the private sector. The largest industrial operation is a copra-processing mill under a government and private-sector joint enterprise. (Copra is dried coconut meat.) The rest of the manufacturing sector consists of small-scale and domestic operations, such as coir making, furniture making, handicrafts, and boat making. In 1986, a government-owned dairy factory was established in Majuro, producing liquid milk, ice cream, and yogurt from imported milk powder and butterfat. In 1987, a small tuna cannery began production in Majuro but did not survive the economic downturns of the late 1990s. Manufacturing output increased rapidly in the early 1990s climbing from $853 million in 1991 to a peak of $2.7 billion in 1995, a 215% increase. The growth was not sustained, and by 1998, manufacturing output had fallen almost 45% to $1.48 billion. Coconut oil was again the Marshall Islands' only appreciable manufactured export.
At the end of 1999 a tuna loining plant was opened in Majuro, an operation that performed all but the canning of tuna, which was done at a StarKist cannery in American Samoa. By 2000 manufacturing output had climbed to $1.72 billion. In the period from 1988 and 1999, the percent of the work force engaged in industry more than doubled, from 10% to 21%. The sector is dominated by small-scale, labor-intensive operations, however, and only accounts for 16% of GDP.
The tuna factory closed in 2005 due to lack of government assistance and interest. Although the plant employed 400 fully trained workers (mostly women), and although it pumped around $6 million in the economy, government officials did not provide any incentives to keep it open. This only accentuated the country's reliance on imports and aid from the United States.
While there are no institutions involved in scientific research or training, the College of Micronesia nursing facility and science center, located in the Majuro Hospital, provides instruction in nursing technology and science.
Domestic trade accounts for the majority of the total gross trade revenue from urban private enterprises. The modern commercial/retail sectors are located in Majuro and Ebeye and consist mainly of service establishments and imported goods, although increasing amounts of locally produced vegetables and fish were being marketed. Most imports are purchased and consumed at these two main locations. Other islanders are primarily employed in subsistence farming or in production of copra and woven handicrafts. Domestic trade in outer island areas is primarily for basic necessities.
Heavy and increasing trade deficits result from limited exports and dependency on imports for consumer and capital goods. Over 90% of the value of exports is accounted for by fish, coconut oil, and copra cake (made of dried coconut meat). The major imports are foodstuffs, machinery and equipment, fuels, beverages, and tobacco.
In 2000, exports totaled $9 million (FOB—Free on Board), while imports grew to $54 million. In 2004, most of the exports went to the United States, Japan, Australia, and China. Imports primarily came from the United States, Japan, Australia, New Zealand, Singapore, Fiji, China, and the Philippines.
The economy suffers from a long-standing imbalance of trade, with imports far exceeding exports. A comprehensive record of international transactions in the form of standardized balance-of-payments accounts was not maintained during the trusteeship period (prior to 1986). The chronic trade deficit is offset by official unrequited transfers, predominantly from the United States.
The US Central Intelligence Agency (CIA) reported that in 2000 the purchasing power parity of the Marshall Islands' exports was $9 million while imports totaled $54 million resulting in a trade deficit of $45 million.
Exports of goods and services totaled $4 million in 2004, while imports grew to $75. The resource balance was consequently negative, and on downward path—from -$51 million in 2003, to -$55 million in 2004. The current account balance was however positive, at $24 million in 2003, and $14 million in 2004. This discrepancy between a negative resource balance and a positive current account balance can be attributed to the aid the Marshall Islands receive from the United States. Foreign exchange reserves (including gold) increased to $18 million in 2003, covering less than three months of imports.
Financial services are provided by three commercial banks: the Bank of Guam and the Bank of Marshalls, located in Majuro, and the Bank of Hawaii, located in Ebeye. The Marshall Islands Development Loan Office in Majuro was established as an independent government corporation in 1982. There were four credit unions, operated by over 2,000 members.
The Marshall Islands has no stock issues or securities trading.
Two foreign insurance companies, located in Majuro, provide coverage. A US insurance company provides loan protection policies to credit unions.
Government revenues are derived from domestic sources and US grants. Domestic revenues are from taxes and nontax sources (fishing rights, philatelic sales, and user charges). The leading areas of expenditure include health services, education, public works, and transportation and communication.
The US Central Intelligence Agency (CIA) estimated that in 1999 the Marshall Islands' central government took in revenues of approximately $42 million and had expenditures of $40 million. Revenues minus expenditures totaled approximately $2 million. Total external debt was $86.5 million.
Income tax is applied to wages and salaries at graduated rates. Business tax is applied to gross revenues of service-related enterprises generated anywhere in the Marshall Islands, the Federated States of Micronesia, and Palau, except on Kwajalein. A sales tax is applied only in Kwajalein. There is also a fuel tax.
Import taxes are generally ad valorem; duties range from 5–75%. The average rate is 10%. Specific duties apply to cigarettes, soft drinks, beer, spirits, wine, gasoline, and other gases and fuels.
The government favors joint ventures with foreign private investors but efforts to attract foreign investment and develop new export products have been largely unsuccessful. The IMF has urged the reduction in the minimum wage and the reserved list for small scale investment as means to secure more foreign direct investment. Foreigners may lease but not own land. The US department of defense operates a missile testing range on behalf of the strategic defense command in Kwajalein.
A tuna canning plant that was opened in 1999 was subsequently closed in 2005, drawing with it disinvestments of almost $6 million annually.
The first five-year national development plan (1985–89), which was rephased to 1986/87–1990/91, to meet the requirements of the Compact of Free Association with the United States, constituted the first phase of a 15-year development program. The plan focused on economic development, with emphasis on private-sector expansion, personnel development and employment creation, regional development, population planning and social development, and cultural and environmental preservation. Total funding across the 15 year span of the agreement was envisioned at about to $1 billion or about $65 million dollars per year in financial aid from the United States. Aid was gradually decreased across the 15 year period, and a down-step in 1996 caused a budget deficit that the government filled with debt financing. Paying off the bond obligations kept government expenditures and investment strapped until they were paid off in 2001. By that time, the size of the government had been significantly reduced. Compared to 1994/95, 2002 expenditures were 25% less in current dollar terms. Also, US aid had dropped to an estimated $39 million. Under Title 11 of the Compact of Free Association, funding was scheduled to expire in 2001, with provision of a two year extension equal to the average level of assistance over the last 15 years. This increased US grant aid to almost $60 million for 2001, above the average of $45.33 million for 1997 to 2001.
Tourism was under development in the late 1990s with the opening of a first-calls resort hotel, the first in the Marshall Islands.
In 2001 the government paid off all commercial debt but usable fiscal resources remained short because of a need to set aside about $30 million in 2001 and 2002 for the initial capitalization of the Marshall Islands Intergenerational Trust Fund (MIITF). The MIITF is the government's long-term solution to the island's public finance needs, but is not projected to provide substantial yearly dividends until at least 2024. In the meantime, the government renegotiated the terms of Title II of the Compact. In an agreement signed 23 April 2002 to go into effect in 2004, US aid was extended for 20 years, to 2024, with a base grant of $37 million. The base grant was to be reduced by $500,000 each year with the decrement to be deposited in the MIITF, which was also to receive an initial $8 million contribution from the United States. Inflation indexation was set with a cap of 5%, down from 7% under the old agreement. It also agreed to establish a RMI-US Joint Economic Review Board (JERB) to monitor and oversee the spending of the grant money. The priority targets set for spending are education, health, and infrastructure. The agreement requires amendment to the Compact of Free Association, which requires passage by both houses of the US Congress.
Another agreement reached in April 2003 was a 50-year extension of the US lease of land on the Kwajalein atoll as a defense site, with an option to extend an additional 20 years. As the current lease was set to expire in 2016, this meant an extension to 2066. In calculating its assistance to the Marshall Islands, the United States includes not only the $13 million a year paid for the Kwajalein lease under the Military Use and Operating Rights Agreement (MUORA) but also an estimated $21 million in tax dollars that are infused through salaries, tax payments and telecom services, plus an estimated $10 million worth of federal programs, like the postal service. The RMI government expressed concerns that the assistance is insufficient to prevent economic stagnation, and social and infrastructure deterioration, and/or prevent recourse to debt financing to fill revenue shortfalls.
Private-sector provision of community and social services is mainly through the Marshalls Community Action Agency, a nonprofit organization. Among government agencies, the Ministry of Social Services is involved in five major areas: housing, women's and youth development, feeding programs, aging, and other community development welfare programs. Funding of these services is provided almost entirely by the United States. A social security system provides old age, disability, and survivor benefits, paid for by employers and employees. The program is funded by 7% contributions from both employers and employees. Retirement is set at age 55.
The Marshallese society retains a traditional matrilineal structure. Each person belongs to the bwij, or clan, of his or her mother, and has the right to use the land and other property of the bwij. The head of the bwij is called an alap. The alap is the spokesperson between the clan members and the members of the iroij, or royal clan. Inheritance of traditional rank and of property is matrilineal, and women occupy important positions within the traditional social system. However, within the economic system, many hold low-paid dead-end jobs. Spousal abuse is common, usually in conjunction with alcohol use. No overt instances of sex discrimination have been reported. The government is committed to protecting and promoting the rights of children.
The government fully respects the human rights of its citizens. No human rights organizations exist, but there are no legal restrictions against their formation.
There are two hospitals: the Armer Ishoda Hospital in Majuro, with an 81-bed capacity, and a renovated hospital in Ebeye. Both hospitals provide dental services. In 2004, there were an estimated 47 doctors, 298 nurses, and 185 midwives per 100,000 people.
Rudimentary health care on the outer atolls is provided through 69 dispensaries staffed by health assistants. Emergency cases are sent to the Majuro or Ebeye hospital and, when necessary, to hospitals in Honolulu. Dental services to the outer atolls are provided by periodic visits by dental teams from Majuro and Ebeye. Once the site for nuclear testing, the Marshall Islands government has once again considered testing on the uninhabitable islands of Bikini and Enewetak.
Infant mortality was an estimated 29.45 per 1,000 live births as of 2005. As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 44.98 and 6.1 per 1,000 people. Life expectancy was 70.01 years in 2005. Immunization rates were as follows: diphtheria, tetanus, and pertussis, 67%; measles, 59%; polio, 62%; and tuberculosis, 96%. The prevalence of anemia in children under five years of age was 43%. No polio, measles, or neonatal tetanus cases were reported. Alcoholism and drug abuse are common and there is a relatively high incidence of sexually transmitted diseases.
In 1999, there were about 6,478 households with an average of 7.8 people per household. About 70% of households relied on rain water as a primary water source, 38% of households had access to flush toilets (either inside their own residence or outside), and 63% had access to electricity for lighting and/or cooking.
Houses in the urban centers are usually simple wooden or cement-block structures, with corrugated iron roofs; because of the limited land availability, houses are heavily crowded. In the outer atolls houses are constructed of local materials, with thatched sloping roofs and sides of plaited palm fronds.
The Ministry of Social Services provides housing grants, principally to low-income families, through a low-cost housing program and a grant-in-aid program. Government housing is administered by the Public Service Commission.
Education is compulsory for nine years. Primary school covers six years of study, followed by six years of secondary school. A high school entrance examination is given to all eighth graders in order to determine the 300 or so students who will be admitted into the two public high schools each year. For students who are admitted to high school, a comprehensive four-year program of secondary education provides instruction in general studies, college preparatory courses, and vocational training.
Primary school enrollment in 2003 was estimated at about 76% of eligible students. The same year, secondary school enrollment was about 65% of eligible students. The student-to-teacher ratio for primary school was at about 17:1 in 2003; the ratio for secondary school was also about 17:1. In 2003, private schools accounted for about 24% of primary school enrollment and 34% of secondary enrollment.
Higher education is provided through formal programs of teacher training and the provision of grants for university training abroad. The Majuro campus of the College of Micronesia opened its School of Nursing and Science Center in 1986. In 1991, the Marshall Islands campus separated from the College of Micronesia system and became accredited by the Accrediting Commission for Community and Junior Colleges of the Western Association for Schools and Colleges (WASC). On 1 April 1993, the College of the Marshall Islands was established as an independent institution with its own Board of Regents. In 2001, about 18% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 1999 was estimated at about 93.7%.
As of 2003, public expenditure on education was estimated at 11.2% of GDP.
The College of Marshall Islands Library has about 10,000 volumes, while the High Court Library holds 50,000. In Majuro, the Alele Museum, which also houses a library, was completed in 1973. Alele Museum showcases both the traditional and colonial history of the Marshalls. The library houses historical documents and photographs from the trust territory archives. More than 2,000 glass-plate negatives taken between 1890 and 1930 are on loan to the museum. One of Alele's latest attractions was the elaborate shell collection from Mili Atoll.
The inter-island communications network consists of shortwave outer-island radio stations, which link all major islands and atolls. In 2003, there were 4,500 mainline phones and 600 mobile phones in use nationwide. The island of Ebeye is linked to Majuro by radio and also by satellite.
As of 2001, there were two radio stations. The government radio station, which has advertising, relays world news from Voice of America and Radio Australia. AFN Kwajalein operates one television station and one radio station for the US military. In 2003, there were 1,400 Internet users in the country served by 6 Internet hosts.
There are no daily newspapers. A weekly newspaper, The Marshall Islands Journal (2002 circulation 3,700), is published in Majuro in English and Marshallese. The Marshall Island Gazette, established in 1982, is a free four-page government newsletter, printed in English.
The constitution provides for free expression and the government is said to respect these provisions in practice.
A number of consumers' cooperatives are in operation. The Chamber of Commerce is located on Majuro. Marshallese society is matrilineal and organized on the basis of the clan (bwij). The head of the clan (alap) serves as spokesman between clan members and members of the royal clan.
At the community level there are youth organizations, including Boy Scouts and Girl Scouts, women's organizations, and various religiously affiliated social organizations. Sports associations exist for such activities as tennis, weightlifting, baseball, and track and field. A national women's organization began in 1986. The Red Cross is also active.
Tourist attractions include the sandy beaches on the atolls, protected lagoons, underwater coral reefs, and abundant marine life, including large game fish. Diving and fishing tours are also popular. The outer atolls of Mili, Maloelap, Wotje, and Jaluit offer many Japanese and American relics from World War II. Tourist facilities are available in Majuro, the capital, however, tourism remains limited in the outer atolls and there are few accommodations for visitors.
There were 7,195 tourists who visited the Marshall Islands in 2003. United States citizens are not required to have a visa. A vaccination certificate may be required if traveling from an infected area. An AIDS test may be necessary if staying for over 30 days.
In 2005, the US Department of State estimated the daily cost of staying in Kwajalein Atoll at us$112.
Amata Kabua (1928–96), president from 1979 until his death, was founder and leader of the Political Movement for the Marshall Islands Separation from Micronesia in 1972. He previously served as a member of the Congress of Micronesia and guided his country to self-governing status under the US-administered UN trusteeship. He was a graduate of the Mauna Olu college in Hawaii and taught secondary school before starting his political career. Kunio Lemari (b.1942) was in office for a month in 1996–97; Imata Kabua (b.1943) was president from 1997 to 2000. Kessai Hesa Note (b.1950) was elected president in 2000 and reelected in 2004.
The Marshall Islands have no territories or colonies.
Compacts of Free Association with the Marshall Islands, Federated States of Micronesia, and Palau. Washington, D.C.: U.S. Government Printing Office, Congressional Sales Office, 1998.
Dibblin, Jane. Day of Two Suns: US Nuclear Testing and the Pacific Islanders. New York: New Amsterdam, 1990.
Harris, Michael. The Atomic Times: My H-Bomb Year at the Pacific Proving Ground: A Memoir. New York: Presidio Press/Ballantine Books, 2005.
Hezel, Francis X. Strangers in Their Own Land: A Century of Colonial Rule in the Caroline and Marshall Islands. Honolulu: Center for Pacific Island Studies, 1995.
Leibo, Steven A. East and Southeast Asia, 2005. 38th ed. Harpers Ferry, W.Va.: Stryker-Post Publications, 2005.
Weisgall, Jonathan M. Operation Crossroads: The Atomic Tests at Bikini Atoll. Annapolis, Md.: Naval Institute Press, 1994.
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