Remarks of David B. Cohen, Deputy Assistant Secretary of the Interior for Insular Affairs, Annual Meeting of the Pacific Power Association, Majuro, Republic of the Marshall Islands, August 7, 2007.
Yokwe, ladies and gentlemen. It’s an honor to be invited to speak at this year’s meeting of the Pacific Power Association. Thank you for inviting me to be here with you today. It’s great to be back here in Majuro. We were here about eight weeks ago with Secretary of the Interior Dirk Kempthorne, and we very much appreciate President Note, the Marshall Islands government and the people of the Marshall Islands for having provided us with a very productive and educational visit.
I believe that most of you are familiar with the U.S. Department of the Interior’s role in the Pacific and with our other island communities. For those of you who don’t know, the Secretary of the Interior generally administers the U.S. Government’s relationship with its territories, specifically Guam, American Samoa, the U.S. Virgin Islands and the Commonwealth of the Northern Mariana Islands. He also administers the financial assistance we provide to the nations in free association with the U.S., namely the Marshall Islands, the Federated States of Micronesia and Palau, under the Compacts of Free Association. Those duties are delegated to me and the office that I run, the Office of Insular Affairs. OIA has an annual budget of $430 million, most of which is provided to the Pacific in the form of grants. Much of those grants go to support infrastructure projects, including power.
Secretary Kempthorne had quite a trip throughout the Pacific. We stopped in Midway, Saipan, Guam, Palau, Pohnpei, Kwajalein, Ebeye, Majuro and American Samoa. We listened to the concerns of local leaders everywhere we went, and everywhere we went, the high cost of energy was near the top of the agenda.
With some analysts predicting that the price of oil may reach $100 per barrel in the not-to-distant future, energy costs are a worldwide concern. I can’t think of anywhere, however, where the impact of energy prices is greater than it is in the islands. Because the islands depend on the ability to have relatively small quantities of fuel transported great distances, it is almost impossible for the islands to purchase fuel on favorable terms. This is compounded by the fact that the generating equipment that the fuel is used for is, in the islands, typically out of date and inefficient. The islands therefore have to pay more for fuel and have to buy more of it to produce a given amount of electricity than is the case, say, in almost every stateside community. That is why some island utilities have to charge more than 30 cents per kilowatt hour. The cost of electricity in the islands is a significant competitive disadvantage when it comes to trying to attract and retain business investment, which makes it even harder for the islands to develop the economies of scale necessary to avoid astronomically high energy costs. The economies of most of our island communities are depressed as it is, and the economics of energy are a massive burden that weighs them down as they try to improve their standards of living and quality of life.
None of this is news to anyone here. Many of you have already had to face your governor, your president, and your legislature and explain why you had to double—or more—power rates to customers. And why that would just barely allow you to buy enough fuel to keep your generators turning—and not enable you to buy the new equipment you desperately need, or perform the preventative maintenance and conduct the training that Tony is always harassing you about. Rising energy prices have sparked public protests in some island communities.
Throughout the world, people are talking about the need to reduce dependence on oil. Nowhere is this a greater imperative than in the Pacific. There are, of course, both environmental and economic reasons for the need to reduce dependence on oil. If oil and other carbon-based fuels indeed contribute to global warming, then the low-lying islands of the Pacific will be the first casualties of the world’s failure to reduce its collective carbon footprint. It is fitting that we are holding this conference in Majuro, a place that some scientists have predicted could one day be underwater. We all hope and pray that those predictions will not come true, but the people who live here have no choice but to take them seriously. I’ve been to Majuro many times, but never cease to be amazed at the view of this atoll from the airplane as you fly in. Majuro, and the other low-lying atolls of the Marshall Islands, are such thin, fragile necklaces of land in the middle of a world’s largest ocean. From the airplane, you wonder how people can live on what looks like such an isolated, precarious sliver of land. That feeling is in no way abated as you drive in from the airport. Throughout your entire ride, the lagoon is immediately to your left and the mighty Pacific Ocean is immediately to your right. And as many of you know, that tiny little bridge that you cross on the way in from the airport—the one that rises maybe about seven feet off the ground—when you’re at the top of that bridge, you’re at the highest point in Majuro.
That is why island communities have to lead the way to a future of alternative energy. In addition to the environmental concern, there is, as I noted earlier, a compelling economic incentive for the islands to reduce their dependence on oil.
It would be a great boon for the islands if they could produce energy from the elements that they have in abundance—sun, water, wind…and even coconuts. For many years, we’ve heard talk about the ability to Ocean Thermal Energy Conversion, or OTEC, technology to produce electricity and fresh water for many island communities. We should all be following with great interest the projects that are moving forward in Diego Garcia and right here in the Marshall Islands, in Kwajalein. If it can work there, it can hopefully work in other island communities where the ocean depth grows steeply from the shore. Solar power and wind power have been in commercial operation for a longer period of time, and we need to aggressively find ways to harness these technologies in ways that make economical and technological sense for small island communities.
I’ve heard of other possibilities as well. Some have suggested, for example, that the geothermal resource in places like the Northern Mariana Islands can be harnessed for cost-effective energy production. I’ve also read promising literature on wave energy technology, although the feasibility of this technology for many of the tropical island communities represented here has not yet been established.
We need to find out which alternative energy solutions are right for the islands. Some of these technologies may not work in the islands or may not work period, but they should be thoroughly explored.
The economic advantage of all of these renewable energy technologies is that their operating costs are not affected by the price of oil. The economic disadvantage is that they tend to have higher capital costs than more conventional technologies. These higher capital costs can be made up over a lifecycle of lower operating costs, but the challenge then is to amass the capital needed to build these renewal energy facilities in the first place. This strains a resource that is even scarcer in the islands than oil: cash.
I have to believe, however, that where there’s a will, there’s a way. For one thing, multilateral institutions have shown a willingness to provide financial support for alternative energy projects in the region. These initiatives are promising, and perhaps those of us in the donor community could do a better job of coordinating our efforts to help the islands fund alternative energy projects. We also have to find ways to involve the private sector and private investors. Many of you may not know this, but I haven’t always been a government bureaucrat. Until five years ago, I actually had to work for a living and be a contributing member of society. I was an attorney—OK, I realize that it may be a stretch to call an attorney a “contributing member of society.” But when I was a private sector attorney my main specialty was project finance, primarily financing energy projects through bank loans, other private investment, bonds and public-private partnerships. I believe that there is an opportunity to finance alternative energy projects in the islands through these means as well, although some projects may need some support from the donor community in order to make them financeable. But if we rely on government and the donor community alone, we’re never going to make sufficient progress.
I understand that many island communities have some degree of wariness about public-private partnerships, which in some contexts is synonymous with privatization. Some island communities, such as the CNMI and Guam, have been willing to involve the private sector in energy functions that the islands have traditionally handled through the public sector. Public-private partnerships can be attractive ways to access capital for energy systems and improve their management. I have a theory about why public-private partnerships, which have been successful around the world, have traditionally been a harder sell in the islands. It’s true that collective ownership is engrained in Pacific cultures. But also, local government employees tend to be the group that is most suspicious of public-private partnerships, because they see it as a threat to their jobs or an indictment of their performance. I believe that the concerns of public employees can be assuaged on both counts, but these perceptions persist. In the islands, at least in the U.S.-affiliated insular areas, local government employees tend to make up a vastly disproportionate percentage of the electorate. That in itself, I believe, is a serious structural problem for the economies of the U.S.-affiliated insular areas, and one of the many negative effects of this structural imbalance is that it makes it politically more difficult to consider public-private partnership solutions that could benefit the community.
We should continue to explore the feasibility of larger scale power generation facilities that use alternative energy technologies. However, there is much that can be done on a smaller, more localized scale to enable the islands to harness the benefits of alternative energy.
Many of you here are already working on establishing alternatives in photovoltaic or solar energy in your communities. I commend these efforts, especially right here in the Marshall Islands. This is a promising source of energy for many island communities, especially those that aren’t competing to set the world’s record for the most rainfall.
Another interesting development has been the use of biofuel from coconuts which can be used to fuel lamps and even diesel vehicles. I know some vehicles in the North Pacific are already using coconut oil diesel fuel, including right here in the Marshall Islands. I was quite pleased to learn that all of the U.S. Peace Corps vehicles driving around the island of Pohnpei are fueled by coconut oil, and leave in their wake the pleasant smell of coconut as they drive by.
The way to get these projects moving is for innovative private sector companies to see them as business opportunities in your island communities. Once again, the Department of the Interior will provide an excellent forum for these opportunities to be explored. Our fourth Conference on Business Opportunities in the Islands will be held on Guam on October 8 and 9. As in past years, alternative energy and other infrastructure will be among the topics addressed. The major headline will be the Guam military buildup, which will entail a government investment of approximately $16 billion. That public sector investment will spur a great deal of commercial opportunity for many businesses, not just those companies that are fortunate enough to get direct contracts with the Department of Defense. Consider that the Guam buildup will result in Guam’s population increasing by 35,000-40,000 people, or over 20 percent. Those people will need places to live, places to shop, places to eat. They will need products and services to buy. And they will most certainly need energy.
There are plenty of opportunities in the other island communities as well. Almost all of the island communities are looking for ways to address their energy needs. Some business opportunities can be supported by financial assistance from the Office of Insular Affairs, the U.S. Department of Agriculture, multilateral institutions and others to support infrastructure development, engineering, consulting, feasibility studies and other activities. Other opportunities will be viable without public financial support.
The Conference on Business Opportunities in the Islands is one-stop shopping for opportunities in all of the U.S.-affiliated island communities. Last year’s conference in Honolulu was hosted by Secretary of the Interior Dirk Kempthorne, and was attended by President Note of the Marshall Islands, President Remengesau of Palau, then-President Urusemal of the FSM, the Governors of the territories, high-ranking U.S. government officials, officials of multilateral institutions such as the Asian Development Bank, high ranking officials from all of the island communities, potential local business partners from all of the island communities, and businesses from all over the U.S. and the world. It’s the one venue where you learn about opportunities in the islands and actually meet the government officials and potential local partners that you’ll need to meet to pursue these opportunities. I encourage all of you to attend, especially the private sector representatives that are here today. You can register online at www.businessopportunitiesconference.com. Space is limited, and we always fill up quickly.
I thank you all for listening to my infomercial, and to my musings on the great need in the islands to develop alternative energy. We all know the saying that the definition of insanity is doing the same thing over and over again and expecting a different result. Continuing to rely on the same old energy solutions will yield the same old result: Excessively high electricity prices, arrested economic development, living standards that don’t improve. We’re going to have to find a better way. I look forward to working with all of you to help find that better way, so that all of our island communities can enjoy a strong and prosperous future.
Thank you and Kommol Tata.
Tuesday, January 29, 2008
Saipan Chamber of Commerce Annual Installation Dinner Speech, 2007
Remarks of David B. Cohen, Deputy Assistant Secretary of the Interior for Insular Affairs, Saipan Chamber of Commerce Annual Installation Dinner, Saipan, Commonwealth of the Northern Mariana Islands, January 5, 2007.
On Monday, I attended the inauguration of Governor Felix Camacho of Guam. His inaugural address was entitled “A Season of Transformation”, and he spoke of the tremendous changes that Guam was about to undergo as a result the expected military buildup there. The Commonwealth of the Northern Mariana Islands is also entering a season of transformation. The forecast for the upcoming season in the CNMI, however, is much stormier than that for its neighbor to the South.
“Federalization” of the CNMI is almost certain to occur in the near future. Of course, “federalization” means a number of different things, and the final contours of the impending federalization are not fully certain. What is certain is that these islands will soon undergo a transformation that may rival the transformation that came with the rise of Saipan’s garment industry.
Under the worst case scenario, the transformation of this society will be abrupt and painful. I’m sorry to say that in my opinion, the worst case scenario is much more likely in this case than the worst case scenario usually is. Can there be Federalization Without Strangulation? I’m afraid that we may soon find out.
As I’m sure you’ve heard by now, federalization of the CNMI minimum wage is on an extremely fast track. It is woven into the bill to increase the Federal minimum wage to $7.25. Under the Democrats’ proposal, the CNMI minimum wage will increase from $3.05 to $7.25 over a four-year period, jumping $1.50 in the first year alone. This could very likely result in a complete and immediate exodus of what’s left of Saipan’s garment industry.
One does not have to be a fan of the Saipan garment industry to recognize the danger of its abrupt departure. The garment industry has in recent years accounted for about 35 percent of the local government’s revenues. Could the local government absorb the rapid loss of such a large portion of its revenues and still protect the health, safety and welfare of its people? Could the economy survive an immediate exit of the garment industry at a time when the other pillar of the economy, the tourism industry, is also reeling? I’m afraid that we may soon find out.
The fact is that Saipan’s garment industry appears to be on its way out anyway. In the long run, I believe that the absence of the garment industry will be good for the CNMI. In order to enjoy the long run, however, we have to survive the short run. Left to its own devices, the steady downsizing of the garment industry had been dragging the CNMI’s economy down to a hard landing. Pushing the industry out the door may result in a crash landing. Unfortunately, there is no soft landing in sight—but it is easier to survive a hard landing than a crash landing.
Congress has expressed an interest in federalizing immigration in the CNMI as well. The timing and terms of any immigration federalization legislation are not yet clear. What I do know is that the U.S. Senate has given my office a lengthy homework assignment—24 complex questions about labor and immigration in the CNMI, due January 26. A hearing is likely to follow shortly thereafter. To state the obvious, federalization of immigration could also have a profound impact on the CNMI economy.
Those who are leading the charge for federalization should actually be given a great deal of credit. It was their pressure several years ago that led to very significant improvements in labor conditions and protections for the CNMI’s guest workers. Just as people like Congressman George Miller deserve credit from the CNMI, so too should they give credit to the CNMI for the progress that has been made here in recent years. Conditions here are far from perfect, but they have improved to the point that this is now a place that deserves to be defended.
The actions that Congress is considering would have a drastic impact on the CNMI. Why, then, should the CNMI not at least be allowed a seat at the table at which its fate will be determined? I have testified before Congress, on behalf of the Bush Administration, in favor of granting the CNMI a delegate to the U.S. House of Representatives. The CNMI is still the only U.S. territory or commonwealth without representation in Congress. The finest sons and daughters of these islands are fighting and dying so that the peoples of Iraq and Afghanistan can elect representatives to their respective national legislatures. And when they return home to Saipan, to Tinian, to Rota, why is it that these brave men and women cannot elect a representative to their own national legislature, the U.S. Congress?
I was at a meeting the other day, and one of our local legislative leaders remarked that at most, only 20 percent of the Members of Congress have even heard of the CNMI. And I thought to myself, “That’s the good news; the bad news is that that 20 percent has only heard about the CNMI because they read Ms. Magazine.” Most Americans who have any sort of impression at all about these islands have the wrong one. There was an old country song that went, “If I didn’t have bad luck, I wouldn’t have any luck at all.” Well if the CNMI didn’t have bad publicity, it wouldn’t have any publicity at all. I’m sure that a lot of people hear “Northern Mariana Islands”, scratch their heads and say, “Isn’t that where Jack Abramoff is from?”
In negative political campaigns, your opponent tries to define you in a negative way before you have the chance to introduce yourself to the public. This is what has happened to the CNMI. Jim Benedetto, Interior’s Federal Ombudsman and an extremely dedicated defender of the rights of CNMI guest workers, has documented the unfair and misleading nature of Ms. Magazine’s recent article on Saipan. But do you know what struck me about that article? Not a single islander was quoted. This was supposed to be a comprehensive story about Saipan, and not a single islander was quoted. There were a couple of mentions of former Governor Pedro P. Tenorio—Teno—but he was the only islander that was even mentioned in that whole long article. If you read that article, you could easily conclude that the only people on these islands are greedy businessmen, exploited workers and the occasional visiting politico or lobbyist. No indigenous people. No indigenous culture. It’s as if you didn’t exist. And nobody is going to care about your well-being if they don’t know that you exist.
The political leaders in Washington need to know who you are. They need to see your face. They need to hear your voice. You need to introduce yourself.
The political leaders in Washington need to meet Chamorros. They need to meet Carolinians. They need to meet Filipinos, Koreans, and people from across Asia and around the world who have made these islands their home. They need to meet small business owners who are struggling to survive. They need to meet working men and women who are afraid of losing their jobs. They need to meet men and women who are back from Iraq, and widows who lost their husbands there. They need to meet social service workers who can barely cope with this tidal wave of human need. They need to meet the clergy. They need to meet the Manamko. They need to meet young people who don’t want to be forced from home to find their future. They need to see the human face of the Northern Mariana Islands. I realize that you can’t all afford to just pick up and fly to Washington to meet your leaders. But if you can do it, now is the time.
The political leaders in Washington need to meet the people who would suffer if there is a fiscal and economic meltdown in the CNMI. The garment factory owners would not suffer—they could simply move their operations to places where workers get paid pennies and have no rights. Jack Abramoff would not suffer. Tom DeLay would not suffer. The people who would suffer are the people that everyone claims to have sympathy for—workers, small business owners, Manamko, mothers, children.
Ladies and gentlemen, I address you tonight not as members of the business community, but as members of the entire community. In times of crisis, there can only be one community. If any portion of this community is at risk, then everyone is at risk. You are all in the same boat, and if that boat sinks, then everyone drowns.
It is important for this community to come together now because Washington needs to hear your voice. And in order to be heard, you need to speak with one voice. For a community this small, Washington simply will not take the time to decipher many voices speaking in cacophony. That’s why it’s so important to transcend the divisions that exist in this community to find the common ground. Businesses in the CNMI right now just want to survive. Workers want to make sure that their rights are protected, and that they can earn decent wages to support their families. Everyone wants to protect jobs. Everyone wants a strong economy. Everyone wants good infrastructure. Everyone wants a local government that has the resources to provide the critical services that the people need. There is no reason why this community cannot come together behind an agenda that addresses the legitimate concerns of the new Congress but protects the legitimate interests of every segment of this society. And if you can make a compelling case for such an agenda in a strong, united voice, then maybe Congress will listen.
Well, now you’re forewarned that the typhoon is approaching. As you well know, you never really know what’s going to happen with a typhoon until it happens. Sometimes it veers away at the last minute. Sometimes it slams through the island in a direct hit. But if there’s one thing islanders know how to do, it’s how to weather a storm. And how to rebuild. And how to come together when it really matters, no matter how much small island bickering goes on when the sun is shining.
Of course, analogies only go so far. There’s nothing you can do to control a real typhoon. But there may still be hope that your actions can protect you from the typhoon of my analogy. Regardless of what happens, a concerted effort that brings this community together can only be a good thing. You should at least make the effort. You have nothing to lose, everything to gain and your community to save.
Si Yu’us Ma’ase.
On Monday, I attended the inauguration of Governor Felix Camacho of Guam. His inaugural address was entitled “A Season of Transformation”, and he spoke of the tremendous changes that Guam was about to undergo as a result the expected military buildup there. The Commonwealth of the Northern Mariana Islands is also entering a season of transformation. The forecast for the upcoming season in the CNMI, however, is much stormier than that for its neighbor to the South.
“Federalization” of the CNMI is almost certain to occur in the near future. Of course, “federalization” means a number of different things, and the final contours of the impending federalization are not fully certain. What is certain is that these islands will soon undergo a transformation that may rival the transformation that came with the rise of Saipan’s garment industry.
Under the worst case scenario, the transformation of this society will be abrupt and painful. I’m sorry to say that in my opinion, the worst case scenario is much more likely in this case than the worst case scenario usually is. Can there be Federalization Without Strangulation? I’m afraid that we may soon find out.
As I’m sure you’ve heard by now, federalization of the CNMI minimum wage is on an extremely fast track. It is woven into the bill to increase the Federal minimum wage to $7.25. Under the Democrats’ proposal, the CNMI minimum wage will increase from $3.05 to $7.25 over a four-year period, jumping $1.50 in the first year alone. This could very likely result in a complete and immediate exodus of what’s left of Saipan’s garment industry.
One does not have to be a fan of the Saipan garment industry to recognize the danger of its abrupt departure. The garment industry has in recent years accounted for about 35 percent of the local government’s revenues. Could the local government absorb the rapid loss of such a large portion of its revenues and still protect the health, safety and welfare of its people? Could the economy survive an immediate exit of the garment industry at a time when the other pillar of the economy, the tourism industry, is also reeling? I’m afraid that we may soon find out.
The fact is that Saipan’s garment industry appears to be on its way out anyway. In the long run, I believe that the absence of the garment industry will be good for the CNMI. In order to enjoy the long run, however, we have to survive the short run. Left to its own devices, the steady downsizing of the garment industry had been dragging the CNMI’s economy down to a hard landing. Pushing the industry out the door may result in a crash landing. Unfortunately, there is no soft landing in sight—but it is easier to survive a hard landing than a crash landing.
Congress has expressed an interest in federalizing immigration in the CNMI as well. The timing and terms of any immigration federalization legislation are not yet clear. What I do know is that the U.S. Senate has given my office a lengthy homework assignment—24 complex questions about labor and immigration in the CNMI, due January 26. A hearing is likely to follow shortly thereafter. To state the obvious, federalization of immigration could also have a profound impact on the CNMI economy.
Those who are leading the charge for federalization should actually be given a great deal of credit. It was their pressure several years ago that led to very significant improvements in labor conditions and protections for the CNMI’s guest workers. Just as people like Congressman George Miller deserve credit from the CNMI, so too should they give credit to the CNMI for the progress that has been made here in recent years. Conditions here are far from perfect, but they have improved to the point that this is now a place that deserves to be defended.
The actions that Congress is considering would have a drastic impact on the CNMI. Why, then, should the CNMI not at least be allowed a seat at the table at which its fate will be determined? I have testified before Congress, on behalf of the Bush Administration, in favor of granting the CNMI a delegate to the U.S. House of Representatives. The CNMI is still the only U.S. territory or commonwealth without representation in Congress. The finest sons and daughters of these islands are fighting and dying so that the peoples of Iraq and Afghanistan can elect representatives to their respective national legislatures. And when they return home to Saipan, to Tinian, to Rota, why is it that these brave men and women cannot elect a representative to their own national legislature, the U.S. Congress?
I was at a meeting the other day, and one of our local legislative leaders remarked that at most, only 20 percent of the Members of Congress have even heard of the CNMI. And I thought to myself, “That’s the good news; the bad news is that that 20 percent has only heard about the CNMI because they read Ms. Magazine.” Most Americans who have any sort of impression at all about these islands have the wrong one. There was an old country song that went, “If I didn’t have bad luck, I wouldn’t have any luck at all.” Well if the CNMI didn’t have bad publicity, it wouldn’t have any publicity at all. I’m sure that a lot of people hear “Northern Mariana Islands”, scratch their heads and say, “Isn’t that where Jack Abramoff is from?”
In negative political campaigns, your opponent tries to define you in a negative way before you have the chance to introduce yourself to the public. This is what has happened to the CNMI. Jim Benedetto, Interior’s Federal Ombudsman and an extremely dedicated defender of the rights of CNMI guest workers, has documented the unfair and misleading nature of Ms. Magazine’s recent article on Saipan. But do you know what struck me about that article? Not a single islander was quoted. This was supposed to be a comprehensive story about Saipan, and not a single islander was quoted. There were a couple of mentions of former Governor Pedro P. Tenorio—Teno—but he was the only islander that was even mentioned in that whole long article. If you read that article, you could easily conclude that the only people on these islands are greedy businessmen, exploited workers and the occasional visiting politico or lobbyist. No indigenous people. No indigenous culture. It’s as if you didn’t exist. And nobody is going to care about your well-being if they don’t know that you exist.
The political leaders in Washington need to know who you are. They need to see your face. They need to hear your voice. You need to introduce yourself.
The political leaders in Washington need to meet Chamorros. They need to meet Carolinians. They need to meet Filipinos, Koreans, and people from across Asia and around the world who have made these islands their home. They need to meet small business owners who are struggling to survive. They need to meet working men and women who are afraid of losing their jobs. They need to meet men and women who are back from Iraq, and widows who lost their husbands there. They need to meet social service workers who can barely cope with this tidal wave of human need. They need to meet the clergy. They need to meet the Manamko. They need to meet young people who don’t want to be forced from home to find their future. They need to see the human face of the Northern Mariana Islands. I realize that you can’t all afford to just pick up and fly to Washington to meet your leaders. But if you can do it, now is the time.
The political leaders in Washington need to meet the people who would suffer if there is a fiscal and economic meltdown in the CNMI. The garment factory owners would not suffer—they could simply move their operations to places where workers get paid pennies and have no rights. Jack Abramoff would not suffer. Tom DeLay would not suffer. The people who would suffer are the people that everyone claims to have sympathy for—workers, small business owners, Manamko, mothers, children.
Ladies and gentlemen, I address you tonight not as members of the business community, but as members of the entire community. In times of crisis, there can only be one community. If any portion of this community is at risk, then everyone is at risk. You are all in the same boat, and if that boat sinks, then everyone drowns.
It is important for this community to come together now because Washington needs to hear your voice. And in order to be heard, you need to speak with one voice. For a community this small, Washington simply will not take the time to decipher many voices speaking in cacophony. That’s why it’s so important to transcend the divisions that exist in this community to find the common ground. Businesses in the CNMI right now just want to survive. Workers want to make sure that their rights are protected, and that they can earn decent wages to support their families. Everyone wants to protect jobs. Everyone wants a strong economy. Everyone wants good infrastructure. Everyone wants a local government that has the resources to provide the critical services that the people need. There is no reason why this community cannot come together behind an agenda that addresses the legitimate concerns of the new Congress but protects the legitimate interests of every segment of this society. And if you can make a compelling case for such an agenda in a strong, united voice, then maybe Congress will listen.
Well, now you’re forewarned that the typhoon is approaching. As you well know, you never really know what’s going to happen with a typhoon until it happens. Sometimes it veers away at the last minute. Sometimes it slams through the island in a direct hit. But if there’s one thing islanders know how to do, it’s how to weather a storm. And how to rebuild. And how to come together when it really matters, no matter how much small island bickering goes on when the sun is shining.
Of course, analogies only go so far. There’s nothing you can do to control a real typhoon. But there may still be hope that your actions can protect you from the typhoon of my analogy. Regardless of what happens, a concerted effort that brings this community together can only be a good thing. You should at least make the effort. You have nothing to lose, everything to gain and your community to save.
Si Yu’us Ma’ase.
A Commitment to Sustained Economic Growth: What Does That Really Mean?
Opening statement delivered by Chairman David B. Cohen at both the annual meeting of the Marshall Islands-U.S. Joint Economic Management and Financial Accountability Committee (JEMFAC), held in Honolulu on August 30, and the annual meeting of the Federated States of Micronesia-U.S. Joint Economic Management Committee (JEMCO), Honolulu, Hawaii, August 30 and 31, 2006.
Distinguished cabinet officers, members of the Committee and other dignitaries:
Good morning. I welcome those of you who have traveled to Honolulu for our annual meeting today. I deliver this opening statement not in my capacity as Chairman of this Committee, but as the head of the Department of the Interior’s Office of Insular Affairs, the manager of the grants provided by the United States under the Compacts of Free Association.
This week, the United States has the honor of hosting the annual meetings of both the U.S.-Marshall Islands Joint Economic Management and Financial Accountability Committee, or JEMFAC, and the U.S.-Federated States of Micronesia Joint Economic Management Committee, or JEMCO. In order to save paper, I have drafted a single opening statement to address both meetings. This is what we environmentalists call “recycling.”
I will confine my remarks to what I believe to be the single most important issue that we face today: How will the Marshall Islands and the Federated States of Micronesia achieve the type of private sector economic growth that will enable them to survive as economically viable nations after the Compact grants expire in 2023?
At the Third FSM Economic Summit, the nation’s leaders committed to a strategy of sustained economic growth. In fact, it does not appear that the FSM or the RMI have any choice but to commit themselves to the pursuit of sustained economic growth. The amount of Compact grants in 2023 will be substantially less, in both nominal and real terms, than the amount of Compact grants today. Even with today’s level of Compact assistance, economic growth is negative in the FSM and stagnant in the RMI. The standard of living in both the FSM and the RMI is determined almost entirely by the level of Compact grants and, to a much lesser extent, other aid from the U.S. and other donors. Unless Compact funds are spent in a manner that promotes sustained economic growth, the economic viability of both the RMI and the FSM will be threatened as Compact grants continue to decline.
Both the RMI and the FSM will receive income from Compact trust funds after 2023, but those trust funds in no way alter the urgent need for sustained economic growth. Even the most optimistic hopes for the trust funds would merely have them replace the level of grant assistance to be provided in 2023—a level of grant assistance that is much less than the levels that are producing stagnant to negative economic growth today. There is simply no escaping the imperative for both the RMI and the FSM to do everything in their power to promote sustained economic growth.
Let us then take this opportunity to remind ourselves of what it means to commit to sustained economic growth. First and foremost, sustained economic growth means sustained private sector economic growth. The public sector-dominated economies of the RMI and the FSM are heavily dependent upon foreign aid. A large public sector can only exist by draining wealth that is created elsewhere. Only the private sector can create new wealth, and therefore only the private sector can provide the engine necessary for sustainable economic growth. Additionally, in no particular order:
Distinguished cabinet officers, members of the Committee and other dignitaries:
Good morning. I welcome those of you who have traveled to Honolulu for our annual meeting today. I deliver this opening statement not in my capacity as Chairman of this Committee, but as the head of the Department of the Interior’s Office of Insular Affairs, the manager of the grants provided by the United States under the Compacts of Free Association.
This week, the United States has the honor of hosting the annual meetings of both the U.S.-Marshall Islands Joint Economic Management and Financial Accountability Committee, or JEMFAC, and the U.S.-Federated States of Micronesia Joint Economic Management Committee, or JEMCO. In order to save paper, I have drafted a single opening statement to address both meetings. This is what we environmentalists call “recycling.”
I will confine my remarks to what I believe to be the single most important issue that we face today: How will the Marshall Islands and the Federated States of Micronesia achieve the type of private sector economic growth that will enable them to survive as economically viable nations after the Compact grants expire in 2023?
At the Third FSM Economic Summit, the nation’s leaders committed to a strategy of sustained economic growth. In fact, it does not appear that the FSM or the RMI have any choice but to commit themselves to the pursuit of sustained economic growth. The amount of Compact grants in 2023 will be substantially less, in both nominal and real terms, than the amount of Compact grants today. Even with today’s level of Compact assistance, economic growth is negative in the FSM and stagnant in the RMI. The standard of living in both the FSM and the RMI is determined almost entirely by the level of Compact grants and, to a much lesser extent, other aid from the U.S. and other donors. Unless Compact funds are spent in a manner that promotes sustained economic growth, the economic viability of both the RMI and the FSM will be threatened as Compact grants continue to decline.
Both the RMI and the FSM will receive income from Compact trust funds after 2023, but those trust funds in no way alter the urgent need for sustained economic growth. Even the most optimistic hopes for the trust funds would merely have them replace the level of grant assistance to be provided in 2023—a level of grant assistance that is much less than the levels that are producing stagnant to negative economic growth today. There is simply no escaping the imperative for both the RMI and the FSM to do everything in their power to promote sustained economic growth.
Let us then take this opportunity to remind ourselves of what it means to commit to sustained economic growth. First and foremost, sustained economic growth means sustained private sector economic growth. The public sector-dominated economies of the RMI and the FSM are heavily dependent upon foreign aid. A large public sector can only exist by draining wealth that is created elsewhere. Only the private sector can create new wealth, and therefore only the private sector can provide the engine necessary for sustainable economic growth. Additionally, in no particular order:
A commitment to sustained economic growth means a commitment to identifying and fostering potential competitive advantages for the economy, and a recognition that the Compact itself is an important competitive advantage.
A commitment to sustained economic growth means a commitment to making significant reforms to improve the business climate—not as an end in itself, but as a necessary means of building a stronger and more prosperous society for all of the people.
A commitment to sustained economic growth means a commitment to getting government out of the business of competing with business—that is, getting the government out of commercial enterprise.
A commitment to sustained economic growth means a commitment to privatizing services that can be provided more effectively by the private sector.
A commitment to sustained economic growth means a commitment to nourishing, not stifling, the creative entrepreneurial spirit.
A commitment to sustained economic growth means a commitment to opening up the economy to foreign investment, because in a closed economy, a few well-connected businessmen get rich while everyone else stays poor. Indeed, a commitment to sustained economic growth means a commitment to proactively identifying and pursuing good outside businesses that can, together with local businesses, bring jobs, capital and opportunity to the islands.
A commitment to sustained economic growth means a commitment to making the approval process for foreign investment transparent, objective, fair, simple and quick.
A commitment to sustained economic growth means a commitment to streamlining the regulatory and permitting process.
A commitment to sustained economic growth means a commitment to ensuring that all businesses can compete on a level playing field, free from government favoritism.
A commitment to sustained economic growth means a commitment to tax reform—that is, designing a system that encourages growth and investment and yields sufficient revenue for the government to provide essential services.
A commitment to sustained economic growth means a commitment to land reform—that is, designing a system that protects cultural values but that gives businesses, government and the donor community the protection they need to build the infrastructure that’s necessary for economic growth.
A commitment to sustained economic growth means a commitment to developing a legal system necessary to support commerce and finance, including comprehensive contract law, sales law, secured transactions law and bankruptcy law.
A commitment to sustained economic growth means a commitment to true capacity building, so that government can develop the strong institutions necessary to protect the legitimate rights of those who engage in commerce and finance.
A commitment to sustained economic growth means a commitment to true capacity building, so that government can generate and report the economic statistics necessary to enable both the public and private sectors to make informed decisions.
A commitment to sustained economic growth means a commitment to public sector reform, so that the public sector can support, rather than get in the way of, the development of economic opportunity.
A commitment to sustained economic growth means a commitment to good governance and good financial management.
A commitment to sustained economic growth means a commitment to good infrastructure.
A commitment to sustained economic growth means a commitment to developing a work force that is healthy, well trained and well educated.
A commitment to sustained economic growth means a commitment to spending Compact funds not for short-term political gain, but to build the solid foundation necessary to give our children hope for the future. A commitment to sustained economic growth means recognizing that there is not enough money in the Compact to do both.
A commitment to sustained economic growth means having the wisdom and self-honesty to recognize that we are way behind schedule, and that further delay threatens the future of our children.
Most of all, a commitment to sustained economic growth means having the courage and the political will to face reality and do what’s right.
We now look forward to hearing your vision for fulfilling all of the commitments that are necessary to secure the future of your nation and its people. I’m sure that we will have plenty of questions, but our main questions will be these: What can we do to help? How can Compact funds best be deployed to support your vision? How can we work together to make your vision a reality?
It is now up to you to articulate a credible vision for sustained economic growth, and to take ownership of that vision. We are here to listen and to lend support. The vision is yours. The future is yours. The floor is yours.
Thank you.
Accountability, Sovereignty and "Typhoon JEMCO"
Keynote Speech, U.S. Deputy Assistant Secretary of the Interior David B. Cohen, Annual Congress of the South Pacific Association of Supreme Audit Institutions in Saipan, Commonwealth of the Northern Mariana Islands, May 22, 2006.
Good afternoon. It's an honor to be here. I've given my remarks the working title of "Accountability, Sovereignty and Typhoon JEMCO," and I hope it will all make sense by the time I finish.
It's very generous of you to have invited me to speak here, given that my office is often the subject of the types of audits that your offices perform. You could say that I'm one of your victims. Perhaps you'd like to rethink your decision to offer me the microphone.
Actually, you have nothing to worry about. I know that the auditor always gets the last word. If I were foolish enough to get up here and badmouth auditors, I'm sure that GAO would shortly thereafter issue a report entitled "Incompetent Leadership of Office of Insular Affairs Threatens to Sink Islands."
In all seriousness, my good-natured teasing aside, I have no desire to badmouth auditors. I fully support what you do, and believe that your mission is absolutely crucial to the development of the islands. I pay you this compliment out of admiration, not fear...although the fear certainly helps.
Before I go on, perhaps I should introduce my office, the U.S. Department of the Interior's Office of Insular Affairs, to those of you who are not familiar with it. The Office of Insular Affairs provides more aid to the Pacific islands than any other agency of the U.S. Government-by a very large margin. On behalf of the Secretary of the Interior, the Office of Insular Affairs generally administers the U.S. Government's relationship with its territories with the exception of Puerto Rico. The Office of Insular Affairs also administers the financial assistance that the U.S. provides to the nations in "free association" with the U.S.-the Republic of the Marshall Islands, the Federated States of Micronesia and the Republic of Palau-under the Compacts of Free Association.
The Office of Insular Affairs has an annual budget of over 425 million U.S. dollars, the large majority of which is provided to the Pacific. We provide financial assistance to eight jurisdictions, including the State of Hawaii. Seven of these eight jurisdictions are in the Pacific. The Office of Insular Affairs is the dominant player in the U.S. financial assistance program for the Pacific islands.
The Office of Insular Affairs' top two areas of focus for the islands are promoting private sector economic development and promoting accountability. As auditors, you have an important role to play not only in promoting accountability, but also in helping to create the conditions necessary for private sector economic development.
We at the Office of Insular Affairs have a unique role that frequently requires us to explain the islands to Washington and to explain Washington to the islands. Sometimes we feel like we're talking out of both sides of our mouths.
In Washington, for example, we try to make sure that people appreciate the serious challenges that the islands face in order to improve their fiscal management. The insular areas have small, isolated populations and have very limited means to train accountants, financial managers and substantive program experts. Locals generally have to leave the island to get these skills, and once they do, they're more likely to find opportunities worthy of their qualifications off-island. When you're in the middle of the ocean, you can't just bring people in from the next county or the next state the way that small stateside communities can. In order to induce qualified professionals to relocate from thousands of miles away, insular area governments generally have to offer compensation packages that are way out of proportion to what the local economy can typically support. Even then, turnover for off-island recruits is very high. For isolated island nations and territories, providing for good fiscal management can itself be a fiscal challenge for a cash-strapped government. The only solution in the long term is for island governments to develop more home-grown talent, but we need to get through the short term in order to make it to the long term.
In Washington, I'm sure that many people feel that my office is filled with bleeding-heart apologists for the islands that are willing to excuse almost anything. In the islands, on the other hand, I'm sure that many people feel that my office is filled with rigid, insensitive, bullying bureaucrats who get pleasure from inflicting pain and suffering on the islands. Because in the islands, we don't encourage excuses. Even if we might have personal sympathy for the challenges that the islands face, we cannot allow that to stand in the way of our obligation to protect U.S. taxpayer funds. By doing our job, we can help ensure that the people of the islands receive the benefits that they are supposed to receive.
One of our greatest accountability challenges is our effort to implement Compact II. For those of you who don't know, "Compact II" refers to the 20-year financial assistance packages that the U.S. provides to the Republic of the Marshall Islands and the Federated States of Micronesia, respectively, under 2003 amendments to the Compacts of Free Association. Even though this is a particular case, I believe that the issues it raises are relevant to all of us.
The RMI and the FSM, of course, were once part of the United Nations Trust Territory of the Pacific Islands, which the U.S. administered in the decades following World War II. It eventually became apparent that the residents of the Trust Territory were ready to take charge of their own destiny but still faced serious challenges of economic development. The founding leaders of the RMI, FSM and Palau negotiated an arrangement with the U.S. whereby they would become sovereign nations in "free association" with the U.S. Under this unique status, the U.S. would receive, among other things, the right to deny other foreign powers military access to the land and waters of these nations. The people of the freely associated states, as these nations came to be known, would receive, among other things, the right to migrate indefinitely to the U.S. without a visa, the right to benefit from several U.S. domestic programs, and long-term financial assistance packages. All of these provisions were spelled out in bilateral agreements known as Compacts of Free Association.
The RMI and the FSM entered the Compact era in 1986, and Palau followed in 1994. The original financial assistance package under the RMI and FSM Compacts was to have lasted 15 years, but was eventually extended for two additional years while a new financial assistance package was being negotiated. During the 17 years of "Compact I," as we now call it, the U.S. provided over $1.5 billion to the FSM and over $1 billion to the RMI.
The negotiation of Compact II for the RMI and the FSM provided a good opportunity to evaluate Compact I. The first Compact period was remarkably successful in allowing the people of the RMI and the FSM to develop strong, stable democratic systems. Since the Compact was an arrangement that had never been tried before, however, it is not surprising that the experience of the first 17 years would suggest areas where improvements could be made. The Government Accountability Office made a number of suggestions to improve accountability for Compact funds, and hence improve health, education and economic opportunity for the people of the freely associated states.
Under Compact I, the legislatures of the RMI and FSM were given wide latitude to spend Compact funds as they saw fit. Compact II, which will provide roughly $3.5 billion to the RMI and FSM over 20 years, incorporates a number of reforms that were designed to ensure that Compact funds would be spent more effectively. These reforms include:
I am, of course, kidding. I am honored to be Chairman of JEMFAC and JEMCO. I am well aware that the decisions of JEMFAC and JEMCO will have a major impact on the quality of life in the region for generations to come. I take these responsibilities very seriously, and am committed to doing the best job that I can do. I know that all members of both committees, be they from the RMI, the FSM or the U.S., feel the same way. Let me make it clear, however, that I am not speaking today on behalf of either committee or in my capacity as a member of either committee.
JEMCO is responsible for approving over $79 million in grants for the FSM each year. This dwarfs the FSM's local tax revenue, which GAO estimated to be only $29 million in 2005. JEMFAC is responsible for approving over $35 million in grants for the RMI each year, as compared to an estimated $22 million in local tax revenue. This illustrates how much power the joint committees have in the FSM and the RMI, respectively.
I point this out not to brag, but to highlight a dilemma: The unelected joint committees have ultimate authority over a much larger share of public revenue in both the RMI and the FSM than do the elected legislatures. Is this an ideal situation? Of course not. Is there a reasonable alternative? In the short run, I believe that the answer is no, for reasons that I will explain. In the long run, if we manage Compact grants effectively, we can hopefully maximize the ability of the RMI and the FSM to generate local revenues and hence reduce the importance of the joint committees. I realize that there is a great distance to travel, but the members of the joint committees must do everything in our power to reduce our own power as rapidly as possible.
The joint committees have a great deal of responsibility, and hence have an obligation to act with a great deal of responsibility. I believe that we do. Every year, the joint committees review massive budget documents that are submitted by the RMI and the FSM, respectively. When we review these budgets, we do not ask whether these are the budgets that we would have come up with had we been starting from scratch. We simply ask whether these budgets are consistent with the letter and spirit of the Compact, and whether they are reasonably likely to further the objectives of the Compact so that we can achieve the progress that needs to occur by the end of the 20-year grant period. The answer to these questions is "yes," we defer to the RMI and FSM governments and approve the budgets. This is what we do the overwhelming majority of the time. Occasionally we make tweaks, especially when we identify major problems that are not adequately addressed in the budget. We only do this to the extent we believe necessary to ensure that our Compact expenditures will improve health, education and economic opportunity in the manner that we all intend.
So far, Compact implementation has proceeded relatively smoothly in the RMI, although we still need to do more to ensure that the RMI is on the path to achieving sufficient economic advancement and budgetary self-reliance.
I believe that we are making excellent progress in the FSM as well, although the FSM poses some inherent challenges that the RMI does not pose. The FSM is a loose confederation of four powerful state governments that represent islands with different languages and cultures. The dynamics among the states and between the states and the national government give rise to logistical complexities that can complicate our efforts to implement the Compact. The geographical dispersion of the FSM's many islands exacerbates these complications.
The unique challenges of the FSM are nobody's fault. They simply are. And we have to deal with them. Let me say that dedicated public servants from the FSM National Government and all four state governments are working extremely hard under very difficult circumstances to make the Compact work, and we appreciate their efforts very much.
I believe that the complexities that I mentioned are at the root of some of the frustrations that some in the FSM have expressed with JEMCO's efforts to implement the Compact. I believe that there is strong support for what we are trying to do with JEMCO, and that support will grow stronger as we continue to explain our activities and objectives. However, some who have criticized JEMCO have done so rather vociferously. Let me explain the joking reference to "Typhoon JEMCO" in the title of these remarks. I recently sat down with one of the most respected founding fathers of the FSM. I had an excellent discussion with this person, whom I will not name, about how we were working collaboratively with our FSM colleagues to try to improve the quality of life in the FSM. And we also discussed how some in the FSM had been so critical of JEMCO. He told me the story of Typhoon Jean, which hit the islands really bad back in the 1960s. The typhoon was so destructive that it affected the quality of life of the people long after it was over. For years and years after Typhoon Jean struck, people blamed it for everything. If someone got sick, he would blame it on Jean. If there was a bad crop, they would blame it on Jean. If someone lost his job, he would blame it on Jean. Whatever misfortune they encountered, they would blame it on Jean. And this very wise gentleman told me that for some people, JEMCO had become like Jean-not because of JEMCO's destructive power, but because of the determination of a few people to blame it for everything. And I say, thank goodness that JEMCO has come along so we can finally give that poor old lady Jean a rest. Typhoon Jean has now been replaced by "Typhoon JEMCO."
I am not making light of criticisms that some have leveled against JEMCO, especially by legislators who see JEMCO as eclipsing their power. They raise legitimate points that deserve to be answered. They claim that because Compact funds so dominate the FSM's public revenues, JEMCO must defer to the wishes of the legislatures or else the sovereignty of the FSM will be undermined. And they claim that JEMCO has not been sufficiently deferential to the will of the legislature.
With the greatest of respect, I would offer this response: For last year's annual meeting, JEMCO reviewed a budget submission that included over 20,000 line items. Out of those 20,000 line items, do you know how many the U.S. and the FSM members were unable to reach unanimous agreement on at that meeting? One. One out of over 20,000. I realize that it is human nature to fixate on the one time we say no and ignore the over 20,000 times we say yes, but we need to maintain our sense of perspective.
And let me take a minute to explain the one time we said no. The U.S. members of JEMCO pushed to set aside $2.5 million for textbooks, because, after consulting with FSM education officials, we came to the conclusion that this was necessary to address a crisis where FSM schoolchildren did not have proper educational materials. For example, one state only had enough textbooks to equip 17 percent of its students at the very most. Many of the history books used in this state could not provide any information to the students about their own nation, because the books were published in 1970-before the FSM became a nation. Over 40 schools in this state, covering almost 5,000 students, had NO textbooks. None. Zero. The other states also had severe textbook shortages.
The FSM representatives said that they had better ways to spend this money than to set aside $2.5 million for textbooks. We had a very thorough and respectful discussion. We kept asking the simple question: How can students learn with no textbooks, and if we don't address this emergency now, is there not a risk that the children of the FSM will fall so far behind that they will never catch up? We listened carefully to the answers, but did not hear, in our judgment, a convincing explanation of how the proposed budget would address this crisis. Perhaps our judgment was wrong, but each of us was bound to follow our own best judgment. We recognize that we can never match the caring that the FSM's leaders have for their own people or the knowledge that they have of their own country's needs. We therefore give them a strong benefit of the doubt. But the benefit of the doubt does not mean that we should approve proposals that still do not make sense to us after we have received a thorough explanation. In this case, we simply failed to get on the same page in spite the best good faith efforts of all parties to do so. That happens sometimes.
I agree that the U.S. members of JEMCO should not be micromanagers. But nor should we be potted plants. We have an obligation to exercise our independent judgment to help ensure that the Compact will be successful. Compact II would never have passed the U.S. Congress had it not included all of the accountability reforms. It is now our duty to implement those reforms. Do we have an obligation to give careful and respectful consideration to the views expressed by the FSM's elected leaders? Absolutely, and we do. Should our failures to achieve consensus be the exception rather than the rule? Yes, and they are. But at the end of the day, each member of JEMCO-whether from the U.S. or the FSM-has a duty to vote according to his conscience. The U.S. members have an obligation to the American taxpayer to ensure that Compact money is spent wisely to benefit the people of these islands.
Some, especially in this roomful of auditors, may criticize us from the other direction: Are we not disapproving enough? Are we giving too much deference to the FSM government? My response is that our excellent record of achieving consensus is a result of the hard work that people from both countries put in all year round. We try to identify issues early and work them out before they reach JEMCO. We communicate extensively with one another at every stage of the process. We have a similar excellent working relationship with the RMI. This is a testament to the excellent partnership that we have with both countries.
To those legislators that complain that the joint committees have too much power, I say, "I hear you." But if you view JEMCO or JEMFAC as a threat to your sovereignty, you're focusing on the symptom and not the disease. The real problem is excessive reliance on outside grants. As long as our grants our involved, we will have an obligation to exercise proper oversight. Some have tried to argue that because Compact funds are the dominant source of revenue for the FSM, they can no longer be thought of as mere grants and should not be managed as grants. I would respectfully respond that the Compact quite clearly provides to the contrary. The fact that Compact funds are important to the FSM does not negate the fact that their effective use is also very important to the U.S. That is why the Compact requires an active oversight role for both the U.S. and the FSM.
The good news is that Compact funds, if invested wisely, should help reduce reliance on outside grants over time. That's why it's so important to use grants not for today's consumption, but for tomorrow's foundation. This is true not only of Compact grants, but of grants that are provided to every recipient represented in this room. If we invest now to ensure that the people of the islands are healthy and educated, that they have proper infrastructure, and that the business climate attracts opportunity rather than chases it away, then these islands will eventually be able to take genuine control of their own destiny. We must view grants not as a source of dependence, but as a means to independence. The overwhelming majority of our colleagues from the RMI and FSM with whom we work on a day-to-day basis understand this. They are committed not to fighting the Compact, but to making the Compact work for them to build a better future. And we are their willing partners in that endeavor.
They say that this generation plants the tree so that the next generation can enjoy the shade. With every penny that we spend, we must ask ourselves: How will this make life better for the next generation?
A while back, I came up with a phrase that I think describes many Pacific island economies: "Upside down in the middle of the ocean." A healthy economy is driven by a strong and diverse private sector, which the public sector can tax at reasonable levels to provide essential services for the people. Many Pacific economies are dominated by the public sector, with a small private sector that is largely dependent on government contracts and favors. This type of economy is upside down, and cannot survive without outside subsidy. And I would suggest that the middle of the ocean, where most Pacific islands are, is the worst place to be upside down. It is important to use aid not to subsidize and perpetuate the upside down economies of the Pacific, but to help them get their heads above water.
I don't have to tell you what a crucial role that auditors play in all of this. Make sure we're spending the money wisely. Make sure that we're spending it accordingly to a plan that will build a better future for the people of the islands. And if we're not doing that, then do what you do best: Humiliate us. Write stink about us in your reports. Make us look stupid. You're very good at humiliating us. That's why we love you-because you remind us of our parents.
And just a thought: While we appreciate being told everything we did wrong a year after the fact, wouldn't it be better if you could actually catch us before we mess up? Some people compare auditors to people who arrive on the battlefield after the battle is over to bayonet the wounded. I don't say that, mind you; I'm just reporting what I've heard from certain ignorant people with bad attitudes. But here's what I will say: The only thing better than good information is good information that arrives in time for you to use it. And to give credit where credit is due, both GAO and the Department of the Interior's Office of the Inspector General have done an excellent job lately in getting us extremely useful constructive suggestions early and often. We greatly appreciate it, it helps us do our job better, and it is resulting in money being used more effectively to serve the needs of real people. So thank you, GAO and OIG, for your willingness to bayonet us before we enter the battlefield.
I appreciate your having taken the time to listen, and thank you for being patient with my good-natured teasing. I sincerely appreciate the honor of being asked to speak before you, and I sincerely appreciate the work that you do. Thank you, and enjoy the rest of the conference.
Good afternoon. It's an honor to be here. I've given my remarks the working title of "Accountability, Sovereignty and Typhoon JEMCO," and I hope it will all make sense by the time I finish.
It's very generous of you to have invited me to speak here, given that my office is often the subject of the types of audits that your offices perform. You could say that I'm one of your victims. Perhaps you'd like to rethink your decision to offer me the microphone.
Actually, you have nothing to worry about. I know that the auditor always gets the last word. If I were foolish enough to get up here and badmouth auditors, I'm sure that GAO would shortly thereafter issue a report entitled "Incompetent Leadership of Office of Insular Affairs Threatens to Sink Islands."
In all seriousness, my good-natured teasing aside, I have no desire to badmouth auditors. I fully support what you do, and believe that your mission is absolutely crucial to the development of the islands. I pay you this compliment out of admiration, not fear...although the fear certainly helps.
Before I go on, perhaps I should introduce my office, the U.S. Department of the Interior's Office of Insular Affairs, to those of you who are not familiar with it. The Office of Insular Affairs provides more aid to the Pacific islands than any other agency of the U.S. Government-by a very large margin. On behalf of the Secretary of the Interior, the Office of Insular Affairs generally administers the U.S. Government's relationship with its territories with the exception of Puerto Rico. The Office of Insular Affairs also administers the financial assistance that the U.S. provides to the nations in "free association" with the U.S.-the Republic of the Marshall Islands, the Federated States of Micronesia and the Republic of Palau-under the Compacts of Free Association.
The Office of Insular Affairs has an annual budget of over 425 million U.S. dollars, the large majority of which is provided to the Pacific. We provide financial assistance to eight jurisdictions, including the State of Hawaii. Seven of these eight jurisdictions are in the Pacific. The Office of Insular Affairs is the dominant player in the U.S. financial assistance program for the Pacific islands.
The Office of Insular Affairs' top two areas of focus for the islands are promoting private sector economic development and promoting accountability. As auditors, you have an important role to play not only in promoting accountability, but also in helping to create the conditions necessary for private sector economic development.
We at the Office of Insular Affairs have a unique role that frequently requires us to explain the islands to Washington and to explain Washington to the islands. Sometimes we feel like we're talking out of both sides of our mouths.
In Washington, for example, we try to make sure that people appreciate the serious challenges that the islands face in order to improve their fiscal management. The insular areas have small, isolated populations and have very limited means to train accountants, financial managers and substantive program experts. Locals generally have to leave the island to get these skills, and once they do, they're more likely to find opportunities worthy of their qualifications off-island. When you're in the middle of the ocean, you can't just bring people in from the next county or the next state the way that small stateside communities can. In order to induce qualified professionals to relocate from thousands of miles away, insular area governments generally have to offer compensation packages that are way out of proportion to what the local economy can typically support. Even then, turnover for off-island recruits is very high. For isolated island nations and territories, providing for good fiscal management can itself be a fiscal challenge for a cash-strapped government. The only solution in the long term is for island governments to develop more home-grown talent, but we need to get through the short term in order to make it to the long term.
In Washington, I'm sure that many people feel that my office is filled with bleeding-heart apologists for the islands that are willing to excuse almost anything. In the islands, on the other hand, I'm sure that many people feel that my office is filled with rigid, insensitive, bullying bureaucrats who get pleasure from inflicting pain and suffering on the islands. Because in the islands, we don't encourage excuses. Even if we might have personal sympathy for the challenges that the islands face, we cannot allow that to stand in the way of our obligation to protect U.S. taxpayer funds. By doing our job, we can help ensure that the people of the islands receive the benefits that they are supposed to receive.
One of our greatest accountability challenges is our effort to implement Compact II. For those of you who don't know, "Compact II" refers to the 20-year financial assistance packages that the U.S. provides to the Republic of the Marshall Islands and the Federated States of Micronesia, respectively, under 2003 amendments to the Compacts of Free Association. Even though this is a particular case, I believe that the issues it raises are relevant to all of us.
The RMI and the FSM, of course, were once part of the United Nations Trust Territory of the Pacific Islands, which the U.S. administered in the decades following World War II. It eventually became apparent that the residents of the Trust Territory were ready to take charge of their own destiny but still faced serious challenges of economic development. The founding leaders of the RMI, FSM and Palau negotiated an arrangement with the U.S. whereby they would become sovereign nations in "free association" with the U.S. Under this unique status, the U.S. would receive, among other things, the right to deny other foreign powers military access to the land and waters of these nations. The people of the freely associated states, as these nations came to be known, would receive, among other things, the right to migrate indefinitely to the U.S. without a visa, the right to benefit from several U.S. domestic programs, and long-term financial assistance packages. All of these provisions were spelled out in bilateral agreements known as Compacts of Free Association.
The RMI and the FSM entered the Compact era in 1986, and Palau followed in 1994. The original financial assistance package under the RMI and FSM Compacts was to have lasted 15 years, but was eventually extended for two additional years while a new financial assistance package was being negotiated. During the 17 years of "Compact I," as we now call it, the U.S. provided over $1.5 billion to the FSM and over $1 billion to the RMI.
The negotiation of Compact II for the RMI and the FSM provided a good opportunity to evaluate Compact I. The first Compact period was remarkably successful in allowing the people of the RMI and the FSM to develop strong, stable democratic systems. Since the Compact was an arrangement that had never been tried before, however, it is not surprising that the experience of the first 17 years would suggest areas where improvements could be made. The Government Accountability Office made a number of suggestions to improve accountability for Compact funds, and hence improve health, education and economic opportunity for the people of the freely associated states.
Under Compact I, the legislatures of the RMI and FSM were given wide latitude to spend Compact funds as they saw fit. Compact II, which will provide roughly $3.5 billion to the RMI and FSM over 20 years, incorporates a number of reforms that were designed to ensure that Compact funds would be spent more effectively. These reforms include:
- Targeted funding, in which grants are provided to six high-priority sectors only;
- Medium- and long-term planning to guide Compact funding;
- Comprehensive reporting requirements and performance measurement;
- Remedies for non-compliance; and
- Increased oversight.
I am, of course, kidding. I am honored to be Chairman of JEMFAC and JEMCO. I am well aware that the decisions of JEMFAC and JEMCO will have a major impact on the quality of life in the region for generations to come. I take these responsibilities very seriously, and am committed to doing the best job that I can do. I know that all members of both committees, be they from the RMI, the FSM or the U.S., feel the same way. Let me make it clear, however, that I am not speaking today on behalf of either committee or in my capacity as a member of either committee.
JEMCO is responsible for approving over $79 million in grants for the FSM each year. This dwarfs the FSM's local tax revenue, which GAO estimated to be only $29 million in 2005. JEMFAC is responsible for approving over $35 million in grants for the RMI each year, as compared to an estimated $22 million in local tax revenue. This illustrates how much power the joint committees have in the FSM and the RMI, respectively.
I point this out not to brag, but to highlight a dilemma: The unelected joint committees have ultimate authority over a much larger share of public revenue in both the RMI and the FSM than do the elected legislatures. Is this an ideal situation? Of course not. Is there a reasonable alternative? In the short run, I believe that the answer is no, for reasons that I will explain. In the long run, if we manage Compact grants effectively, we can hopefully maximize the ability of the RMI and the FSM to generate local revenues and hence reduce the importance of the joint committees. I realize that there is a great distance to travel, but the members of the joint committees must do everything in our power to reduce our own power as rapidly as possible.
The joint committees have a great deal of responsibility, and hence have an obligation to act with a great deal of responsibility. I believe that we do. Every year, the joint committees review massive budget documents that are submitted by the RMI and the FSM, respectively. When we review these budgets, we do not ask whether these are the budgets that we would have come up with had we been starting from scratch. We simply ask whether these budgets are consistent with the letter and spirit of the Compact, and whether they are reasonably likely to further the objectives of the Compact so that we can achieve the progress that needs to occur by the end of the 20-year grant period. The answer to these questions is "yes," we defer to the RMI and FSM governments and approve the budgets. This is what we do the overwhelming majority of the time. Occasionally we make tweaks, especially when we identify major problems that are not adequately addressed in the budget. We only do this to the extent we believe necessary to ensure that our Compact expenditures will improve health, education and economic opportunity in the manner that we all intend.
So far, Compact implementation has proceeded relatively smoothly in the RMI, although we still need to do more to ensure that the RMI is on the path to achieving sufficient economic advancement and budgetary self-reliance.
I believe that we are making excellent progress in the FSM as well, although the FSM poses some inherent challenges that the RMI does not pose. The FSM is a loose confederation of four powerful state governments that represent islands with different languages and cultures. The dynamics among the states and between the states and the national government give rise to logistical complexities that can complicate our efforts to implement the Compact. The geographical dispersion of the FSM's many islands exacerbates these complications.
The unique challenges of the FSM are nobody's fault. They simply are. And we have to deal with them. Let me say that dedicated public servants from the FSM National Government and all four state governments are working extremely hard under very difficult circumstances to make the Compact work, and we appreciate their efforts very much.
I believe that the complexities that I mentioned are at the root of some of the frustrations that some in the FSM have expressed with JEMCO's efforts to implement the Compact. I believe that there is strong support for what we are trying to do with JEMCO, and that support will grow stronger as we continue to explain our activities and objectives. However, some who have criticized JEMCO have done so rather vociferously. Let me explain the joking reference to "Typhoon JEMCO" in the title of these remarks. I recently sat down with one of the most respected founding fathers of the FSM. I had an excellent discussion with this person, whom I will not name, about how we were working collaboratively with our FSM colleagues to try to improve the quality of life in the FSM. And we also discussed how some in the FSM had been so critical of JEMCO. He told me the story of Typhoon Jean, which hit the islands really bad back in the 1960s. The typhoon was so destructive that it affected the quality of life of the people long after it was over. For years and years after Typhoon Jean struck, people blamed it for everything. If someone got sick, he would blame it on Jean. If there was a bad crop, they would blame it on Jean. If someone lost his job, he would blame it on Jean. Whatever misfortune they encountered, they would blame it on Jean. And this very wise gentleman told me that for some people, JEMCO had become like Jean-not because of JEMCO's destructive power, but because of the determination of a few people to blame it for everything. And I say, thank goodness that JEMCO has come along so we can finally give that poor old lady Jean a rest. Typhoon Jean has now been replaced by "Typhoon JEMCO."
I am not making light of criticisms that some have leveled against JEMCO, especially by legislators who see JEMCO as eclipsing their power. They raise legitimate points that deserve to be answered. They claim that because Compact funds so dominate the FSM's public revenues, JEMCO must defer to the wishes of the legislatures or else the sovereignty of the FSM will be undermined. And they claim that JEMCO has not been sufficiently deferential to the will of the legislature.
With the greatest of respect, I would offer this response: For last year's annual meeting, JEMCO reviewed a budget submission that included over 20,000 line items. Out of those 20,000 line items, do you know how many the U.S. and the FSM members were unable to reach unanimous agreement on at that meeting? One. One out of over 20,000. I realize that it is human nature to fixate on the one time we say no and ignore the over 20,000 times we say yes, but we need to maintain our sense of perspective.
And let me take a minute to explain the one time we said no. The U.S. members of JEMCO pushed to set aside $2.5 million for textbooks, because, after consulting with FSM education officials, we came to the conclusion that this was necessary to address a crisis where FSM schoolchildren did not have proper educational materials. For example, one state only had enough textbooks to equip 17 percent of its students at the very most. Many of the history books used in this state could not provide any information to the students about their own nation, because the books were published in 1970-before the FSM became a nation. Over 40 schools in this state, covering almost 5,000 students, had NO textbooks. None. Zero. The other states also had severe textbook shortages.
The FSM representatives said that they had better ways to spend this money than to set aside $2.5 million for textbooks. We had a very thorough and respectful discussion. We kept asking the simple question: How can students learn with no textbooks, and if we don't address this emergency now, is there not a risk that the children of the FSM will fall so far behind that they will never catch up? We listened carefully to the answers, but did not hear, in our judgment, a convincing explanation of how the proposed budget would address this crisis. Perhaps our judgment was wrong, but each of us was bound to follow our own best judgment. We recognize that we can never match the caring that the FSM's leaders have for their own people or the knowledge that they have of their own country's needs. We therefore give them a strong benefit of the doubt. But the benefit of the doubt does not mean that we should approve proposals that still do not make sense to us after we have received a thorough explanation. In this case, we simply failed to get on the same page in spite the best good faith efforts of all parties to do so. That happens sometimes.
I agree that the U.S. members of JEMCO should not be micromanagers. But nor should we be potted plants. We have an obligation to exercise our independent judgment to help ensure that the Compact will be successful. Compact II would never have passed the U.S. Congress had it not included all of the accountability reforms. It is now our duty to implement those reforms. Do we have an obligation to give careful and respectful consideration to the views expressed by the FSM's elected leaders? Absolutely, and we do. Should our failures to achieve consensus be the exception rather than the rule? Yes, and they are. But at the end of the day, each member of JEMCO-whether from the U.S. or the FSM-has a duty to vote according to his conscience. The U.S. members have an obligation to the American taxpayer to ensure that Compact money is spent wisely to benefit the people of these islands.
Some, especially in this roomful of auditors, may criticize us from the other direction: Are we not disapproving enough? Are we giving too much deference to the FSM government? My response is that our excellent record of achieving consensus is a result of the hard work that people from both countries put in all year round. We try to identify issues early and work them out before they reach JEMCO. We communicate extensively with one another at every stage of the process. We have a similar excellent working relationship with the RMI. This is a testament to the excellent partnership that we have with both countries.
To those legislators that complain that the joint committees have too much power, I say, "I hear you." But if you view JEMCO or JEMFAC as a threat to your sovereignty, you're focusing on the symptom and not the disease. The real problem is excessive reliance on outside grants. As long as our grants our involved, we will have an obligation to exercise proper oversight. Some have tried to argue that because Compact funds are the dominant source of revenue for the FSM, they can no longer be thought of as mere grants and should not be managed as grants. I would respectfully respond that the Compact quite clearly provides to the contrary. The fact that Compact funds are important to the FSM does not negate the fact that their effective use is also very important to the U.S. That is why the Compact requires an active oversight role for both the U.S. and the FSM.
The good news is that Compact funds, if invested wisely, should help reduce reliance on outside grants over time. That's why it's so important to use grants not for today's consumption, but for tomorrow's foundation. This is true not only of Compact grants, but of grants that are provided to every recipient represented in this room. If we invest now to ensure that the people of the islands are healthy and educated, that they have proper infrastructure, and that the business climate attracts opportunity rather than chases it away, then these islands will eventually be able to take genuine control of their own destiny. We must view grants not as a source of dependence, but as a means to independence. The overwhelming majority of our colleagues from the RMI and FSM with whom we work on a day-to-day basis understand this. They are committed not to fighting the Compact, but to making the Compact work for them to build a better future. And we are their willing partners in that endeavor.
They say that this generation plants the tree so that the next generation can enjoy the shade. With every penny that we spend, we must ask ourselves: How will this make life better for the next generation?
A while back, I came up with a phrase that I think describes many Pacific island economies: "Upside down in the middle of the ocean." A healthy economy is driven by a strong and diverse private sector, which the public sector can tax at reasonable levels to provide essential services for the people. Many Pacific economies are dominated by the public sector, with a small private sector that is largely dependent on government contracts and favors. This type of economy is upside down, and cannot survive without outside subsidy. And I would suggest that the middle of the ocean, where most Pacific islands are, is the worst place to be upside down. It is important to use aid not to subsidize and perpetuate the upside down economies of the Pacific, but to help them get their heads above water.
I don't have to tell you what a crucial role that auditors play in all of this. Make sure we're spending the money wisely. Make sure that we're spending it accordingly to a plan that will build a better future for the people of the islands. And if we're not doing that, then do what you do best: Humiliate us. Write stink about us in your reports. Make us look stupid. You're very good at humiliating us. That's why we love you-because you remind us of our parents.
And just a thought: While we appreciate being told everything we did wrong a year after the fact, wouldn't it be better if you could actually catch us before we mess up? Some people compare auditors to people who arrive on the battlefield after the battle is over to bayonet the wounded. I don't say that, mind you; I'm just reporting what I've heard from certain ignorant people with bad attitudes. But here's what I will say: The only thing better than good information is good information that arrives in time for you to use it. And to give credit where credit is due, both GAO and the Department of the Interior's Office of the Inspector General have done an excellent job lately in getting us extremely useful constructive suggestions early and often. We greatly appreciate it, it helps us do our job better, and it is resulting in money being used more effectively to serve the needs of real people. So thank you, GAO and OIG, for your willingness to bayonet us before we enter the battlefield.
I appreciate your having taken the time to listen, and thank you for being patient with my good-natured teasing. I sincerely appreciate the honor of being asked to speak before you, and I sincerely appreciate the work that you do. Thank you, and enjoy the rest of the conference.
Education in the Pacific: "Finish Your Tatoo"
Keynote Speech by David B. Cohen, U.S. Deputy Assistant Secretary of the Interior, Pacific Education Conference, Majuro, Republic of the Marshall Islands, July 12, 2005.
Iakwe, Alii, Aloha, Hafa Adai, Kaselehlia, Len wo, Mogethin, Ran annim, Talofa and Tirow.
It's quite an honor to be here. You know, I don't think I've ever spoken in front of so many teachers. And I have to say it's making me a little nervous. It's giving me a flashback to my childhood. I feel like I have to give an oral report and you're all grading me. But instead of giving my oral report in front of one teacher, which is bad enough, I have to give my report to over a thousand teachers. That's a thousand times as scary. I'm so nervous right now that all I want to do is skip this class, sneak off to the Boy's Room and smoke a cigarette. Not that I ever did that when I was really in school....
I have to tell you that I really admire the job that you do, out there on the front lines. There are so many challenges that we face. We have a long way to go to catch up to the rest of the world in terms of educational achievement, and we don't have the resources that we need.
I think that the greatest challenge that we face is making sure that people throughout the islands understand the value of education. Everybody says they value education, WE say we value education, but I'm afraid that too many of our people don't really understand the importance of education, not enough to truly value it. The people in this gathering, we understand what's at stake.
Let's talk about what's at stake. I had the honor of being the commencement speaker at Northern Marianas College recently. What I told the graduates there is a fitting message for students throughout the Pacific. I told them that they live on a small island, but they also live in a great big world. Like it or not, we live in an interconnected global economy, where those who are educated will get farther and farther ahead, and those who are not will get further and further behind. The Pacific, as a whole, is already far behind, and sadly, it is not catching up.
They say now that the world is flat, and with the internet, improved telecommunications and reduced trade barriers, everyone is basically competing with everyone else, no matter where they live. John Donne said that No Man is an Island. But in today's interconnected world, it's even fair to say that No Island is an Island. There's no place to hide from the competitive pressures of the world economy, not even on a remote island like Majuro, Rongalap, Kosrae, Pohnpei, Weno, Yap, Babeldaub, Rota, Guam or Tutuila.
Those of us who understand what's at stake have a moral duty to educate our people about the true importance of education. And if there are cultural barriers to doing so, then maybe we have to think about transforming the culture.
Speaking of culture, I think we can learn a lot by observing how different cultures do things. I think I'm uniquely well suited to observe different cultures: One of my parents is Samoan, one of my parents is Jewish, my wife is Indian, and I'm related by blood or marriage to Tongans, Filipinos, African Americans, Asian Americans, Arabs, Jews, Christians, Hindus and Muslims. For those of you who know me, if you're wondering why I'm always walking around looking confused, that's why.
I know this is a sensitive subject, but I think it's important to look at cultures around the world not in a judgmental way, but to try to figure out what some cultures do right about educating their children to move forward. My cousin, who was raised in American Samoa, went to college in California. His roommate was Asian, and he was really struck by the fact that when his roommate was studying for his finals, the roommate's parents came over to cook for him so he could concentrate on his studies. In most Pacific cultures, the children always serve the parents, and here the parents were serving the children so that the children could succeed academically.
It's something for us to think about. In this flat, competitive world, our children are competing with cultures that are doing whatever it takes to allow their children to succeed, including reversing our notion of the traditional roles between parent and child.
Again, we all say that we value education, but do we really value it in the way that other cultures do? Another one of my relatives was saving money to put himself through college. Shortly before he was planning to start college, his father took a chiefly title. The father had a ceremony, a saofa'i, in Samoa, and the son gave all of his college money for the ceremony. The son ended up never going to college. The son demonstrated his love for his father by giving up all of his college money. Forgive me for saying this, but I wish that the father had demonstrated his love for his son by refusing to accept it.
I realize that what I'm saying is almost sacrilegious to some people, and I don't mean to offend anyone. But maybe we have to at least consider new ideas in order to move forward.
Here's a cultural example from all the way in Africa. In Uganda, the World Bank discovered that only 13% of aid funds that were allocated for schools ever reached the schools. About a fifth of the money that was meant for teachers' salaries was taken by "ghost workers." These findings were published by the schools and the local newspapers. The parents were outraged and demanded action. As a result, a few years later, 80-90% of the money was reaching the schools, which is still too little, but quite an improvement. The schools were receiving $18 million more per year than they were receiving before.
When I read about that story from Uganda, I thought to myself: Could that type of thing happen in the Pacific? Could parental outrage about ghost employees and misspent aid funds result in more money finding its way into the classroom? This reminded me of a situation that we found in Chuuk, where we went to investigate how our Compact funds were being spent. What we found there were schools that apparently had ghost employees-not to mention ghost teachers, ghost textbooks, ghost desks, ghost chairs, ghost school supplies, ghost cafeterias and ghost lunches. I don't know if these were schools or haunted houses.
Now let me hasten to add that this problem isn't isolated to Chuuk, but Chuuk is where we happened to do a detailed investigation. We will do others. Let me also stress that when we brought this to the attention of the FSM National Government, they were as outraged as we were. I recently visited the new Governor of Chuuk, who has also pledged his support to ensure that Compact funds are properly spent in Chuuk. In nations like the FSM that consist of thousands of remote islands, it's impossible for the government to be everywhere at all times. That's why we have to take strong, decisive action whenever we find a problem. Speaking for the U.S. Government, we have ZERO TOLERANCE for the waste, fraud or abuse of funds that are supposed to be used to educate the children of the islands. I know we have counterparts in the FSM National Government and Chuuk State who feel the same way.
But let's get back to my question: As things stand today, is it likely that parental outrage can result in positive change for education in the Pacific? Outrage isn't something that we always do very well in the Pacific. Sure, some of the Native Hawaiian activists know how to get outraged, and some of the Chamorro activists in Guam are pretty good at getting outraged, but in between, there is a kind of cultural passivity, and also a healthy respect for authority, that might prevent the type of parental response that happened in Uganda from happening here. Also, there's not enough of a press. Where would these findings be published? Would anyone read them? Would anyone challenge authority, and demand that their children's schools get the money that was meant for them?
Maybe that would not happen, but on the other hand, maybe it would happen, or could happen. For one thing, the coconut wireless works very well. And there are signs that a healthy press is starting to develop in parts of Micronesia that have not had a press in the past. You're lucky to have The Marshall Islands Journal here, by the way. And we have seen encouraging signs lately that public outrage-not noisy demonstrations, but a kind of quiet outrage that can travel through the villages-has thwarted politicians that have attempted to abuse their power. So I believe that there is hope after all.
Notwithstanding some questions I raise about culture, I recognize that culture is our ally. When I spoke at the Northern Marianas College graduation, trying to encourage students who had just earned a two-year degree to go on to complete their bachelor's degree, I found that the analogy that really hit home was the analogy of a Samoan tattoo, or a pe'a.
I told the students that an education was like a Samoan tattoo, and I gave them three reasons why:
a. First: An education, like a tattoo, stays with you for the rest of your life.
b. Secondly: Getting an education, like getting a tattoo, can often be a painful experience.
c. And the third reason why getting an education is like getting a tattoo: If you start it, and don't finish it, IT'S VERY SHAMEFUL.
Now, I had used that analogy when I spoke at the college graduation in American Samoa, and of course everyone got it. In Samoa, they have a disparaging term for someone who quits before his tattoo is finished: a pe'a mutu, or broken tattoo. It's a mark of shame.
When I decided to use this tattoo analogy in my Northern Marianas College graduation speech, I wasn't sure if it would strike the same chord. I realize that Micronesians also have a tradition of tattoos, but I didn't know if the analogy would register in Saipan in the same way that it registered in Samoa. I was pleased to find, however, that that was the one thing that the students in Saipan really remembered about my speech. A number of people have told me that since my speech there, associate degree graduates have been going around telling each other, "Hey man, you need to finish your tattoo."
Now, I don't mean to offend anyone in the audience that did not finish their education-or their tattoo, for that matter. I'm just trying to make people feel that they must, as a matter of cultural pride, finish their education. And remember, the world is flat, and we're competing with cultures that are almost fanatically committed to education. In some cultures, parents find a way to get their children educated, period. They do not let anything get in the way of their children graduating college-not lack of money, not illness, not weddings, not funerals. In fact, in these cultures, the only funeral that might excuse a student not graduating college is the funeral of the student himself.
I don't want to finish this speech without sharing some thoughts about how each and every person in this audience can make a positive impact on education in the Pacific. For this, I sought out the advice of Joann Morris, the education expert from our Honolulu office. We hired her from PREL, actually.
Joann told me that I could inspire the audience by talking about this wonderful book that she had just read called The Tipping Point. I told her, "Joann, I have not read The Tipping Point." She said, "Don't worry, I'll tell you everything about it that you need to know."
And I wondered: Isn't that a little like trying to b.s. your way through a Book Report, when you've really only seen the movie? The last thing I want to do is try that in an audience full of a thousand teachers, because you guys are experts at figuring out when a student is b.s.'ing and hasn't really read the book. I still remember the book report I handed in when I was in school about The Great Gatsby by F. Scott Fitzgerald. I got an "F." And I couldn't figure out why, because my report went into great and eloquent detail about how Robert Redford did this, and Mia Farrow did that. To this day, I cannot figure out how my teacher knew that I didn't really read the book. You guys must have ESP.
In any event, Joann tried to explain to me the important concepts of The Tipping Point. She told me: "In order to make an important idea spread, you have to make it contagious." I said, "What do you mean by contagious?" So she gave me an example: "If you get up when you make your speech and you start yawning, soon everyone in the audience will unconsciously start yawning too. Yawning is contagious." And I said: "Listen, Joann, I do not need to resort to cheap tricks like that. If I want to get everyone yawning, all I have to do is give my speech. It happens every time I give a speech." And she said, "No, no, you're missing the point."
Well, after repeated attempts, I think Joann finally got through to me. So here, before an audience of a thousand teachers, it is my pleasure to present my book report on The Tipping Point, by Malcolm Gladwell.
I said earlier that it's the moral obligation of each and every one of us here to spread the idea that education must be raised to paramount importance throughout the Pacific. How can this book help us do that? Well, the author cites key elements needed to make an idea take hold, which I'd like to share with you. One that is significant to us as Pacific Islanders is the importance of personal interaction. Gladwell refers to three personality types that are key to spreading a new idea, concept or behavior.
He refers to Connectors. Those are the individuals in our communities who know everybody, who have wide social circles, and who have the ability to bring together a wide range of people. If you share a new idea with a Connector, he or she will know exactly who to tell to spread the word even further. In your home community, who do you know who is a Connector? How can you get these Connectors involved in improving education? If you engage them, they will carry your message to the furthest parts of your island.
A second personality type is the Maven. These people are information gatherers. They love to have the latest information and to pass it on to others. They may not be as socially outgoing as Connectors, but they love to share information. Think for a moment of the Mavens, the information-gatherers in your home community. How can you get them involved in gathering and sharing information about the needs of your educational community? If they possess all the relevant data, have them speak on your behalf or write articles in the newspaper, if you have one. Share that information.
The third type of natural pollinators of new ideas are the Salespeople. These individuals are adept at persuading others. Salespeople make convincing arguments for needed change. They start and sustain social epidemics. Who in your community are the Salespeople? How can you engage these personality types in rallying the community or the legislature to bring positive change to your school system?
We all know people who are one of these three personality types: Connectors, Mavens, and Salespeople. Seek them out and engage them in your educational pursuits. You should see your efforts multiply through their innate behaviors.
Malcolm Gladwell also provides direction about how to ensure our educational (or other) message reaches as many people as possible. We need to be mindful of three rules.
The first is the Law of the Few. This rule means that it takes just a few committed people to create change. It refers also to the three social personalities cited earlier. Just think of the change that could happen if you gathered together those three key personally types: social connectors, information gatherers and sharers, and salespeople. Seek these people out and get them as committed to education as you are.
The second rule is the Stickiness Factor. The Stickiness Factor means that messages must be memorable. Think of a current advertising slogan: "I just saved a bunch of money on my car insurance by switching to GEICO"; "What happens in Vegas, stays in Vegas." Advertisers know how to make a message "sticky". If people aren't getting our educational message, maybe it isn't impactful enough. Maybe we need to make small changes in our presentation that can make a big difference. We want our message to be irresistible and move people to action. And if I may, how's this for a sticky message: "Hey man, you need to finish your tattoo."
The third rule is the Power of Context. That rule refers to the environment in which our idea, product, message or behavior is operating. We know that ideas or strategies that might work on the mainland U.S. will not automatically work here in the Pacific. We must tailor our ideas and reforms to our community context.
As you move forward to improve education, remember that a few well-placed people (the Connectors, Mavens and Salespeople); a simple yet well-thought out, "sticky" idea; and a respect for our unique Pacific context can create major change.
Too often, we think that we are limited in what we can do because our Pacific populations are small, our human and financial resources are few, and our communities are isolated. However, in his book Malcolm Gladwell clearly indicates through numerous examples that a small number of critical people and small but significant changes to an idea, product, message or behavior can be infectious and spread, until the Tipping Point is reached and dramatic change can occur.
And how will we know when we've reached the Tipping Point? Well here's a thought: I mentioned before that the U.S. Government has Zero Tolerance for the waste, fraud or abuse of education funds for the islands. I also said that we have counterparts in the FSM National Government, and I believe in the Chuuk State Government, that feel the same way. I suggest that we will have reached the Tipping Point when we can say that all of the parents have Zero Tolerance for the squandering of their children's education money-the parents of Chuuk, parents throughout the FSM, parents in Palau, parents in the Northern Marianas, parents in Guam, parents in American Samoa, parents in Hawaii, parents here in the Marshalls and throughout the Pacific. And we will have reached the Tipping Point when we can say that parents throughout the Pacific are as committed to their children's education as parents in Singapore and Japan, and that parents have Zero Tolerance for landowners who take back school property out of greed, for teachers who don't show up, and for children who don't graduate. The day that we can say all of that, ladies and gentlemen, is the day that we can say that we've finished our tattoo.
Thank you, G-d bless you and have a wonderful conference. Kommol tata.
Iakwe, Alii, Aloha, Hafa Adai, Kaselehlia, Len wo, Mogethin, Ran annim, Talofa and Tirow.
It's quite an honor to be here. You know, I don't think I've ever spoken in front of so many teachers. And I have to say it's making me a little nervous. It's giving me a flashback to my childhood. I feel like I have to give an oral report and you're all grading me. But instead of giving my oral report in front of one teacher, which is bad enough, I have to give my report to over a thousand teachers. That's a thousand times as scary. I'm so nervous right now that all I want to do is skip this class, sneak off to the Boy's Room and smoke a cigarette. Not that I ever did that when I was really in school....
I have to tell you that I really admire the job that you do, out there on the front lines. There are so many challenges that we face. We have a long way to go to catch up to the rest of the world in terms of educational achievement, and we don't have the resources that we need.
I think that the greatest challenge that we face is making sure that people throughout the islands understand the value of education. Everybody says they value education, WE say we value education, but I'm afraid that too many of our people don't really understand the importance of education, not enough to truly value it. The people in this gathering, we understand what's at stake.
Let's talk about what's at stake. I had the honor of being the commencement speaker at Northern Marianas College recently. What I told the graduates there is a fitting message for students throughout the Pacific. I told them that they live on a small island, but they also live in a great big world. Like it or not, we live in an interconnected global economy, where those who are educated will get farther and farther ahead, and those who are not will get further and further behind. The Pacific, as a whole, is already far behind, and sadly, it is not catching up.
They say now that the world is flat, and with the internet, improved telecommunications and reduced trade barriers, everyone is basically competing with everyone else, no matter where they live. John Donne said that No Man is an Island. But in today's interconnected world, it's even fair to say that No Island is an Island. There's no place to hide from the competitive pressures of the world economy, not even on a remote island like Majuro, Rongalap, Kosrae, Pohnpei, Weno, Yap, Babeldaub, Rota, Guam or Tutuila.
Those of us who understand what's at stake have a moral duty to educate our people about the true importance of education. And if there are cultural barriers to doing so, then maybe we have to think about transforming the culture.
Speaking of culture, I think we can learn a lot by observing how different cultures do things. I think I'm uniquely well suited to observe different cultures: One of my parents is Samoan, one of my parents is Jewish, my wife is Indian, and I'm related by blood or marriage to Tongans, Filipinos, African Americans, Asian Americans, Arabs, Jews, Christians, Hindus and Muslims. For those of you who know me, if you're wondering why I'm always walking around looking confused, that's why.
I know this is a sensitive subject, but I think it's important to look at cultures around the world not in a judgmental way, but to try to figure out what some cultures do right about educating their children to move forward. My cousin, who was raised in American Samoa, went to college in California. His roommate was Asian, and he was really struck by the fact that when his roommate was studying for his finals, the roommate's parents came over to cook for him so he could concentrate on his studies. In most Pacific cultures, the children always serve the parents, and here the parents were serving the children so that the children could succeed academically.
It's something for us to think about. In this flat, competitive world, our children are competing with cultures that are doing whatever it takes to allow their children to succeed, including reversing our notion of the traditional roles between parent and child.
Again, we all say that we value education, but do we really value it in the way that other cultures do? Another one of my relatives was saving money to put himself through college. Shortly before he was planning to start college, his father took a chiefly title. The father had a ceremony, a saofa'i, in Samoa, and the son gave all of his college money for the ceremony. The son ended up never going to college. The son demonstrated his love for his father by giving up all of his college money. Forgive me for saying this, but I wish that the father had demonstrated his love for his son by refusing to accept it.
I realize that what I'm saying is almost sacrilegious to some people, and I don't mean to offend anyone. But maybe we have to at least consider new ideas in order to move forward.
Here's a cultural example from all the way in Africa. In Uganda, the World Bank discovered that only 13% of aid funds that were allocated for schools ever reached the schools. About a fifth of the money that was meant for teachers' salaries was taken by "ghost workers." These findings were published by the schools and the local newspapers. The parents were outraged and demanded action. As a result, a few years later, 80-90% of the money was reaching the schools, which is still too little, but quite an improvement. The schools were receiving $18 million more per year than they were receiving before.
When I read about that story from Uganda, I thought to myself: Could that type of thing happen in the Pacific? Could parental outrage about ghost employees and misspent aid funds result in more money finding its way into the classroom? This reminded me of a situation that we found in Chuuk, where we went to investigate how our Compact funds were being spent. What we found there were schools that apparently had ghost employees-not to mention ghost teachers, ghost textbooks, ghost desks, ghost chairs, ghost school supplies, ghost cafeterias and ghost lunches. I don't know if these were schools or haunted houses.
Now let me hasten to add that this problem isn't isolated to Chuuk, but Chuuk is where we happened to do a detailed investigation. We will do others. Let me also stress that when we brought this to the attention of the FSM National Government, they were as outraged as we were. I recently visited the new Governor of Chuuk, who has also pledged his support to ensure that Compact funds are properly spent in Chuuk. In nations like the FSM that consist of thousands of remote islands, it's impossible for the government to be everywhere at all times. That's why we have to take strong, decisive action whenever we find a problem. Speaking for the U.S. Government, we have ZERO TOLERANCE for the waste, fraud or abuse of funds that are supposed to be used to educate the children of the islands. I know we have counterparts in the FSM National Government and Chuuk State who feel the same way.
But let's get back to my question: As things stand today, is it likely that parental outrage can result in positive change for education in the Pacific? Outrage isn't something that we always do very well in the Pacific. Sure, some of the Native Hawaiian activists know how to get outraged, and some of the Chamorro activists in Guam are pretty good at getting outraged, but in between, there is a kind of cultural passivity, and also a healthy respect for authority, that might prevent the type of parental response that happened in Uganda from happening here. Also, there's not enough of a press. Where would these findings be published? Would anyone read them? Would anyone challenge authority, and demand that their children's schools get the money that was meant for them?
Maybe that would not happen, but on the other hand, maybe it would happen, or could happen. For one thing, the coconut wireless works very well. And there are signs that a healthy press is starting to develop in parts of Micronesia that have not had a press in the past. You're lucky to have The Marshall Islands Journal here, by the way. And we have seen encouraging signs lately that public outrage-not noisy demonstrations, but a kind of quiet outrage that can travel through the villages-has thwarted politicians that have attempted to abuse their power. So I believe that there is hope after all.
Notwithstanding some questions I raise about culture, I recognize that culture is our ally. When I spoke at the Northern Marianas College graduation, trying to encourage students who had just earned a two-year degree to go on to complete their bachelor's degree, I found that the analogy that really hit home was the analogy of a Samoan tattoo, or a pe'a.
I told the students that an education was like a Samoan tattoo, and I gave them three reasons why:
a. First: An education, like a tattoo, stays with you for the rest of your life.
b. Secondly: Getting an education, like getting a tattoo, can often be a painful experience.
c. And the third reason why getting an education is like getting a tattoo: If you start it, and don't finish it, IT'S VERY SHAMEFUL.
Now, I had used that analogy when I spoke at the college graduation in American Samoa, and of course everyone got it. In Samoa, they have a disparaging term for someone who quits before his tattoo is finished: a pe'a mutu, or broken tattoo. It's a mark of shame.
When I decided to use this tattoo analogy in my Northern Marianas College graduation speech, I wasn't sure if it would strike the same chord. I realize that Micronesians also have a tradition of tattoos, but I didn't know if the analogy would register in Saipan in the same way that it registered in Samoa. I was pleased to find, however, that that was the one thing that the students in Saipan really remembered about my speech. A number of people have told me that since my speech there, associate degree graduates have been going around telling each other, "Hey man, you need to finish your tattoo."
Now, I don't mean to offend anyone in the audience that did not finish their education-or their tattoo, for that matter. I'm just trying to make people feel that they must, as a matter of cultural pride, finish their education. And remember, the world is flat, and we're competing with cultures that are almost fanatically committed to education. In some cultures, parents find a way to get their children educated, period. They do not let anything get in the way of their children graduating college-not lack of money, not illness, not weddings, not funerals. In fact, in these cultures, the only funeral that might excuse a student not graduating college is the funeral of the student himself.
I don't want to finish this speech without sharing some thoughts about how each and every person in this audience can make a positive impact on education in the Pacific. For this, I sought out the advice of Joann Morris, the education expert from our Honolulu office. We hired her from PREL, actually.
Joann told me that I could inspire the audience by talking about this wonderful book that she had just read called The Tipping Point. I told her, "Joann, I have not read The Tipping Point." She said, "Don't worry, I'll tell you everything about it that you need to know."
And I wondered: Isn't that a little like trying to b.s. your way through a Book Report, when you've really only seen the movie? The last thing I want to do is try that in an audience full of a thousand teachers, because you guys are experts at figuring out when a student is b.s.'ing and hasn't really read the book. I still remember the book report I handed in when I was in school about The Great Gatsby by F. Scott Fitzgerald. I got an "F." And I couldn't figure out why, because my report went into great and eloquent detail about how Robert Redford did this, and Mia Farrow did that. To this day, I cannot figure out how my teacher knew that I didn't really read the book. You guys must have ESP.
In any event, Joann tried to explain to me the important concepts of The Tipping Point. She told me: "In order to make an important idea spread, you have to make it contagious." I said, "What do you mean by contagious?" So she gave me an example: "If you get up when you make your speech and you start yawning, soon everyone in the audience will unconsciously start yawning too. Yawning is contagious." And I said: "Listen, Joann, I do not need to resort to cheap tricks like that. If I want to get everyone yawning, all I have to do is give my speech. It happens every time I give a speech." And she said, "No, no, you're missing the point."
Well, after repeated attempts, I think Joann finally got through to me. So here, before an audience of a thousand teachers, it is my pleasure to present my book report on The Tipping Point, by Malcolm Gladwell.
I said earlier that it's the moral obligation of each and every one of us here to spread the idea that education must be raised to paramount importance throughout the Pacific. How can this book help us do that? Well, the author cites key elements needed to make an idea take hold, which I'd like to share with you. One that is significant to us as Pacific Islanders is the importance of personal interaction. Gladwell refers to three personality types that are key to spreading a new idea, concept or behavior.
He refers to Connectors. Those are the individuals in our communities who know everybody, who have wide social circles, and who have the ability to bring together a wide range of people. If you share a new idea with a Connector, he or she will know exactly who to tell to spread the word even further. In your home community, who do you know who is a Connector? How can you get these Connectors involved in improving education? If you engage them, they will carry your message to the furthest parts of your island.
A second personality type is the Maven. These people are information gatherers. They love to have the latest information and to pass it on to others. They may not be as socially outgoing as Connectors, but they love to share information. Think for a moment of the Mavens, the information-gatherers in your home community. How can you get them involved in gathering and sharing information about the needs of your educational community? If they possess all the relevant data, have them speak on your behalf or write articles in the newspaper, if you have one. Share that information.
The third type of natural pollinators of new ideas are the Salespeople. These individuals are adept at persuading others. Salespeople make convincing arguments for needed change. They start and sustain social epidemics. Who in your community are the Salespeople? How can you engage these personality types in rallying the community or the legislature to bring positive change to your school system?
We all know people who are one of these three personality types: Connectors, Mavens, and Salespeople. Seek them out and engage them in your educational pursuits. You should see your efforts multiply through their innate behaviors.
Malcolm Gladwell also provides direction about how to ensure our educational (or other) message reaches as many people as possible. We need to be mindful of three rules.
The first is the Law of the Few. This rule means that it takes just a few committed people to create change. It refers also to the three social personalities cited earlier. Just think of the change that could happen if you gathered together those three key personally types: social connectors, information gatherers and sharers, and salespeople. Seek these people out and get them as committed to education as you are.
The second rule is the Stickiness Factor. The Stickiness Factor means that messages must be memorable. Think of a current advertising slogan: "I just saved a bunch of money on my car insurance by switching to GEICO"; "What happens in Vegas, stays in Vegas." Advertisers know how to make a message "sticky". If people aren't getting our educational message, maybe it isn't impactful enough. Maybe we need to make small changes in our presentation that can make a big difference. We want our message to be irresistible and move people to action. And if I may, how's this for a sticky message: "Hey man, you need to finish your tattoo."
The third rule is the Power of Context. That rule refers to the environment in which our idea, product, message or behavior is operating. We know that ideas or strategies that might work on the mainland U.S. will not automatically work here in the Pacific. We must tailor our ideas and reforms to our community context.
As you move forward to improve education, remember that a few well-placed people (the Connectors, Mavens and Salespeople); a simple yet well-thought out, "sticky" idea; and a respect for our unique Pacific context can create major change.
Too often, we think that we are limited in what we can do because our Pacific populations are small, our human and financial resources are few, and our communities are isolated. However, in his book Malcolm Gladwell clearly indicates through numerous examples that a small number of critical people and small but significant changes to an idea, product, message or behavior can be infectious and spread, until the Tipping Point is reached and dramatic change can occur.
And how will we know when we've reached the Tipping Point? Well here's a thought: I mentioned before that the U.S. Government has Zero Tolerance for the waste, fraud or abuse of education funds for the islands. I also said that we have counterparts in the FSM National Government, and I believe in the Chuuk State Government, that feel the same way. I suggest that we will have reached the Tipping Point when we can say that all of the parents have Zero Tolerance for the squandering of their children's education money-the parents of Chuuk, parents throughout the FSM, parents in Palau, parents in the Northern Marianas, parents in Guam, parents in American Samoa, parents in Hawaii, parents here in the Marshalls and throughout the Pacific. And we will have reached the Tipping Point when we can say that parents throughout the Pacific are as committed to their children's education as parents in Singapore and Japan, and that parents have Zero Tolerance for landowners who take back school property out of greed, for teachers who don't show up, and for children who don't graduate. The day that we can say all of that, ladies and gentlemen, is the day that we can say that we've finished our tattoo.
Thank you, G-d bless you and have a wonderful conference. Kommol tata.
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