ANALYSIS Effects of unstable federal policy in NMI •Must the NMI allow a repeat of history?

When the former Trust Territory Government started deploying to the permanent seat of the FSM in the late seventies, the NMI faced serious economic setback as it deals with the eventual loss of over $9 million in revenue generation, annually. It had to scramble at the eleventh hour to find substitute means of bracing for the impending loss of substantial revenue.

The infamous foreign investment law was the first to be scrapped. This law was a relic of the old TTG so designed to grant the indigenous people the opportunity to invest in businesses that wish to make the NMI their permanent home. The only way to invest here was for investors to grant the local people 51 percent ownership in the establishment of businesses. But when push came to shove in finding substitute for the eventual loss of $9 million (a huge contraction then), it was repealed in its entirety.

The scrapping of the foreign investment law also provided an opportunity for investors to buy-out the share of their local partners. It took out the wind of a true partnership in investment in a budding tourism industry that was very profitable from the outset. Understandably, these investors prefer dealing with their own kind in a strange land that is an archipelago inhabited by simple island folks. Thus, local shares were bought-out leaving investments strictly in foreign investors’ hands altogether.

This shift from an old reliance on the TTG to standing on one’s feet (triggered by self-government born by the Covenant Agreement) was scaffold by a seven-year guaranteed funding under the terms and conditions of the agreement. It allowed the NMI to invest in its basic infrastructure to replace dilapidated relics of the Central
Intelligence Agency that once occupied Capital Hill. It was all uphill given that the basic need for infrastructure emplacement isn’t limited to a single island. It includes Tinian and Rota too. Thus, the often protracted provincial feud over how the NMI’s limited financial resources is divided among the three senatorial districts.

Then came the controversial casino gambling law that was vetoed and overridden by the first constitutionally established bicameral legislature. It didn’t get anywhere when the Catholic Church and a women’s group took a united front to repeal such law via a referendum. It was shot down by an overwhelming majority of about 78 percent of total number of votes in 1979. When this economic venture died, the NMI continued to scramble for any workable economic venture that would help replace revenue losses that took place when the old TTG relocated to Pohnpei.

Determination to establish an economy

The NMI was determined to welcome investors to these isles. It believes in wealth creation as the means to create jobs for the increasing number of high school graduates that march out of campus every June.

More hotels were built from one end of the island to the next. The build-up in tourism related facilities was augmented by the “bubble economy” in Japan. The bubble benefited a lot of landowners who leased out their properties for golf resorts as there’s a craze for it in tourists who come from the Land of the Rising Sun.

It was economic boom time in the islands.

In 1983, the first garment manufacturing company was established here. The NMI accepted it. Officials from the US Department of Interior encouraged it with repetitious refrain that the NMI uses the Headnote 3-a under the Covenant Agreement to export finished apparel products into US markets, duty free. Neither investor, Interior nor the NMI had any inkling then that this industry would develop into a major economic sector in the islands. In fact, it is now the lead industry here when tourism stumbled and crumbled when the Asian crisis came some two years ago. What was then a small and humble sector has turned into a $1.2 billion industry.

Shift in federal policy

By the early nineties, the garment industry has become the “Little David” of this Pacific Isle that apparently has given the US textile industry a run for its money. Thus, the beginning of a punitive attitude against the NMI with no back-up plans from the lead federal agency that has turned its role from advocate to adversary.

It brings into focus a question whether Interior is capable of upholding the principle of law or is its blind agenda a willful display of an old Trust Territory mentality of “Don’t listen to what we say, just do what we ask you to do?” It must dawn on Interior officials that Headnote 3-a is part of the Covenant Agreement. The Covenant Agreement is US Law! Is this so difficult to understand? Why the willful violation of this provision of law? This punitive or bully pulpit attitude goes to illustrate that even Interior officials would violate the principles of law to effect changes it never had the legal authority to do so in the first place. Hello, anybody home?

The NMI, perhaps for the first time in its developmental history, has seen the consequence of a shift in federal policies that always excludes its views and sentiments. This attitude turns representative democracy on its head. It turns our pride as US Citizens into muted voices that long for freedom and equality however the NMI may be situated outside mainstream America. The NMI is part of a greater nation. It is up to Washington to turn federal policy consideration inclusive of the sentiments of the very people it would benefit or destroy. Inclusiveness has never been the forte of Interior especially in recent years. How then could we jointly strengthen our democratic institutions if this punitive and destructive attitude continues to be the center piece in NMI/US relations?

Be that as it may, the NMI however faltering slow in its efforts to impose reforms has never lost sight of what its mother country stands for. It equally understands that for the most part, it is key players without legal authority who violate the principle of law however it wishes to do so with arrogance where stalwarts have come to convince themselves that they are above the law when dealing with minorities, especially those situated outside mainstream America. Such sense of adolescency must never ever be condoned. God Bless America!