The Compact of Free Association (now superseded by Compact II) is the international agreement between the United States Government and the Federated States of Micronesia that allows for direct aid and “free association” between the two nations. The first Compact was negotiated in 1983, following the 1979 creation of the Federated States of Micronesia (FSM). The four island groups comprising the FSM were formerly ruled by the United States as part of a region-wide United Nations Trust Territory (1947-1979).
One one hand the Compact provides a huge array of national and state level assistance, as well as individual access to a wide range of US program traditionally reserved for US citizens. Direct assistance means that Micronesian schools receive money from the US Department of Education, the FSM Post Office works in conjunction with the USPS, and many of federal programs in the FSM mirror US departments in structure and funding source.
At the individual level the Compact includes the full range of social services and safety net entitlement programs, eligibility for higher education loans and grants, unrestricted migration to and from the US with only a passport, as well as the ability to enlist in the US military. This has led to large numbers of Micronesians living and working in Guam, Hawaii, and even the mainland US.
On the other hand some critics argue that these benefits pale in comparison to the total control exercised by the US over the region, and that they fail to compensate for the short comings of US development efforts during the 30-year UN Trusteeship. The Outer Islands of Micronesia in particular remain among the least developed communities in the region and the world.
Analysis of Compact II by Dr. Robert A. Underwood of the East-West Center in Guam.
Independency and Self-Sufficiency in the Post Cold War Pacific by Ellen Boneparth, and M. James Wilkinson, Ambassador (Ret.)
Fact Sheet written by the US Citizenship and Immigration Services about the Compact defined rights of Micronesians in the US.