Foreign Relations

Since the implementation of the Compact of Free Association in 1986, the United States has provided more than $2.6 billion in financial and other assistance, of which more than $1.5 billion was provided to the Federated States of Micronesia and more than $1.1 billion was provided to the Republic of the Marshall Islands during fiscal years 1987 through 1999. The Interior Department provided most of the assistance through quarterly payments to the Islands' bank accounts to be used for such purposes as capital construction projects, energy production, and communications capabilities. Before the Compact, the Untied States provided about $250 million in assistance to what is now the Republic of the Marshall Islands for the effects of the U.S. nuclear weapons testing program that had taken place there during the 1940s and 1950s. GAO found inaccuracies and inconsistencies in the data being used by Interior to supervise and monitor federal assistance programs.

GAO noted that: (1) since the implementation of the Compact of Free Association in 1986, the United States has provided more than $2.6 billion in financial and other assistance, of which more than $1.5 billion was provided to Micronesia and over $1.1 billion was provided to Marshall Islands during fiscal years 1987 through 1999; (2) Interior provided the majority of the assistance, about $2 billion, through quarterly payments to the islands' bank accounts to be used for such purposes as capital construction projects, energy production, communication capabilities, and current account costs, such as those for payroll, maintenance, and other governmental activities; (3) the remaining half billion dollars was provided by 19 federal agencies in the form of grants, loans, equipment, and technical assistance, such as weather forecasting support and airport training activities; (4) prior to the Compact, the United States provided about $250 million in funding and assistance to what is now Marshall Islands for the effects of the U.S. nuclear weapons testing program that took place in the Marshall Islands during the 1940s and 1950s; (5) the Department of Defense, the Department of Energy, and Interior provided direct payments to the Marshall Islands' governments and individuals, rehabilitation and resettlement services, and health care and monitoring of islanders exposed to radioactive fallout; (6) in gathering and verifying data on the cost of U.S. assistance provided to the Islands, GAO found inaccuracies and inconsistencies with the data being used by Interior to supervise and monitor federal assistance programs; (7) for example, Interior had a number of errors in the budget data it reported annually to Congress on direct payments to the Islands; (8) there were significant inconsistencies in Interior's data on the assistance provided by other agencies to the Islands and the data the agencies reported to GAO; (9) Interior had not used the annual audit information available from the Islands to corroborate its figures; and (10) collectively, therefore, Interior's ability to accurately report on assistance provided is called into question.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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