VZCZCXRO9165
RR RUEHKN
DE RUEHKN #0073 1272243
ZNR UUUUU ZZH
R 072243Z MAY 09
FM AMEMBASSY KOLONIA
TO RUEHC/SECSTATE WASHDC 2288
INFO RUEHKN/AMEMBASSY KOLONIA 2653

UNCLAS KOLONIA 000073 
 
SENSITIVE 
SIPDIS 
 
FOR EAP/ANP 
 
E.O. 12958: N/A 
TAGS: EAID PGOV FM
SUBJECT: FSM COMPACT INFRASTRUCTURE STARTS TO ROLL AND TO REQUIRE 
ENHANCED MANAGEMENT 
 
REF: A) STATE 044616,  B) KOLONIA 53 
 
1.(U) Ref A provided useful guidance.  At a subsequent meeting 
with Federated States of Micronesia (FSM) President Emanuel Mori 
on May 5, Ambassador Miriam Hughes conveyed key points. 
Pursuant to Para 3 of Ref A, she explained that although the 
Embassy sought to be helpful, post could not become too involved 
in an internal FSMNG personnel issue with a contract employee. 
 
¶2.  (SBU) The President acknowledged that he was responsible for 
the decision to fire Mr. Robert Westerfield based upon his own 
observations and a volume of complaints he had received from FSM 
state and Congressional officials.  He reiterated that he had 
discussed this decision with the Department of the Interior 
(DOI) Acting Deputy Assistant Secretary Nik Pula in Honolulu on 
April 8.  He had called Ambassador Hughes to his office on April 
15 to ensure the Embassy was in the loop.  Looking ahead, he 
emphasized the need to find a qualified replacement for 
Westerfield with strong construction engineering, contract and 
management skills.  Mori said he appreciated the assistance of 
the Embassy's Defense Liaison, Admiral French of COMNAVMARIANAS, 
whom the President telephoned on April 16.  In response to a 
question from the Ambassador, the President said he had already 
instructed his Public Information Officer to create a website 
for the Project Management Unit (PMU), which would intend to 
post information on Compact infrastructure projects and budgets. 
 
 
¶3.  (U) Reviewing a troubled history of Compact infrastructure 
implementation and internal political intrusion within the FSM, 
Mori shared his concern that if the PMU is found deficient, 
operations could again shut down and bring the emerging projects 
to a halt.  He recalled the FSM's bad experience with an 
American company, GMP of Hawaii, which the FSMNG contracted 
approximately four years ago to manage the infrastructure 
contracts.  An investigation by DOI's Office of the Inspector 
General revealed contractual conflicts and cost overruns that 
led to the cessation of Compact payments to GMP, which had 
operated under the auspices of the FSM Department of 
Transportation, Communication and Infrastructure (TC&I). 
 
¶4.  (U) When President Mori took office in 2007, he transferred 
the remnants of the PMU from TC&I to his own office in order to 
reinvigorate Compact infrastructure.  Recently, the FSM Congress 
voted unanimously to return the PMU back to the Department of 
TC&I.  President Mori vetoed this recent measure, the Congress 
overrode the veto and the President then delivered a letter to 
the Congress on April 27 that reportedly explains why he is not 
ready to move the PMU at this time.  Mori continues to take a 
strong, personal interest in Compact infrastructure as a key 
stimulus to economic development. 
 
¶5. (SBU) On May 7, DOI Infrastructure Grant Manager Steve Savage 
briefed Ambassador Hughes on PMU operations, stating that $2.1 
million of the annual Compact infrastructure grant currently 
covers costs of PMU operating expenses.  Finding a qualified 
replacement for Westerfield on a limited budget will be 
problematic and potentially serious, as Westerfield makes the 
major contract decisions, Savage said.  As a backlog of Compact 
infrastructure projects comes on stream, at an accumulated value 
of some $130 million, Savage and Hughes agreed that the PMU 
needs more engineers and stronger management.  Under the amended 
Compact, the FSM will continue to receive annual infrastructure 
allocations of some $24 million a year, or 30 percent of the 
value of all the sector grants.  Given the current PMU 
configuration and lack of Micronesian capacity, it is unclear 
whether the FSMNG is up to managing this challenge. 
 
¶6.  (SBU) Comment.  One positive aspect of recent developments 
is the initiative of President Mori to reach out to three U.S. 
representatives to discuss a significant Compact issue. 
Otherwise, communication at the FSM national level is generally 
compartmentalized and secretive, fueling political tension.  If 
a PMU website is indeed developed and maintained, the universal 
ease of access to information on current and future projects, 
costs and bid procedures could help allay suspicion and jealousy 
among the four FSM states, the national Congress and potential 
bidders on construction projects.  However, the efficiency and 
professional capacity of the PMU itself is likely to remain a 
problem.  For all of President Mori's urgent concern, his 
administration has still not posted a vacancy announcement for 
Westerfield's position.  Anything we can do to work 
appropriately with the Micronesians, DOI and others to 
strengthen FSM self-capacity to absorb and apply our 
considerable Compact aid lies at the heart of U.S. interests 
here.  Development and democratic maturation depend upon it. 
 
HUGHES