The ancestors of the Micronesians settled the Caroline Islands over
4,000 years ago. A decentralized chieftain-based system eventually evolved
into a more centralized economic and religious empire centered on Yap.
European explorers -- first the Portuguese in search of the Spice Islands
(Indonesia) and then the Spanish -- reached the Carolines in the 16th century,
with the Spanish establishing sovereignty. The current FSM passed to German
control in 1899, then to the Japanese in 1914, and finally to the U.S.
under UN auspices in 1947 as part of the Trust Territory of the Pacific
On May 10, 1979, four of the Trust Territory districts ratified a new
constitution to become the Federated States of Micronesia. The neighboring
trust districts of Palau, the Marshall Islands, and the Northern Mariana
Islands chose not to participate. The FSM signed a Compact of Free Association
with the U.S., which entered into force on November 3, 1986, marking Micronesia's
emergence from trusteeship to independence.
The Governments of the FSM and the U.S. signed the final version of
the Compact of Free Association on October 1, 1982. The Compact went into
effect on November 3, 1986, and the FSM became a sovereign nation in free
association with the United States. Under the Compact, the U.S. has full
authority and responsibility for the defense of the FSM. This security
relationship can be changed or terminated by mutual agreement. The Compact
provides U.S. grant funds and federal program assistance to the FSM. Amended
financial assistance provisions came on-line in FY 2004. The basic relationship
of free association continues indefinitely.