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 Islands.
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.