Northern Mariana Islands: The History Of This Island Nation And It’s People

(THIS ARTICLE IS COURTESY OF THE CIA WORLD FACT BOOK)

 

Northern Mariana Islands

Introduction Under US administration as part of the UN Trust Territory of the Pacific, the people of the Northern Mariana Islands decided in the 1970s not to seek independence but instead to forge closer links with the US. Negotiations for territorial status began in 1972. A covenant to establish a commonwealth in political union with the US was approved in 1975, and came into force on 24 March 1976. A new government and constitution went into effect in 1978.
History European Explorers

The first European exploration of the area was that led by Ferdinand Magellan in 1521, who landed on nearby Guam and claimed the islands for Spain. After being met offshore and accepting the refreshments offered to them by the native Chamorros, the latter then helped themselves to a small boat belonging to Magellan’s fleet. This led to a cultural clash because in the old Chamorro culture there was little if any private property and to take something that one needed, such as a boat for fishing, was not considered thievery.

Due to that cultural misunderstanding, around half a dozen locals were killed and a village of 40 homes burned before the boat was retrieved. The archipelago thus acquired the ignominious name Islas de los Ladrones (“Islands of the Thieves”).

Three days after he had arrived, Magellan fled the archipelago under attack–a portentous beginning to its relationship with the Spanish. The islands were then considered by Spain to be annexed, and therefore under their governance, from the Philippines, as part of the Spanish East Indies. The Spanish built a Royal Palace in Guam for the Governor of the Islands. Its remains could still be seen in 2006.

Guam was an important stop-over from Mexico for galleons carrying gold and other cargo between the Philippines and Spain. There are several lost sunken Spanish galleons off Guam.

In 1668 the islands were renamed by Padre Diego Luis de Sanvitores as Las Marianas after Mariana of Austria, widow of Spain’s Philip IV.

Most of the islands’ native population (90%-95%)[5] died out or intermarried with non-Chamorro settlers under Spanish rule, but new settlers, primarily from the Philippines and the Caroline Islands, were brought in to repopulate the islands. Despite this, the Chamorro population did gradually resurge, and Chamorro, Filipino and Carolinian language and ethnic differences remain basically distinct in the Marianas.

To facilitate cultural and religious assimilation, Spanish colonists forced the Chamorros to be concentrated on Guam for a period of time. By the time Chamorros were allowed to return to the present-day Northern Marianas, Carolinians (from present-day eastern Yap State and western Chuuk State) had settled in the Marianas. Hence Carolinians and Chamorros are both considered as indigenous to the Northern Marianas and both languages are official in the commonwealth (but not on Guam).

German and Japanese possession

After the Spanish-American War of 1898, Spain ceded Guam to the United States and sold the rest of the Marianas (along with the Caroline and Marshall Islands) to Germany.

Japan declared war on Germany during World War I and invaded the Northern Marianas. In 1919, the League of Nations, pre-cursor of the United Nations, awarded the islands to Japan by mandate. During Japan’s occupation, sugar cane became the main industry of the islands, and labor was imported from Japan and associated colonies (especially Okinawa and Korea).

Hours after the Pearl Harbor attack, Japanese forces from the Marianas launched an invasion of Guam on December 8, 1941. Chamorros from the Northern Marianas, then under Japanese rule for more than two decades, were brought to Guam to assist the Japanese administration. This combined with the harsh treatment of Guamanian Chamorros during the brief 31-month occupation created a rift between the two populations that would become the main reason Guamanians rejected reunification referendum approved by the Northern Marianas in the 1960s.

American acquisition

Near the end of World War II, the United States military invaded the Mariana Islands on June 15, 1944, beginning with the Battle of Saipan, which ended on July 9 with the Japanese commander committing seppuku (a traditional Japanese form of ritual suicide). U.S. forces then recaptured Guam beginning July 21 and invaded Tinian (see Battle of Tinian) on July 24, which provided the take off point for the Enola Gay, the plane dropping the atomic bomb on Hiroshima a year later. Rota was left untouched (and isolated) until the Japanese surrender in August 1945, due to its military insignificance.

The war did not end for everyone with the signing of the armistice. The last group of Japanese soldiers surrendered on Saipan on December 1, 1945. On Guam, Japanese soldier Shoichi Yokoi hid out in the village of Talofofo until 1972.

Between the end of the invasion and the Japanese surrender, the Saipan and Tinian populations were kept in concentration camps. Japanese nationals were eventually repatriated, and the indigenous Chamorro and Carolinians returned to the land.

The Commonwealth

After Japan’s defeat, the islands were administered by the United States as part of the United Nations Trust Territory of the Pacific Islands; thus, defense and foreign affairs are the responsibility of the United States. The people of the Northern Mariana Islands decided in the 1970s not to seek independence, but instead to forge closer links with the United States. Negotiations for territorial status began in 1972. A covenant to establish a commonwealth in political union with the U.S. was approved in 1975. A new government and constitution went into effect in 1978. The islands are not represented in the U.S. Congress.

Geography Location: Oceania, islands in the North Pacific Ocean, about three-quarters of the way from Hawaii to the Philippines
Geographic coordinates: 15 12 N, 145 45 E
Map references: Oceania
Area: total: 477 sq km
land: 477 sq km
water: 0 sq km
note: includes 14 islands including Saipan, Rota, and Tinian
Area – comparative: 2.5 times the size of Washington, DC
Land boundaries: 0 km
Coastline: 1,482 km
Maritime claims: territorial sea: 12 nm
exclusive economic zone: 200 nm
Climate: tropical marine; moderated by northeast trade winds, little seasonal temperature variation; dry season December to June, rainy season July to October
Terrain: southern islands are limestone with level terraces and fringing coral reefs; northern islands are volcanic
Elevation extremes: lowest point: Pacific Ocean 0 m
highest point: unnamed location on Agrihan 965 m
Natural resources: arable land, fish
Land use: arable land: 13.04%
permanent crops: 4.35%
other: 82.61% (2005)
Irrigated land: NA
Natural hazards: active volcanoes on Pagan and Agrihan; typhoons (especially August to November)
Environment – current issues: contamination of groundwater on Saipan may contribute to disease; clean-up of landfill; protection of endangered species conflicts with development
Geography – note: strategic location in the North Pacific Ocean
Politics The Northern Mariana Islands have a presidential representative democratic system, in which the Governor is head of government, with a multi-party system. The Northern Mariana Islands are a commonwealth in political union with the United States. Federal funds to the Commonwealth are administered by the Office of Insular Affairs of the U.S. Department of the Interior.

Repeating the separation of powers in other U.S. territories and state governments, executive power is exercised by the Governor of the Northern Mariana Islands. Legislative power is vested in the bicameral Northern Mariana Islands Commonwealth Legislature. Senate President Joseph Mendiola is a founding member of the Outlying Areas Senate Presidents Caucus. The judiciary is independent of the executive and the legislative branches.

However, politics in the Northern Mariana Islands is often “more a function of family relationships and personal loyalties” where the size of one’s extended family is more important than a candidate’s personal qualifications. Some critics, including the author of Saipan Sucks, charge that this is nepotism carried out within the trappings of democracy. [2] Archive copy at the Internet Archive

The Northern Mariana Islands have also come into the news recently due to their connection to the scandals involving Jack Abramoff and allegedly former House Majority Leader Tom DeLay [3]. As a direct result of lobbying by Abramoff and associates, the Northern Mariana Islands received special federal subsidies. [4] As well, Congressman Bob Ney allegedly received free trips to the Northern Mariana Islands from Abramoff, in violation of federal law. [5]

The Northern Marianas Islands are also the site of another controversy, one involving Rep. John Doolittle (R-CA), Jack Abramoff, and Rep. Richard Pombo (R-CA) and the alleged links to the Saipan Garment Manufacturers Association and the Northern Mariana Islands role in stopping legislation aimed at cracking down on sweatshops and sex shops on the islands in 2001.

The Northern Marianas Islands allegedly have the most abusive labor practices of anywhere in the United States. According to the progressive think tank American Progress Action Fund, “Human ‘brokers’ bring thousands there to work as sex slaves and in cramped sweatshop garment factories where clothes (complete with ‘Made in U.S.A.’ tag) have been produced for all the major brands.”

People Population: 86,616 (July 2008 est.)
Age structure: 0-14 years: 18.4% (male 8,342/female 7,594)
15-64 years: 79.9% (male 27,996/female 41,245)
65 years and over: 1.7% (male 740/female 699) (2008 est.)
Median age: total: 29.9 years
male: 32 years
female: 28.9 years (2008 est.)
Population growth rate: 2.377% (2008 est.)
Birth rate: 19.04 births/1,000 population (2008 est.)
Death rate: 2.31 deaths/1,000 population (2008 est.)
Net migration rate: 7.04 migrant(s)/1,000 population (2008 est.)
Sex ratio: at birth: 1.06 male(s)/female
under 15 years: 1.1 male(s)/female
15-64 years: 0.68 male(s)/female
65 years and over: 1.06 male(s)/female
total population: 0.75 male(s)/female (2008 est.)
Infant mortality rate: total: 6.72 deaths/1,000 live births
male: 6.68 deaths/1,000 live births
female: 6.76 deaths/1,000 live births (2008 est.)
Life expectancy at birth: total population: 76.5 years
male: 73.89 years
female: 79.26 years (2008 est.)
Total fertility rate: 1.18 children born/woman (2008 est.)
HIV/AIDS – adult prevalence rate: NA
HIV/AIDS – people living with HIV/AIDS: NA
HIV/AIDS – deaths: NA
Nationality: noun: NA (US citizens)
adjective: NA
Ethnic groups: Asian 56.3%, Pacific islander 36.3%, Caucasian 1.8%, other 0.8%, mixed 4.8% (2000 census)
Religions: Christian (Roman Catholic majority, although traditional beliefs and taboos may still be found)
Languages: Philippine languages 24.4%, Chinese 23.4%, Chamorro 22.4%, English 10.8%, other Pacific island languages 9.5%, other 9.6% (2000 census)
Literacy: definition: age 15 and over can read and write
total population: 97%
male: 97%
female: 96% (1980 est.)

After Puerto Rico’s Debt Crisis, Worries Shift to Virgin Islands

(THIS ARTICLE IS COURTESY OF THE NEW YORK TIMES)

Lindbergh Bay beach in St. Thomas, U.S. Virgin Islands, on Memorial Day weekend.CreditMireya Acierto for The New York Times

CHARLOTTE AMALIE, V.I. — The United States Virgin Islands is best known for its powdery beaches and turquoise bays, a constant draw for the tourists who frequent this tiny American territory.

Yet away from the beaches the mood is ominous, as government officials scramble to stave off the same kind of fiscal collapse that has already engulfed its neighbor Puerto Rico.

The public debts of the Virgin Islands are much smaller than those of Puerto Rico, which effectively declared bankruptcy in May. But so is its population, and therefore its ability to pay. This tropical territory of roughly 100,000 people owes some $6.5 billion to pensioners and creditors.

Now, a combination of factors — insufficient tax revenue, a weak pension system, the loss of a major employer and a new reluctance in the markets to lend the Virgin Islands any more money — has made it almost impossible for the government to meet its obligations. In January, the Virgin Islands found itself unable to borrow and nearly out of funds for basic government operations.

The sudden cash crunch was a warning sign that the financial troubles that brought Puerto Rico to its knees could soon spread. All of America’s far-flung territories, among them American Samoa, Guam and the Northern Mariana Islands, appear vulnerable.

“I don’t think you can say it’s a crisis, but they have challenges — high debt, weak economies and unfunded pensions,” said Jim Millstein, whose firm, Millstein & Company, advised Puerto Rico on its economic affairs and debt restructuring until this year and has reviewed the situation in Guam and the Virgin Islands. He called the combination of challenges in the territories “a recipe for trouble in the future.”

Gov. Kenneth Mapp, left, walking in the Memorial Day parade in St. Thomas. CreditMireya Acierto for The New York Times

For decades, these distant clusters of islands in the Caribbean and the Pacific have played critical roles as American listening posts, wartime staging grounds, practice bombing ranges and even re-entry points for astronauts splashing down in the Pacific.

The military presence buoyed their small economies, and a federal tax subsidy made it relatively easy for them to issue bonds. Over the years, they have collectively borrowed billions of dollars to build roads, run schools, treat drinking water and fund hospitals.

Congress has generally relied on the Government Accountability Office to monitor the financial health of the territories, but it did not intervene over the years when the auditors brought back reports of “formidable fiscal challenges” or “serious internal control weaknesses” on the islands. Not, at least, until Puerto Rico went over the edge.

Now the G.A.O. auditors are back, re-examining the debt and repayment ability of each territory, amid concerns that other crushing debt burdens may have escaped notice. An agency spokesman, Fuller O. Griffith, said it would report by the end of the year on “federal options to avert the future indebtedness of territories.” It is not clear what those options will be.

“Washington can’t appropriately manage its relationship with the states, much less the territories,” said Matt Fabian, a partner at Municipal Market Analytics.

Even the states are not immune, despite their legal status as sovereigns. Illinois, stuck in political gridlock, is just days from entering its new fiscal year without a balanced budget, in violation of its own constitution. The ratings agencies warn that Illinois’s bond rating is in peril of being downgraded to junk. Once that happens, as the territories show, hedge funds move in and economic management becomes a series of unpleasant choices.

American Samoa, one of the smallest territories, lost one of the biggest engines of its economy in December when a big tuna cannery closed after being required to pay the federal minimum wage. Moody’s Investors Service then put the territory’s debt under negative outlook, citing its fragile economy.

After a bond sale fell through this year, the Virgin Islands could not buy fuel for its power plants, like this one on St. Thomas. CreditMireya Acierto for The New York Times

In the Northern Mariana Islands, the depleted public pension fund was wreaking such fiscal havoc in 2012 that the territory declared it bankrupt, but the case was thrown out. The government then tried cutting all retirees’ pensions 25 percent, but the retirees have been fighting the cuts, and the fund is nearly exhausted anyway.

Even Guam, which enjoys the economic benefit of several large American military installations, has been having qualms about its debt after Puerto Rico’s default.

“Puerto Rico’s troubles provide a teachable moment for Guam,” said Benjamin Cruz, the speaker of the legislature, who recently helped defeat a proposal to borrow $75 million to pay tax refunds. “Spending borrowed money is too easy.”

But the debt dilemma is now most acute in the Virgin Islands — the three main islands are St. Thomas, St. Croix and St. John — where the government has been struggling ever since a giant refinery closed in 2012, wiping out the territory’s biggest nongovernment employer and a mainstay of its tax base.

Its troubles began to snowball last July, when Puerto Rico defaulted on most of its debts.

Last August, Fitch downgraded the Virgin Islands’ debt to junk, citing the territory’s chronic budget deficits and habit of borrowing to plug the holes, like Puerto Rico.

More downgrades followed, and in December, Standard & Poor’s dealt the territory a rare “superdowngrade” — seven notches in one fell swoop — leaving it squarely in the junk-bond realm. That scared away investors and forced it to cancel a planned bond offering in January.

The failed bond deal meant there was not enough cash to pay for basic government operations in February or March. As a stopgap, the territory diverted its workers’ pension contributions.

Coreen Lloyd-Adams and Shenika Freeman, registered nurses, preparing a bed in the labor and delivery unit at the Schneider Regional Medical Center in St. Thomas. When federal money has fallen short, the Virgin Islands has had to borrow to keep its hospitals running. CreditMireya Acierto for The New York Times

The Virgin Islands’ governor, Kenneth E. Mapp, said he had no intention of defaulting on any bonds.

“I didn’t ask anybody for debt relief, so don’t put me in the debt-relief boat,” Mr. Mapp said in an interview at Government House, the ornate seat of the territorial government, perched on a hillside overlooking the lush palms and bougainvillea of the capital, Charlotte Amalie, located on St. Thomas.

Still, Mr. Mapp is contending with many of the same problems that proved too much for Puerto Rico, driving it in May to seek bankruptcylike protection under a new law for insolvent territories, known as Promesa. Puerto Rico is now embroiled in heated negotiations over how to reduce its roughly $123 billion in debts and unfunded pensions.

When Congress drafted the Promesa law last year, it made it possible for the other American territories to seek the same kind of help.

Now, even though the Virgin Islands maintains it has no intention of defaulting on its debts — and has even given creditors new protections — the mere prospect of bankruptcy has spooked the markets, putting borrowed money beyond the territory’s reach and greatly limiting its options.

In something of a self-fulfilling prophecy, by giving territories the option to declare bankruptcy, Congress seems to have made such an outcome more likely.

“That innocuous provision, when sent to the bond market, said, ‘Here’s an escape valve for your debt obligations,’” said Mr. Mapp. “That changed the whole paradigm.”

The territory’s pension system made loans to companies, like the inter-island airline Seaborne, that could not borrow elsewhere. CreditMireya Acierto for The New York Times

The problem is that in Puerto Rico, Promesa is turning out to shred the many legal mechanisms that governmental borrowers use to make their debts secure. These include liens and allowing creditors access to the courts.

“Under Promesa, all the security structures are dissolving,” Mr. Fabian said.

Investors who thought they were secured creditors before now find themselves holding moral obligation pledges, which are not enforceable.

After the Virgin Islands’ bond offer fell through in January, the fuel supplier to its electric authority stopped shipments, saying it had not been paid; the authority was already in court with its previous fuel supplier, which had not been paid either.

Then came the House of Representatives’ plan to repeal and replace the Affordable Care Act. Mr. Mapp saw the federal money that the Virgin Islands relies on for its public hospitals going up in smoke.

Mr. Mapp scrambled. He reactivated a five-year economic plan that had been languishing and pushed higher taxes on alcohol, cigarettes and soft drinks through the legislature. He fought for a permanent electric rate increase. He got $18 million in new federal funds for health care. He struck a deal to tax Airbnb rentals.

He hired collection agents to go after delinquent property and income taxes. He scheduled auctions for delinquent properties. He hired a team to work on the pension system, which is in severe distress, with only about six years’ worth of assets left.

Until recently, the pension system was chasing high returns by investing in high-risk assets, like a $50 million placement in life viaticals — an insurance play that is, in effect, a bet that a selected group of elderly people will die soon. It also made loans to an insolvent inter-island airline, a resort that went bankrupt, and a major franchisee of KFC restaurants. The territory’s inspector general has declared the loans illegal.

The Government Employees Retirement System building in St. Thomas. The pension system does not have enough money to pay the $4.5 billion due to retirees. CreditMireya Acierto for The New York Times

Mr. Mapp said he hoped to start restructuring the pension system in the fall. Already, he said, the government had stopped diverting the workers’ pension contributions, as residents began filing their tax returns and payments in April. The tax payments eased the immediate liquidity crisis.

Recently, he met with the Treasury Secretary, Steven Mnuchin, to discuss possible incentives to attract tech business to the Virgin Islands. And he hopes to return to the capital markets.

“The fact that we didn’t complete the sale in January gives the impression that our market access is constrained,” said Valdamier O. Collens, the territorial finance commissioner.

Investors have nothing to worry about, said the governor. For decades, the Virgin Islands has used a lockbox arrangement that makes default all but impossible.

Merchants collect sales taxes and send the money to a trustee for the bondholders. Not a cent goes to the territorial government, including the pension fund, until the bond trustee gets enough to make all scheduled bond payments for the coming year.

“We have no access to the moneys before the bondholders are paid,” Mr. Mapp said. “These moneys are taken out of the pie before the pie is even in the oven. Our debt has never been in jeopardy.”

But in Puerto Rico, such lockbox arrangements have turned out to be one of the thorniest disputes of the bankruptcy proceedings. And Mr. Collens, the finance commissioner, is all too aware that the same dynamic could upend the Virgin Islands, too.

“We know that there has been a contagion effect with Puerto Rico,” Mr. Collens said. “The market saw that by the stroke of a pen, Congress could create a Promesa for the rest of the territories.”