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continue to provide services and assistance at the level these
services were provided under the Trusteeship Agreement.

As in the

case of the Northern Mariana Islands Commonwealth Covenant,

the

resolution approving the Compact constitutes a commitment and
pledge of the full faith and credit of the United States for the
appropriation and payment of the guaranteed levels of funding so

specified.

The fiscal authority necessary to meet United States

commitments during the first year of the Compact is approximately
$295.644 million for the Federated States of Micronesia and the
Marshall Islands.

This amount contains the partial inflation

adjustment which the Compact specifies and several one-time
special purpose payments including the creation of the Marshall
Islands nuclear claims trust fund.

Thereafter, the average total

anticipated annual funding called for in the Compact is approximately $115.4 million not including estimates for partial
inflation adjustment but including estimates for the specified
federal services.

It is the Administration's opinion that the

aggregate U.S. outlays under the Compact over the fifteen-year
funding period will be lower by some $300 million than would have
been our outlays were the Trusteeship to continue for the same
period.

Title Three of the Compact recognizes the continued full
United States authority and responsibility for all security and
defense matters in or relating to the Federated States of
Micronesia and the Marshall Islands.

As a corollary, the freely

associated states have agreed to refrain from any action which the

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