The CNMI is shrinking back to its past
IN its report, which was prepared before Typhoon Sinlaku, the Governor’s Revenue Council compared the current economic downturn to what the CNMI experienced in the 1980s. But what the islands went through more than four decades ago was not an economic downturn. Before tourism — and later garment manufacturing — took off, the islands’ only “industry” was the government. That was what the Commonwealth inherited from the U.S.-administered Trust Territory government, along with an economy consisting of only a handful of stores.
What has happened since the local economy peaked in 1997 is that it has shrunk to what it was in the late 1970s and early 1980s, when newspaper headlines included: “Hospitals Below Minimum Requirement”; “Saipan’s Prison Not Secure”; “Accidents and Violence Increase on Saipan”; and “Power Cut Looms With Barge Repair.” (This referred to the U.S. Navy barge “Impedance,” commissioned in 1943. The barge provided power to the island, whose power plant at the time had limited capacity.)
But eventually, the local economy grew — phenomenally. In the words of a former NMC Business Development Center director, the CNMI “economically outperformed every U.S. territory or insular area, some states, and most of its Pacific island neighbors.” This resulted in, among other things, higher living standards; better infrastructure, including indoor plumbing, paved roads and typhoon-proof homes; scholarships; more jobs; a generous retirement program; and a government that could afford to pay for fuel for its power plants. To be sure, the CNMI still faced problems back then, but outmigration and financial meltdown were not among them.
Today, however, the CNMI no longer has the tools provided by the Covenant — local control over immigration and the minimum wage — that once helped drive the local economy.
There are not many good options, but there are sensible recommendations outlined in the 2025 Marianas Economic Roadmap. The CNMI should give them a try. What does it have to lose?
It could be worse
ANOTHER recently issued report, this time by the U.S. Government Accountability Office, is an urgent reminder of how much worse things could get for the local economy — and the CNMI government’s financial sustainability:
“From 2002 through 2022, the CNMI’s real GDP (adjusted for inflation) contracted by $644 million (44 percent)….
“Structural geographic characteristics contribute to economic development challenges in the CNMI. The islands’ small size, approximately one-sixth the size of Rhode Island, limits the land available for commercial development, and there are few natural resources to export. The small size also constrains its potential population, which results in a smaller local customer base for businesses that do not export. Geographic isolation raises the cost of shipped goods and makes flights to and from the CNMI expensive….
“These challenges facing the CNMI are compounded on the smaller and less populated islands of Rota and Tinian.”
Economic recovery requires an adequate workforce. The current CW law, however, is set to expire in December 2029, and if Congress does not renew it, “the CNMI would need to increase the number of native-born workers; recruit workers from other parts of the United States; use other visa programs, such as the H-1B and H-2B programs; or use a combination of these approaches.”
These options, alas, face severe mathematical, structural, and financial constraints. Federal policymakers should ask themselves: How is the U.S., with a population of more than 300 million, faring with its own persistent labor shortages? And what about Western European nations, Japan, Canada, and other prosperous countries with populations far larger than the tiny, remote CNMI, whose indigenous population is around 17,000?
Abruptly ending the CW program because of an arbitrarily imposed deadline would result in acute labor shortages and more business closures, preventing even a modest recovery from the islands’ long-standing tourism downturn. The transition period would mirror the kind of stagflationary shock economists describe — higher costs of operating in the CNMI coupled with lower economic output.
Nobody wants that
AS the GAO itself has noted, “The CNMI’s economy is important to U.S. efforts to prevent instability in the region and limit exploitation by countries that could undermine U.S. interests, such as China. Maintaining economic stability in the CNMI is vital to U.S. interests.” The GAO, however, recommends…another study.
The CNMI, for its part, should continue lobbying Congress to pass the CNMI delegate’s comprehensive legislative framework, which aims to replace the expiring transitional program with a permanent structural model.
Ensuring the CNMI’s short- and long-term economic viability is not a partisan issue. Every CNMI official and every candidate for elective office this year should speak with one voice on this issue.
The CNMI needs a new workforce law under federal supervision but attuned to island realities — one that prioritizes the hiring of qualified U.S. workers, strengthens immigration enforcement, allows the local economy to recover and diversify, makes the CNMI less dependent on federal handouts, and enables the Commonwealth government to fund critical public services locally.
Zaldy Dandan is the recipient of the NMI Society of Professional Journalists’ Best in Editorial Writing Award and the NMI Humanities Award for Outstanding Contributions to Journalism. His four books are available on amazon.com/.
