The Marshall Islands comprise a group of 34 widely scattered atolls in the central Pacific Ocean, formerly under US rule as part of the UN Trust Territory of the Pacific Islands. An agreement which granted internal sovereignty in free association with the USA became operational in 1986, and the Trust was formally dissolved in 1990. The economy is almost entirely dependent on US aid and rent for the US missile base on Kwajalein Atoll.

Of the 34 atolls making up the Marshall Islands, 24 are inhabited. Majuro, the capital and commercial center, is home to almost half of the population, many of whom live in its overcrowded slums.

The other main center of population is Ebeye Island in the Kwajalein Atoll, where tensions are high due to poor living conditions. Most of Kwajalein Atoll's inhabitants were forcibly relocated to Ebeye in 1947 to make way for a US missile tracking, testing, and interception base; many still travel daily to work at the base. Life on the outlying islands is still centered on subsistence agriculture and fishing. Society is traditionally matrilineal.

Strengths

US guarantee against economic collapse to preserve strategic influence. Aid from the USA, on which islands almost totally depend. Copra. Huge tourism potential.

Weaknesses

High unemployment. Dependence on imports, which are twice as large as exports. All fuel has to be imported. Vulnerability to storm damage. Large state sector employs 75% of workers.

Politics is traditionally dominated by chiefs. Amata Kabua, the islands' high chief and first president until his death in December 1996, was succeeded in early 1997 by his cousin Imata Kabua. However, the 1999 elections were won by the United Democratic Party, whose presidential candidate, commoner and former parliamentary speaker Kessai Note, was elected in early January 2000. Just over a year later Imata Kabua returned to lead an unsuccessful vote of no confidence in Note's administration – only the second in the islands' history. The vote was motivated by criticism of the government approach to the crucial renegotiation of the Compact of Free Association with the USA. The original treaty, which provided most of the islands' revenue and defense, expired in 2001; a new treaty is under negotiation.

The Compact of Free Association has made ties to the USA of central importance. From 1986 the USA provided $1 billion in return for the use of Kwajalein Atoll as a missile firing range and has determined the islands' foreign and defense policies. A new Compact is under discussion. Taiwan has become a source of funding for development, provoking controversy on the issue of diplomatic recognition.

There is no defense force. All defense is provided by the USA under the Compact of Free Association. The USA does not have offensive weapons sited in the Marshalls, but its navy patrols regularly.

There are few known strategic resources. Exploratory tests have revealed some high-grade phosphate deposits, but not in economically viable quantities. Small diesel generators are used for electricity production.

Between 1946 and 1958, Bikini, Enewetak, and neighboring atolls were rendered uninhabitable by a series of US nuclear military tests. Enewetak residents were allowed to return in 1980, and Rongelap was declared habitable in 2001. A 1999 tribunal adopted stringent standards for further decontamination. The USA has now paid out over $101 million to victims of nuclear testing. Nuclear waste imports were banned in 1999. The effects of rising sea levels are a major concern. Erosion affects beaches and soil is being lost and also contaminated by brackish water.

The transportation system is limited, although there is some interisland shipping. State carrier Air Marshalls has experienced economic difficulties.

Medical facilities are rudimentary. Complex operations are performed in Hawaii. Levels of malnutrition and Vitamin A deficiency are high.

Education, compulsory between the ages of six and 14 years, is based on the US model. The number of secondary school graduates exceeds the availability of suitable employment in the Marshall Islands. Many go on to university in the USA.

Crime levels are generally low; however, the rate is up in Ebeye. Outlying islands are crime-free.

Wealth disparities are small. Very few citizens can afford luxuries such as air conditioning and cars.

In the late 1990s major resort complexes were established on Majuro and on Mili Atoll. Attractions include diving, game-fishing, and exploring the sites and relics of World War II battles.

After a period under Spanish rule, the Marshall Islands became a German protectorate in 1885; Japan took possession at the start of World War I. The islands were transferred to US control in 1945.

• 1946 US nuclear testing begins.
• 1947 UN Trust Territory of the Pacific established.
• 1961 Kwajalein becomes US army missile range.
• 1979 Constitution approved in referendum. Government set up.
• 1986 Compact of Free Association with US operational.
• 1990 Trust terminated by UN.
• 1997 Imata Kabua elected president after death in office of Amata Kabua, his cousin.
• 2000 Kessai Note president after opposition election victory.