Palau

 

Bureau of East Asian and Pacific Affairs                                      
June 2007                                                                     
                                                                       
  Background Note: Palau                                                      
                                                                       
  Palau flag is light blue with a large yellow disk - representing the moon - 
  shifted slightly to the hoist side.                                         
                                                                       
  PROFILE                                                                     
                                                                       
  OFFICIAL NAME:                                                              
  Republic of Palau                                                           
                                                                       
  Geography                                                                   
  Area: 458 sq. km. (about 190 sq. mi.) in eight main islands plus more than  
  250 islets.                                                                 
  Cities: Capital--Melekeok (pop. 391).                                       
  Terrain: Varies from mountainous main island to smaller, reef-rimmed coral  
  islands.                                                                    
  Climate: Tropical.                                                          
                                                                       
  People                                                                      
  Nationality: Noun and adjective--Palauan.                                   
  Population: 19,907 (non-Palauan population, 5,469). Age structure: less than
  15 years old, 5,152; 16-64 years old, 13,619; more than 65 years old, 1,136.
  Population growth rate: 1.3%.                                               
  Ethnic groups: Palauans are Micronesian with Malayan and Melanesian elements.
  Religion: Roman Catholic, Protestant, Modekngei (an indigenous Palauan      
  religion).                                                                  
  Languages: English (official in all 16 states), Palauan.                    
  Education: Literacy--92%.                                                   
  Health: Life expectancy--male 68 yrs.; female 76 yrs. Infant mortality      
  rate--16.2/1,000.                                                           
  Work force: Public sector--56%; private sector--44%.                        
                                                                       
  Government                                                                  
  Type: Constitutional republic in free association with United States.       
  Independence (from U.S.-administered UN trusteeship): October 1, 1994.      
  Constitution: January 1, 1981.                                              
  Branches: Executive--president (head of state and government), vice         
  president, cabinet. Legislative--bicameral parliament elected by popular    
  vote. Judicial--Supreme Court, National Court, Court of Common Pleas, and the
  Land Court.                                                                 
                                                                       
  Economy                                                                     
  GDP (2006, provisional figure): $157.7 million.                             
  GDP per capita: $7,921.                                                     
  National income (GDP + foreign assistance): $195.4 million.                 
  National income per capita: $9,817.                                         
  GDP composition by sector: Public administration 23%, trade 20%, construction
  15%, hotels and restaurants 11%, transportation and communications 9%,      
  fisheries 2%, agriculture 1%, manufacturing and mining 1%.                  
  Industry: Types--government, trade, construction, tourism.                  
  Trade: Exports ($5.9 million, 2004)--fish, handicrafts. Export markets--U.S.,
  Japan and Taiwan. Imports ($107.3 million)--fuel, food and beverages,       
  manufactured goods. Import sources--U.S. (Guam), Japan, Singapore, Taiwan,  
  and Korea.                                                                  
  External debt (2006): $38 million.                                          
  Currency: U.S. dollar.                                                      
                                                                       
  GEOGRAPHY AND PEOPLE                                                        
  The Republic of Palau consists of eight principal islands and more than 250 
  smaller ones lying roughly 500 miles southeast of the Philippines. The      
  islands of Palau constitute part of the Caroline Islands chain. About 70% of
  Palauans live in the capital city of Koror on Koror Island. The capital,    
  however, relocated in 2006 from Koror to a newly constructed complex in     
  Melekeok State on the larger but less developed island of Babeldaob--the    
  second largest island in all of Micronesia after Guam.                      
                                                                       
  HISTORY                                                                     
  Palau was initially settled more than 4,000 years ago, probably by migrants 
  from what today is Indonesia. British traders became prominent visitors in  
  the 18th century, followed by expanding Spanish influence in the 19th       
  century. Following its defeat in the Spanish-American War, Spain sold Palau 
  and most of the rest of the Caroline Islands to Germany in 1899. Control    
  passed to Japan in 1914 and then to the United States under UN auspices in  
  1947 as part of the Trust Territory of the Pacific Islands.                 
                                                                       
  Four of the Trust Territory districts formed a single federated Micronesian 
  state in 1979, but this eventually dissolved as the individual              
  districts--long culturally distinct--opted for more locally popular status. 
  Palau approved a new constitution in 1981, subsequently signing a Compact of
  Free Association with the United States in 1982. After eight referenda and an
  amendment to the Palauan constitution, the Compact went into effect on      
  October 1, 1994, marking Palau's emergence from trusteeship to independence.
                                                                       
  GOVERNMENT                                                                  
  Palau is a democratic republic with directly elected executive and          
  legislative branches. Presidential elections take place every 4 years, at the
  same time as the United States' presidential election, to select the        
  president and the vice president, who run on separate tickets. The Palau    
  National Congress (Olbiil era Kelulau) has two houses. The Senate has nine  
  members elected nationwide. The House of Delegates has 16 members, one each 
  from Palau's 16 states. All of the legislators serve 4-year terms. Each state
  also elects its own governor and legislature.                               
                                                                       
  The Council of Chiefs, comprising the highest traditional chiefs from each of
  the 16 states, is an advisory body to the president. The Council is consulted
  on matters concerning traditional laws and customs.                         
                                                                       
  The judicial system consists of the Supreme Court--with trial and appellate 
  divisions--the Court of Common Pleas, and the Land Court. (Palau's          
  constitution has a provision for an additional National Court, but this is  
  not currently active.)                                                      
                                                                       
  The current president, Tommy Remengesau, was re-elected for a second term on
  November 2, 2004, an election that also brought into office Vice President  
  Elias Camsek Chin and several political newcomers to the Senate and the     
  House.                                                                      
                                                                       
  Principal Government Officials                                              
  Head of State and Government--President Tommy E. Remengesau, Jr.            
  Vice President--Elias Camsek Chin                                           
  Ambassador to the U.S.--Hersey Kyota                                        
  Ambassador to the UN--Stuart Beck                                           
                                                                       
  Palau maintains an embassy at 1700 Pennsylvania Avenue, Suite 400,          
  Washington, DC 20006 (tel: 202-452-6814, fax: 202-452-6281). The Republic of
  Palau's Mission to the United Nations is located at 866 United Nations Plaza,
  Suite 575, New York, New York 10017 (tel: 212-813-0310, fax: 212-813-0317). 
                                                                       
  POLITICAL CONDITIONS                                                        
  While calm in recent years, Palau witnessed several instances of political  
  violence in the 1980s. The republic's first president, Haruo I. Remeliik, was
  assassinated in 1985, with the Minister of State eventually found to be     
  complicit in the crime. Palau's third president, Lazurus Salii, committed   
  suicide in September 1988 amidst bribery allegations. Salii's personal      
  assistant had been imprisoned several months earlier after being convicted of
  firing shots into the home of the Speaker of the House of Delegates.        
                                                                       
  Legislation making Palau an "offshore" financial center was passed by the   
  Senate in 1998. In 2001 Palau passed its first bank regulation and anti-money
  laundering laws.                                                            
                                                                       
  ECONOMY                                                                     
  Palau's per capita GDP of $7,921 makes it one of the wealthier Pacific Island
  states. Nominal GDP increased by an annual average of nearly 14% from 1983 to
  1990, and by an annual rate of over 10% from 1991 to 1997. Growth turned    
  sharply negative in 1998 and 1999 as a result of the Asian financial crisis,
  but there has been a gradual rebound in recent years and the economy grew by
  5.4% in 2005.                                                               
                                                                       
  Tourism (and its attendant infrastructure changes) is Palau's main industry.
  Its major draws are its diverse and pristine marine environment, and its    
  above-water tropical island beauty. The number of visitors--75% of whom come
  from Taiwan, Japan, and the U.S.--exceeded 100,000 in 2006, a 15% increase  
  from 2005. Continental Airlines, Far Eastern Transport (FAT), and Asian     
  Spirit have direct flights to Palau from Guam, Taiwan, and the Philippines. 
                                                                       
  Japan Airlines runs chartered flights from Tokyo. In 2002--the last year for
  which figures are available--tourist spending in Palau was $66 million.     
  Palauan tourism and environmental authorities would like to adjust the      
  industry, simultaneously decreasing tourist volume and increasing income    
  while by attracting more high-dollar tourists.                              
                                                                       
  The service sector dominates the Palauan economy, contributing more than 50%
  of GDP and employing more than half of the work force. The government alone 
  employs nearly 25% of workers and accounts for 23% of the GDP. One of the   
  government's main responsibilities is administering external assistance.    
  Under the terms of the Compact of Free Association with the United States,  
  Palau will receive more than $450 million in assistance over 15 years and is
  eligible to participate in more than 40 federal programs. The first grant of
  $142 million was made in 1994. Further annual payments in lesser amounts will
  be made through 2009. Total U.S. grant income in 2006 was $23.7 million.    
                                                                       
  Construction is an important industrial activity, contributing over 15% of  
  GDP. Several large infrastructure projects, including the Compact Road,     
  relocation of the new capital, and new hotels, have boosted this sector's   
  recent contribution to GDP.                                                 
                                                                       
  Agriculture is mainly on a subsistence level, the principal crops being     
  coconuts, taro, and bananas. Fishing is a potential source of revenue, but  
  the islands' tuna output dropped by over one-third during the 1990s. Fishing
  industry revenues are mostly from license fees from fishing vessels.        
                                                                       
  The main economic challenge confronting Palau is to ensure the long-term    
  viability of its economy by reducing its reliance on foreign assistance. The
  Compact of Free Association created a trust fund to provide perennial budget
  support when U.S. direct assistance ends in 2009. The value of the trust fund
  in 2005 was approximately $150 million.                                     
                                                                       
  FOREIGN RELATIONS                                                           
  Palau gained its independence October 1, 1994 with the entry into force of  
  the Compact of Free Association with the United States. Palau was the last  
  Trust Territory of the Pacific Islands territories to gain its independence.
  Under the Compact, the U.S. remains responsible for Palau's defense for 50  
  years.                                                                      
                                                                       
  Palau is a sovereign nation and conducts its own foreign relations. Since   
  independence, Palau has established diplomatic relations with a number of   
  nations, including many of its Pacific neighbors, and is one of two dozen   
  nations that have diplomatic relations with Taiwan. Palau was admitted to the
  United Nations on December 15, 1994, and has since joined a number of other 
  international organizations.                                                
                                                                       
  Principal U.S. Officials                                                    
  Chargé d'Affaires--Mark Bezner                                              
                                                                       
  The mailing address for the U.S. Embassy is P.O. Box 6028, Republic of Palau
  96940. Telephone: 680-488-2920/2990. Fax: 680-488-2911. Email:              
  USembassyKoror@palaunet.com.                                                
                                                                       
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