Palau - Tips

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.


Republic of Palau

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
Climate: Tropical.

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
Languages: English (official in all 16 states), Palauan.
Education: Literacy--92%.
Health: Life expectancy--male 68 yrs.; female 76 yrs. Infant mortality
Work force: Public sector--56%; private sector--44%.

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.

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.

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.

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.

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

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).

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.

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.

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

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:

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traveling and residing abroad through Consular Information Sheets, Public
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For the latest security information, Americans living and traveling abroad
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Publications, which contain information on obtaining passports and planning a
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The National Passport Information Center (NPIC) is the U.S. Department of
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representatives and operators for TDD/TTY are available Monday-Friday, 7:00
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Travelers can check the latest health information with the U.S. Centers for
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Further Electronic Information
Department of State Web Site. Available on the Internet at http://, the Department of State web site provides timely, global
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