Palau Country Brief - April 2008
Introduction
The Republic of Palau is an independent country in a Compact of Free Association with the United States. Only eight of its 340 islands are inhabited. A Micronesian country, it lies to the east of the Philippines. The President of Palau, Tommy Remengesau, is both Head of State and Head of Government.
Political Overview
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 is an advisory body to the president containing the highest traditional chiefs from each of the 16 states. The Council is consulted on matters concerning traditional laws and customs.
The judicial system consists of the Supreme Court, National Court, the Court of Common Pleas, and the Land Court. The Supreme Court has trial and appellate divisions and is presided over by the Chief Justice.
Key Ministers in the Remengesau Government are Elias Camsek Chin (Vice President), Temmy Shmull, Minister of State and Otoichi Besebes Minister of Commerce and Trade.
Economic Overview
Palau has one of the highest standards of living of the Pacific island countries. Wealth and development are unevenly spread throughout the country. In 2007, real GDP growth was 5.5%. The main economic challenge confronting Palau is to ensure the long-term viability of its economy by reducing its reliance on foreign assistance.
Under the compact arrangements, the US Government has agreed to pay approximately US$447 million over the first fifteen years of the fifty-year Compact, i.e. from 1994 to 2009. US$70 million has been set aside in a Trust Fund, which has so far grown to about US$144 million, for use after Compact grants cease in 2009. There are also provisions for major infrastructure projects including the recent construction of a road around Babeldoab, the largest of the Palauan islands. Provision is also made for continuation of some US federal programs. The Compact and its subsidiary agreements commit the US to continue to provide, at no cost to Palau, many services including air safety, weather prediction, health services and assistance in the event of natural disasters.
The Palauan economy has good potential for sustained growth. While tourism infrastructure development remains a priority of the Government, so too is the need to keep a balance between tourist numbers and the maintenance of Palau's renowned pristine environment. Promotion has been geared to high-yielding, low-volume tourism. The President of Palau, Tommy Remengesau, was recently named a world hero of the environment by Time Magazine because of his efforts to preserve a priceless marine environment.
The service sector dominates the Palauan economy, contributing more than 80 per cent of GDP and employing around 50 percent of the population. The Government employs nearly 15 percent of the population. 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 forty federal programs and favourable provisions for travelling to and working in the United States.
Bilateral Relationship
Australian development assistance to Palau is expected to total an estimated $436,000 in 2007-08. Education is a priority of the program which concentrates on scholarships and a small grants scheme supporting community organisations. Australia donated a Pacific Patrol boat to Palau, which was accepted by President Nakamura during his visit to Perth in May 1996. Australia continues to fund technical support of the Pacific Patrol boat, estimated to be $1.07 million in 2007-08. An Australian parliamentary delegation visited Palau in November 2005.
Palau has provided police officers to the Regional Assistance Mission to Solomon Islands since May 2006.
Bilateral Economic and Trade Relationship
Australian trade relations with Palau are limited. Australian goods exports to Palau totalled A$1.39 million in 2006-07 (mainly meat, paints and varnishes, milk and cream). Exports from Palau to Australia totalled $30,000 (mainly musical instruments and shipping equipment).
Visitor Information
Australians travelling to Palau are advised to consult the Smartraveller travel advice.