Flag of Palau

Palau country brief

Overview

The Republic of Palau consists of a tightly clustered archipelago of 340 islands with a total land area of 458 square kilometres, to the east of the Philippines. The country's resident population of about 18,000 live on only eight of the islands. The capital of Palau is Melekeok, located on Babeldoab, the largest island.

Political overview

Palau is an independent country in a Compact of Free Association with the United States. It is a democratic republic with directly elected executive and legislative branches. Presidential elections take place every four years, at the same time as the United States' presidential election, to select the President and the Vice-President. The last election was held in November 2012. President Remengesau Jr won office at the election and was inaugurated on 17 January 2013. He is both Head of State and Head of Government. Antonio Bells is Palau's Vice President and Minister of Justice.

The Palau National Congress (Olbiil era Kelulau) has two houses. The Senate has nine members elected nationwide and the House of Delegates has 16 members, one each from Palau's 16 states. All of the legislators serve four 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.

Compact of Free Association with the United States

Palau's compact of free association with the United States runs for 50 years, from 1994 to 2044. Under the compact arrangements, the United States Government provided about US$700 million in assistance over the compact's first 15 years (1994 to 2009). Palau signed a new compact with the United States for US$250 million from 2010-2024, although it is still to be approved by the US Congress. The compact has funded major infrastructure projects including the construction of a road around Babeldoab. The compact also provides for some US federal programs. The compact and its subsidiary agreements commit the United States 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 until the end of the compact in 2044. Under the compact, more than 40 US government agencies such as the Federal Aviation Administration, US Postal Service, the Small Business Administration, and FEMA operate programs or render assistance to Palau. Under the compact, Palauans enjoy favourable provisions for travelling to, and working in, the United States. The Department of the Interior is the US agency responsible for oversight and coordination of US funding assistance under the Compact of Free Association.

Bilateral relations

Australia and the Republic of Palau enjoy a close bilateral relationship supported by shared regional interests, particularly ensuring maritime and transnational security, tourism development and the protection of Palau’s pristine marine environment, a common interest in supporting economic and human development. The Australian Embassy in Pohnpei, Federated States of Micronesia is responsible for Australian affairs in Palau.

Development assistance

Palau’s prospects for long term economic growth are strongly linked to its growing tourism sector, private sector development and careful management of its marine environment. Australian aid to Palau focuses on helping Palau clear large amounts of unexploded ordnance (UXO) from World War II to improve public safety and reduce risks that UXOs present to the country’s people and tourism industry. Australia is the lead donor working in this area in Palau. Australia also provides much-valued technical assistance to help Palau strengthen its productive capacity through improvements to the education curriculum and health services.

Australia provided Palau one Pacific Patrol Boat and continues to support it through the bilateral Defence Cooperation Program.

Australia Awards

Australia Awards delivered under the Australian aid program are an important component of the Australian Government's overseas aid program.  Our North Pacific program has two types of Australia Awards: the Australia Awards Pacific Scholarships and the Australia Awards Leadership Program.

Australia Awards Pacific Scholarships provide opportunities to study at selected education institutions in the Pacific region.

The Australia Awards Leadership Program provides scholarships for postgraduate study in Australia.

For more information see the Australia Awards website.

Volunteers

The Australian Volunteers for International Development (AVID) program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations to deliver effective and sustainable development outcomes.

See the AVID website for further information.

Direct Aid Program (DAP) and Small Grant Scheme (SGS

The DAP and SGS support projects which directly contribute to the welfare and the income-generating capacity of poor or disadvantaged groups, or enhance the long-term productivity and sustainability of the physical environment.

Visit the Australian Embassy in Micronesia website for further information on DAP and SGS.

Economic overview

Palau has one of the Pacific Islands' higher standards of living. It has a well-established high-end tourism sector with good potential for expansion, although care is needed to maintain environmental standards. Palau has a strong services industry and an active private sector. Fisheries and small-scale agriculture are also important for local employment. Palau faces many development challenges including a small population and the high cost of service delivery due to the levels and cost of imported goods and expertise. The service sector dominates the Palauan economy, contributing more than 50 per cent of GDP and employing more than half of the work force. The government alone employs nearly 31 per cent of workers and accounts for 20 per cent of GDP.

Trade and investment

Australia’s merchandise exports to Palau in 2013 totalled $0.8 million (principally meat prepared or preserved).

High level visits

July 2014: Deputy Prime Minister, the Hon. Warren Truss, and the Parliamentary Secretary to the Minister for Foreign Affairs, Senator the Hon. Brett Mason, attended the 45th Pacific Islands Forum.