Palau Country Brief
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, Johnson Toribiong, is both Head of State and Head of Government.
Political Overview
Government
Palau 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. President Toribiong won office at elections on 4 November 2008 and was inaugurated on 15 January 2009. Kerai Mariur is Palau’s Vice President. 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.
Economic Overview
Palau has one of the highest standards of living of the Pacific island countries. The main economic challenge confronting Palau is to ensure the long-term viability of its economy by reducing its reliance on foreign assistance.
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 agreed to provide $US47 million in assistance over the compact’s first 15 years (i.e. from 1994 to 2009). Possible future assistance beyond 2009 is the subject of negotiations between Palau and the United States. US$70 million in assistance to date has been set aside in a trust fund for use after compact grants cease. The balance in the trust fund has so far grown to about US$144 million. The compact has funded major infrastructure projects including the recent construction of a road around Babeldoab, the largest of the Palauan islands. The compact also provides for some United States federal programs to continue after grants cease. 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 until the end of the compact in 2044.
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 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 roughly 15 percent of the population. One of the Government's main responsibilities is administering external assistance. Under the compact, Palauans enjoy access to US federal programs and favourable provisions for travelling to, and working in, the United States.
Bilateral Relationship
Australian bilateral development assistance to Palau in 2008-09 was $150,000. Education is a priority of the program which concentrates on scholarships and a small grants scheme supporting community organisations.
Australia's regional development program assists Palau across a range of areas including health (HIV/AIDS, non-communicable diseases) land, energy efficiency, environment, gender equity and governance.
Australia donated a Pacific Patrol boat to Palau, which was accepted by former President Nakamura during his visit to Perth in May 1996. Australia continues to fund technical support of the Pacific Patrol boat.
The Parliamentary Secretary for Pacific Island Affairs, the Hon Duncan Kerr SC MP, visited Palau in July 2009 for bilateral discussions and in January 2009 to attend President Toribiong’s inauguration. Vice President Mariur visited Australia in August 2009 to attend the Pacific Island Forum Leaders Meeting in Cairns.
Palau has provided police officers to work as part of the Regional Assistance Mission to Solomon Islands since May 2006.
Bilateral Economic and Trade Relationship
Australian exports to Palau in 2007-08 totalled $762,000 (principally preserved meat). Australian imports from Palau in the same period totalled $12,000 (principally electric power machinery and parts).
Foreign Relations
Palau is a member of the United Nations and Pacific Island Forum. The United States is responsible for Palau’s defence under the compact.
Visitor Information
Australians travelling to Palau are advised to consult the Smartraveller travel advice.
Updated Srptember 2009