Overview

The Republic of Palau consists of a tightly clustered archipelago of approximately 300 (Source: Palau Visitors Authority) islands with a total land area of 458 square kilometres, 1,500 kilometres to the east of the Philippines. The country's resident population of approximately 18,000 people live on nine 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 legislative and executive branches.

The legislature, Olbiil Era Kelulau (National Congress), is bicameral, comprising the Senate and the House of Delegates. The Senate has 13 members elected nation-wide. Each of the 16 states elect one representative to the House of Delegates. A Council of Chiefs — an advisory body — is comprised of sixteen tribal chiefs (one per state). It advises the President on matters concerning traditional laws, customs and their relationship to the Constitution and the laws of Palau.

Elections are held every four years – the last election took place on 5 November 2024. The President and the Vice-President are elected by popular vote and the President is both Head of State and Head of Government.  President Surangel Whipps Jr took office on 21 January 2021 and was re-elected in the 2024 election. He took office for his second term as President on 16 January 2025.

The judicial system consists of the Supreme 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

The Republic of Palau's Compact of Free Association with the United States was first agreed in 1986 and came into effect in 1994. The compact terms are indefinite, while the economic elements have a 20-year term, with reviews throughout the course of the term. In exchange for exclusive military operating rights, the United States provides Palau with economic assistance (including sector grants and trust fund contributions), access to federal services and programs (for instance postal and meteorological services), permission for citizens to enter, work/study and reside in US states and territories and assumes responsibility for Palau's defence and security.

The current Compact agreement between Palau and the United States was signed into law in March 2024 and is valued at USD0.9 billion for FY2024-FY2043.  This phase of Compact assistance includes greater support for the environment, climate change adaptation, health care, education, and infrastructure. 

The US Department of the Interior is responsible for oversight and coordination of funding under the Compact of Free Association.

Bilateral relations

2024 marked the 30th anniversary of the establishment of diplomatic relations between Australia and the Republic of Palau. Australia and Palau enjoy a close and friendly relationship. The Australian Embassy in Koror, Palau, was established in 2019.

Development assistance

Our development cooperation program in Palau seeks to respond pragmatically to Palau's priorities, including support tax reform, digitisation of the health and agricultural sector, tertiary education and training, aviation connectivity, cyber security, gender equality, removal of UXOs, community, media and sports projects. 

Australia Awards

Australia Awards are an important component of the Australian Government's overseas aid program. Australia Awards Pacific scholarships provide opportunities to study at selected education institutions in the Pacific region.

Volunteers

The Australian Volunteers program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations deliver effective and sustainable development outcomes. The Australian Volunteers program provides opportunities for skilled Australians to contribute to the Australian Government's development cooperation program.

New Colombo Plan

Since the New Colombo Plan commenced in 2015, 76 New Colombo Plan students were offered scholarships in the Republic of Palau. Forty-five of these students were from Flinders University and collaborated with the Micronesian Shark Foundation to learn about marine tropical ecology, as well as the history, traditions and local language of Palau.

Economic overview

The International Monetary Fund characterises the Republic of Palau as a high-income microstate. Palau's economy is dominated by grants, predominately as part of the Compact State Agreement with the United States, as well as tourism. Palau faces structural constraints similar to other small island states: a narrow economic base, remote location, small population, infrastructure challenges, limited business climate, and exposure to climate change impacts. Tourism has the potential to drive Palau's economic growth however this sector was significantly impacted by COVID-19.

Trade and investment

Australia's goods and services trade with the Republic of Palau in 2023 totalled $10 million. This was largely comprised of travel, both business and recreational, and prepared and preserved meat.

High level visits

• January-February 2025: President Whipps visited Australia 29 January – 1 February and met with Senator Green.  He returned to Palau on the Palau Paradise Express operated by Qantas.
• January 2025:  Assistant Minister to the Prime Minister, Patrick Gorman, attended the inauguration of President Whipps on 16 January 2025.
• January 2024: Assistant Minister to the Prime Minister, Patrick Gorman, met with President Whipps on 22 January 2024 in Majuro, at the inauguration of the RMI’s President.
• June 2023: Minister Conroy led a delegation to Palau during which he held a bilateral dialogue with President Whipps, announced the signing of a memorandum of understanding between the ABC and Palau's government radio station, Eco Paradise FM, and attended a ceremony to mark the completion of the Palau Cable Spur 2 landing station.
• December 2022: Minister for Foreign Affairs Penny Wong and Shadow Minister for Foreign Affairs Simon Birmingham led a bipartisan visit to Koror, during which they met President Whipps, Minister of State Gustav Aitaro and other Cabinet members; announced the Australia-Palau Connector, a weekly flight service from Brisbane to Koror (via Port Moresby); and launched a new e-health system project for Palau's national hospital.