PALAU

Republic of Palau

Belau

CAPITAL: Koror, Koror Island

FLAG: The flag, adopted 1 January 1981, is light blue, with a yellow disc set slightly off center toward the hoist.

ANTHEM: Belau er Kid.

MONETARY UNIT: The US dollar is the official medium of exchange.

WEIGHTS AND MEASURES: British units are used, as modified by US usage.

HOLIDAYS: New Year's Day, 1 January; Youth Day, 15 March; Senior Citizens Day, 5 May; Constitution Day, 9 July; Labor Day, 1st Monday in September; United Nations Day, 24 October; Thanksgiving Day, 4th Thursday in November; Christmas, 25 December.

TIME: 8 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Palau (also known as Belau) is located in the western extremities of the Pacific Ocean. It consists of the Palau group of islands, in the western Caroline Islands, and four remote islands to the sw. Palau is isolated from larger land masses, with Papua New Guinea/Irian Jaya (Indonesia) 660 km (410 mi) to the s, the Philippines 885 km (550 mi) to the w, and Japan 3,042 km (1,890 mi) to the n. Yap Island in the Federated States of Micronesia lies 579 km (360 mi) to the ne. The country consists of more than 200 islands, with a total land area of 458 sq km (177 sq mi). Babelthuap is the largest island, with an area of 397 sq km (153.2 sq mi); Koror Island, containing the capital, has an area of 18 sq km (7.1 sq mi). The islands of Peleliu and Angaur are about 50 km (30 mi) s of Koror. Sonsorol and Hatohobei, the two smallest island states, lie 560–640 km (350–400 mi) sw of Koror. Kayangel is a coral atoll 45 km (28 mi) n of Babelthuap.

TOPOGRAPHY

The islands include four types of topographical formation: volcanic, high limestone, low platform, and coral atoll. The Palau barrier reef encircles the Palau group, except Angaur Island and the Kayangel atoll. The reef encloses a lagoon (1,267 sq km/489 sq mi) on the western side, containing a large number of small elevated limestone islets known as the Rock Islands. Babelthuap and Koror, with peak elevations of 217 m (713 ft) and 628 m (2,061 ft), respectively, contain elevated limestone and volcanic formations. Arakabesan, Malakal, and several small northern islands are volcanic formations. Peleliu and Angaur are low-platform reef islands.

CLIMATE

Located near the equator, Palau's climate is maritime tropical, characterized by little seasonal and diurnal variation. The annual mean temperature is 28°c (82°f) in the coolest months. There is high precipitation throughout the year and a relatively high humidity of 82%. Heavy rainfall occurs from May to November. The short torrential nature of the rainfall produces up to 380 cm (150 in) of precipitation annually. Typhoons and tropical storms occur from June through November.

FLORA AND FAUNA

Plant life, abundant throughout most of the islands, includes mangrove swamps, savanna land, and rain forest in upland areas. Food crops, such as taros, cassavas, sweet potatoes, coconuts, bananas, papayas, and citrus fruits, are mostly wild. Marine life is also abundant, with more than 1,500 species of tropical fish and 700 species of coral and anemones in the lagoons and reefs. Fauna includes the sea turtle, which is consumed as a delicacy, and the dugong, or sea cow, a marine mammal that is close to extinction.

ENVIRONMENT

While much of Palau's fragile natural environment remains free of environmental degradation, there are several areas of concern, including illegal fishing with the use of dynamite, inadequate facilities for disposal of solid waste in Koror, and extensive sand and coral dredging in the Palau lagoon. Like the other Pacific island nations, a major environmental problem is global warming and the related rising of sea level. Water coverage of low-lying areas is a threat to coastal vegetation, agriculture, and the purity of the nation's water supply. Palau also has a problem with inadequate water supply and limited agricultural areas to support the size of the population. The nation is also vulnerable to earthquakes, volcanic activity, and tropical storms. Sewage treatment is a problem, along with the handling of toxic waste from fertilizers and biocides.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 3 types of mammals, 2 species of birds, 2 types of reptiles, 6 species of fish, 5 types of mollusks, and 3 species of plants. Threatened species included the hawksbill turtle, tiger sharks, grey dolphins, coconut crabs, and green turtles. The Palau flying fox has become extinct.

POPULATION

The population of Palau in 2005 was estimated by the United Nations (UN) at 21,000, which placed it at number 190 in population among the 193 nations of the world. In 2005, approximately 5% of the population was over 65 years of age, with another 24% of the population under 15 years of age. According to the UN, the annual population rate of change for 2005–10 was expected to be 0.9%. The government's family planning programs succeeded in curbing the high birth rate, and the government viewed the population growth rate as satisfactory. The projected population for the year 2025 was 23,000. The population density was 46 per sq km (118 per sq mi).

The UN estimated that 70% of the population lived in and around the capital city, Koror on Koror Island, which had a population of 14,000 in 2005. The annual population growth rate in Koror that year was estimated at 1.80%.

MIGRATION

In 1999, persons not Palau-born accounted for nearly 30% of the total population. Most were born in the Philippines, China, and Bangladesh; there were also significant numbers from the Federated States of Micronesia, the United States, and Japan. Most were workers; in 1999, foreigners made up 46% of the total work force. The vast majority of these foreigners were located in Koror. About one-fifth of all Palauans live abroad, many on Guam. Remittance flows are poorly documented. Since 2001 the ratio of Palauans to foreign workers has remained 50:50. In 2005, the net migration rate was 2.36 migrants per 1,000 population. The government views the migration levels as too high.

ETHNIC GROUPS

Palauans are a composite of Polynesian, Malayan, and Melanesian races. At the 2000 census, Palauans accounted for about 69.9% of the total population. The largest non-Palauan ethnic groups included Filipinos (15.3%), Chinese (4.9%), other Asians (2.4%), Carolinians (1.4%), other Micronesians (1.1%), and people of European descent (1.9%).

LANGUAGES

English is the official language in all of Palau's 16 states; however, it is only spoken by about 9.4% of the population. Palauan, a Malayo-Polynesian language related to Indonesian, is the most commonly spoken language, used by 64.7% of the population. Palauan is used, in addition to English, as an official language in 13 states. Sonsorolese is official in the state of Sonsoral; Anguar and Japanese in the state of Anguar; and Tobi in the state of Tobi. About 13.5% of the population speak Filipino. 5.7% speak Chinese, 1.5% speak Carolinian, 1.5% Japanese, and 2.3% other Asian languages.

RELIGIONS

Most Palauans are Christians. The Roman Catholic Church holds the largest number of members at about 65% of the population. Other significant denominations include the Evangelical Church, the Seventh-Day Adventists, The Church of Jesus Christ of Latter-Day Saints, and Jehovah's Witnesses. Modekngei, which is indigenous to Palau and combines both pagan and Christian beliefs and customs, is practiced by about 800 people. There are a small number of Bangladeshi Muslims. Several foreign missionaries are active in the country.

Religious groups register as nonprofit organizations through the Office of the Attorney General. There is no state religion, but the government does offer some financial support to religious schools. Freedom of religion is provided for in the constitution.

TRANSPORTATION

The nation's roads at last estimate totaled 61 km (37.9 mi), of which 36 km (22 mi) were paved. Asphalt roads are found only in Koror, Airai, and Melekeok. A two-lane concrete bridge, constructed in 1976, links Koror with Airai. The Koror state government provides a public bus service. Palau's deepwater harbor at Malakal in Koror offers international port facilities. Heavy reliance is placed on small private watercraft throughout the country.

As of 2004, there were three airports, of which one (as of 2005), had a paved runway. The international airport is located in Airai, 10 km (6 mi) from Koror. Three airlines provide international service: Air Micronesia/Continental, Air Nauru, and South Pacific Island Airways. There are three domestic airlines: Palau Paradise Air, Aero Belau, and Freedom Air.

HISTORY

As part of the Carolinian archipelago, the islands were sighted by European navigators as early as the 16th century. In 1686, the Spanish explorer Francisco Lezcano named Yap Island (now in the Federated States of Micronesia) "La Carolina" after King Charles II of Spain. The name was later generalized to include all the islands. Spanish sovereignty was established in 1885. In 1899, after Spain's defeat in the Spanish-American War of 1898, Palau, with the rest of the Carolines, was sold to Germany. At the outbreak of World War I in 1914, the islands were taken by the Japanese. As a member of the League of Nations, Japan was given a mandate over Palau in 1920, and Koror was developed as an administrative center of Japanese possessions in the north Pacific.

In 1947, following occupation by US forces in World War II, Palau became part of the UN Trust Territory of the Pacific Islands, which was administered by the United States. After the adoption of a constitution in 1980, Palau became a self-governing republic in 1981. Beginning in 1982, the republic was involved in negotiating a Compact of Free Association (CPA) with the United States. Negotiations stalled because the United States wanted to use the islands as a military site, while Palau's 1980 constitution prohibited any placement of nuclear weapons.

In June 1985, President Haruo Remeliik was assassinated; Vice President Alfonso Oiterang served as acting president until August 1985, when he was defeated in an election by Lazarus E. Salii. President Salii committed suicide in August 1988. Kuniwo Nakamura was elected president in November 1992.

On 1 October 1994 Palau became an independent nation in free association with the United States; under the 1994 CPA, the United States is responsible for Palau's defense. In addition, CPA funds were allocated to finance the building of roads and infrastructure on Babelthuap, across from the capital Koror, in order to attract people and economic activity. As of 1999, despite President Nakamura's support, Paramount Chief Ibedul Yutaka Gibbons of Koror, the most powerful traditional leader in Palau, opposed the Compact and its channeling of resources away from Koror and to Babelthuap, arguing the Compact would erode Palau's autonomy and threaten traditional values. Palau's CPA with the United States was scheduled for renegotiation in 2009.

In July 1999, Palau hosted the First Micronesian Traditional Leaders' Conference. In October 1999, Palau hosted the 30th South Pacific Forum with more than 300 foreign delegates, observers, and media members. The Forum considered issues on climate and sea level change, regional security and law enforcement, fisheries, and the United Nations Special Session on Small Island Developing States. Trade ministers of the South Pacific Forum endorsed the proposal for a Pacific Free Trade Area (FTA) that would create a regional market of six million people, allowing goods produced in the 14 island countries to be traded freely. Late in 2005, the FTA and the trade liberalization it could bring were still under discussion.

In 2003, Palau became a member of SOPAC, the South Pacific Applied Geoscience Commission, a group which has among its aims the sustainable development of mineral and other nonliving resources, and the reduction of poverty for the people of the Pacific.

In 2005, Palau supported Japan's attempts to expand commercial whaling, as well as its application for permanent membership on the United Nations Security Council.

In general elections held 2 November 2004, Tommy E. Remengesau, Jr. was elected to a second term as president, and Camsek Chin to a first term as vice president.

In 2004 President Remengesau favored a constitutional amendment to change the existing bicameral congress (House of Representatives and Senate) to a unicameral form of government to reduce the cost of government. This proposed change had been discussed in the congress as early as 1993. Other amendments Remengesau championed included having presidential and vice presidential candidates run on a single ticket, and allowing Palauans dual citizenship. When the Senate failed to act on these amendments, the president signed into law a Constitutional Convention to be held from 17 May 2005–15 June 2005. The 25 delegates to the Convention were charged with reviewing the constitution and proposing amendments.

Discussed during the Constitutional Convention were the above-mentioned move from a bicameral to a unicameral legislature, vesting increased powers in the cabinet, and changing the title of cabinet ministers to secretaries. Any proposed amendments coming out of the convention had to be approved in the 2008 elections by a popular majority and three quarters of the states.

GOVERNMENT

The government comprises three branches: the executive, the legislative, and the judicial. The executive branch is headed by the president, who is elected by popular vote for not more than two terms of four years each. The president is assisted by a cabinet of ministers, one of whom is the vice president and is also elected by popular vote. The president and vice president run on separate tickets. A council of chiefs, based on Palau's clan system, advises the president on traditional and customary matters.

The legislative branch, known as the Olbiil Era Kelulau, or National Congress, is a bicameral form of legislature, comprising 9 senators and 16 delegates. The senators, elected for four-year terms, are apportioned throughout Palau on the basis of population and traditional regional political groupings. The delegates are elected from each of the 16 states and have the same four-year term as the senators.

In November 1992 Kuniwo Nakamura and Tommy E. Remengesau, Jr. were elected Palau's new president and vice president, respectively. Both Nakamura and Remengesau were reelected in 1996. In the 2000 general elections, Remengesau was elected president, and Sandra Pierantozzi became Palau's first woman vice president. In November 2004, Remengesau was reelected, taking 64% of the popular vote, while Camsek Chin took 70% of the votes to become vice president.

POLITICAL PARTIES

No political parties exist in Palau.

LOCAL GOVERNMENT

Each of Palau's 16 states has a government headed by a governor, who is popularly elected, in most cases, for a four-year term. The members of the state legislatures are popularly elected for a four-year term, although in a few states, the term of office is limited to two years. The states are empowered to make their own laws, which must not be in conflict with the national constitution or any existing laws.

JUDICIAL SYSTEM

The Supreme Court is the highest court in the land. Other courts include the National Court and the lower court system, consisting of the Court of Common Pleas and the Land Court. Court appointments are for life. In October, 1990 US Interior Secretary Manuel Lujan issued an order granting the Interior Department in Washington the power to veto laws and reverse decisions by Palau's courts. This reassertion of legal authority by the United States was partially in response to the decade of unsuccessful negotiations concerning a plan for eventual self-government.

The constitution provides for an independent judiciary and the government respects this provision in practice. Palau has an independent prosecutor and an independent public defender system.

ARMED FORCES

The United States is responsible for defense. Palau has no armed forces and does not have US armed forces within its borders except for a small contingent of US Navy Seabees who undertake civil action projects.

INTERNATIONAL COOPERATION

Palau became a member of the United Nations on 15 December 1994; it participates in ESCAP, the World Bank, the FAO, ICAO, IMF, IFC, UNCTAD, UNESCO and WHO. Palau is also a member of the ACP Group, the Asian Development Bank, G-77, the Pacific Island Forum, and the Alliance of Small Island States (AOSIS). The country is part of the Organization for the Prohibition of Chemical Weapons. Under the Compact of Free Association, the United States is responsible for the island nation's defense. In environmental cooperation, Palau is part of the Convention on Biological Diversity, the Kyoto Protocol, the Montréal Protocol, and the UN Conventions on the Law of the Sea, Climate Change and Desertification.

ECONOMY

The economy has a narrow production base as a result of limited natural resources and few skilled personnel. The services sector consists largely of government administration and trade. Large gaps exist between government revenues and expenditures and between imports and exports. These gaps are financed largely by grant assistance from the United States. Unemployment is a major problem. Expansion of air travel in the Pacific has fueled growth of the tourist sector. Tourist arrivals number 50,000 in 2000/01, down a from a peak of 66,441 in 1996/97. Real GDP growth slid precipitously after booming postindependence rates of 24.3% in 1994/95 and 18.1% in 1995/96. In 1996/97 growth moderated to 5.5%, but in the wake of the Asian financial crisis, the economy contracted 5.4% in 1997/98. The economy remained flat in 1998/99, and 1999/00, with growth rates of 1.1% and 1%, respectively. The Compact Trust Fund balance, at $70.8 billion at independence, reached $161.8 billion by 1999/00, but had fallen to $135 billion in 2000/01.

In 2004, the economy grew by 2.0%, following a period of economic slump in 2002, and 2003 (when the GDP actually shrunk by -4.7% and -0.1% respectively). The inflation rate has been fluctuating slightly but did not pose a major problem to the economy—in 2004, it dropped to 0.2%, from 1.3% in 2003.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Palau's gross domestic product (GDP) was estimated at $174.0 million. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $9,000. The annual growth rate of GDP was estimated at 1%. The average inflation rate in 2000 was 3.4%.

LABOR

The economically active population of Palau was 9,845 persons in 2000 (the latest year for which data was available). Recent data on the occupational breakdown of the workforce is not available. In 2000, the unemployment rate was estimated at 2.3%.

There are no specific provisions granting the right to strike or organize unions, but the issue has never come up and there were no organized trade unions.

There is no minimum age for employment, but children do not typically work, except to help out in small scale family enterprises such as fishing or agriculture. Education is compulsory until age 14, and this is enforced by the government.

Palau's first minimum wage law, passed in 1998, set a rate of $2.50 per hour. This was still in effect in 2002, and generally provides for a decent standard of living for a family. There are many foreign workers in Palau, and these workers often receive housing and food in addition to wages. There are no legally proscribed work hours, but most businesses are closed on Saturday or Sunday.

AGRICULTURE

Agricultural production belongs almost entirely to the nonmonetary, or subsistence, sector. Most households outside Koror are fully or partially engaged in subsistence agriculture. Staple subsistence crops include taros, cassavas, sweet potatoes, bananas, and papayas. Commercial produce is marketed mainly in Koror, consisting mostly of copra and coconut oil, vegetables, and a wide variety of tropical fruits.

ANIMAL HUSBANDRY

Livestock is limited to pigs, chickens, ducks, cattle, and goats. Pigs and chickens are raised by most households. Several small commercial egg-producing operations supply eggs to the Koror market. The Livestock Branch of the Division of Agriculture maintains breeding herds of pigs, cattle, and goats.

FISHING

Palau's marine resources are rich and diverse. Subsistence fishing within the reef is a major activity and dominates market production. The total catch was 1,051 tons in 2003. Deep-sea fishing for pelagic species resulted in a tuna catch of 68 tons in 2003. Seasonal trochus harvesting for shell button manufacture is an important source of income for most fishermen. Other marine resources include pearls, shrimp, ornamental fish, seaweed (agar agar), and mollusks. Palau is known for having some of the best diving, snorkeling, and sport fishing areas in the world.

FORESTRY

About 76% of Palau was forested in 2000. Forestry resources consist of coastal mangrove, coconut and pandanus palms, and rain forest species in upland areas. Palau is heavily dependent on imported forestry products, including furniture and lumber for house construction. The government's forestry station at Nekken on Babelthuap Island, of which more than half of the 1,257 hectares (3,105 acres) consists of natural forest, provides primarily mahogany seedlings to farmers. Palau imported $1.1 million in forest products during 2004.

MINING

Crystalline calcite from glistening limestone caves was first quarried as many as 1,500–2,000 years ago. The doughnut-shaped finished carved products would be transported by canoe some 400 km (250 mi) to Yap (now part of the Federated States of Micronesia), and used as currency.

The Koror state government engages in commercial production of dredged coral from the Palau lagoon, with a production capacity of 800 cu m per day. Other states are also involved in coral dredging. A private company supplies aggregates for concrete from crushed basalt rock and beach sand.

ENERGY AND POWER

The economy is almost totally dependent on imported petroleum for energy. Electricity is supplied from the Malakal power plant, located in the state of Koror, with an installed capacity of approximately 8,000 kW. There are state-owned power plants with capacities ranging from 30 kW to 120 kW in Peleliu, Angur, Ngiwal, Ngeremlengui, Airai, Ngaraard, and Ngerchelong. Per capita consumption of electricity in 1995 was 11,704 kWh. Both production and consumption of electricity were 200 million kWh in 1996; of the power produced, 85% came from fossil fuels and 15% from hydropower.

INDUSTRY

Manufacturing plays a limited role in the economy. A copra-processing plant is located in Malakal. Concrete blocks are manufactured, utilizing imported cement, and there is a small-scale sawmill industry. Other industries include the manufacturing of craft items (from shell, wood, pearls), construction, and garment making.

SCIENCE AND TECHNOLOGY

Palau's Micronesian Mariculture Demonstration Center, established in 1973, promotes the cultivation of commercially valuable and ecologically threatened marine species. The center attracts visiting marine scientists. Its giant clam hatchery was the first and remains the largest of its kind.

DOMESTIC TRADE

Domestic trade is centered in Koror. Private-sector activities in tourism, restaurants and hotels, small workshops, banking, wholesale and retail outlets, transportation, and freight handling are located in Koror and, to a limited extent, the adjacent state of Airai. Most of the work force is employed in services related to tourism. The country relies heavily on imports for basic goods.

FOREIGN TRADE

Palau's economy sustains a large trade deficit. Food, beverages, and tobacco account for 19% of imports; manufactured goods, 20%; machinery and transportation equipment, 28%; mineral fuel and lubricants, 13%; and other imports, 20%. The country's low volume and limited range of exports include shellfish, tuna, copra, and garments. The United States, Japan, and Singapore are Palau's predominant trading partners.

In 2001, exports totaled $18 million (FOB—Free on Board), while imports grew to $99 million. In 2003, 86.7% of exports went to Japan, but by 2004 the United States was Palau's main export partner—an indicator of Palau's fragile economic base and its dependency on other countries. The United States, Guam, Japan, Singapore, and South Korea were the main import partners in 2004.

BALANCE OF PAYMENTS

Standardized balance-of-payments accounts have not yet been prepared by the government. The chronic trade deficit is largely offset by US grant assistance.

The US Central Intelligence Agency (CIA) reported that in 1999 the purchasing power parity of Palau's exports was $11 million while imports totaled $126 million resulting in a trade deficit of $115 million.

Exports of goods and services totaled $75 million in 2004, up from $70 million in 2003. Imports grew from $102 million in 2003, to $124 million in 2004. The resource balance was on a negative upsurge, growing from -$33 million in 2003, to -$50 million in 2004. A similar trend was registered for the current account balance, which deteriorated from -$5 million in 2003, to -$23 million in 2004.

BANKING AND SECURITIES

In 1993, there were five commercial banks. Two are branches of foreign banks, the Bank of Hawaii and the Bank of Guam; the other, a local bank which started in 1985, is the Bank of Palau.

INSURANCE

Social security and pension fund contributions are made by the government on behalf of its employees.

PUBLIC FINANCE

The US Central Intelligence Agency (CIA) estimated that in FY 1998/99, the most recent year for which statistics are available, Palau's central government took in revenues of approximately $57.7 million and had expenditures of $80.8 million. Revenues minus expenditures totaled approximately -$23.1 million.

TAXATION

Graduated income taxes are levied on wages and salaries. Business gross revenue tax is imposed at a flat rate minus employees' remuneration. There is also a profits tax on financial institutions.

CUSTOMS AND DUTIES

There are no import duties on raw materials if they are processed for sale outside Palau. There is also an import duty rebate offered by Palau as an investment incentive.

FOREIGN INVESTMENT

There is a Foreign Investment Board for processing applications from foreign investors; the Division of International Trade of the Bureau of Foreign Affairs is responsible for establishing contacts with foreign companies to promote Palau's trade interests.

ECONOMIC DEVELOPMENT

When Palau became independent in 1994 in entered into a Compact of Free Association with the United States. Under the Compact, Palau is to receive grants of totaling about $600 million over a 15-year period to 2009. In the meantime, the government is to be engaged in developing ways to make the economy self-sufficient. A major part of the strategy was the building of a trust fund. The government's first five-year national development plan (1987–91) was the first phase of its 15-year development program. The plan focuses on the development of a private-sector production-based economy, efficient public-sector management, development of natural resources to earn foreign exchange, personnel development, regional development, and environmental preservation.

Long term prospects for the tourist sector have brightened because of the expansion of are travel in the Pacific and the rising prosperity of leading East Asian countries.

SOCIAL DEVELOPMENT

A system of old age, disability, and survivor's pensions was first introduced in 1967. This program covers all gainfully employed persons, and provides old age pensions after the age of 60. It is financed by 6% of employee earnings, matched by an equal contribution from employers. There is voluntary coverage for some self-employed persons. The government contributes only as an employer.

In the traditional social structure, rank and inheritance are matrilineal. Women are accorded considerable respect within the clan system. However, weakening extended family ties and the rise of drug and alcohol abuse are leading to an increase in domestic violence and abuse of women. In urban areas, women face minimal gender based discrimination in employment. The government adequately funds education and medical care for children.

Foreigners residing in Palau are barred from owning land or obtaining citizenship. Some foreigners complain of discrimination in access to housing, education and employment. Human rights are well respected in Palau, and nongovernmental organizations operate without government interference.

HEALTH

Hospital services are provided by the MacDonald Memorial Hospital in Koror, which has 60 beds. Medical services in Koror are also provided by the Belau Medical Clinic and the Seventh-Day Adventist Eye Clinic. In 2004, there were 109 physicians, 141 nurses, and 11 dentists per 100,000 people.

As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 19.3 and 7.1 per 1,000 people. In 2005 life expectancy averaged an estimated 70.14 years and the infant mortality rate was 14.84 per 1,000 births. The fertility rate was 2.5 children per woman.

Immunization rates for children under one were as follows in 1995: diphtheria, pertussis and tetanus, 100%; polio, 100%; measles, 100%; and hepatitis B, 100%. No measles or polio cases were reported, and AIDS is not a significant concern.

HOUSING

There were 2,501 occupied houses in 1986, of which 72% were located in Koror and the adjacent state of Airai. Most house walls are constructed from metal sheets, wood, or concrete blocks, and roofs are of corrugated material. About 80% of all houses have water and electricity. The majority of homeowners finance their house construction under the traditional ocheraol system, whereby clan members contribute to construction costs.

EDUCATION

Elementary education is free and compulsory for all Palauan children ages 6–14. The gross enrollment ratio in primary school for 2000/02 (i.e. the number of pupils enrolled divided by the number of children of primary-school age) was 113, indicating some attendance by students not in the primary age group. The gross enrollment rate for secondary students that year was about 89%. It is estimated that about 96.5% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 16:1 in 2000; the ratio for secondary school was about 15:1. In 2000, private schools accounted for about 18.4% of primary school enrollment and 29.1% of secondary enrollment.

The Palau High School in Koror is the only public high school. Postsecondary education is provided by the College of Micronesia's Micronesian Occupational College (MOC) in Koror. The adult literacy rate is 98%. In 2001, about 39% of the tertiary age population were enrolled in some type of higher education program; 26% for men and 54% for women. The adult literacy rate has been estimated at about 92%.

As of 2003, public expenditure on education was estimated at 11.1% of GDP, or 20% of total government expenditures.

LIBRARIES AND MUSEUMS

The Palau Community College Library is the largest in the country, with a collection of about 26,000 items. The PCC library also serves as a depository library for the Secretariat of the Pacific Community, the United Nations, and the World Health Organization. There is a small public library in Koror, with a collection comprising about 17,000 books. The Palau Congress Library, established in 1981, has about 5,000 volumes and offers reading rooms open to the public.

The Belau National Museum, established in 1973, is also located in Koror as is the Etpison Museum; both museums contain collections on art and history. The Palau International Coral Reef Center on Koror houses an aquarium, a nursery of giant clams, a crocodile farm, an old Japanese shrine, WWII relics and monuments, and a traditional Bai meeting house.

MEDIA

The Palau National Communications Corp., established in 1982, provides domestic and international telephone connections, radio broadcasting, telex and telegram communications, and navigational and weather services. In 2002, there were 6,700 mainline telephones and 1,000 cellular phones in use.

A radio station in Koror broadcasts to listeners in the outer islands. As of 2002, there were five radio stations, 1 AM and 4 FM. Television is limited to one channel in the Koror area, provided by a local private company. As of 1997, there were 478 radios and 85 television sets in use per 1,000 population. Internet access is available.

There are no daily papers. Two popular periodicals are Palau Gazette (monthly, 1995 circulation 3,000), and Tia Belau (weekly, 5,000). The constitution provides for free speech and a free press, and the government respects these rights in practice.

ORGANIZATIONS

The clan system forms the basic unit of social organization. Youth, women's, and community development organizations provide economic self-help, community involvement and leadership training, skills training, and sports and recreation. There are also a few sports associations affiliated with international organizations. The Lion's Club has programs in the country. There is a national chapter of the Red Cross Society.

TOURISM, TRAVEL, AND RECREATION

Palau's scenic areas include the Rock Islands, a large number of small, mushroom-shaped islands that are unique in the region, and the Floating Garden Islands. The marine environment is rich in live coral formations and tropical fish, making the country a prime destination for snorkeling and scuba diving. Many tourists visit the World War II battlefields, war memorials, and shrines.

In 2005, the television show "Survivor: Palau" was aired on CBS. The US Department of State found this heightened the level international awareness of the small nation. A new luxury hotel affiliated with Japan Airlines opened on Palau that same year.

Palau's main industry, tourism, brought in about 68,300 visitors in 2003, a 16% increase from 2002. The US Department of State estimated the daily cost of staying in Palau in 2005 at us$246.

FAMOUS PALAUANS

Tommy Remengesau (b.1956) was elected president in 2000 and reelected in 2004.

DEPENDENCIES

Palau has no territories or colonies.

BIBLIOGRAPHY

Hijikata, Hisakatsu. Society and Life in Palau. Tokyo: Sasakawa Peace Foundation, 1993.

Leibo, Steven A. East and Southeast Asia, 2005. 38th ed. Harpers Ferry, W.Va.: Stryker-Post Publications, 2005.

Leibowitz, Arnold H. Embattled Island: Palau's Struggle for Independence. Westport, Conn.: Praeger, 1996.

Sloan, Bill. Brotherhood of Heroes: The Marines at Peleliu, 1944: The Bloodiest Battle of the Pacific War. New York: Simon and Schuster, 2005.

Wright, Derrick. To the Far Side of Hell: The Battle for Peleliu, 1944. Tuscaloosa: University of Alabama Press, 2005.

PALAU

Republic of Palau

Belau

COUNTRY OVERVIEW

LOCATION AND SIZE.

Palau is located in the north Pacific Ocean some 2,000 kilometers (1,242.8 miles) north of Australia. It estimated that there are more than 200 islands in a chain running from northeast to southwest, although only 8 are inhabited. The islands are rocky and mountainous, with the highest point being Mount Ngerchelchauus at 242 meters. The largest island is Babeldoab (also spelled Babelthuap). The total land area is 458 square kilometers (176.8 square miles). There are gold deposits (although unmined) and the possibility of further minerals in the seabed within the 200 nautical mile economic zone claimed by the islands. The capital is Koror on Koror Island. However, the constitution calls for the capital to be sited at Melekeok on the nearby island of Babeldoab, and construction is under way to fulfill that requirement. The country is ranked as the fourteenth smallest nation in the world.

Palau is located in the tropics, and the weather is generally hot and very humid. Temperatures average around 27 degrees Celsius (80 degrees Farenheit), and vary little during the year. A rainy season lasts from May to November, with annual rainfall of around 3,600 milimeters (142 inches). The islands are hit by typhoons from time-to-time, and the main typhoon season is in the second half of the calendar year.

POPULATION.

The population was estimated at 18,766 in mid-2000, giving a population density of 41 persons per square kilometer (106 per square mile), quite a bit lower than the neighboring Marshall Islands, which have a density of 375 persons per square kilometer (971 per square mile). The population was estimated to be growing at 1.8 percent a year in 2000. The birth rate is 20 per 1,000 people, and the death rate is 7 persons per 1,000. Migration is low, with about 90 citizens leaving each year. The average fertility rate is 2.5 children per woman. With this modest rate of population growth, the population can be expected to have most of its population in the working age groups. The 0 to 14 age group contains 27 percent of the population, and the 15 to 64 group contains 68 percent. Five percent are 65 and over. More than half the population live in the current capital, Koror, and urban residents account for 80 percent of the total population.

Almost all the people on the islands originate from Polynesian, Malayan, and Melanesian ethnic groups, and mostly follow the Christian religion, although a local traditional belief, Modekngei, is practiced by more than 30 percent of the population. English is the main official language. In 13 states Palauan is also an official language; in Sonsoral, Sonsoralese is also official; in Tobi, the Tobi language is also official; and in Angaur, Anguar and Japanese are also official. Overall life expectancy is 69 years, with male life expectancy being 65 years and female life expectancy 72 years. The adult literacy rate in 1980 was 92 percent, with 93 percent of adult males and 90 percent of females achieving literacy.

OVERVIEW OF ECONOMY

Given its small population, its inaccessible location, poor infrastructure , lack of skilled labor, and the absence of any significant minerals, it is remarkable that the economy generates as much income for its citizens as it does. Gross domestic product (GDP) per capita , at $6,696 in 1998, places Palau in the upper-middle income group of countries in the world economy. This is increased by significant receipts from the United States, which add around 16 percent to the income generated domestically.

Most employment, 89 percent in 1995, was in the services sector. The agriculture sector is very small in terms of both its contribution to total output and employment, while the industry sector is also small and is mainly made up of construction. Fish is the main export, and tourism is the main foreign exchange earner. Almost all commodities, apart from some food, are imported.

Economic growth can vary yearly, affected by fashions in tourism and by the economic conditions in the countries of origin of tourists. Since 1992, the level of GDP has remained almost unchanged, with a zero growth rate over the period. However, the volatility is observed in a fall in GDP of 12.3 percent in 1993 and an expansion of 14.3 percent in 1995.

POLITICS, GOVERNMENT, AND TAXATION

The islands of Palau were originally settled by people from neighboring Pacific islands. In the 16th century, Spain claimed the islands, although Germany was allowed trading rights. With the decline of Spanish influence, the islands came under German control. The Germans established Palau as a protectorate. At the outbreak of World War I, the Japanese took over the islands and administered them under a United Nations (UN) mandate. This was a period of considerable development, with the creation of schools, hospitals, and a change in land tenure that allowed private land rights. By the end of their administration period, the Japanese in Palau numbered 26,000, outnumbering the local inhabitants. During World War II, the United States clashed with the occupying Japanese, and the United States established control of the islands in 1944. From 1947, the United States administered Palau as Trustees for the United Nations. Talk of self-determination for Palau began in 1965. In 1979, Palau approved a constitution, and in 1981 became the Republic of Palau, although not fully independent of the United States. Efforts to have approval for a Compact of Free Association with the United States (which would allow the United States to provide defense and contribute financial support) were continually thwarted by an inability to have the proposals approved by 75 percent of the vote in a referendum. After changing the constitution to allow approval by simple majority, the compact was approved in 1993, and Palau became fully independent in 1994.

The Palau government is a democracy modeled on the United States. Although the country has a long history of traditional tribal rule, democracy has been accepted and any citizen is eligible for high office. The 1979 constitution established a parliamentary government, with 2 houses. The Senate (Oibiil Era Kelulau) has 14 seats, and members are elected for 4-year terms by popular vote. The House of Delegates has 16 members, one for each state, and members are elected by popular vote, also for 4-year terms. Parliamentary candidates contest elections on the basis of their personalities and platforms; there are no party affiliations. There is a president and vice-president. There are 3 levels of court, headed by a Supreme Court, supported by a National Court, and Courts of Common Pleas.

Palau has been successful at blending its traditional heritage with its new democratic government, and that resulting government has helped to mix Palau's traditional economy with its new, more market-oriented one. Land ownership is one example of Palau's success at blending traditional practices with its new economy. As with many Pacific island nations, Palau has a long history of sharing income and land within a clan and community. Market economies are based on private ownership of land. The Palau government has taken legislative steps to accommodate the traditional sharing of lands with the free market economy by designing laws that provide guidelines for issuing land titles on land traditionally held by a family or clan.

In the year 1997-98, that government revenue (including grants) was anticipated in the budget as 57 percent of GDP. Of this, 59 percent was raised by government tax and other non-tax income, and 41 percent was grants from the United States. Income tax raised 11 percent of government revenues (excluding grants), import duties 10 percent, gross revenue tax on business 14 percent, other taxes 8 percent, and non-tax revenue (licenses, fees, trust fund income, investment income) 56 percent.

Total spending in 1997-98 was projected at 50 percent of GDP. General administration makes up 57 percent of total government spending, education 14 percent, health 14 percent, and capital expenditures 15 percent. A budgetary surplus of 6 percent of GDP was realized. The budget has been in overall surplus from 1992 to 1998, although the annual outcome has varied between a 119 percent surplus in 1994-95 (as a result of a substantial grant from the United States on the final acceptance of the Compact agreement), and a projected deficit of 18 percent in 1997-98.

The main tax rates are: 6 percent on incomes from employment, rising to 12 percent; 4 percent on the gross revenues of businesses; 4 percent on the net incomes of financial institutions; import duties varying between 3 percent (most goods) to 150 percent (tobacco); hotel room tax (10 percent); departure tax ($20); and road tax ($50 to $150).

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

There are 61 kilometers (38 miles) of roads, of which 36 kilometers (22.4 miles) are paved. The road round Babeldaob, 100 kilometers (62 miles) in length, is a major improvement in the road system. The unpaved roads are coral-surfaced roads and provide practical, if bumpy, highways. There are no railways. The main port is on Koror, and this is the only port that is able to receive large ocean-going vessels. The mountainous terrain makes the construction of airports a problem, but there are 3 airports. The only one with a paved runway is the international airport located across from the capital Koror on Babeldoab island.

Palau's electricity is supplied mostly by diesel generators (85 percent in 1996), but the terrain does allow for the construction of dams, and 15 percent of electricity comes from hydroelectricity. In 1996 the Palau generated 200 million kWh. There is some domestic use of bottled gas for cooking. Water supply is adequate.

In 1988, there were an estimated 1,500 land line telephones in use and no mobile telephones. It is to be expected that provision of telephones, both land lines and mobiles, have increased substantially since then. International links are provided by an Intelsat satellite earth station.

The islands had 1 AM radio station and 1 shortwave station in 1998, and in 1997 there was 1 television station, and 11,000 television receivers. The Palau Gazette is published monthly by the government, and Tia Belau is published bi-weekly in both English and Palauan.

ECONOMIC SECTORS

The services sector dominates the economy, with a large number of public sector employees. In 1998, services generated 87 percent of GDP and employed 76 percent

of the labor force in 1995. The incomes in this sector are above average. The smallest sector in terms of output is agriculture (which includes fishing), which produced 5 percent of output in 1998 and engaged 9 percent of the labor force in 1995. The industry sector only employed 15 percent of the labor force in 1995, generating 8 percent of GDP in 1998.

AGRICULTURE

Palau does not produce enough food to support itself, mainly because the cost of doing so is higher than the cost of importing needed items. The main crops are coconuts, bananas, root crops such as taro (similar to the potato), vegetables, and tropical fruits. Poultry, pigs, and dairy cows are the main livestock. Crops and livestock generated only about 2 percent of GDP in 1998. Since Palau cannot incorporate any economies of scale in agricultural production, the likelihood of significant increases in the sector are slim. Fisheries generated about 3 percent of GDP in 1998, but output from the fisheries sector appears to be in a steady decline—in 1992, the value of fish landed was almost 4 times greater, and the fishing fleet has halved to 150 vessels in 1998.

Much of the catch from Palau's waters is taken by Chinese and Japanese vessels, and Palau receives income from licence fees of around $200,000 a year. It is felt that there is considerable illegal fishing. In addition, local boats meet with Chinese and Japanese vessels at sea and sell their catches to them, leading to under-recording of the Palau catch.

INDUSTRY

There is little mining and quarrying, being almost entirely the quarrying of coral for construction. The main manufacturing enterprise is a garment factory, employing some 300 workers. Other manufacturing includes bakeries, building material, furniture, and handicrafts, all of which serve the domestic market.

There are 2 power plants at Aimeliik and Malakai. The construction sector is the largest part of the industry sector, and it generates 8 percent of GDP and employs 14 percent of the workforce.

SERVICES

The services sector employs three-quarters of the workforce and generates more than four-fifths of GDP. Transport and communications generate 16 percent of GDP; distribution, restaurants and hotels, 27 percent; financial services 6 percent; and public administration, community and other services, 51 percent.

The banking sector is made up of 3 U.S. commercial banks, 5 domestically-owned commercial banks, and the National Development Bank of Palau (NDBP). Most lending by the commercial banks is made up of consumer loans for construction, travel, and education. The NDBP is responsible for most business loans. There was concern over the operation of the domestically-owned commercial banks in 1999, which were not subject to any banking regulation. A ban was imposed on certain international transactions, as it was thought that the banks were being used for money laundering . There have subsequently been U.S.-assisted initiatives to tighten control of the banks.

The publicly-owned Palau National Communication Corporation, by virtue of operating a monopoly , generally manages to cover its costs. However, the 1997-98 reduction in tourism, as a result of the Asian economic crisis, led to a fall in the number of lucrative international calls, and the corporation posted a loss.

Tourism is a major source of foreign exchange earnings. In 1997, there were 73,000 arrivals in the Islands, and the sector generated $70 million, equivalent to 53 percent of GDP. The sector is expanding rapidly—in 1993, tourism receipts were $18 million. At present there are 1,200 hotel beds, and a further 560 are planned to be in operation by the end of 2001.

INTERNATIONAL TRADE

Merchandise exports of $11 million in 1997-98 were made up almost entirely of fish products. There are some exports of copra (dried coconut), garments and handi-crafts. Exports of seashells for buttons, ornaments, and making lacquers are not recorded, but there is probably a small amount of informal trade. The fishing sector appears to be in a steady decline. In 1992-93, fish exports were around $17.7 million. The decline is partly because of changes in the available fish stocks, as a result of oceanographic factors. In addition, fish prices fell after 1996 as a result of the Asian economic crisis, reducing demand for fish. Exports of fish have also been hindered by a shortage of refrigerated air freight services from Palau. Exports go mostly to the United States and Japan.

Merchandise imports were $52 million in 1997-99. Food products made up 14 percent of imports by value, beverages and tobacco 8 percent, petroleum 25 percent, chemicals 3 percent, machinery and transport equipment 23 percent, and manufactured consumer goods 26 percent. The main sources of imports were the United States (40 percent), Guam (18 percent), Japan (13 percent), Singapore (13 percent), and Taiwan (5 percent).

MONEY

Palau uses the U.S. dollar as its currency. This has the advantage of bypassing the expense of running a central bank. Also, the currency is completely convertible,

and price stability is reasonably well ensured, as Palau does not have the ability to print currency. The rate of inflation was less than 3 percent a year from 1996-98. The only drawback for "dollarised" economies is that they do not earn the seigniorage (the profit earned from the minting of coins) they would gain if they issued their own currency. The increasing number of countries that have been attracted to using the U.S. dollar in place of a domestic currency has caused the United States to consider sharing some of the seigniorage it earns as a currency issuer.

POVERTY AND WEALTH

There are no figures on the numbers below the poverty line, but given the income level and the structure of the economy, probably less than 10 percent of the population live in poverty. Most of those affected are among the 30 percent of the population living outside Koror, who rely on small-scale agriculture and fishing for their livelihoods. Infant mortality is 18 per 1,000 births in 2000 (in the United States, the rate is 6 per 1,000). The per capita GDP of Palau ($6,987 in 1998) was one-third that of Guam and about one-quarter that of Hawaii. Household and agricultural workers had the lowest wages, while bankers, insurance agents, and lawyers had the highest.

Retail workers made up the largest category of wage earners and reported an average yearly wage ($6,044) that was slightly lower than the GDP per capita .

A life expectancy in 2000 of 69 years is high, and the level of adult literacy, last surveyed in 1980, was 92 percent. Taken together with its upper-middle income status, these factors, when evaluated by the criteria used by the UN, give Palau a position near the top of the countries with a medium level of human development.

WORKING CONDITIONS

The economically active labor force was estimated at 8,300 in 1988, and 7 percent of the labor force was recorded as being unemployed. However, the unemployment rate has little meaning in an economy like that of Palau—it relates to those registering as looking for jobs in the urban areas as a percentage of the formal labor force. A substantial part of the labor force is in the agriculture and fishing sectors, much of it in small-scale family enterprises outside the formal sector. There are no unemployment benefits, and those without work or support from families or charities cannot survive. It is likely that there is considerable disguised unemployment in the rural areas, with tasks being shared and the work capable of being carried out by a smaller workforce.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1000 B.C. Migration to Palau Islands from other Pacific Ocean islands begins.

1525. Spanish navigator Alonso de Salasar is first European to sight the archipelago of the Caroline Islands, of which present-day Palau is a part.

1529. Alvaaro de Saavedra lands on the Caroline Islands, and claims them for Spain.

1783. British vessel, under Captain Henry Wilson is shipwrecked near Koror, and the crew stays 3 months rebuilding the ship.

1885. Pope Leo XIII, acting as a European mediator, confirms Spanish dominion over the Caroline Islands, while also allocating Germany trading rights.

1899. Spain sells islands to Germany, who begin phosphate mining in Anguar, plant coconuts and begin to reduce the impact of influenza and dysentery which were causing widespread loss of life.

1914. With the outbreak of World War I, Japan assumes control of the islands.

1920. Japan receives a UN mandate to administer the islands, establish schools and land property rights, and develop Koror.

1922. Japan establishes administration of all of its Micronesian territories from Koror.

1944. After fierce fighting between Japanese and American forces, the United States occupies the islands.

1945. Japanese settlers are repatriated .

1947. UN assigns the Caroline Islands, as the Trust Territory of the Pacific Ocean, to the United States. The U.S. Navy undertakes day-to-day administration.

1965. Congress of Micronesia formed by delegates from Pacific islands to press for independence.

1967. Commission established to make recommendations on the future government of the islands of Micronesia.

1970. Commission confirms that the peoples of Micronesia have a right to sovereignty, self-rule, and to terminate association with the United States.

1979. Referendum in Palau District approves constitution, which forbids presence of nuclear weapons, including those on visiting vessels.

1981. Constitution comes into effect, and the islands become the Republic of Palau, although not independent of the United States. Haruo Remeliik becomes first president.

1982. The United States signs Compact of Free Association which will allow an independent Palau to rely on the United States for defense and to receive U.S. aid.

1983. Referendum in Palau fails to endorse Compact of Free Association (which allows transit and storage of nuclear materials) by requisite 75 percent of votes cast.

1984. Referendum again fails to endorse Compact.

1985. President Remeliik assassinated. Lazarus Salii elected to succeed Remeliik.

1986. Despite the United States agreeing to observe ban on nuclear material, Compact again fails to be endorsed in 2 successive referenda.

1987. Fifth referendum on Compact fails. President suspends 70 percent of public sector employees on the grounds of financial crisis. Further referendum approves change in constitution to require only simple majority for the endorsement of the Compact. In December, Compact is approved by referendum on a simple majority.

1988. Supreme Court rules against approval of Compact by a simple majority. President Salii, under investigation for corruption by U.S. General Accounting Office, commits suicide. Ngiratkel Etpison elected president.

1990. Seventh referendum again fails to approve Compact by required 75 percent.

1992. Kuniwo Nakamura wins presidential election. Second referendum to allow simple majority for endorsement of Compact is approved by 62 percent of voters. Challenge to decision in courts is unsuccessful.

1993. Eighth referendum on the Compact is endorsed by 68 percent of voters, but the decision is challenged in the courts.

1994. Court challenges fail. Palau finally becomes independent on October 1, under the terms of the Compact of Free Association.

1996. During presidential election, bridge between the islands of Koror and Babeldoab collapses, killing 2. Nakamura re-elected president.

1997. Legal settlement for collapse of bridge between Koror and Babeldoab with payment of $13.8 million to Palau. New bridge approved at cost of $3.8 million.

1999. Palau is subject to an international banking transactions ban as a result of practices thought to facilitate money laundering.

2000. Tommy Remengesau elected president. New $100 million road around the island of Babeldoab is announced which will allow capital to be moved to Melekeok.

FUTURE TRENDS

The economy is heavily dependent on the grants received from the United States as part of the Compact agreement. In the 1998-99 budget the Compact grants were $13 million (10 percent of GDP), and other grants from the United States were $11 million (8.5 percent of GDP). The Compact grants are scheduled to be phased out, and to end in 2008-09. Palau has invested some of the large early payments under the Compact agreement, and income from these investments will serve to cushion the position when the Compact agreement is due to end. It is expected that the Compact agreement will be renewed, as the defense provisions are an important consideration for Palau, and it is possible that Compact grants will be continued. Even if they are not, it is likely that the United States will increase grants under other headings to compensate, so that the situation after 2008-09 is not likely to be as severe as at one time anticipated.

Tourism is clearly the best long-term prospect for generating income in Palau, given the scenic attractions of the mountainous islands and the strong association with Japan (Japanese is an official language in one of the states). However, international investment will be necessary for the development of tourism, but a barrier at present is the regulation that prevents foreigners from owning land.

DEPENDENCIES

Palau has no territories or colonies.

BIBLIOGRAPHY

Bank of Hawaii. Republic of Palau Economic Report: 2000. <http://www.boh.com/econ/pacific/pal/2000/palau2000.pdf>. Accessed August 2001.

International Monetary Fund. Republic of Palau: Recent Economic Developments. Washington D.C.: IMF, 1999.

U.S. Central Intelligence Agency. CIA World Factbook 2000: Palau. <http://www.cia.gov/cia/publications/factbook/geos/ps.html>. Accessed August 2001.

World Yearbook. London: Europa Publications, 2000.

—Michael Hodd

CAPITAL:

Koror (a new capital is being constructed on the nearby island of Babeldoab).

MONETARY UNIT:

United States dollar ($).

CHIEF EXPORTS:

Fish, coconut products, shells, handicrafts.

CHIEF IMPORTS:

Foodstuffs, beverages, tobacco, petroleum, cement, machinery, transport equipment, consumer manufactures.

GROSS DOMESTIC PRODUCT:

US$160 million (1997 est.) [includes U.S. spending].

BALANCE OF TRADE:

Exports: US$11 million (1998 est.). Imports: US$63 million (1998 est.).

Palau

Culture Name

Palauan (Belauan)

Alternate Names

Pelew (archaic English), Los Palaos Islands (Spanish)

Orientation

Identification. The name Palau may be derived from the Palauan word for village, beluu (Pelew). Some trace the name to the Spanish word for mast, palao.

Palau comprises several cultures and languages. Ethnic Palauans predominate, inhabiting the main islands of the archipelago. Descendants of the Carolinean atolls, especially Ulithi, settled on Palau's southern atolls of Hatohobei, Sonsorol, Fannah, Pulo Anna, and Merir. Southwest Islanders, as these Carolineans are called, speak Nuclear Micronesian languages. Today most live on Koror and also speak Palauan and English.

Palauans recognize a series of expanding identities, from the village of one's father, one's mother, one's village, or one's island, to the Palauan nation as a whole. Overseas, Palauans retain strong links and identification to their homeland, while developing their own variations on Palauan identity. Shared schooling and work experiences have resulted in some elites considering themselves Micronesian.

Location and Geography. Located in the western Pacific, the Palauan archipelago is the westernmost portion of the Caroline Islands, which are in turn part of the Micronesian geographical subdivision of Oceania. East of Mindanao in the Philippines, Palau is 722 nautical miles (1,340 kilometers) southwest of Guam. Palau's three hundred volcanic and raised coral islands and atolls rise up from the Philippine Plate, with the highest stone outcrops reaching about 720 feet (2,220 meters) on the largest island, Babel thuap. The islands have a total land area of 191 square miles (495 square kilometers). The weather is hot and humid, with annual rainfall around 150 inches (3,800 milimeters). The flora and fauna are tropical, but Palau is best known for its 70-mile-long (113-kilometer-long) barrier reef which encloses spectacular coral reefs and a lagoon of approximately 560 square miles (1,450 square kilometers), a divers' paradise.

The capital and major population center is Koror, the small set of islands to the south of the main island of Babelthuap. In 2004 the capital will be relocated to Melekeok on Babelthuap.

Demography. As of 1995 the resident population of Palau was 17,225. It was 71 percent urban. The demography of Palau must be understood in historical perspective. Estimated at fifty thousand prior to European contact, the number dropped to about thirty-seven hundred people by 1900. The population then began a slow growth that finally accelerated from 1945 through the 1960s.

Fertility has stabilized at 2.1 children per woman, with a death rate of 7.4 per thousand. In the late twentieth century, the natural population growth has been counterbalanced by outmigration. While the number of Palauans has been relatively stable at about thirteen thousand, including the peoples of Hatohobei and Sonsorol, an estimated seven thousand Palauans today reside overseas for a total population of around twenty thousand.

The most important demographic shift of the late twentieth century was the increase in resident foreigners, from 4 percent of the population in 1973 to 25.5 percent in 1995. The largest and longeststanding community was then Filipinos (2,654 workers and their dependents), followed by other Asians (738), Americans (535), other Micronesians (467) and Pacific islanders (232). By 1999 Asian workers had increased to 5,250.

Linguistic Affiliation. Palauan is considered an Austronesian language of a Western subgroup, which along with Chamorro (Mariana Islands) is considered separate from the other Micronesian and Pacific languages grouped under the label "Oceanic." English and Palauan are official languages; elders also read and speak Japanese. The Palauan language incorporates Spanish, German, Japanese, and English loanwords.

Symbolism. Most of Palau's important cultural symbols are derived from its chiefly past, in particular the gable of the community meetinghouse, bai. This impressive thatched building was the center of political, social, and artistic life. Today the decorated bai gable is used in most national and state seals and to decorate Palauan buildings. Other important symbols include the circle subdivided in four, representing wealth, and the half shell symbol of the giant clam shell, which also represents the foundation of Palau and the creation of humanity from the sea. The image of the traditional Palauan mother at the time of her first child ceremony symbolizes the wealth and fertility of this matrilineal society. Symbols of nationhood include the national flag, a full golden moon on a blue background, and the national anthem.

History and Ethnic Relations

Emergence of the Nation. Archaeologists estimate that the islands were first settled approximately 4,000–4,500 years ago. Palauans participated in the wide-ranging Micronesian trade system, with some interaction with Malay traders. In the nineteenth century Palau was loosely part of the Spanish Pacific. After the Spanish-American War in 1898, Palau was among the islands sold to Germany. In 1914 the islands were occupied by the Japanese, a control later confirmed as a League of Nations Class C Mandate. The United States took possession of the islands in 1944, during World War II. Starting in 1947, Palau was part of the United Nations Trust Territory of the Pacific Islands, under the administration of the United States. Palauans chose not to affiliate with the remaining islands of the territory in the Federated States of Micronesia, instead establishing their own constitutional government in 1981.

While the majority of Palauans preferred free association with the United States, ratification of a Compact of Free Association was delayed by constitutional nuclear-free clauses, which required a 75 percent suspension vote of the people to conform with the compact. Palauans also feared U.S. military land use. Between 1983 and 1991 Palau conducted seven plebiscites and experienced escalating violence, including the assassination of the first elected president. After a three-year cooling-off period, and clarifying statements by the United States on the conditions under which the U.S. military might be present on the islands, the compact was approved, the trusteeship terminated, and the nation formally recognized by the United Nations in 1994.

National Identity. The concept of being "Palauan" grew during the century of colonial administration, drawing together those previously separated by villages, clans, and cultures. While the disruptions of the compact plebiscites pitted Palauans against one another, the plebiscites also cemented support for the national constitution.

Ethnic Relations. Palauans are inclusive in their conceptualization of being Palauan, incorporating long-term residents according to Palauan custom. The constitution confirms the citizenship of all those of Palauan heritage. Ethnic differences between Palauans and Southwest Islanders are declining in importance in the face of increasing numbers of Asian foreign workers.

Urbanism, Architecture, and the Use of Space

Palau is highly urbanized, with 71 percent of its population residing in Koror and Airai on the south of Babelthuap. Those without land rights on Koror live on land leased from the government, generally in single- or two-story houses of wood or cement with tin roofs.

The bai gable is a common architectural feature. Village communities still have bai meeting houses, a few in traditional styles. Today's government buildings are large air-conditioned cement structures. The future capital, Melekeak, is influenced by classical architecture. The national congress, named the Olbiil era Kelulau (House of Whispers), symbolizes the process of quiet consensus rather than open public debate of issues.

Food and Economy

Food in Daily Life. Palauans enjoy a strong domestic economy based on the dual importance of protein (odoim ) provided by men and starch (ongraol ) foods produced by women. Each clan has certain recognized food taboos, and there are special foods for titled individuals and for pregnant and lactating women. The extended family system was organized around a series of clan exchanges of food and related valuables—at the time of the building of a house, taking of a title, birth, and death.

Today, imported rice is a staple food that has been integrated into the exchange cycle. A basic meal comprises a starch food, preferably soft or hard taro, tapioca, or rice, and a protein food, normally fish. Coffee and breads or cereal may instead provide a fast breakfast. While starch and protein foods still comprise the basic categories, the Palauan diet is strongly enriched by Japanese and American foods, and more recently by the various cuisines of China, the Philippines, and Korea. There are many restaurants, and local markets feature both Palauan and imported food. Beer is commonly consumed and a local brewery has been established.

Food Customs at Ceremonial Occasions. Special foods vary by state, village, and occasion. In the past a special drink made from a molasses derived from coconut sap was served to chiefs and elders; it was valued for its medicinal benefits and its religious meanings.

Nearly every weekend Palauan kin groups gather in the modern equivalents of clan exchanges for house parties and funerals, and to celebrate a woman's first child. Classmates and workmates also join in the festivities and exchanges. Rice and store-bought foods predominate in these exchanges, in addition to taro, fish, and pork.

Basic Economy. The production of root crops and fishing still provide a strong basis for the Palauan economy. Large taro swamps are worked by women in each of the villages, and men fish primarily from large outboard motorboats. Foreign workers are now employed in the farming and fishing industries and also work in household food production.

On this subsistence basis there is a strong wage economy. Of the Palauan population sixteen years of age and older, 58 percent are engaged in wage labor, with a male participation rate of 68 percent and female rate of 51 percent. About 40 percent work in the government sector.

Payments associated with the Compact of Free Association between the United States and Palau accounted for 55 percent of 1999 revenues. These payments began in 1994 and are front-loaded within the fifteen-year agreement. Major infrastructural development projects are funded by the compact and by international aid.

Land Tenure and Property. In the past, lands, titles, and wealth were held by the clans and controlled by senior female and male elders; in this matrilineal society, however, those related through a senior female had a stronger say in such areas than those related through a man. Each clan controlled taro fields, a named house plot, and other lands. There were certain village lands: those for the chiefly meetinghouses, men's clubs, and dock houses, as well as some public lands. Certain lands could also pass individually from a father to his children.

The majority of lands were alienated during colonial control; these lands were returned to Palau in the 1980s. Certain lands were retained by the new nation for public buildings such as the hospital and government edifices. Otherwise, land may be owned only by Palauan citizens.

Commercial Activities. The traditional Palauan economy was an integrated system of trade and exchange. One could earn Palauan money by performing certain tasks, such as house and canoe building, or through the preparation of certain foods. One also earned wealth for one's clan by participating in the food exchanges, with taro the standard for Palauan money. Commercial activities have been added to the traditional economy. Raw and cooked foods are prepared for sale in markets and stores. Carved storyboards are produced for sale mainly to visitors. A full range of contemporary commercial occupations have been added, mainly in retail sales, construction, and housing services.

Major Industries. The major industry at present is the construction of public infrastructure, funded by the Compact of Free Association and foreign aid. Tourism and fisheries are major export earners; agricultural production is primarily for local consumption.

Trade. Importation of capital goods associated with infrastructural development constitutes over half of all imports, with imports of foods and live animals at 13 percent. Imports are primarily commercial, totaling $65.9 million (U.S.) in 1998 (a decline from $79.6 million [U.S.] in 1996). Total exports, composed of predominantly fish, were $3 million (U.S.)in 1996. The annual fish catch fluctuates between 500,000 and 780,000 pounds (186,500 and 291,000 kilograms).

Tourism is the country's fastest growing industry, with foreign visitors increasing nearly threefold from 23,398 in 1990 to 54,745 in 1999. It is estimated that tourism contributed $65 million (U.S.) to the economy in 1995.

Division of Labor. Except for certain highly specialized tasks such as master builder, master fisher, or master farmer, men and women of all ages traditionally performed basic productive tasks, moving into management positions in the clan and village as they aged. The main division of labor at this time is by nationality, with Palauans and Southwest Islanders holding the primary positions in the governmental sector—in management and the professions—with increased participation by foreigners in private sector positions. Filipino and Chinese workers are primarily engaged in production and service occupations.

Social Stratification

Class and Castes. In the past, members of the highest ranking clans of the village were also the wealthiest, controlling state and village as well as clan monies and resources. Leaders were responsible for caring for their descendants and dependents.

The chiefly system is declining as new systems of stratification based on educational attainment and wealth develop in concert with increased participation in the world economy. Foreigners generally fit into the stratification system according to the level and status of their wage-paying job.

Symbols of Social Stratification. In the past there were few symbols of social stratification, other than women wearing Palauan money pieces around their necks, chiefly men wearing a dugong (sea cow) vertebrae bracelet or adze. Today fine clothing, houses, fast speedboats, and four-wheel-drive cars are signals of personal achievement.

Political Life

Government. The Palau national constitution was ratified in 1981. It is modeled on the United States constitution with a popularly elected president and vice president, two-house National Congress, and a judiciary. There are sixteen states based on historical village-states, each with a governor and state constitution.

Leadership and Political Officials. The president and vice president are the highest recognized elected officials. There are no political parties. The Ibedul of Koror and the Reklai of Melekeok continue to be recognized as paramount chiefs of Palau. The states are comprised of a number of villages, each of which has its own male and female chiefly councils. A council of chiefs from each state advises the national government. At the state level both elected governors and traditional leaders are recognized. The level of integration of the elected and traditional leadership varies by state.

Social Problems and Control. There is a national police and judiciary. Palau is experiencing many of the social problems of societies undergoing rapid transformation. High consumption of alcohol contributes to accidents and assaults especially involving young men. Marijuana is grown and sold in the islands, and imported drugs such as "ice" (cocaine) are a problem among the young. The paramount chiefs are working with government officials on youth programs and programs that aim to control alcohol and drug use.

Military Activity. Palau does not have a national military, although the young men's clubs of the village-states are still active; in the civil unrest of the 1980s these clubs were often called in to establish and maintain order. Some Palauans do volunteer for service in the various branches of the U.S. military.

Social Welfare and Change Programs

The constitution mandates a strong program of health and educational support. Education is free and mandatory through high school (grade twelve), with support services for those who do not graduate. Private religious elementary and high schools (including Catholic, Protestant, Seventh Day Adventist, and Palauan Modekngei) are supported by school fees as well as government contributions. Medical services are provided at low cost through the Belau National Hospital and clinics, and there are several private medical clinics. There is a national social security system for those who have contributed through taxes upon their wages, and there are both government and private retirement programs.

Nongovernmental Organizations and Other Associations

Semigovernmental nonprofit organizations include a community action agency, head start programs, and the Belau National Museum. Environmental concerns are strongly represented by the Palau Conservation Society, and local offices of the Nature Conservancy.

Gender Roles and Statuses

Division of Labor by Gender. In the past there was a strongly gendered division of labor in daily work tasks, with men in charge of fishing and the construction of houses and community buildings, and women in charge of farming and shellfish collection. Today both men and women are active in wage labor, and gender is of little importance except in national political offices, which are rarely held by women. There are women physicians, lawyers, and business managers, and the first Palauan woman serves on the Palau Supreme Court.

The Relative Status of Women and Men. Palauan society recognizes complementary roles for men and women. The traditional governing village council was male, with a female chiefly counterpart council. Senior women were integrally involved in leadership: they selected (and could remove) the male titleholders. Senior women still have strong voices in clan decisions on property and wealth controlled by the matrilines, because money from exchanges enters the clan through the woman. Changes in legal inheritance, however, are eroding women's power.

Marriage, Family, and Kinship

Marriage. In the past marriages were arranged, with intermarriage among members of the high clans, but at present, individuals may select their own partners. Within the clan marriage is not permitted to relatives reckoned through either the father or mother to four generations. Marriage may be formalized through the court, church, and/or traditional ceremonies involving the exchange of prescribed foods and wealth between the clans. Divorce is common, especially among younger couples with few children, and may be initiated by either husband or wife. In the past most adults would marry; today, there are increasing numbers of single or widowed individuals.

Domestic Unit. The basic unit is the telungalek —people descended from one woman. In the past households were comprised of three- or four-generation extended families. Today, there are increasing numbers of nuclear family households, particularly among the young.

Inheritance. Lands, titles, and wealth traditionally passed through the matriline, with decisions made by senior female and male elders. Today, social security payments and intestate estates pass to the wife and children of the deceased, a major transformation of inheritance practices.

Kin Groups. Beyond the telungalek are recognized lineages and clans that may extend beyond the village or state. Certain clans are associated by past histories.

Socialization

Infant care. At the time a woman's first child is born there are special ceremonies: her female elders gather, organize a series of hot baths, and present the young woman to the community in a public ceremony. During this time the infant is cared for primarily by female relatives, who bring the child to the mother for nursing. Care of infants is dispersed among family members, and it is common for children to be adopted by their grandparents. Men are active in caring for their young children, especially boys.

Child Rearing and Education. In the past, children learned through observation and working alongside adults. Today there is a formal education system beginning generally with head start or kindergarden classes, followed by elementary and secondary schools.

Higher Education. Secondary education is universal, with most Palauans bilingual in Palauan and English. There is a two-year Palau Community College which trains students from throughout the region and also feeds into four-year systems predominantly in Guam and the United States. Palauans enjoy high standards of education and literacy.

Etiquette

Respect toward elders and leaders is still pronounced. In particular the head is considered sacred and should not be touched.

Religion

Religious Beliefs. Christianity has been established in Palau for the past century, with Catholic (44 percent) and Protestant (29 percent) churches predominating. There is also a syncretic Palauan religion, Modekngei, which in 1995 accounted for 11 percent of the people.

Palauans still recognize Palauan gods and their totemic embodiments, refraining from eating clan totems. Christian beliefs and indigenous practices often coexist.

Religious Practitioners. Ordained priests, pastors, and Modekngei leaders are highly respected leaders of religious ceremonies, and there is strong lay and community involvement in the churches.

Rituals and Holy Places. Major Christian rituals and holy places are recognized, in addition to indigenous village-based shrines.

Death and the Afterlife. Funerals remain one of the most important of all Palauan rituals. As in the past this is the occasion for a major gathering of the lineages and clans, organized primarily by the female elders. Transfers of food and wealth are made to settle the affairs of the deceased and for a deceased man, the obligations to his wife and children, who return to the woman's natal house. Although general graveyards were established in the nineteenth century by colonial administrations, it is still common for an individual to be buried in the stone platform of the house or lineage.

Medicine and Health Care

Local Palauan medicines of leaves and herbs and Palauan medicinal and massage practitioners are still valued, although Palau has also fully incorporated Western medicine. The Belau National Hospital provides a high standard of services, relying in some cases on medical referrals to the Philippines and the United States. There are male and female trained physicians and surgeons, as well as nurses. There is an active dental service and village-based public health services.

Secular Celebrations

Palau celebrates a range of national holidays including Constitution Day (9 July) and Independence Day, many American holidays, as well as an extended Christmas/New Year's period.

The Arts and Humanities

Support for the Arts. The Belau National Museum, which opened in 1955, was begun privately with strong local support. The government of Palau is considering funding a new national museum as part of the capital relocation project. Palau has twice sent delegations to the Pacific Festival of Arts and will host the 2004 festival.

Literature. Poetry is the most developed of Palauan literary arts (in Palauan and in English), with several well-known poets; little is available, however, in published form.

Graphic Arts. The graphic arts are highly developed in Palau. In the past the village meetinghouse was the center of both visual and performance arts. The end gables (bai) of these houses and the interior beams were decorated with low-relief painted carvings, depicting histories of the village and its relationships with other villages. Most of the older houses (depicting sailing ships and planes as well as Palauan scenes) were destroyed during World War II or by typhoons, and the few extant and newly constructed gables today depict pre-European Palauan styles.

Carved wooden storyboards, derived from the beam carvings, are a highly developed art form, primarily for sale to foreigners. Carvers of storyboards, shell jewelry makers, and weavers may earn considerable income. Watercolors of traditional village scenes by the late Charlie Gibbons are highly prized. Palauan artists also work in oils and linocuts.

Performance Arts. Dancing is a highly developed art form. Traditional dances are performed by village groups. The women's dances are stately and performed by two lines of women, while the men's line dances often include war stances and stick dances. Oratory is highly developed, with senior elders performing historical chants and pieces from a number of musical genres. In village meetings there are also informal theatrical skits and clowning in informal dancing. Contemporary Palauan music is composed and performed in nightclubs and on public occasions, with local diskettes and CDs offered for sale.

The State of the Physical and Social Sciences

Palau has long been a site of research in marine biology, building upon the scientific skills of Palauan master fishermen. Scientists at the Micronesian Mariculture Demonstration Center were the first to successfully spawn giant clams in a laboratory environment, and to develop programs to build stocks of endangered hawksbill turtles. The Palau International Coral Reef Center for scientific research, coral reef management, and educational programs, funded by Japan, is due to open in 2001. A private Coral Reef Research Foundation studies the biochemical properties of marine invertebrates, especially sponges, in cancer research.

The Palau Ministry of Community and Cultural Affairs—which includes the Palau Historic Preservation Office, Belau National Museum, and Ministry of Education—operates aggressive programs in cultural conservation, counteracting strong American influences in education. In conjunction with the construction of the Babelthuap road, major archaeological and oral history projects are under way.

Bibliography

Nero, K. L. "The Breadfruit Tree Story: Mythological Transformations in Palauan Politics." Pacific Studies 15 (4): 199–209, 1992.

—— and N. Thomas. An Account of a Voyage to Pelew, 2001.

Parmentier, R. J. The Sacred Remains: Myth, History, and Polity in Belau, 1987.

Ramarui, D. The Palauan Arts, 1980.

Republic of Palau. Office of Planning and Statistics. Statistical Yearbook, 1999, 1999.

Smith, D. R. Palauan Social Structure, 1983.

Yamaguti, O. The Music of Palau: An Ethnomusicological Study of the Classical Tradition, 1967.

Zobel, E. The Position of Chamorro and Palauan in the Austronesian Family Tree: Evidence from Verb Morphology and Morphsyntax. Paper presented at the Eighth International Conference on Austronesian Linguistics, Taipei, December 1997.

—Karen L. Nero

Palau

PROFILE
GEOGRAPHY AND PEOPLE
HISTORY
GOVERNMENT
POLITICAL CONDITIONS
ECONOMY
FOREIGN RELATIONS
TRAVEL

Compiled from the December 2007 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name:

Republic of Palau

PROFILE

Geography

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 islands.

Climate: Tropical.

People

Nationality: Noun and adjective—Palauan.

Population: Approximately 20,000 (non-Palauan population, approx. 5,500). Age structure—less than 15 years old, 5,150; 16-64 years old, 13,600; more than 65 years old, 1,130.

Population growth rate: 1.3%.

Ethnic groups: Palauans are Micronesian with Malayan and Melanesian elements.

Religions: Roman Catholic, Protestant, Modekngei (an indigenous Palauan religion).

Languages: English (official in all 16 states), Palauan.

Education: Literacy—92%.

Health: Life expectancy—male 68 yrs.; female 76 yrs. Infant mortality rate—16.2/1,000.

Work force: Public sector—56%; private sector—44%.

Government

Type: Constitutional republic in free association with United States. Independence (from U.S.-administered UN trusteeship) October 1, 1994.

Constitution: January 1, 1981.

Government 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.

Economy

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.

GEOGRAPHY AND PEOPLE

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.

HISTORY

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.

GOVERNMENT

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 now run as a team. 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 and are limited to three consecutive 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, Jr., 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 House.

Principal Government Officials

Last Updated: 2/1/2008

President: Tommy REMENGESAU, Jr.

Vice President: Elias Camsek CHIN

Min. of Administration & Finance: Elbuchel SADANG

Min. of Commerce & Trade: Otoichi BESEBES

Min. of Community & Cultural Affairs: Alexander R. MEREP

Min. of Education: Mario KATOSANG

Min. of Health: Victor Minoru YANO

Min. of Justice: Elias Camsek CHIN

Min. of Resources & Development: Fritz KOSHIBA

Min. of State: Temmy SHMULL

Ambassador to the US: Hersey KYOTA

Permanent Representative to the UN, New York: 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).

POLITICAL CONDITIONS

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 “off-shore” financial center was passed by the Senate in 1998. In 2001 Palau passed its first bank regulation and anti-money laundering laws.

ECONOMY

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 82,000 in 2006, a 2% increase from 2005. Continental Airlines and Far Eastern Transport (FAT), have direct flights to Palau from Guam, Taiwan, and the Philippines. Japan Airlines runs chartered flights from Tokyo; Korean Airlines does the same from Seoul on a seasonal basis. In 2006 tourist spending in Palau was $62 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 2007 was approximately $175 million.

FOREIGN RELATIONS

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 component of the Trust Territory of the Pacific Islands to gain its independence. Under the Compact, the U.S. remains responsible for Palau's defense for 50 years.

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 admit-

ted to the United Nations on December 15, 1994, and has since joined a number of other international organizations.

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

KOROR (E) P.O. Box 6028, Koror, PW 96940, (680)488-2920/2990, Fax (680)488-2911, INMARSAT Tel 383/ 32623/24, Workweek: 07:30-11:30 12:30-4:30.

TRAVEL

Consular Information Sheet

December 27, 2007

Country Description: The Republic of Palau is a constitutional democracy in free association with the United States. Palau is an archipelago consisting of several hundred volcanic and limestone islands and coral atolls, few of which are inhabited, and is politically divided into 16 states. Palau's developing economy depends on tourism, marine resources and a small agricultural sector. There are two kinds of public transportation available, taxi and Airai bus service. Palau International Airport is located on Babeldaob Island, near Koror Island. Direct commercial air service exists from Manila, Taipei and Guam to Palau.

Entry Requirements: Citizens and nationals of the United States of America, with the exception to United States military personnel must have a valid passport or other travel document for entry. United States military personnel shall have in their possession official orders or documents certifying the status of the individual or group. Such orders or documents shall be shown on request to the appropriate authorities of the Government concerned. For the purpose of their identification while in Palau, United States military dependents ten years of age or older shall have in their possession a personal identification card authorized by the Government of the United States which shall show the name, date of birth, status, and photograph of the bearer. Such card shall be shown on request to the appropriate authorities of the Government concerned. A passport shall not be considered valid if it expires in less than six months from date of entry. A visa is not required for U.S. citizens visiting Palau for one year or less, provided the visitor otherwise complies with applicable regulations, for example, on employment. For more information about entry requirements of Palau, travelers may consult with the Embassy of Palau, 1700 Pennsylvania Avenue NW, Suite 400, Washington, DC 20036, (202) 452-6814. Visit the Embassy of Palau's web site at http://www.palauembassy.com/for the most current information.

Safety and Security: For the latest security information, Americans traveling abroad should regularly monitor the Department's web site, where the current Worldwide Caution Travel Alert, Middle East and North Africa Travel Alert, Travel Warnings and other Travel Alerts can be found. Up-to-date information on security can also be obtained by calling 1-888-407-4747 toll free in the U.S., or, for callers outside the U.S. and Canada, a regular toll line at 1-202-501-4444.

Crime: Although, the crime rate in Palau is relatively low, foreign residents can be the target of petty and sometimes violent crimes, as well as other random acts against individuals and property. Therefore, visitors should not be complacent regarding personal safety or the protection of valuables.

Information for Victims of Crime: The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, assist you to find appropriate medical care, to contact family members or friends and explain how funds could be transferred. Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney, if needed.

Medical Facilities and Health Information: Health facilities in Palau are adequate for routine medical care, but limited in availability and quality. Doctors and hospitals often expect immediate cash payment for health services. Serious medical conditions requiring hospitalization or evacuation to the United States, or elsewhere, may cost thousands of dollars.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877-FYI-TRIP (1-877394-8747); or via the CDC's web site at http://wwwn.cdc.gov/travel. For information about outbreaks of infectious diseases abroad consult the World Health Organization's (WHO) web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith/en.

Medical Insurance: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning Palau is provided for general reference only, and may not be totally accurate in a particular location or circumstance.

Palau accepts a driver's license issued by a U.S. state or military authority. Roads in Koror, where the vast majority of the population lives, are in fair condition, but lack sidewalks and have little or no shoulder. Roads on the island of Babeldaob are under construction, with completion scheduled for sometime in the near future. The national speed limit is 25 miles per hour, but this is now routinely ignored on the completed sections of the new Babeldaob road. Traffic moves more slowly in congested areas. Passing slow-moving vehicles is prohibited.

Aviation Safety Oversight: As there is no direct commercial air service to the United States by carriers registered in Palau, the U.S. Federal Aviation Administration (FAA) has not assessed Palau's Civil Aviation Authority for compliance with International Civil Aviation Organization (ICAO) aviation safety standards. For more information, travelers may visit the FAA's web site at http://www.faa.gov.

Special Circumstances: The official currency of Palau is the U.S. dollar. Major credit cards, including Visa, Mastercard, and American Express, are accepted in most locations catering to tourists. There are several ATMs in Koror, located at branches of U.S. banks. Koror State, where most tourist facilities are located, enforces a curfew between 2:30 a.m. and 5:00 a.m. Monday to Thursday, and between 4:00 a.m. and 6:00 a.m. Friday to Sunday and on national holidays. Firearms of any kind are strictly prohibited in Palau. The penalty for possession of a firearm or ammunition is up to fifteen years imprisonment. Palau customs authorities may enforce strict regulations concerning temporary importation into or export from Palau of certain items. It is advisable to contact the Embassy of Palau in Washington, D.C., for specific information regarding customs requirements.

General information regarding disaster preparedness is available via the Bureau of Consular Affairs' website, and from the U.S. Federal Emergency Management Agency (FEMA) home page at http://www.fema.gov.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than those in the United States for similar offenses.

Persons violating Palauan laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession of, use of, or trafficking in illegal drugs in Palau are strict, and convicted traffickers face a mandatory twenty-five year jail sentence and USD 50,000 fine. Engaging in sexual conduct with children or using or disseminating child pornography in a foreign country is a crime, prosecutable in the United States.

Children's Issues: For information on international adoption of children and international parental child abduction, see the Office of Children's Issues website at http://travel.state.gov/family.

Registration and Embassy Locations: Americans living in or visiting Palau are encouraged to register at the Consular Section of the U.S. Embassy in Koror or through the State Department's travel registration web site, and to obtain updated information on travel and security within Palau. Americans without Internet access may register directly with the nearest U.S. Embassy or Consulate. By registering, American citizens make it easier for the Embassy or Consulate to contact them in case of emergency. The U.S. Embassy is located in Koror, the capital city, in an area known as Nger-mid Hamlet. There is no street address. The mailing address is: PO Box 6028, Koror, Palau 96940. The telephone number is (680) 488-2920/ 2990. The fax number is (680) 488-2911. The Embassy does not issue passports; that function is performed by the Honolulu Passport Agency.

International Adoption

July 2007

The information in this section has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services. For more information, please read the International Adoption section of this book and review current reports online at http://travel.state.gov/family.

Disclaimer: The information in this flyer relating to the legal requirements of specific foreign countries is based on public sources and current understanding. Questions involving foreign and U.S. immigration laws and legal interpretation should be addressed respectively to qualified foreign or U.S. legal counsel.

Important Note: Although the “Compact of Free Association” between Palau and the United States permits Palauan citizens to travel to the United States for some temporary purposes without a U.S. visa, this provision is NOT applicable to adopted children who will reside per-manently with American families in the United States.

Prospective adoptive parents of Palauan children must go through the appropriate Palauan adoption procedures as well as the relevant U.S. immigration procedures related to adopted foreign orphans. Adopted Palauan children who enter the United States without a visa will later have difficulties adjusting their U.S. immigration status and, eventually, acquiring U.S. citizenship.

Patterns of Immigration: No Palauan children have received U.S. orphan immigrant visas in the past five fiscal years (2002-2006).

Adoption Authority: There is no specifically designated Palauan authority or agency overseeing adoption procedures. Americans considering adoption from Palau should begin by contacting a Palauan attorney to assist them in the judicial process.

Eligibility Requirements for Adoptive Parents: Under Palauan law, both married couples and single individuals may adopt Palauan children if the Palauan authorities deem the prospective adoptive parents “suitable.” Foreign citizens who are married to Palauan citizens may also adopt their Palauan stepchildren.

Residency Requirements: The Palauan government has no specific requirement or policy as regards the residency of foreign prospective adoptive parents.

Time Frame: The U.S. Embassy in Koror, Palau has indicated that Palauan adoptions generally take from one to two months to complete.

Adoption Agencies and Attorneys: Prospective adoptive parents are advised to fully research any adoption agency or facilitator they plan to use for adoption services.

Adoption Fees: Prospective adoptive parents should expect to pay a court filing fee in Palau of fifty U.S. dollars ($50). If they hire a local attorney to assist them in the adoption process, they would of course also have to pay the attorney. Attorneys' fees vary.

Adoption Procedures: Palauan adoption procedures are very straightforward: the prospective adoptive parents petition the court for adoption, and if the court grants the adoption, the child's name can be changed and the child may leave the country after receiving a U.S. immigrant visa.

Despite the apparent simplicity of this process, however, the U.S. Embassy in Koror strongly recommends that prospective adoptive parents residing outside of Palau hire a Palauan lawyer who will be easily able to investigate and provide to the court any/all relevant information on their background, living environment and financial status.

Required Documents: According to the Palauan authorities, the prospective adoptive parents must present the child's original Palauan birth certificate as well as a letter of consent from the child's birth parents.

Embassy of Palau
1700 Pennsylvania Avenue, N.W.,
Suite 400
Washington, DC 20036
Telephone: (202) 452-6814
http://www.palauembassy.com

U.S. Immigration Requirements: Prospective adoptive parents are strongly encouraged to consult USCIS publication M-249, The Immigration of Adopted and Prospective Adoptive Children, as well as the Department of State publication, International Adoptions. Please see the International Adoption section of this book for more details and review current reports online at http://travel.state.gov/family.

U.S. Embassy: The U.S. Embassy in Palau is located in Koror, the capital city, in an area known as Ngermid Hamlet. There is no street address. The mailing address is: P.O. Box 6028, Koror, Palau 96940. The telephone number is (680) 488-2920/ 2990. The fax number is (680) 488-2911.

Additional Information: Specific questions about adoption in Palau may be addressed to the U.S. Embassy in Koror. Questions about the immigrant visa process for Palauan orphans should be directed to the U.S. Embassy in Manila. General questions regarding intercountry adoption may be addressed to the Office of Children's Issues, U.S. Department of State, CA/OCS/CI, SA-29, 4th Floor, 2201 C Street, NW, Washington, D.C. 20520-4818, toll-free Tel: 1-888-407-4747.

Palau

1 Location and Size

2 Topography

3 Climate

4 Plants and Animals

5 Environment

6 Population

7 Migration

8 Ethnic Groups

9 Languages

10 Religions

11 Transportation

12 History

13 Government

14 Political Parties

15 Judicial System

16 Armed Forces

17 Economy

18 Income

19 Industry

20 Labor

21 Agriculture

22 Domesticated Animals

23 Fishing

24 Forestry

25 Mining

26 Foreign Trade

27 Energy and Power

28 Social Development

29 Health

30 Housing

31 Education

32 Media

33 Tourism and Recreation

34 Famous Palauans

35 Bibliography

Republic of Palau

Belau

CAPITAL: Koror, Koror Island

FLAG: The flag, adopted 1 January 1981, is light blue, with a yellow disc set slightly off center toward the hoist.

ANTHEM: Belau er Kid.

MONETARY UNIT: The U.S. dollar is the official medium of exchange.

WEIGHTS AND MEASURES: British units are used, as modified by U.S. usage.

HOLIDAYS: New Year’s Day, 1 January; Youth Day, 15 March; Senior Citizens Day, 5 May; Constitution Day, 9 July; Labor Day, 1st Monday in September; United Nations Day, 24 October; Thanksgiving Day, 4th Thursday in November; Christmas, 25 December.

TIME: 8 pm = noon GMT.

1 Location and Size

Palau is located in the western extremities of the Pacific Ocean. It consists of the Palau group of Pacific islands, in the western Caroline Islands, and four remote islands to the southwest. There are more than 200 islands, with a total land area of 458 square kilometers (177 square miles). The total coastline is 1,519 kilometers (944 miles). The capital city of Koror is located on Koror Island.

2 Topography

The islands include four types of land formation: volcanic, high limestone, low platform, and coral atoll. The Palau barrier reef encircles the Palau group, except Angaur Island and the Kayangel atoll. The reef encloses a lagoon (1,267 square kilometers/489 square miles) on the western side, containing a large number of small, elevated, limestone islets known as the Rock Islands. Babelthuap and Koror, contain elevated limestone and volcanic formations. The highest point is Mount Ngerchelchauus of Babelthuap, with an elevation of 242 meters (794 feet). The lowest point is at sea level (Pacific Ocean). Arakabesan, Malakal, and several small northern islands are volcanic formations. Peleliu and Angaur are low-platform reef islands.

3 Climate

The annual mean temperature is 26°c (80°f). There is high precipitation throughout the

GEOGRAPHICAL PROFILE

Geographic Features

Area: 458 sq km (177 sq mi)

Size ranking: 180 of 194

Highest elevation: 242 meters (794 feet) at Mount Ngerchelchauus

Lowest elevation: Sea level at the Pacific Ocean

Land Use*

Arable land: 9%

Permanent crops: 4%

Other: 87%

Weather**

Average annual precipitation: 376 centimeters (148.4 inches)

Average temperature in January: 26°c (80°f)

Average temperature in July: 26°c (80°f)

* Arable Land: Land used for temporary crops, like meadows for mowing or pasture, gardens, and greenhouses.

Permanent crops: Land cultivated with crops that occupy its use for long periods, such as cocoa, coffee, rubber, fruit and nut orchards, and vineyards.

Other: Any land not specified, including built-on areas, roads, and barren land.

** The measurements for precipitation and average temperatures were taken at weather stations closest to the country’s largest city.

Precipitation and average temperature can vary significantly within a country, due to factors such as latitude, altitude, coastal proximity, and wind patterns.

year—up to 380 centimeters (150 inches)—and a relatively high humidity of 82%. Typhoons and tropical storms occur from June through November.

4 Plants and Animals

Plant life, abundant throughout most of the islands, includes mangrove swamps, savanna land, and rain forest in upland areas. Food crops, such as taros, cassavas (a type of edible root), sweet potatoes, coconuts, bananas, papayas, and citrus fruits, are mostly wild. Marine life is also abundant, with more than 1,500 species of tropical fish and 700 species of coral and anemones in the lagoons and reefs. Other animal life includes the sea turtle, which is consumed as a delicacy, and the dugong, or sea cow, a marine mammal that is close to extinction.

5 Environment

Major concerns include illegal fishing with the use of dynamite, inadequate facilities for disposal of solid waste, and extensive sand and coral dredging in the Palau Lagoon. Like the other Pacific island nations, a major environmental problem is global warming and the related rising of sea level. Palau also has a problem with inadequate water supply and limited agricultural areas to support the size of the population. The nation is also vulnerable to earthquakes, volcanic activity, and tropical storms. Sewage treatment is a problem, along with the handling of toxic waste from fertilizers and biocides (chemical disinfectants that are nonagricultural).

In 2006, three types of mammals, six species of fish, and three species of plants were considered threatened. Threatened species included the hawksbill turtle, tiger shark, coconut crab, and green turtle. The Palau flying fox has become extinct.

6 Population

The 2005 estimated population was 21,000, with an overall population density of 43 people per square kilometer (111 per square mile) in 2005. During the 1990s, the population grew each year by an average of 2.1%. It was estimated that nearly three-quarters of the population lived in urban areas in 2001. The capital city, Koror, had a 2005 population of 14,000.

7 Migration

In 1999, only 70% of the population were born in Palau. Most of the foreign-born residents were from the Philippines, China, and Bangladesh. There were also significant numbers from the Federated States of Micronesia, the United States, and Japan. Most were workers, whose numbers have been rapidly increasing. In 1999, foreigners made up 46% of the total workforce. The vast majority of these foreigners lived in Koror. About one-fifth of all Palauans live abroad, many on Guam. In 2005, the estimated net migration rate was 2.4 migrants per 1,000 population.

8 Ethnic Groups

Palauans are a mixture of Polynesian, Malayan, and Melanesian races. They account for about 70% of the population. At last estimate, the largest non-Palauan ethnic groups included Filipinos (15.3%), other Micronesians (1.1%), Chinese (4.9%), and people of European descent (1.9%).

9 Languages

English is the official language in all of Palau’s 16 states. However, Palauan, a Malayo-Polynesian

language related to Indonesian, is the most commonly spoken language. Palauan is used, in addition to English, as an official language in 13 states. Sonsorolese is the official language in the state of Sonsoral; Anguar and Japanese in the state of Anguar; and Tobi in the state of Tobi.

10 Religions

Most Palauans are Christians. The Roman Catholic Church holds the largest number of members at about 65% of the population. A significant percentage of the population observes

BIOGRAPHICAL PROFILE

Name: Tommy Remengesau Jr.

Position: President of a republic

Took Office: 1 January 2001, reelected November 2004

Birthdate: 28 February 1956

Education: Received his college education in the United States.

Spouse: Debbie M. Remengesau

Of interest: In 1984 he was the youngest senator ever elected to the National Congress. By 1992 he was the youngest vice-president of Palau.

the Modekngei religion, which is indigenous to Palau and combines both pagan and Christian beliefs and customs. There are a small number of Bangladeshi Muslims.

11 Transportation

The nation’s roads at last estimate totaled 61 kilometers (37.9 miles), of which 36 kilometers (22 miles) were paved. Palau’s deepwater harbor at Koror offers international port facilities. As of 2004, there were three airports, one with a paved runway. Air Micronesia/Continental, Air Nauru, and South Pacific Island Airways provide international service.

12 History

Until the end of the 19th century, the Caroline Islands were under Spanish colonial administration. In 1899 Spain sold the islands to Germany. At the outbreak of World War I in 1914, the islands were taken by the Japanese, who were given control of them in 1920, and Koror was developed as a Japanese administrative center in the north Pacific.

In 1947, Palau became part of the United Nations Trust Territory of the Pacific Islands, which was administered by the United States. Palau became a self-governing republic in 1981. Since 1982 the republic has been negotiating a Compact of Free Association (CFA) with the United States. Negotiations were stalled over American intentions to use the islands as a military site. On 1 October 1994, Palau became an independent nation in free association with the United States. Under the CFA, the United States is responsible for Palau’s defense. Aid from the United States was scheduled to be completely phased out by 2009.

In July and October 1999, Palau hosted the First Micronesian Traditional Leaders’ Conference and the Thirtieth South Pacific Forum, respectively.

A new capital is under construction in eastern Babelthuap, about 20 kilometers (12.42 miles) northeast of Koror.

Tommy E. Remengesau Jr. was elected president in general elections held 7 November 2000 and reelected to a second term in 2004. Sandra Pierantozzi became the first woman vice president after the 2000 elections.

13 Government

The government is made up of executive, legislative, and judicial branches. The executive branch is headed by the president, who is elected by popular vote. The legislative branch, known as the Olbiil Era Kelulau, or national congress, is a two-chamber legislature with nine senators and sixteen delegates.

Each of Palau’s 16 states has its own executive and legislative branches, and a government headed by a governor, who is popularly elected, in most cases, for a four-year term. The members of the state legislatures are popularly elected for a four-year term, although in a few states, the term of office is limited to two years.

Yearly Growth Rate

This economic indicator tells by what percent the economy has increased or decreased when compared with the previous year.

14 Political Parties

No political parties exist in Palau.

15 Judicial System

The Supreme Court is the highest court in the land. Other courts include the National Court and the Court of Common Pleas. Court appointments are for life. The constitution provides for an independent judiciary and the government respects this provision in practice.

16 Armed Forces

The United States is responsible for defense, although it does not keep troops within Palau’s borders.

17 Economy

Large gaps exist between what money the government takes in (revenues) and expenditures (what

Components of the Economy

This pie chart shows how much of the country’s economy is devoted to agriculture (including forestry, hunting, and fishing), industry, or services.

it spends). The country also imports more than it exports. These gaps are financed largely by grant aid from the United States, which was scheduled to be phased out by 2009. Unemployment is a major problem. Tourism, however, is increasing, as Pacific air travel improves. In 2004, the economy grew by 2.0%, following a period of economic slump in 2002 and 2003.

18 Income

The gross domestic product (GDP) of Palau was estimated to be $174 million in 2005, or about $9,000 per person. The annual growth rate of GDP was estimated at 1% in 2001, but had improved to 5.4% by 2005. The average inflation rate in 2002 was 3.4%.

19 Industry

Manufacturing plays a limited role in the economy. A plant to process copra (dried coconut meat) is located in Malakal. Concrete blocks are manufactured using imported cement. There also is a small-scale sawmill industry. Other industries include the manufacturing of craft items, construction, and garment making.

20 Labor

The economically active population was 9,845 persons in 2000. In 2000, the unemployment rate was 2.3%.

There is no minimum age for employment, but children do not typically work, except to help out in small-scale family enterprises such as fishing or agriculture. Education is compulsory until age 14, and this is enforced by the government. Palau’s minimum wage in 2002 was $2.50 per hour. This generally provides for a decent standard of living for a family.

21 Agriculture

Most households outside Koror are fully or partially engaged in subsistence agriculture. Staple subsistence crops include taros, cassavas, sweet potatoes, bananas, and papayas. Commercial produce is marketed mainly in Koror, consisting mostly of copra (dried coconut) and coconut oil, vegetables, and a wide variety of tropical fruits.

22 Domesticated Animals

Livestock is limited to pigs, chickens, ducks, cattle, and goats. Pigs and chickens are raised by most households. Several small commercial egg-producing operations supply eggs to the Koror market. The Livestock Branch of the Division of Agriculture maintains breeding herds of pigs, cattle, and goats.

Selected Social Indicators

The statistics below are the most recent estimates available as of 2006. For comparison purposes, data for the United States and averages for low-income countries and high-income countries are also given. About 15% of the world’s 6.5 billion people live in high-income countries, while 37% live in low-income countries.

23 Fishing

Subsistence fishing within the reef is a major activity and dominates market production. In 2003, the total catch was 1,051 tons. Deep-sea fishing resulted in a tuna catch of 68 tons in 2003. Other marine resources include pearls, shrimp, ornamental fish (for aquariums), seaweed, and mollusks. Palau is known for having some of the best diving, snorkeling, and sport fishing areas in the world.

24 Forestry

About 76% of Palau was forested in 2000. Forestry resources consist of coastal mangrove, coconut and pandanus palms, and rain forest species in upland areas. Palau is heavily dependent on imported forestry products, including furniture and lumber for house construction. In 2004, Palau imported $1.1 million in forest products.

25 Mining

Crystalline calcite is produced from limestone caves. Commercial production of dredged coral from the Palau Lagoon is important in the country.

26 Foreign Trade

Palau’s economy sustains a large trade deficit. Imports include food, beverages, and tobacco; manufactured goods; and machinery and transportation equipment. The country’s limited range of exports includes shellfish, tuna, copra, and garments. The United States, Guam, Japan, and Singapore are Palau’s main trading partners.

27 Energy and Power

The economy is almost totally dependent on imported petroleum for energy. Electricity is supplied from one power plant, with an installed capacity of approximately 8,000 kilowatts.

28 Social Development

Social organization is based on the maternal kin group, or clan. Villages ideally consist of ten clans, with the leader of the highest-ranking clan serving as village chief.

A system of old age, disability and survivor’s pensions was first introduced in 1967. This program covers all employed persons and provides old age pensions after the age of 60.

29 Health

Hospital services are provided by the MacDonald Memorial Hospital in Koror, which has 60 beds. Medical services in Koror are also provided by the Belau Medical Clinic and the Seventh-Day Adventist Eye Clinic. In 2004, there were 109 physicians, 141 nurses, and 11 dentists per 100,000 people.

In 2005, life expectancy averaged an estimated 67 years for men and 74 years for women. Only one case of acquired immunodeficiency syndrome (AIDS) was reported in 1996.

30 Housing

About 80% of all houses have water and electricity. Most house walls are constructed from metal sheets, wood, or concrete blocks, and roofs are of corrugated material.

31 Education

Elementary education is free and compulsory for all Palauan children ages 6–14. The Palau High School in Koror, the only public high school, enrolls two-thirds of the total secondary-school enrollment. Postsecondary education is provided by the College of Micronesia’s Micronesian Occupational College in Koror.

The adult literacy rate has been estimated at 92%.

32 Media

In 2002, there were 6,700 mainline telephones and 1,000 cellular phones in use. A radio station in Koror broadcasts to listeners in the outer islands. As of 2002, there were five radio stations, one AM and four FM. Television is limited to one channel in the Koror area, provided by a local private company. Internet access is available.

There are no daily papers. Two popular periodicals are Palau Gazette (monthly, 1995 circulation 3,000), and Tia Belau (weekly, 5,000).

33 Tourism and Recreation

Palau is rich in live coral formations and tropical fish, making the country a popular destination for snorkeling and scuba diving. Many tourists visit the World War II (1939–45) battlefields, war memorials, and shrines. In 2003 Palau had 68,300 tourist arrivals.

34 Famous Palauans

Lazarus E. Salii (1937–1988) became the third president of Palau in September 1985. He committed suicide after being charged with misusing government funds.

35 Bibliography

BOOKS

Hijikata, Hisakatsu. Society and Life in Palau. Tokyo: Sasakawa Peace Foundation, 1993.

Leibowitz, Arnold H. Embattled Island: Palau’s Struggle for Independence. Westport, CT: Praeger, 1996.

Parmentier, Richard J. The Sacred Remains: Myth, History, and Polity in Belau. Chicago: University of Chicago Press, 1987.

Roff, Sue Rabbitt. Overreaching in Paradise: United States Policy in Palau Since 1945. Juneau, AK: Denali Press, 1991.

WEB SITES

Country Pages. www.state.gov/p/eap/ci/ps/. (accessed on January 15, 2007).

Government Home Page. www.palaugov.net/mainbody.html. (accessed on January 15, 2007).