Palau History

After liberation from Japanese occupation during World War II, Palau became part of the Trust Territory of the Pacific Islands, administered by the USA under a mandate from the United Nations in 1947. In 1986, the governments of Palau and the USA agreed the terms of a Compact of Free Association, similar to those reached with other Micronesian Trust members, which allows for virtual independence under a US defense umbrella. The Palau Compact, however, remained unsigned, because of a crucial clause forbidding the presence of any nuclear weapons on the islands, including visits by ships equipped to carry them. This was unacceptable to the USA, which therefore refused to sign the Compact until the clause was rescinded. The dispute over the Compact introduced a violent aspect into Palau’s politics – president Haruu Remeliik was assassinated in 1985; his successor, Lazarus Salii, committed suicide in August 1988. At the presidential election of November 1992, Kuniwo Nakamura won a narrow victory. A decision over the Compact could not be left much longer. The island was faced with a stark choice of accepting it or seeking full independence – a hazardous proposition for economic reasons. In October 1994, the Compact was endorsed and Palau was subsequently admitted to the UN in December 1994 and became a member of the IMF in 1997. Nakamura served a second term between 1996 and 2000, after which he was replaced by the current president, Tommy Remengesau. Economic issues have dominated the political agenda in recent years, as Palau attempts to deal with the typical problems of all Pacific islands – isolation and lack of infrastructure.

Government
Executive authority is vested in the president, who is elected for a four-year term. Legislative authority rests with the bicameral National Congress, the Olbiil era Kelulau. In 1994, Palau achieved independence under the Compact of Free Association.

Economy
Subsistence agriculture is a vital employer, with cassava, coconuts, bananas and sweet potatoes as the main crops. Fishing is valuable mainly through the sale of licenses to large foreign fleets. Industry is limited to small-scale light manufacturing, such as food-processing and boat-building.

Foreign aid, mainly from the USA, completes the country’s principal sources of revenue. Tourism has grown steadily during the last decade despite problems arising from the islands’ inaccessibility and a lack of investment, especially in basic infrastructure.

Palau is a member of the two main regional economic organizations, the South Pacific Forum and the South Pacific Commission.


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