The Republic of Palau consists of a tightly clustered archipelago of 340 islands with a total land area of 458 square kilometres, to the east of the Philippines. The country's resident population of about 18,000 live on only eight of the islands. The capital of Palau is Ngerulmud, located on Babeldoab, the largest island.
Palau is an independent country in a Compact of Free Association with the United States. It is a democratic republic with directly elected executive and legislative branches. Presidential elections take place every four years, at the same time as the United States' presidential election, to select the President and the Vice-President. The last election was held in November 2016. President Remengesau Jr won office at the election and was inaugurated on 19 January 2017. He is both Head of State and Head of Government. Raynold Oilouch is Palau's Vice President and Minister of Justice.
The Palau National Congress (Olbiil era Kelulau) has two houses. The Senate has nine members elected nationwide and the House of Delegates has 16 members, one each from Palau's 16 states. All of the legislators serve four year terms. Each state also elects its own governor and legislature.
The Council of Chiefs is an advisory body to the president containing the highest traditional chiefs from each of the 16 states. The Council is consulted on matters concerning traditional laws and customs.
The judicial system consists of the Supreme Court, National Court, the Court of Common Pleas, and the Land Court. The Supreme Court has trial and appellate divisions and is presided over by the Chief Justice.
Compact of Free Association with the United States
Palau's compact of free association with the United States runs for 50 years, from 1994 to 2044. Under the compact arrangements, the United States Government provided about US$700 million in assistance over the compact's first 15 years (1994 to 2009). Palau signed a new compact with the United States for US$250 million from 2010-2024, although it is still to be approved by the US Congress. The compact has funded major infrastructure projects including the construction of a road around Babeldoab. The compact also provides for some US federal programs. The compact and its subsidiary agreements commit the United States to continue to provide, at no cost to Palau, many services including air safety, weather prediction, health services and assistance in the event of natural disasters until the end of the compact in 2044. Under the compact, more than 40 US government agencies such as the Federal Aviation Administration, US Postal Service, the Small Business Administration, and FEMA operate programs or render assistance to Palau. Under the compact, Palauans enjoy favourable provisions for travelling to, and working in, the United States. The Department of the Interior is the US agency responsible for oversight and coordination of US funding assistance under the Compact of Free Association.
Australia and the Republic of Palau enjoy a close bilateral relationship supported by shared regional interests, particularly ensuring maritime and transnational security, tourism development and the protection of Palau’s pristine marine environment, a common interest in supporting economic and human development. The Australian Embassy in Pohnpei, Federated States of Micronesia is responsible for Australian affairs in Palau.
More information on development assistance to Palau.
Australia Awards delivered under the Australian aid program are an important component of the Australian Government's overseas aid program. Australia Awards Pacific Scholarships provide opportunities to study at selected education institutions in the Pacific region. Since 2007 there have been 30 Australia Awards provided to students from Palau.
For more information see the Australia Awards website.
New Colombo Plan
By the end of 2017, Palau will have hosted two mobility projects and 25 students. In 2016, ten students from the University of New South Wales, studying a variety of different disciplines, spent time in Palau identifying opportunities for social innovation to help communities design resilient, local solutions to the challenges of climate change. In late 2017, 15 biological sciences students from Flinders University will spend two weeks in Palau learning about marine tropical ecology, as well as the history, tradition and local language of Palau. This project will be taught in collaboration with the Palau International Coral Reef Centre, Fish ‘n Fins, and the Micronesian Shark Foundation, ensuring local engagement and stewardship.
The Australian Volunteers for International Development (AVID) program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations to deliver effective and sustainable development outcomes. In 2016-17 there was one AVID assignment in Palau.
See the AVID website for further information.
Direct Aid Program (DAP)
The DAP supports projects which directly contribute to the welfare and the income-generating capacity of poor or disadvantaged groups, or enhance the long-term productivity and sustainability of the physical environment.
Visit the Australian Embassy in Micronesia website for further information on DAP.
Palau has one of the Pacific Islands' higher standards of living. It has a well-established high-end tourism sector with good potential for expansion, although care is needed to maintain environmental standards. Palau has a strong services industry and an active private sector. Fisheries and small-scale agriculture are also important for local employment. Palau faces many development challenges including a small population and the high cost of service delivery due to the levels and cost of imported goods and expertise. The service sector dominates the Palauan economy, contributing more than 50 per cent of GDP and employing more than half of the work force. The government alone employs nearly 31 per cent of workers and accounts for 20 per cent of GDP.
Trade and investment
Australia’s merchandise exports to Palau in 2016 totalled $2 million (principally prepared or preserved meat; prefabricated buildings; and manufactured tobacco).
High level visits
July 2014: Deputy Prime Minister, the Hon. Warren Truss, and the Parliamentary Secretary to the Minister for Foreign Affairs, Senator the Hon. Brett Mason, attended the 45th Pacific Islands Forum.