Palau (pälou') , officially Republic of Palau, independent nation (2005 est. pop. 20,300), c.192 sq mi (497 sq km), W Pacific, in the W Caroline Islands. Belau, the native form of Palau, is sometimes used. Until 1994, Palau was administered by the United States as the last UN trust territory. It consists of about 200 islands and islets, of which Babelthuap, Oreor (the capital), Arakabesan, and Malakal are the most important. A new capital is being built on Babelthuap. Administratively, the islands are divided into 16 states. Palau has a bicameral parliament, a president, and a vice president. Subsistence farming and some commercial fishing and shellfishing are the chief economic activities.

Government

Politics of Palau takes place in a framework of a presidential representative democratic republic, whereby the President of Palau is both head of state and head of government, and of a pluriform multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the Palau National Congress. The Judiciary is independent of the executive and the legislature. In July of 2004, Palau Micronesia Air was launched with service from Palau to Yap, Guam, Micronesia, Saipan, Australia, and the Philippines. It was thought of giving Continental Micronesia a run for its money due to the low fares which it offered to its passengers, however it has ceased operations in December of the same year and has not restarted operations since.

Economy

The economy consists primarily of tourism, subsistence farming, and fishing. Tourist activity focuses on scuba diving and snorkeling in the islands' rich marine environment, including the Floating Garden Islands to the west of Koror and the Rock Islands to the south. The government is the major employer of the work force, relying heavily on financial assistance from the US. Business and tourist arrivals numbered 50,000 in the financial year 2000/2001. The population enjoys a per capita income twice that of the Philippines and much of Micronesia. Long-term prospects for the key tourist sector have been greatly bolstered by the expansion of air travel in the Pacific, the rising prosperity of leading East Asian countries, and the willingness of foreigners to finance infrastructure development.

History

Spain held the islands for about 300 years before selling them to Germany in 1899. Japan seized them in 1914 and was given a mandate over them by the League of Nations in 1920. A major Japanese naval base in World War II, Palau was seized by U.S. forces in 1944 and made part of the U.S.-administered United Nations Trust Territory of the Pacific Islands in 1947. Palau's constitution, adopted in 1980, prohibits nuclear weapons, causing a conflict with the Free Association Compact proposed by the United States in 1985–86. Palau became self-governing in 1981. The islands voted in favor of the compact in 1987, but the referendum failed to garner the 75% of the votes then required. In a new plebiscite held in 1993 the compact was approved, opening the door to closer official linkage with the United States. The following year Palau became an independent nation in free association with the United States. Tommy Remengesau, Jr., was elected president in 2000, succeeding Kuniwo Nakamura, and reelected in 2004.