The president, who serves as both head of state and head of government, is directly elected for up to two consecutive four-year terms using a two-round system, with a runoff if no candidate wins an absolute first-round majority. Surangel Whipps Jr., brother-in-law of term-limited incumbent Tommy Remengesau Jr., was elected in two rounds in November 2020, defeating outgoing vice president Raynold Oilouch. Whipps was sworn in as president in January 2021.

The bicameral National Congress consists of a 13-member Senate and a 16-member House of Delegates. All members of the National Congress are elected for four-year terms. Congressional elections were held in November 2020, concurrently with the presidential contest. Most House of Delegates incumbents won new terms, while seven senators were reelected.

Electoral administration is widely considered to be fair and impartial. A review of the Senate’s size and electoral system is undertaken every eight years by a Reapportionment Commission. During the 2016 review, the commission recommended the Senate maintain its current seat count. While the Supreme Court ruled that the body should only contain 11 seats in response to a petition, the court restored the original 13-seat count later that year.

There are no laws restricting the formation of political parties, but in practice all candidates run and compete freely as independents. Politicians tend to organize in loose political alliances, often based on clan or family relationships.

Although there are no political parties, lawmakers do organize into informal progovernment and opposition camps, and no single political force has control of the legislature. Power is transferred democratically between rival politicians.

Palau receives financial assistance from the United States under a Compact of Free Association (CoFA), but the US government does not exert improper influence over the country’s internal politics. While the political views of traditional chiefs are respected, they do not have authoritative control over the choices of voters.

Women generally have equal political rights in law and in practice. Some state-level legislative seats are reserved for male chiefs, who in turn are customarily chosen by councils of women elders. After the November 2020 polls, only one woman held a seat in each house of the National Congress.

About a third of the population consists of foreign nationals who do not have political rights in Palau. Citizenship must be inherited from at least one parent, as there are no provisions for naturalization.

In 2019, former president John Toribiong (2009–13) launched a petition seeking to end the acceptance of absentee ballots, asserting that the petition would combat the political influence wielded by the increasing number of citizens living outside the country. In December 2021, the government passed the Digital Residency Identification bill, after initially being defeated by the Senate. The law will offer virtual residency to non-Palauan citizens and the ability to have valid government identification, but it does not provide a pathway to citizenship.

Palau’s democratically elected government determines and implements policy without undue interference. Traditional chiefs formally play an advisory role regarding customary matters through the national Council of Chiefs. While they also exercise informal influence over government policy, this is widely seen as a positive check on potential mismanagement or abuse of power by elected officials.

The CoFA, in effect since Palau became independent in 1994, ensures self-government but also provides for close military and economic relations with the United States, including responsibility for Palau’s defense. A scheduled 15-year review of the compact resulted in a 2010 bilateral agreement on development aid and other benefits to last until the next review in 2024. In late 2017, former US president Donald Trump signed a defense bill that included implementing provisions for the compact review agreement. Meetings over the CoFA’s extension began in 2019 and continued in 2020. In August 2020, then–US defense secretary Mark Esper became the first of his office to visit Palau. Then-president Remengesau invited the United States to establish a military facility in the country during that visit.

Palau maintains diplomatic recognition of Taiwan, amidst several other Pacific nations shifting their recognition to China. President Whipps used his inaugural address in January 2021 to reiterate his desire to support Taiwan and push back against Chinese government influence.

In February 2021, President Whipps announced Palau intended to leave the PIF. Members of the PIF had been divided over the forum’s future leadership, which eventually was given to a Cook Islands politician. Whipps and others claimed the leadership should have been passed to a candidate from Micronesia.

High-ranking public officials have faced corruption charges in recent years, and several have been convicted. The government and lawmakers have deliberated on strategies to deal with corruption more effectively. The Office of the Ombudsman currently operates as part of the president’s office under an executive order.

In 2018, the European Union (EU) said that Palau authorities pledged to implement certain reforms and removed the country from its list of tax havens. Palau was returned to the EU’s tax-haven list in February 2020, with the bloc saying Palau had not fulfilled its pledge. It remained on the list in 2021.

A 2014 Open Government Act provides for public access to official documents and hearings, and government officials are obliged to submit annual financial disclosures that are available to the public. However, authorities have sometimes resisted disclosing requested information, particularly at the subnational level.

Freedom of the press is respected. There are several independent news outlets, including newspapers and broadcasters, but they often struggle financially. Regional and international news services are also available. Internet access has been hampered by high costs and lack of connectivity outside the main islands.

Constitutional guarantees of religious freedom are upheld in practice. Although religious organizations are required to register as nonprofit organizations, the process is not onerous or restrictive. Foreign missionaries are also required to obtain a permit.

There have been no reports of restrictions on academic freedom.

There are no constraints on political discussion, and the government does not monitor personal communications.

Freedom of assembly is protected by the constitution and respected in practice.

Nongovernmental organizations operate freely, with various groups focusing on issues such as environmental conservation, youth development, public health, and women’s rights.

Workers can freely organize unions and bargain collectively, but there are no laws specifically regulating trade unions or strikes or prohibiting antiunion discrimination. Union membership and activity are low in practice, as the private sector consists mostly of small, family-run businesses.

The judiciary has a reputation for independence and integrity. The president appoints judges to lifelong terms based on recommendations from an independent Judicial Nominating Commission, which is made up of three presidential appointees, three jurists named by their peers, and the chief justice.

The authorities generally uphold legal safeguards against arbitrary arrest and detention, and trial proceedings ensure due process.

Law enforcement agencies maintain internal order, and instances of abuse or impunity are rare, though overcrowding in the country’s limited detention facilities remains a problem. In 2019, the vehicle of Narcotics Enforcement Agency chief Ismael Aguon was set ablaze. Aguon believed the action could be interpreted as retaliation for a series of upcoming drug trials.

The legal system prohibits discrimination based on gender, race, place of origin, and other categories. Sexual orientation and gender identity are not protected categories, but Palau repealed legal provisions that criminalized consensual same-sex sexual activity in 2014. Then president Remengesau publicly called the country’s same-sex marriage ban discriminatory in 2019, though the ban remained in place in 2021. Women generally enjoy equal treatment in practice.

Foreign nationals sometimes face discrimination regarding employment, education, and other matters. Growing tourism from China in particular has created jobs but also raised the cost of living, and some locals regard the presence of Chinese businesses and residents with hostility. However, the number of Chinese tourists has fallen in recent years due to Chinese state policy.

There are usually no significant restrictions on freedom of movement, including internal and international travel. However, Palau restricted inbound travel in response to the COVID-19 pandemic in March 2020 and imposed mandatory quarantine periods for travelers that April. Tourists were effectively unable to visit Palau due to pandemic-related measures. These measures were progressively lifted throughout 2021 as the number of individuals vaccinated against the virus increased.

The legal framework generally supports property rights and private business activity, and the government has undertaken reforms to improve conditions in recent years, though some bureaucratic obstacles and corruption-related impediments persist.

Noncitizens cannot purchase land, which is inherited matrilineally among Palauans.

Personal social freedoms are largely respected, and women have equal rights regarding marriage, child custody, and other personal status matters. Rape, including spousal rape, and domestic violence are criminal offenses, though instances of domestic abuse are often not reported to police.

Residents generally have access to economic opportunity, and the law provides some protections against exploitative labor practices. However, enforcement of such safeguards is inadequate, and foreign workers remain vulnerable to sexual exploitation, forced labor, or otherwise abusive working conditions in sectors including domestic service and agriculture. The minimum wage law does not apply to foreign workers. Some officials have been accused of complicity in human trafficking.

The 2021 US State Department’s Trafficking in Persons Report noted that the government made efforts to combat human trafficking during its reporting period, including by charging a government official with labor trafficking and conducting research into trafficking with an international organization. However, the report noted that the government lacked standard operating procedures for identifying trafficking victims, had not made a conviction during the reporting period, and did not investigate potential contract violations faced by foreign workers.