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In November 2004, Tommy Esang Remengesau was reelected president of Palau for another four years. Voters also decided to hold a constitutional referendum in 2005 on several issues, including recognition of dual citizenship, a requirement that the president and vice president run on the same ticket, and a merger of the bicameral legislature into a unicameral body.
The United States administered Palau, which consists of 8 main islands and more than 250 smaller islands about 500 miles southeast of the Philippines, as a UN Trusteeship Territory from the end of World War II until Palau became self-governing, in 1981. Full independence was achieved in 1994 under the Compact of Free Association with the United States. By the terms of the compact, the United States provides Palau with $442 million in aid over 15 years from 1994 on and shoulders responsibility for Palau's external defense. In return, the United States has the right to set up military bases in the island state.
Vice President Remengesau was elected president in a narrow victory over Senator Peter Sugiyama in November 2000. Esang officially succeeded President Kuniwo Nakamura in January 2001. In the November 2004 election, Remengesau won 66.5 percent of the votes against his opponent Polycarp Basilios, who took 33.5 percent.
In a referendum held concurrently with the November general elections, voters decided to support the formation of a constitutional convention in 2005 to consider amending the constitution. The convention will review a number of issues, including allowing dual citizenship. Currently, the constitution states that only citizens can vote and own land in Palau, and about 25 percent of all Paluans live and work in the United States. An amendment would allow Palauans living in the United States and elsewhere to acquire citizenship in their resident countries without losing their right to vote and own land in Palau. Other major proposals to be reviewed are: requiring the president and vice president to be on the same ticket, adopting a unicameral legislature to replace the current bicameral one, and imposing term limits in congress and making those offices part-time. Proponents hoped these measures would reduce factional fighting and the cost of running a legislature for the country's small population.
The country has been plagued by reports of human and drug trafficking, prostitution, and money laundering by criminal groups in recent years. The escape of a foreign drug convict from prison also sparked strong public criticism of the government. The authorities responded that more resources would be needed to make the necessary improvements in law enforcement and the judiciary.
Citizens of Palau can change their government democratically. A bicameral legislature, the Olbiil Era Kelulau, consists of the 9-member Senate and the 16-member House of Delegates. Legislators are elected to four-year terms by popular vote. The president and vice president are also elected to four-year terms by popular vote. There is no limit on the number of terms, except that the president may serve only two terms consecutively. President Tommy E. Remengesau Jr. was elected to his first term in November 2000, and Senator Sandra S. Pierantozzi became the first woman vice president. Remengesau won a second four-year term and Camsek Chin was elected Vice President in November 2004. Politically, the island republic is organized into 16 states, each of which is headed by a governor. In December 2003, several states held state elections, which were regarded as fair and free. The winners were sworn in on January 1, 2004. There are no political parties but factions exist. Alliances are formed and dismantled with such frequency that it has had a destabilizing effect on politics and government.
Public dissatisfaction with government corruption pressured the government to charge two lawmakers with fraud in February. Freedom of speech and the press is respected. There are five privately owned radio stations and one television station. The Internet, though not in widespread use, is accessible with no government intervention. Greater diffusion is limited by cost and access outside the main islands.
Citizens of Palau enjoy freedom of religion, but the government regulates the establishment of religious organizations by requiring them to obtain charters as nonprofit organizations from the Office of the Attorney General; no group has been denied its application. There were no reports of restrictions on academic freedom.
Freedom of association is respected, and civic associations and nongovernmental groups can operate freely. Many such groups focus on youth, health, and women's issues. Palau has no trade unions, although there are no laws or government policy against their formation. Freedom of assembly is guaranteed in the constitution and respected by the government.
The judiciary is independent, and fair trials are carried out. Internal order is provided for by a 300-member police and first response force. Palau has no armed forces; external defense is the responsibility of the United States under the Compact of Free Association. The compact, which will end in 2009, also provides Palau with financial and other assistance in exchange for the right to maintain military bases in the island state until 2034. Prisons are stark and have not seen significant improvement over time.
According to a May 2000 census, foreign workers account for nearly 30 percent of the population and 73 percent of the workforce. Reports of discrimination and abuse against foreign workers have surfaced in recent years, and the government has instituted strict measures to keep out foreign workers who are not actively employed. In 2003, the government announced tighter supervision to prevent marriages of convenience between foreigners and Palauans. Foreigners are said to have used fake marriages to extend their stay in Palau and to enter the United States, which grants Palauan citizens visa-free entry and residence under the compact agreement. There have been reports of human trafficking from China, the Philippines, and Taiwan, with some seeking employment in Palau and others using it as a conduit to enter the United States.
The economy is heavily dependent on transfer payments from the United States under the compact agreement, as well as money sent back to the island by its citizens working overseas. Subsistence agriculture and fishing are widely practiced. The government and tourist industry are the main employers.
Customarily high regard for women in this matrilineal society has led many women to be active in both traditional and modern sectors of the economy, as well as in politics. A small number of domestic abuse cases, many linked to alcohol and drug abuse, have been reported. Civil society groups assert that the true number may be higher as a result of underreporting due to shame, fear of reprisal, and family pressure. The law prohibits rape, including spousal rape. Prostitution and sexual harassment are illegal.