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In April 2007, the government protested Palau’s inclusion on a U.S. State Department international narcotics watch-list. The legislature passed a bill to tighten controls on official corruption and abuses in May. In December, the president named the chief negotiator for talks with the United States on the future of the compact agreement and signed into law new anti-money laundering measures and a new class of elite investment-based visas to bolster government revenue.
The United States administered Palau, consisting of eight main islands and more than 250 smaller islands, as a UN Trust Territory from 1947 until 1981, when it became a self-governing territory. Palau gained full independence in 1994 under a Compact of Free Association with the United States. The compact stipulates that the United States will grant Palau a total of $442 million in economic aid for 15 years between 1994 and 2009; allow Palauan citizens to reside, work, and study in the United States and its territories as well as have access to a variety of federal government programs; and defend Palau in exchange for U.S. military access to the archipelago until 2044.
Tommy Esang Remengesau was first elected president in 2000 and won a second term in the 2004 general election.
In a referendum held concurrently with the 2004 polls, voters endorsed the initiation of a constitutional convention in 2005 to consider amendments to the constitution. Proposals included restricting parliamentary terms to three years, making legislative posts part-time positions and switching to a unicameral legislature to save money, and allowing presidential and vice presidential candidates to run as a team. Another proposed amendment would allow Palauans living in the United States (about 25 percent of all Palauan citizens) and elsewhere to acquire citizenship in their countries of residence without losing their right to vote and own land in Palau. The review, completed in 2005, approved 25 proposed amendments for citizens to vote in the next general election in 2008.
In April, the U.S. State Department listed Palau as a country of concern in its International Narcotics Control Strategy Report for 2007. The report advised Palau to criminalize the financing of terrorism and to begin implementation of legal reforms that were already in place. The Palauan government rejected the report’s designation of the country.
For this island state, maintaining U.S. economic assistance and access to the U.S. for its citizens is central to its economic survival. Thus, in December, President Remengesau said that, in the national interest, he will not select politicians or would-be candidates in the 2008 elections as members of a negotiation panel regarding extension of the compact with the United States. Further, the president signed into law new anti-money laundering measures in anticipation of reviews by the International Monetary Fund and other organizations in 2008. This would improve Palau’s credit rating and give its overseas banking industry a second chance. The government also created a new special 10-year visa for those who will invest in a second residence and businesses in Palau to raise revenue for the government.
Palau is an electoral democracy. The bicameral legislature, the Olbiil Era Kelulau, consists of the nine-member Senate and the 16-member House of Delegates. Legislators are elected to four-year terms by popular vote, as are the president and vice president. The president may serve only two terms consecutively. The country is organized into 16 states, each of which is headed by a governor. The capital, previously located in Koror, was moved to a new complex in Melekeok in 2006.
There are no political parties, but there are no laws against their formation. The prevalent system of loose political alliances, quickly formed and dismantled, have had a destabilizing effect on governance in recent years.
Official corruption and abuses are serious problems. Three state governors were convicted of bribery, theft, and misconduct, and removed from office in 2005, and the House speaker was charged with misuse of public funds in 2007. To further improve accountability and curb corruption, the legislature in 2007 removed the six-year statute of limitations on filing charges against public officials to allow more time to investigate and prosecute suspects. Palau was not rated in Transparency International’s 2007 Corruption Perceptions Index.
Freedom of speech and the press is respected. There are three major print publications: Tia Belau and Palau Horizon are English-language weeklies, and Roureur Belau is a Palauan weekly. There are five privately owned radio stations and one privately owned television station. Most households receive cable television, which rebroadcasts U.S. and other foreign programs. The internet is accessible without government interference, but diffusion is limited by cost and a lack of access outside the main islands.
Citizens of Palau enjoy freedom of religion. Although the government requires religious organizations to register with the Office of the Attorney General, no application has ever been denied. There have been no reports of restrictions on academic freedom, and the government provides well-funded basic education for all.
Freedom of assembly and association are respected. Many nongovernmental groups focus on youth, health, and women’s issues. No laws or policies bar formation of trade unions. The economy, based largely on subsistence agriculture, is heavily dependent on U.S. aid and rent payments, as well as remittances from citizens working overseas. The government and the tourist industry are the main employers.
The judiciary is independent, and trials are generally fair. A 300-member police and first-response force maintains internal order. Palau has no military. There have been no reports of prisoner abuse or extreme hardship for inmates.
Foreign workers account for about one-third of the population and 73 percent of the workforce. There have been reports of discrimination against and abuse of foreign workers, and the law bars them from changing employers once inside Palau. Foreigners are said to use fake marriages to exploit privileges regarding access to the United States under the compact. There have been reports of human trafficking from China, the Philippines, and Taiwan into Palau as a conduit to the United States. In May 2007, two Chinese nationals and one Philippine national were convicted of multiple counts of human trafficking, which carries a maximum 25-year prison sentence.
There is high regard for women in this matrilineal society, in which land rights and familial descent are traced through women. This has allowed many women to be active in both traditional and modern sectors of the economy, as well as in politics. A small number of domestic violence cases, many linked to alcohol and drug abuse, have been reported. Prostitution and sexual harassment are illegal; the law prohibits rape, including spousal rape.