Palau 2016 Country Review http://www.countrywatch.com Table of Contents Chapter 1 1 Country Overview 1 Country Overview 2 Key Data 3 Palau 4 Pacific Islands 5 Chapter 2 7 Political Overview 7 History 8 Political Conditions 9 Political Risk Index 16 Political Stability 31 Freedom Rankings 46 Human Rights 58 Government Functions 60 Government Structure 61 Principal Government Officials 65 Leader Biography 67 Leader Biography 67 Foreign Relations 68 National Security 72 Defense Forces 73 Chapter 3 75 Economic Overview 75 Economic Overview 76 Nominal GDP and Components 77 Population and GDP Per Capita 79 Real GDP and Inflation 80 Government Spending and Taxation 81 Money Supply, Interest Rates and Unemployment 82 Foreign Trade and the Exchange Rate 83 Data in US Dollars 84 Energy Consumption and Production Standard Units 85 Energy Consumption and Production QUADS 86 World Energy Price Summary 87 CO2 Emissions 88 Agriculture Consumption and Production 89 World Agriculture Pricing Summary 91 Metals Consumption and Production 92 World Metals Pricing Summary 94 Economic Performance Index 95 Chapter 4 107 Investment Overview 107 Foreign Investment Climate 108 Foreign Investment Index 110 Corruption Perceptions Index 123 Competitiveness Ranking 135 Taxation 144 Stock Market 144 Partner Links 144 Chapter 5 146 Social Overview 146 People 147 Human Development Index 148 Life Satisfaction Index 151 Happy Planet Index 163 Status of Women 172 Global Gender Gap Index 174 Culture and Arts 184 Etiquette 185 Travel Information 185 Diseases/Health Data 194 Chapter 6 199 Environmental Overview 199 Environmental Issues 200 Environmental Policy 202 Greenhouse Gas Ranking 203 Global Environmental Snapshot 214 Global Environmental Concepts 225 International Environmental Agreements and Associations 240 Appendices 264 Bibliography 265 Palau Chapter 1 Country Overview Palau Review 2016 Page 1 of 277 pages Palau Country Overview PALAU Palau is an island nation in the North Pacific Ocean, southeast of the Philippines. In 1947 Palau became a United Nations Trust Territory under U.S. administration. In 1994 Palau became independent under the Contract of Free Association with the U.S. under which Palau receives financial aid from the United States. With a population of just about 20,000, Palau’s economy is heavily dependent on U.S. aid through the Contract of Free Association. Like other island nations, Palau faces economic development constraints including vulnerability to external shocks, a narrow production and export base, and geographical isolation. Palau Review 2016 Page 2 of 277 pages Palau Key Data Key Data Region: Pacific Islands Population: 21265 Climate: Wet season May to November; hot and humid English (official) Sonsorolese Languages: Angaur and Japanese Tobi Palauan Currency: 1 United States dollar (US$) = 100 cents Holiday: Constitution Dayis 9 July (1979), Independence Day is 1 October (1994) Area Total: 458 Area Land: 458 Coast Line: 1519 Palau Review 2016 Page 3 of 277 pages Palau Palau Country Map Palau Review 2016 Page 4 of 277 pages Palau Pacific Islands Regional Map Palau Review 2016 Page 5 of 277 pages Palau Palau Review 2016 Page 6 of 277 pages Palau Chapter 2 Political Overview Palau Review 2016 Page 7 of 277 pages Palau History Palau's first inhabitants are believed to have originated in present-day eastern Indonesia; these people are belived to have settled in the Palau islands. These early Palauans constructed complex social systems, and relied on fishing and farming. In 1783, an English explorer, Captain Henry Wilson, became the first Westerner to visit Palau, beginning nearly 100 years of British trade primacy. At the time, Palau was considered to be part of the Caroline Islands enclave. Spain claimed the Caroline Islands and Pope Leo XIII upheld this claim to the islands, including Palau, in 1885. In 1899, Spain sold the Carolines and the Northern Marianas to Germany. The German period (1899-1914) saw increased economic activity in the form of coconut planting and phosphate mining. The Germans also had success in battling longstanding epidemics of influenza and dysentery that had reduced the population of Palau from 40,000 to 4,000 over the previous 120 years. Japanese forces invaded Palau in 1914, in accordance with a secret agreement with the British. Koror became the administrative center for all Japanese possessions in Micronesia, and by 1935, the Japanese civilian population in Palau reached almost 26,000. Japan made Palau a closed military zone in 1938. During World War II, fighting between United States and Japanese forces took place on the islands of Peleliu, Angaur and Koror. From 1947 until independence in 1994, Palau was part of the Trust Territory of the Pacific Islands administered by the United States under a United Nations mandate. Meanwhile, in 1979, Palau, along with the Marshall Islands, decided not to join a single, federal Micronesian state. Then, in 1980, a constitution was adopted and in 1981, the Palau islands were declared to be the Republic of Palau. President Haruo Remeliik became Palau's leader. President Haruo Remeliik was assassinated in June 1985. Lazarus Salii was then elected president Palau Review 2016 Page 8 of 277 pages Palau in September 1985. An apparent suicide resulted in the succession of Salii by President Ngiratkel Etpison in 1989. Palau's President in 1992 was Kuniwo Nakamura. In 2000, Palau's former Vice President Tommy Remengesau won the presidential elections of that year. Meanwhile, following successive referenda, Palau signed a Compact of Free Association with the United States on Oct. 1, 1994, marking its accession to independent nationhood. Note on History: In certain entries, open source content from the State Department Background Notes and Country Guides have been used. A full listing of sources is available in the Bibliography. Political Conditions Political Chronology: While calm in recent years, Palau was troubled by several instances of political violence in the 1980s. President Haruo Remeliik was assassinated in 1985. In 1987, a special assistant to President Salii was convicted of firing shots into the home of the speaker of the House of Delegates, Santos Olikong. President Salii's death on Aug. 20, 1988, amid allegations of misuse of government funds, was found to be a suicide. Palau's president Kuniwo Nakamura completed his two consecutive terms in the office in November 2000. Leading up to the election campaign, Nakamura and Remengesau claimed a number of accomplishments during their two terms at the helm of the country. The duo claimed that the national budget was balanced for the sixth consecutive year, and external funding was secured for the new Koror-Babeldaob bridge, channel and harbor development at Peleliu Island, and an international coral reef research center to be located on Koror's M Dock. Attractive sports facilities were completed in time for Palau to host the August 1998 Micronesian Games, in which Palauan athletes performed exceptionally well. Nakamura also attacked the legislature of Palau during his annual state of the republic address to the nation. In his speech, he criticized legislators for their inattention to duty and expressed alarm over Congress's failure to appropriate funds for important projects. Nakamura advised the lawmakers to resign if they could not carry out their responsibilities. Palau Review 2016 Page 9 of 277 pages Palau In the face of this backdrop, it was hardly surprising that in the presidential elections held in November 2000, Nakamura's protégé and vice president Tommy Remengesau won the elections hands down, by defeating his sole opponent Peter Sugiyama by a healthy margin of over six percent. Remengesau obtained 52 percent votes, while Sugiyama ended up with about 46 percent of the votes. Senator Sandra Pierantozzi (the former minister of administration) was elected the vice president, making her the first woman vice president in Palau. The elections to the National Congress were also held in November 2000. All the new members of the House of Delegates, which has 16 members, were elected for a four-year term. But in the days leading up to the election, the Senate of the National Congress was changed by reapportionment for the third time since the Palau Constitution was implemented in 1981. Instead of electing 14 senators, the Palauan electorate chose just nine in the November 2000 elections. All the elected members to both the houses were non-partisan candidates, since political parties are not allowed to contest the elections and are not formally recognized. In order to develop the investment climate and invigorate the economy, the government of Palau is working to expand its own, and the region's air transportation sector. In conjunction with efforts to establish a regional airline with other members of the South Pacific Forum, Palau has signed bilateral aviation agreements with Taiwan and Macau. With the assistance of the United States, Palau has also upgraded its own air navigation equipment. With help from international donors, especially the United States and Japan, Palau has progressed in improving its infrastructure. In December 1999, work began on a 85 km road around Badeldaop Island. In addition, the Badeldaop Bridge, connecting the island to Koror, will be reconstructed. These improvements are intended to promote development on the island, including projects based on foreign investment. Tourism is a major linchpin of Palau's economy. Spectacular coral reefs make it a scuba diving paradise. The government consequently attaches great importance to national and international efforts to protect reef ecosystems. In January 2000, construction began on the International Coral Reef Center, dedicated to reef-related research and education. In late 1999, Palau was among a group of Pacific island states that came under scrutiny, and ultimately a transactions ban, for questionable banking practices deemed to facilitate money laundering. In January 2000, the government of Palau established a National Banking Review Commission. The commission's purpose is to review the country's financial system and take measures to ensure the legitimacy of financial and banking activities.