pol i t ical reviews • 209 from Okinawa in 2010 promises a for copper by local scrap dealers sup- major economic shot in the arm to plying Chinese markets, thieves are the whole archipelago. Approximately actually stripping the copper tubing on $10 billion has been earmarked to anything from window air condition- develop infrastructure and facilities ers, live electric dropped lines, and on ; the impact of this spending power lines to streetlights along the will be felt in , Tinian, and even Beach Road walkway. Even telephone Rota. There may be a massive deple- switch boxes have been gutted, cutting tion of construction skills in Saipan as telephone services to entire neighbor- long-resident workers are given free hoods. access to the United States. Tinian samuel f mcphetres will almost certainly be utilized as a military training area on a permanent basis, requiring permanent infrastruc- Republic of ture on the island. It is also expected that the educational establishment Activities of Palau’s president and on Saipan, Tinian, and Rota will be National Congress, relocation of the expanded to provide vocational ser- national capitol, the -spon- vices for people seeking employment sored summit with its Pacifi c allies, in the military. advances in conservation and environ- Two new casinos with 300 to mentalism, preparations for compact 500 guest rooms are slated for con- review, establishment of diplomatic struction on Tinian. One casino will relations with Russia, and the collapse include a golf course, while the other of the homegrown Pacifi c Savings will include a collection of luxury Bank were some of the major events villas for its clientele. These enter- that took place in the Republic of prises will certainly fi nd the expanded Palau during the year under review. population on Guam attractive in As of January 2008, President terms of marketing opportunities. Tommy E Remengesau, Jr, has one Popular initiatives to allow casinos on year remaining in his second four-year both Saipan and Rota were slated for term and is ineligible to run for offi ce the November 2007 ballot. The Tinian again in November 2008. Neverthe- airport is now capable of handling less, he has remained very active. international jets, although operations During the year under review he met await the installation of an instrument with the presidents of the other freely landing system to allow the planes to associated states (the Federated States land at night. of Micronesia [FSM] and the Republic Crime has been on the rise. Attacks of the [RMI]) at their on poker arcades, some of which have sixth summit in , RMI. Perhaps involved fi rearms, have risen, with their most important achievement was thirteen robberies over a period of the agreement to begin implementa- three months. Some arrests have been tion of the Micronesian Challenge, made. Another criminal activity that whereby signatories pledge to have has become endemic is copper-wire 30 percent of their nearshore marine theft. Because of the high price offered areas and 20 percent of their forest 210 the contemporary pacifi c • 20:1 (2008) resources under environmental protec- the National Congress over the 2007 tion by 2020. The three leaders also budget kept the president occupied. made progress in completing treaties Because of ongoing disagreement for the extradition of criminals and over the budget, the congress had to maritime boundary delimitations. At pass a continuing resolution to keep meetings with the chief executives of the government working. Finally, in Yap, Guam, and the Commonwealth early January 2007, a budget law of the was passed and signed, totaling some (CNMI) held in Yap, FSM, in late July, $57.6 million. After three months of more agreements were made regard- heated debate between the congress ing the fi nancing of the Micronesian and the executive branch, compro- Challenge conservation effort. Prog- mises were reached on nine items ress in recycling and the removal of that had been holding up the process: metallic waste was reported. With the closure of Palau’s consulate offi ces at assistance of Japan, Palau has imple- Guam and Saipan, hiring of a bureau mented a robust program of recycling director in the Ministry of Education, and segregation of solid waste in pension plan contributions, rental , and the once unsanitary town payments to Palau’s rural states, the dump has been contained and capped, scope of presidential reprogramming now forming a grassy hill. The leaders of budget funds, the status of the pub- explored the idea of bulk fuel pur- lic auditor, fi nancing for state capitol chases to gain better prices and con- improvement projects, and the hiring sidered more active efforts in develop- of an independent special prosecutor ment of renewable energy sources. to examine the Pacifi c Savings Bank Perhaps Remengesau’s most important collapse. overseas visits were to Saipan, CNMI, The relocation of the national capi- where he joined in the opening of tol from Koror to State was the 2006 Micronesian Games, and a defi ning event that coincided with to Paris where he met with President the near completion of the fi fty-three- Jacques Chirac. In Israel, Remenge- mile circle road, which sau and his party met with top Israeli has been built using $150 million in offi cials, who expressed their apprecia- US compact funds. Palau’s Constitu- tion for Palau’s support in the United tion of 1979 called for moving the Nations. The Israeli offi cials were capitol, and in the 1980s leaders from amazed to learn that one of Palau’s Melekeok persuaded the National National Congress senators, Alan Congress to designate Melekeok as Seid, is of Jewish descent, and that the location; they donated a large hill, Palau’s ambassador to the United Ngerulmud, to serve as the site. As Nations, Stuart Beck, is also Jewish. one of Palau’s four ancient polities, The president and his party visited Melekeok had been eclipsed by Koror several holy sites in Jerusalem, includ- because of Koror’s popularity with ing the Wailing Wall. foreigners. The new capitol consists of At home, landslides along the four buildings in classic Greek-Roman impressive US-fi nanced Babeldaob architecture: a three-story congress compact road and skirmishes with building complete with an impressive pol i t ical reviews • micronesia 211 dome, a two-story judiciary building, as solar and wind are badly needed for a two-story president’s building (in the Palau’s long-term economic and social style of the Jefferson Memorial), and a progress. Several new electrical gen- three-story government-administration erators were purchased with a us$7 building, as well as two underground million loan from the International water storage tanks of 530,000-gallon Commercial Bank of China, Taiwan capacity. Funding for the huge project (TBN, 25 Aug–1 Sept 2006, 1). was provided by Taiwan (about us$40 Mr Remengesau and his top advis- million) and the United States (us$2 ers were involved in two international million). Construction was carried out meetings of major importance. The in two main phases (the earthworks, fi rst was the Taiwan-Pacifi c Allies and the buildings and water storage Summit held in Palau. Besides Palau, tanks); fi ve more phases (costing about the other Pacifi c Island nations main- us$12 million) were needed to com- taining diplomatic relations with Tai- plete the entire project. wan sent their heads of government, While the decision on the style and including RMI President Kessai Note, size of the buildings was made by President Anote Tong of the Republic representatives from the president’s of , President Ludwig offi ce, the traditional chiefs, the state Scotty, Prime Minis- governors, and the National Con- ter Mannaseh Sogavare, and gress, it has attracted much criticism Prime Minister Apisai Ielemia. In ses- from Palauans who argue that it is sions with the meeting’s host, Republic too large, too expensive, and untradi- of China President Chen Shui-bian, tional. Defenders of the Greek-Roman the Pacifi c leaders supported enhanced classic style maintain that the Palauan cooperation with Taiwan with regard people want their capitol to be of to law enforcement, information tech- great international signifi cance and nology, tourism, health care, protec- symbolic of democracy, unity, liberty, tion of natural resources, economic and justice. Wisely, all the buildings partnerships, cooperation in agricul- are decorated with permanent indig- ture and fi sheries, and the preserva- enous motifs that make them distinc- tion of culture. Since Taiwan and each tively Palauan. The grand opening of of the Pacifi c Island allies commonly the capitol complex on Independence use the English language (in addition Day, 1 October 2006, was fi lled with to vernaculars), and have a continu- feasting and much celebration. It was ing need for development assistance, a nation-building event of consider- advances in these areas are likely. able importance, rivaling Palau’s The summit was signifi cant for superb hosting of the Ninth Festival Taiwan in that it received a sover- of Pacifi c Arts in 2004. eignty endorsement from the attend- President Remengesau made the ing Pacifi c nations. Their declaration local headlines by accepting blame for stated: “The Leaders of Taiwan’s the August/September power outages Pacifi c allies strongly support Taiwan’s and rationing of electricity. Electrical achievements in political democrati- power outages are recurrent problems, zation and economic development. and renewable sources of power such Taiwan’s Allies acknowledge Taiwan 212 the contemporary pacifi c • 20:1 (2008) as a sovereign nation whose right to alerted the United Nations to this participate in international organiza- destructive practice and the General tions such as the United Nations and Assembly is expected to take action on World Health Organization cannot be it soon. deprived. Taiwan’s Allies are commit- Furthermore, Remengesau gained ted to continuing their fi rm support Forum members’ support for the of Taiwan’s entitlement to undertake Republic of China/Taiwan to be full involvement in international and accepted as an equal Post Forum regional organizations and initiatives” Dialogue partner, in recognition of (TBN, 8–15 Sept 2006, 1). It is also Taiwan’s substantial contributions to noteworthy that this declaration used the Forum and its regional programs “Taiwan” instead of “Republic of (TBN, 3–10 Nov 2006, 2). China.” President Chen experienced Early in 2007, Mr Remengesau some political turbulence during his made a second state visit to Taiwan visit to the Pacifi c when his offi cial jet with an eight-person party consisting aircraft was refused permission to land of State Minister Temmy Shmull, First on Guam, a US territory. The refusal Lady Debbie Remengesau, and several stemmed from the United States’ state governors and traditional chiefs. desire not to provoke the People’s This visit was a follow-up to the Sep- Republic of China. Thus Chen was tember Pacifi c Allies Summit in Palau. forced to use the services of Continen- Mr Remengesau requested Taiwan’s tal Airlines. support for additional infrastructure Mr Remengesau led Palau’s del- projects, a humanitarian loan to assist egation to the Thirty-Seventh Pacifi c small depositors suffering because of Island Forum held in in October. the failure of the Pacifi c Savings Bank, The Forum consists of sixteen inde- and further cooperation in the areas pendent Pacifi c countries, includ- of health and conservation consistent ing and . with the summit agreements. Remengesau played an important role Establishing ties with Russia was in the Forum meeting by advancing a huge diplomatic step forward for his commitment to the conservation Palau. On 28 November in New York, of marine and terrestrial habitats. He Palau’s UN Ambassador Stuart Beck won full support from his colleagues, and Vitaly Churkin, Ambassador of who tasked the Forum Secretariat to the Russian Federation to the United assist in ensuring that the commitment Nations, signed a joint communiqué was upheld. An added bonus was the offi cially establishing diplomatic rela- funding support for the Micronesian tions. Beck lauded Russia for its rich Challenge and related initiatives from history, strong economy, and con- fi nancial donors such as Nature Con- tributions to the international com- servancy, Global Environmental Facil- munity. The two ambassadors agreed ity, and Conservation International. to cooperate in the areas of fi sheries Remengesau also gained enthusiastic and climate change/global warming. support for Palau’s law prohibiting Diplomatic relations between Palau deep-sea bottom trawling in its waters. and its much larger neighbor, Indone- Palau’s UN Ambassador Stuart Beck sia, are pending. pol i t ical reviews • micronesia 213

Prior to the New Year, Palauans independent auditing fi rm, J Scott witnessed the rebirth of one local Magliari & Company. The report bank and the total collapse of another. was completed in May 2006 but was Palau’s fi rst locally owned bank, Bank kept under wraps by the bank until 3 of Palau, was established by the late November, just four days prior to its Roman Tmetuchl in 1981 during the collapse. Palau’s fi nancial watchdog, closing years of the US-administered the Financial Institutions Commis- Trust Territory of the Pacifi c Islands. sion (fic), closed down the bank and The bank lost its license for some locked its doors because of insolvency: years but reorganized to meet the psb liabilities exceeded its assets, and Financial Institutions Commission’s the bank could not satisfy demands legal conditions of solvency and on deposits. The bank also reportedly liquidity. The revived bank, now had only $45,000 available, whereas known as the First Fidelity Bank, is it was legally required to have at least located in the pdc (Pacifi ca Develop- $500,000 cash on hand. During the ment Corporation) building in central six months prior to the collapse, and Koror. Attorney Johnson Toribiong, probably in response to inside infor- Tmetuchl’s nephew, led the effort to mation about an impending failure, reinstate the bank. about $9.2 million was withdrawn by In contrast, Pacifi c Savings Bank, several government agencies, private Ltd (psb), which was chartered in businesses, and a dozen individuals 1992 and claimed to be the “people’s with large deposits in the range of bank,” collapsed with a thunderous $20,000 to $2.4 million. What sank roar on 7 November 2006. With over the bank was a large number of bad 7,000 depositors, 7,900 accounts, loans and the total breakdown of 1,800 loans totaling $11.5 million, fi duciary duty and responsibility. The and some 1,000 shareholders, the fic revoked the bank’s license, sus- psb directors and offi cers must take pended the bank’s administrators, and responsibility for this social and named Kaleb Udui, Jr, president of the fi nancial catastrophe. They are Tim National Development Bank of Palau, Taunton, the president and chairman as the receiver. These actions were of the bank’s board of directors and carried out in accordance with Palau’s owner of 32 percent of the shares; banking laws. In addition, numerous the late Johnny Reklai, who held lawsuits, both civil and criminal, have 18 percent of the shares; Silvester been fi led, and Palau’s attorney general Spichtincher with 9 percent; and Jay is moving to extradite psb President Cobele, Tadao Ngotel, and Margo Taunton from New Zealand, where Llecholch, each having 2 percent of he fl ed two days after the collapse. He the bank’s shares. The remaining 34 had over $4 million in bad loans. percent of psb shares are owned by With thousands of small sharehold- individuals who each hold less than 2 ers and depositors, the Pacifi c Savings percent (TBN, 10–17 Nov 2006, 1, 15). Bank collapse hurt many individual The serious irregularities and Palauans and their families, as well illegalities in the psb operations as small businesses. The failure of the were uncovered in a report by an so-called people’s bank generated both 214 the contemporary pacifi c • 20:1 (2008) despair and anger. Especially hard hit agreement. The review commission is were the private schools that had their mandated by Republic of Palau Public operating funds in the bank: Bethania Law 7-15 to identify Palau’s positions High School with $198,000; Seventh- on compact-related issues and provide Day Adventist Elementary School with names of qualifi ed individuals to serve $148,449; Palau Mission Academy on a negotiating team “in bilateral with $46,329; Emmaus High School re-negotiation of the Compact and the with $25,000; and Emmaus Kinder- subsidiary agreements” (TBN, 11–18 garten with $18,000. Palau’s Tia Belau Aug 2006, 4). News described the collapse as a tale The commission visited leaders of of mismanagement and abuse unprec- the other compact states, the Republic edented in the development of Palau’s of the Marshalls and the Federated local institutions (TBN, 26 Jan–1 Feb States of Micronesia, to learn about 2007, 1, 5). their renegotiations, which were com- Responding to an emergency pleted in 2003. The key issues were request from President Remengesau, new requirements concerning postal Taiwan became Palau’s new “Uncle services, immigration, and compact Sam” by making a short-term, inter- fund management. Fund manage- est-free loan of $3.3 million. Of this ment requirements involve a “stricter amount, $2.4 million has been used to process of review and approval for the fully pay some 4,950 depositors who expenditure of Compact Funds, eligi- had less than $2,000 in Pacifi c Sav- bility for fewer federal programs, and ings Bank. These are mainly accounts perhaps less funding in the long run” belonging to individuals, schools, state (Underwood 2003, 2). The Compact governments, and several churches. Review Commission will revise Palau’s The political status of free associa- master development plan, which was tion has been accepted by the United completed with the beginning of the Nations as an appropriate way to compact in 1994. Furthermore, with end a non-self-governing or colonial funding assistance from the Asian status. Palau’s compact agreement Development Bank, the review com- with the United States was fully imple- mission conducted a national eco- mented in 1994 and Palau became nomic symposium that involved exter- sovereign and the 185th member of nal fi nancial and economic specialists the United Nations in the same year. as well as local experts. What may Palau’s compact agreement runs for make Palau’s compact review interest- fi fty years, and over $500,000 million ing is the recent US Inspector General’s (not including infl ation adjustments) report, released in 2006. Requested in funding was provided for fi fteen by Palau’s Public Auditor, the report years, that is, from 1994 to 2009. evaluates Palau’s expenditure of Palau’s Compact Review Commission, funds for the period 1994–2005. chaired by former President Kuniwo One glaring conclusion is that a key Nakamura, along with eight other compact objective has not been met: members and a two-person staff, have the advancement of Palau’s economic been hard at work reviewing Palau’s development and self-suffi ciency. performance under the 1994 compact An unusually large number of pol i t ical reviews • micronesia 215 important people died during the invasion of Angaur in 1944. Another review period. Viviana Ucherbelau member of the US military, Army was a teacher, sports coach, and Koror Corporal Meresbang T Ngiraked, age state legislator; Salvator Ongrung twenty-one, was the third solider of worked for the Trust Territory and Palauan ancestry to die in Iraq and Palau governments for nearly forty the twenty-second fi ghting man from years in community and economic the Micronesian region to make the development; Katsutoshi Becheser- ultimate sacrifi ce there. Lastly, former rak was a Palau High School teacher, senator and presidential candidate, vice principal, activist, and part-time Peter Lawrence Naoya Sugiyama, legislator; Joseph Ngiracheluolu was passed away on 10 June 2007. Known a sailor, small businessman, heavy as “Pete,” Sugiyama was an excep- equipment operator, and Koror com- tionally dedicated civil servant who munity activist; Omelau Tanaka had had a long and distinguished career, a long career as magistrate during fi rst in government administration and the Trust Territory period, served as then as a senator in the Palau National both governor and traditional chief Congress. The high points of his polit- of Ngchesar State, and was a legisla- ical career were his participation in tor, gardener, and expert fi sherman; Palau’s fi rst Constitutional Convention Herman Rodas was the long-time of 1979, his presidency of the Sen- announcer for Palau’s wszb radio ate from 1997 to 2000, and his close station, Palau’s Labor Division head, second-place fi nish in the presidential member of the Seventh Palau Legis- race of 2000. lature, and traditional chief; Santos donald r shuster Edward was a musician, traditional chief, and building designer and Special thanks to Yoichi K Rengiil contractor who built a number of for comments on an earlier draft of important buildings in both Koror and on Angaur. A most extraordinary this review. man, Ngirchobeketang Sachelboi Wasisang, passed away at age eighty- two. For nearly thirty-fi ve years, he References was the leader of the Modekngei, TBN, Tia Belau News. Weekly. Koror, Palau’s indigenous religious group. Republic of Palau. Senate President Johnny Rekali, a Underwood, Robert A. 2003. The cofounder of the Pacifi c Savings Bank, Amended US Compacts of Free Associa- died by drowning in a freak fi shing tion with the Federated States of Micro- accident. The fi rst American to marry nesia and the Republic of the Marshall a native Palauan woman and settle Islands: Less Free, More Compact. East- in Palau, Henry “Hank” Worswick, West Center Working Paper 16. : died at age eighty-four. As a US Navy East-West Center. man, Worswick was involved in the