History of Palau The ancestors of modern Palauans are believed to have migrated from Indonesia, New Guinea, and possibly Polynesia. Pictographs, pottery, and other artifacts on Babeldaob and the Rock Islands provide evidence of habitation as early as 1000 BC. Organized into villages and clans, a complex matriarchal and matrilineal society developed. Sixteenth-century Spanish explorers were likely the first Europeans to sight Palau, but the first significant exchange between Palauans and Europeans occurred when a British shipwrecked there in 1783. The sailors stayed for three months while they and Koror islanders worked together to rebuild the ship. Britain traded with Palau until 1885, when Spain asserted a claim over the Caroline Islands (now Palau and the Federated States of Micronesia). In 1899, the Spanish sold the Carolines to Germany, whose interest focused on exporting phosphate and coconut products. At the conclusion of World War I in1919, the Treaty of Versailles passed the islands’ ownership from Germany to Japan. The Japanese built roads and causeways, brought electricity to Koror, and introduced individual property ownership to replace clan ownership. During the final years of World War II, Palau was the site of fierce fighting between Allied and Japanese forces. After Japan’s defeat in 1945, the United Nations declared the Caroline, Mariana, and Marshall islands under U.S. administration as the Trust Territory of the Pacific Islands. The United States was given the mandate to improve the region’s education, health care, and infrastructure in preparation for nationhood. Palauans voted against becoming part of the Federated States of Micronesia, which became independent in 1979. Instead, Palau remained under U.S. administration for another 15years, during which the Palauan and U.S. governments negotiated the terms of independence. The major impasse in the negotiations was a clause in Palau’s constitution that banned nuclear weapons and testing in the islands. Wanting to secure nuclear weapons access to Palau, the United States made this a condition of its proposed post- independence agreement, the Compact of Free Association. In eight referendums between 1983 and 1990, a proposal to suspend the constitution’s nuclear-free clause repeatedly failed to gain approval from the required 75 percent of voters. When the Palauan government changed the requirement for approval to a simple majority in 1993, the proposal passed and the Compact of Free Association was ratified. The United States granted Palau independence on 1 October 1994. Page 1 of 2 History of Palau Under the terms of the 50-year agreement, the United States gives Palau US$700 million over the first 15 years and provides for Palau’s defense. In exchange, Palau gives the U.S. military access to Palauan territory. Palau is heavily reliant on U.S. funding, which gives it a per capita income higher than most Pacific countries. The nation has also sought to develop its own industries. Capitalizing on the islands’ natural beauty, tourism has become the most successful economic sector. References: “Republic of Palau.” CultureGrams World Edition. 2008. Page 2 of 2 .