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The Republic of Palau consists of a tightly clustered archipelago of 340 islands with a total land area of 458 square kilometres, to the east of the Philippines. The country's resident population of about 20 500 live on only eight of the islands. The capital of Palau is Melekeok, located on Babeldoab, the largest island.
Palau is an independent country in a Compact of Free Association with the United States. It is a democratic republic with directly elected executive and legislative branches. Presidential elections take place every four years, at the same time as the United States' presidential election, to select the president and the vice president. The next election will be held in November 2012. President Toribiong won office at elections on 4 November 2008 and was inaugurated on 15 January 2009. He is both Head of State and Head of Government. Kerai Mariur is Palau's Vice President and additionally serves as Minister of Finance.
The Palau National Congress (Olbiil era Kelulau) has two houses. The Senate has nine members elected nationwide and the House of Delegates has 16 members, one each from Palau's 16 states. All of the legislators serve four year terms. Each state also elects its own governor and legislature.
The Council of Chiefs is an advisory body to the president containing the highest traditional chiefs from each of the 16 states. The Council is consulted on matters concerning traditional laws and customs.
The judicial system consists of the Supreme Court, National Court, the Court of Common Pleas, and the Land Court. The Supreme Court has trial and appellate divisions and is presided over by the Chief Justice.
Palau has one of the Pacific Islands’ higher standards of living. It has a well-established high-end tourism sector with good potential for expansion, although care is needed to maintain environmental standards. Palau has a strong services industry and an active private sector. Fisheries and small-scale agriculture are also important for local employment. Palau faces many development challenges including a small population and the high cost of service delivery due to the levels and cost of imported goods and expertise. The service sector dominates the Palauan economy, contributing more than 50 per cent of GDP and employing more than half of the work force. The government alone employs nearly 31 per cent of workers and accounts for 20 per cent of GDP.
Palau's compact of free association with the United States runs for 50 years, from 1994 to 2044. Under the compact arrangements, the United States government agreed to provide US$410 million in assistance over the compact's first 15 years (1994 to 2009). Palau has recently signed a new compact with the United States for US$250 million from 2010-2024, although it is still to be approved by the US Congress. The compact has funded major infrastructure projects including the construction of a road around Babeldoab. The compact also provides for some United States federal programs. The compact and its subsidiary agreements commit the US to continue to provide, at no cost to Palau, many services including air safety, weather prediction, health services and assistance in the event of natural disasters until the end of the compact in 2044. Under the compact, more than 40 US Government agencies such as the Federal Aviation Administration, US Postal Service, the Small Business Administration, and FEMA operate programs or render assistance to Palau. Under the compact, Palauans enjoy favourable provisions for travelling to, and working in, the United States. The Department of the Interior is the US agency responsible for oversight and coordination of US funding assistance under the Compact of Free Association.
The Parliamentary Secretary for Pacific Island Affairs, Richard Marles, visited Palau in February 2011.
Australian bilateral development assistance to Palau was upgraded through a Pacific Partnership for Development signed by President Toribiong and then Foreign Minister Smith on 4 August 2010. Australia is a small donor in Palau by comparison with the United States, Japan and Taiwan. Australia's ongoing development program in Palau will deliver specialist technical assistance, scholarships, small-scale procurement, small grants and volunteers. Australia’s official development assistance budget to Palau is approximately $2.06 million in 2011-12. Further information on Australia's development assistance in Palau can be found on the AusAID website (http://www.ausaid.gov.au/) .
Australia donated a Pacific Patrol boat to Palau in May 1996. Through its Defence Cooperation Program Australia continues to fund technical support of the vessel.
Palau has provided police officers to work as part of the Regional Assistance Mission to Solomon Islands since May 2006.
Australian exports to Palau in 2010-11 totalled $512 000 (principally pumps and parts and meat). Australia's imports from Palau in the same period totalled $30 000 (principally civil engineering equipment and parts).
Australians travelling to Palau are advised to consult the Smartraveller travel advice (http://smartraveller.gov.au/advice/palau).
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