Background: After three decades as part of the UN Trust Territory of the Pacific under US administration this westernmost cluster of the Caroline Islands opted for independent status in 1978 rather than join the Federated States of Micronesia. A Compact of Free Association with the US was approved in 1986 but not ratified until 1993. It entered into force the following year when the islands gained their independence.
Geography Note: includes World War II battleground of Beliliou (Peleliu) and world-famous rock islands; archipelago of six island groups totaling over 200 islands in the Caroline chain
Ethnic groups: Palauans are Micronesian with Malayan and Melanesian admixtures
Languages: English and Palauan official in all states except Sonsoral (Sonsorolese and English are official) Tobi (Tobi and English are official) and Angaur (Angaur Japanese and English are official)
Religions: Christian (Catholics Seventh-Day Adventists Jehovah's Witnesses the Assembly of God the Liebenzell Mission and Latter-Day Saints) Modekngei religion (one-third of the population observes this religion which is indigenous to Palau)
Environment Current issues: inadequate facilities for disposal of solid waste; threats to the marine ecosystem from sand and coral dredging illegal fishing practices and overfishing
Legislative branch: bicameral Parliament or Olbiil Era Kelulau (OEK) consists of the Senate (14 seats; members elected by popular vote on a population basis to serve four-year terms) and the House of Delegates (16 seats - one from each state; members elected by popular vote to serve four-year terms)
Judicial branch: Supreme Court; National Court; Court of Common Pleas
Economy overview: The economy consists primarily of subsistence agriculture and fishing. The government is the major employer of the work force relying heavily on financial assistance from the US. The population enjoys a per capita income of more than twice that of the Philippines and much of Micronesia. Long-run prospects for the tourist sector have been greatly bolstered by the expansion of air travel in the Pacific and the rising prosperity of leading East Asian countries.