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The Republic of Palau lies in the western Pacific Ocean and consists of a total of 241 islands, eleven of which are permanently inhabited. Like the islands of the neighbouring state of Micronesia, the islands of Palau belong to the Caroline Islands. The land area covers 501 km². A large part of the islands lies within an approximately 110 km long coral reef, which encloses a lagoon of approximately 1,300 km². The largest island is Babelthuap (Babeldaop) with 406 km², south of it lies the island Koror, on which also the capital of the same name is located. Further islands are e.g. Ukukthapel, Eil Malk, Ngerol, Peleliu and Angaur southwest of Koror.

The islands of the republic are all of volcanic origin. While some of them are of volcanic rock and rise high out of the sea (e.g. Koror and Babelthuap, where the highest point is 242 m), other islands consist of coral limestone, which is built on sunken volcanic cones. These islands (e.g. Peleliu and Angaur) are flat and often only a few metres above sea level.

The Rock Islands (Chalbacheb), which stretch between Koror and Peleliu, are one of the scenic sights in the South Pacific. These are hundreds of tiny dome-shaped coral reefs covered with lush vegetation.

Political System

According to the Constitution of 1981, the Republic of Palau is a presidential republic. The head of state is the president, who also heads the government (since January 2013 Tommy Remengesau). He is directly elected by the people for a term of four years.

The legislative power lies with the Parliament (Olbiil Era Kelulau), which consists of two chambers: a House of Delegates with 16 seats and a Senate with 13 seats. The members of both chambers are elected by the people for four years each. There is also a 16-member Council of Chiefs as an advisory body. There are no political parties in Palau.

In defence policy, the interests of the Republic of Palau are represented by the USA (Free Association Treaty of 1994). Palau is divided into 16 administrative districts (states).


In terms of per capita income of the population, the Republic of Palau is a relatively prosperous country in the region (US$10,800 in 2012). However, a large part of the state budget is financed with US economic aid.

Agriculture and fishing are predominantly subsistence farming, with about one fifth of the population working in this sector. The most important crops are coconuts, manioc and bananas. Coconuts, copra and, to a lesser extent, fishery products are exported.

Industry is poorly developed and there are only a few food processing companies. Natural materials are also used to make handicrafts.

The most important economic sector is the services sector, which accounts for around 77% of gross domestic product (GDP). The vast majority of the workforce is employed in this sector. Tourism accounts for 70 % of total GDP and has shown stable growth rates since the mid-1990s. Most tourists come from Asian countries, especially Japan and Taiwan, but also Korea. Americans are the strongest visitor group outside Asia. Especially for divers, the coastal waters are considered a paradise.

Palau has to import mainly food, machinery and consumer goods. The most important trading partners are the USA, Guam and Japan. So far there are only a few paved roads on the larger islands. The most important seaport is on the island of Koror, an international airport on Babelthuap. Currency is the US dollar.