Palau was established as a sovereign country by the Compact of Free Association on 1st October, 1994, which guaranteed the continuation of military, economic and political links between Palau and the US for fifty years. The Compact of Free Association outlines the relationships that three sovereign countries had entered into as associated nations with the U. S A. These nations are Republic of Palau, Republic of the Marshall Islands and Federated States of Micronesia. These nations were previously under the trusteeship of the United Nations and administered by the US navy and the US Department of the Interiors. During the first fifteen years of the Compact the USA will give funds to a limit of $500 million to the Republic of Palau. The economy of Palau is still in the developing stage and is supported by its fishing industry, tourism industry, and its public sector which is financed by Compact of Free Association funds as provided by the USA.
Palau comprises of eight primary islands and over 250 others which are much small in size. These islands are located about 500 miles southeast of Philippines. The islands actually form a section of the chain of Caroline Islands. The total area of the nation is 458 sq. km and its size is approximately 2.5 times of Washington DC. Its coastline is 1520 km and the terrain varies geographically from mountainous regions in the main island of Babeldaob to the lower coral islands surrounded by barrier reefs.
Palau relates to free association by way of the Compact of Free Association that became effective from 1st October, 1994 with the involvement of the USA in promoting economic development and self sufficiency for the nation. The free association provides for 15 year period during which economic assistance will be provided by the USA. The two governments will review the terms of the compact and other connected agreements in the fiscal year, 2009 if any modifications are to be made. The US Department of the Interior is entrusted with the task of overseeing the proper use of the compact funds. The General Accounting Office (GAO) of the US will report on the different aspects of financial assistance to Palau and its prospects for the achievement of economic self-reliance. The GAO reviews the compact annual reports, internal audit reports, and financial statements of Palau to ascertain that the funds are used in the right direction.
The history of Palau can be traced back to over 4000 years when it was inhabited by migrant people from Indonesia. In the 18th century, the islands were visited frequently by British traders and in the 19th-century Spanish influence began to gain ground. After the defeat of Spain in the Spanish American War of 1899, Palau was sold along with the Caroline Islands to Germany. Control of the islands passed over to Japan in 1914 and finally, the United States took over in 1944 during the Second World War when huge casualties were suffered by America and Japan. During the Battle of Peleliu which raged at the islands from 15th September to 25th November 1944, over 10000 Japanese and 2000 Americans were killed. As part of the Trust Territory of the Pacific Islands, the control of the Caroline Islands was formally handed over to the USA in 1947 under the auspices of the United Nations.
Works Cited
GAO Reports and Testimony, Compact of Free Association: Palau’s Use of and Accountability for U.S. Assistance and Prospects. 2009. Web.
Pacific Islands Report, GAO-08-732, Web.