Republic of Palau

Activities of Palau's president and National Congress, relocation of the national capitol, the Taiwan-sponsored summit with its Pacific allies, advances in conservation and environmentalism, preparations for compact review, establishment of diplomatic relations with Russia, and the collapse of the homegrown Pacific Savings Bank were some of the major events that took place in the Republic of Palau during the year under review.

As of January 2008, President Tommy E Remengesau, Jr, has one year remaining in his second four-year term and is ineligible to run for office again in November 2008. Nevertheless, he has remained very active. During the year under review he met with the presidents of the other freely associated states (the Federated States of Micronesia [FSM] and the Republic of the Marshall Islands [RMI]) at their sixth summit in Majuro, RMI. Perhaps their most important achievement was the agreement to begin implementation of the Micronesian Challenge, whereby signatories pledge to have 30 percent of their nearshore marine areas and 20 percent of their forest resources under environmental protection by 2020. The three leaders also made progress in completing treaties for the extradition of criminals and maritime boundary delimitations. At meetings with the chief executives of Yap, Guam, and the Commonwealth of the Northern Mariana Islands (CNMI) held in Yap, FSM, in late July, more agreements were made regarding the financing of the Micronesian Challenge conservation effort. Progress in recycling and the removal of metallic waste was reported. With the assistance of Japan, Palau has implemented a robust program of recycling and segregation of solid waste in Koror, and the once unsanitary town dump has been contained and capped, now forming a grassy hill. The leaders explored the idea of bulk fuel purchases to gain better prices and considered more active efforts in development of renewable energy sources. Perhaps Remengesau's most important overseas visits were to Saipan, CNMI, where he joined in the opening of the 2006 Micronesian Games, and to Paris where he met with President Jacques Chirac. In Israel, Remengesau and his party met with top Israeli officials, who expressed their appreciation for Palau's support in the United Nations. The Israeli officials were amazed to learn that one of Palau's National Congress senators, Alan Seid, is of Jewish descent, and that Palau's ambassador to the United Nations, Stuart Beck, is also Jewish. The president and his party visited several holy sites in Jerusalem, including the Wailing Wall.

At home, landslides along the impressive US-financed Babeldaob compact road and skirmishes with the National Congress over the 2007 budget kept the president occupied. Because of ongoing disagreement over the budget, the congress had to pass a continuing resolution to keep the government working. Finally, in early January 2007, a budget law was passed and signed, totaling some $57.6 million. After three months of heated debate between the congress and the executive branch, compromises were reached on nine items that had been holding up the process: closure of Palau's consulate offices at Guam and Saipan, hiring of a bureau director in the Ministry of Education, pension plan contributions, rental payments to Palau's rural states, the scope of presidential reprogramming of budget funds, the status of the public auditor, financing for state capitol improvement projects, and the hiring of an independent special prosecutor to examine the Pacific Savings Bank collapse.

The relocation of the national capitol from Koror to Melekeok State was a defining event that coincided with the near completion of the fifty-three-mile Babeldaob circle road, which has been built using $150 million in US compact funds. Palau's Constitution of 1979 called for moving the capitol, and in the 1980s leaders from Melekeok persuaded the National Congress to designate Melekeok as the location; they donated a large hill, Ngerulmud, to serve as the site. As one of Palau's four ancient polities, Melekeok had been eclipsed by Koror because of Koror's popularity with foreigners. The new capitol consists of four buildings in classic Greek-Roman architecture: a three-story congress building complete with an impressive dome, a two-story judiciary...