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  • Republic of Palau
  • Donald R. Shuster (bio)

The major issues for 2007–2008 were the activities of the Republic of Palau (ROP) executive and the National Congress (Olbiil Era Kelulau, or OEK); relations with the United States, Taiwan, and Indonesia; the special prosecutor; fishing; and activities of the rural states.

President Tommy E Remengesau Jr is nearing the end of his eight-year presidency and departing as one of Time magazine's "heroes of the environment" for his Micronesia Challenge initiative. This commitment involves the conservation of 30 percent of a nation's marine environment and 20 percent of its terrestrial resources by the year 2020. All the states of the Federated States of Micronesia (FSM), Palau, the Marshall Islands, Guam, and the Commonwealth of the Northern Mariana Islands have signed on to the [End Page 136] challenge. Remengesau attended the Bali international conference on the environment, and Minister of State Temmy Shmull accepted a $3. 6 million grant from the European Union to fund renewable energy and sustainable alternative energy projects. Remengesau met briefly with US Secretary of Interior Dirk Kempthorne while attending the tenth annual Coral Reef Task Force meeting in Washington DC. At a series of conferences to celebrate Israel's sixtieth birthday (1948–2008), Remengesau called on the assembled leaders to develop alternative renewable energy sources, including wind, solar, and water. The conference moderator, former British Prime Minister Tony Blair, commended Remengesau for his brevity and passion. Israel has assisted Palau with fish farming, medicine, and radiology. Furthermore, in April Taiwan donated a half million dollars to the Micronesia Challenge trust fund and, perhaps inspired by this action, the Netherlands, Germany, Italy, and Spain also agreed to contribute.

President Remengesau presented a $67. 9 million budget to the Olbiil Era Kelulau in July 2007, rather than in April as usual. The budget included a $10. 3 million deficit that the president maintained could be covered by an increase in taxes as recommended by a Tax Task Force. The National Congress balked and Palau did not have an approved budget on 1 October 2007, the beginning of the fiscal year. The disappointed president finally approved a compromise budget of $59. 4 million at the end of November. The National Congress agreed on increases to the hotel room tax and fish export tax, and addressed other tax increases on advice from World Bank and Asian Development Bank experts.

The big event of the year was the official opening of the US-funded, fifty-three-mile, $149 million Compact Road on Independence Day, 1 October. An engineering marvel that tested the resolve of Daewoo Engineering and Construction Corporation by running badly over budget and beyond all timelines, the road is a magnificent achievement of design and construction. The US Army Corps of Engineers will be responsible for clearing future landslides, and some twenty Daewoo workmen will remain in Palau for the one-year road warranty period. Remengesau is also hoping to enhance his legacy with the completion of the $11. 9 million Koror-Airai arterial road rehabilitation project by Japan's Nishimatsu Construction Company. The current urban road system, built in 1980–1981, is well worn.

By executive action, Remengesau created the Oil and Gas Task Force. With representation from most segments of Palauan society, the group, chaired by Senator Santy Asanuma, recognized that it still needed to enlarge its membership, being "duty bound to safeguard and protect the varying interests of all Palauan stakeholders, inclusive of both the national and individual states without prejudice" (TB, 11–17 Jan 2008, 2; emphasis added). The World Bank has provided $223, 300 to finance technical assistance to the task force, including consulting services to develop a hydrocarbon code and model agreement, petroleum operation regulations that respect environmental regulations, and hydrocarbon tax regulations. [End Page 137] This is all taking place without knowing whether or not oil exists in commercially valuable quantities north of Kayangel Atoll, the northern-most island area in Palau.

In light of the terrible consequences of the 2006 bankruptcy of the Pacific Savings Bank, Remengesau signed into law a bill amending the Financial Institutions Act of 2001. The amendment will require an annual external audit of all banks...


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pp. 136-143
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