Palau was initially settled more than 4,000 years ago, probably by
migrants from what today is Indonesia. British traders became prominent
visitors in the 18th century, followed by expanding Spanish influence in
the 19th century. Following its defeat in the Spanish-American War, Spain
sold Palau and most of the rest of the Caroline Islands to Germany in 1899.
Control passed to Japan in 1914 and then to the United States under UN
auspices in 1947 as part of the Trust Territory of the Pacific Islands.
Four of the Trust Territory districts formed a single federated Micronesian
state in 1979, but the districts of Palau and the Marshall Islands declined
to participate. Palau instead approved a new constitution and became the
Republic of Palau in 1981, signing a Compact of Free Association with the
United States in 1982. After eight referenda and an amendment to the Palauan
constitution, the Compact went into effect on October 1, 1994, marking
Palau's emergence from trusteeship to independence. Palau was the last
Trust Territory of the Pacific Islands territories to gain its independence.
Under the Compact, the U.S. remains responsible for Palau's defense for
While calm in recent years, Palau witnessed several instances of political
violence in the 1980s. The republic's first president, Haruo I. Remeliik,
was assassinated in 1985, with the Minister of State eventually found to
be complicit in the crime. Palau's third president, Lazurus Salii, committed
suicide in September 1988 amidst bribery allegations. Salii's personal
assistant had been imprisoned several months earlier after being convicted
of firing shots into the home of the Speaker of the House of Delegates.
Legislation making Palau an "offshore" financial center was passed by
the Senate in 1998. In 2001 Palau passed its first bank regulation and
anti-money laundering laws.
Palau was selected as the venue for the American TV series Survivor
for a 2005 season. This will almost certainly have an impact on tourism
and help to educate Americans about this former US possession.