History
Spain claimed the Caroline Islands (Palau and FSM) in 1855 but, following the Spanish defeat in the Spanish-American War, the islands were sold to Germany (1899).

During the First World War (1914-1918) Palau was occupied by the Japanese. After the War the League of Nations allowed Japanese colonization.

At the end of the Second World War (1939-1945) Palau passed to the Americans. The US administration began in 1947 - the islands were part of the Trust Territory of the Pacific Islands, under United Nations authority. Other members of the Trust Territory were the Federated State of Micronesia (FSM), the Marshall Islands and the Northern Mariana Islands.

In 1979 Palau, and the combined States of Chuuk, Kosrae, Pohnpei, and Yap (the Federated States of Micronesia), gained separate status and in 1981 the Republic of Palau came into existence.

Palau became independent under a 50-year Compact of Free Association (COFA) with the US in 1994: financial aid is received from the USA in return for US control over defence affairs and the right to establish military bases.

Economy
The Compact of Free Association with the USA provides Palau with financial aid. Revenue is also gained from overseas countries for fishing licences.

Some of the people are engaged in subsistence fishing and farming. Around half of the working population is employed by the government. Industries include construction, copra, garments and craft products.

Tourism is an important earner of foreign currency. The aim of the tourist industry is to promote Palau as an exclusive tourist destination. Many visitors are from East Asia countries. (2011)

Arts
Crafts reflect the old way of life in Palau: canoe building, weaving and woodcarving.

Carving was a way of documenting history. Events were carved and painted on the wooden beams of meeting houses. Today, histories are reproduced on pieces of wood known as storyboards.

Chanting is another traditional means of telling stories and transmitting history. Dances, performed by village groups, are a highly developed art form.

Sport
Baseball, basketball and volleyball are popular in Palau.

Palau is famous for its dive sites. Other water sports are kayaking and big game fishing.

Holidays
Easter, Christmas and New Year are celebrated. Other holidays include Independence Day - 1 October and Thanksgiving Day - 25 November.

News
News from Palau is available from Newslink.

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