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Defining Palau’s Foreign Policy

A nation’s economic development must deliver its promises of educating its children, pay for healthcare, and provide safety and security to the people. To foot these bills, the costs are huge for a small island nation with small population and scant resources to encourage an economy of sufficient size.

Palau, like many other island countries, struggles to generate enough revenue to provide for these services.

Since becoming an independent nation 22 years ago, Palau has set up its own foreign policy and pursued its national interests. It has established bilateral and multilateral relations to support a government that can provide the public services its citizens have come to expect today.

In simpler terms, Palau must be able to generate sufficient revenues instead of relying on the annual Compact funding from the United States and millions of dollars’ worth of foreign assistance largely from Japan and Taiwan for physical infrastructure and development programs.

Palau follows the familiar path of establishing an economic base by putting in place its national infrastructures including network of roads, electricity and water system. It has sent its children as far as Cuba for medical doctor’s training, and has widened opportunity for educational scholarship from many of Palau’s diplomatic partners leading President Tommy E. Remengesau Jr. to say, “More scholarships available than there are students graduating.” Ensuring Palau continues its economic progress and maintaining close relationship with the United States, Japan, and Taiwan form a backbone of Palau’s foreign policy.

The other area of Palau’s foreign policy is the development of the tourism industry.

The Palau National Marine Sanctuary Act has in a way provided the direction as to where Palau is going in regards to developing its tourism industry. Currently, a task force is putting together a tourism policy for Palau. The PNMSA provides guidance pending completion of a spelled-out or articulated policy.

The Palau National Marine Sanctuary Act shifts Palau’s economic development focus and foreign policy to tourism. This has been expressed well by Justin Alger, a visiting scholar from the Sydney Environment Institute, as part of his research “Marine Conservation as Economic Policy in Palau.” He clarified that closing off the entire exclusive economic zone to foreign fishing and establishing the 200,000-square miles Palau National Marine Sanctuary was not just about marine conservation; rather, it is a component of a plan intended to strengthen Palau’s economy in the long-run.

Palau is heavily dependent on tourism, which accounted for 54 percent of the nation’s GDP in 2015. A small amount of commercial fishing also occurs in Palau, but the majority of the profits it generates do not stay in the country. These two features of Palau’s economy were integral to Palau’s decision to establish the marine sanctuary.

The marine sanctuary also serves an important branding purpose. The slogan “Pristine Paradise Palau” has been adopted in an effort to attract high-end, high-value visitors and stay clear of mass tourism. The target niche market, which centers on low-impact tourism, constitutes eco-tourists who leave fewer footprints on the environment but spend more dollars that stay in the local economy.

In April 2015, the government initiated a policy to reduce the number of charter flights from China to Palau, in a serious effort to control mass tourism. In return, Palau was able to get Japan’s blue chip airline company, the All Nippon Airways, to provide a charter service to Palau.

But more has to be done by Palau to reap economic benefits from its marine sanctuary.

A revamped tourism industry and a commercial fishing industry make up Palau’s ambitious plans for the marine sanctuary, but the nation faces too many challenges to realize these goals.

Definitely, Palau has started to receive financial support and pledges from a number of governments and NGOs to assist with various elements of the PNMS.

Alger reminds us that “these partnerships will be an important part of Palau’s strategy to implement this legislation. These challenges notwithstanding, the PNMS is a marine conservation initiative that explicitly intends to fundamentally alter a national economy. This makes it in the very least unique in its ambition.”

And that is where Palau’s diplomatic efforts should be strengthened to unlock these potential resources for Palau’s marine conservation policy to deliver the economic development and its promises.


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