Prior to its independence in 1994, the Republic of Palau was a United Nations Trusteeship under the administration of the United States. The Republic of Palau is the westernmost island cluster in the Caroline Island Group. By virtue of its position in the Pacific, about 800 kilometers east of the Philippines and 800 kilometers north of Papua New Guinea, Palau has the greatest marine biodiversity among all the islands in the Oceania group. The Palau archipelago stretches over 400 miles in a north-south direction from the atoll of Kayangel to the islet of Hatohobei. Palau consists of 586 islands, of which only twelve are continuously inhabited. The Exclusive Economic Zone of Palau extends 200 miles seaward from its coasts and comprises an area of approximately 600,900 square kilometers.
Although recognized as part of the Caroline island group, which features both volcanic and coralline islands, the western Caroline islands are exposed peaks of undersea ridges stretching between Japan and New Guinea and are not located on the Pacific Plate. Palau is located on the eastern edge of the Philippine tectonic plate close to the western edge of the Pacific Plate. The Palau, Yap, and Mariana Trenches that mark the subduction zone, where the Pacific plate is being driven under the Philippine plate, are some of the deepest waters on Earth.
Palau's natural terrain varies geologically from the mountainous high island of Babeldaob to coral atolls typically fringed by large barrier reefs. Palau's highest point is Mount Ngerchelchauus located in Ngardmau State on Babeldaob, the largest island in the Palau chain. The peak of Mount Ngerchelchauus is 242 meters above sea level. However, studies have determined that 25% of Palau's landmass is below 10 meters above sea level, which is significant in light of sea level rise trends. Palau's natural resources consist of one of the largest tropical rainforests in Micronesia, minerals (especially gold), natural gas deposits, marine products, and deep-seabed minerals.
The date of first human arrival to the Palauan islands is not known, though pottery uncovered in Babeldaob has been carbon dated to about 4,000 years ago. First foreign contact of significance occurred in 1783, with the arrival of the vessel Antelope under the command of English Captain Henry Wilson. Foreign governance of the Palau islands officially began when Pope Leo XIII asserted Spain's rights over the Caroline Islands in 1885. In 1899, Spain sold the Caroline Islands to Germany after Spain's defeat in the Spanish American War. Under German administration, three major economic industries were developed, phosphate and bauxite mining in Anguar and Babeldaob respectively, as well as copra production.
At the outbreak of World War I, the Japanese government assumed control over Palau in 1914. The League of Nations officially gave Japan control over Micronesia, including Palau in 1920. In 1922, Koror island became the administrative center for all Japanese possessions in the South Pacific. The population reached a record high of 40,000 people, of which fewer than 10 percent were native Palauans. During the 1920's and '30s, Japan further developed the phosphate mining industry, and expanded agriculture and fish exports. In 1947, following World War II, Palau became one of six island districts as part of the United Nations Trust Territories of the Pacific.
By the first foreign contact in 1783, Palau had already developed a sophisticated and highly organized social system. The matrilineal civilization was based on clans and chiefdoms, which are still very much part of the Palauan social structure in modern society. Villages were organized by clanships through the female line and subdivided into two political statuses. A Council of chiefs, comprised of a member of each of the ten ranking clans of a community, governed the village. Women had an important advisory role and were particularly influential in the control of land and money.
There were three major facets to the Palauan culture: prestige orientation, competition between individuals and clans, and reciprocity services. Kinship was the major determinant of social behavior, and each individual in Palauan society, from the moment of birth, had a definite rank in the village, clan, and family. This rank was based on family background and clan ranking, but achievement through individual merit was possible and aggressively sought.
Palau's society is a complex blend of old traditions and western concepts. Palau has maintained much of its traditional values, but life has changed dramatically with the introduction of western technology and money. Koror State, the provisional capital of Palau, is equipped with westernized infrastructure. The central importance of land and money as the root of wealth and power within Palauan society has not diminished with the various foreign occupations of Palau.
Palau's intricate system of bead-like money is still actively used both economically and socially in inter-clan payments for important events such as birth, marriage, divorce, and death. Although Palauan money is still used today for ceremonial purposes, land and other commodities are typically purchased using the US Dollar, Palau's current means of economic exchange. Land, for the most part, is considered to be owned by an entire clan and Palau's Constitution prohibits foreign ownership of land.