Palau experienced an especially busy year from July 2004 through June 2005. Major events included Palau's magnificent performance as host of the Ninth Festival of Pacific Arts; the seventh national elections; a local airline that flew and then collapsed; overseas interest in megaprojects; the beginning of a constitutional convention; and an international sports fest.

Magical, memorable, best ever, fantastic, overwhelming, and unprecedented were some of the adjectives used to describe the Ninth Festival of Pacific Arts, locally known as "Bestibal," which was held 22–31 July 2004. Representatives of twenty-seven Pacific Island countries and territories as well as three Asian nations engaged in nonstop feasting, dancing, singing, storytelling, art and literature demonstrations, musical performances, symposia, films, and concerts. It was an amazing cultural exchange that enlivened Palau and made Palauans proud as hosts. As [End Page 114] President Tommy E Remengesau Jr remarked, "The nation has come together. This is the true nature of Palauan culture when it comes to national events and national responsibility."

President Remengesau easily won reelection in November. For second spot in the executive, assertive and ambitious one-term Vice President Sandra Sumang Pierantozzi was defeated by retired US Army officer Camsek Elias Chin. Both winners campaigned hard. During the race, it was rumored that money from both Taiwan and the People's Republic of China was going to the presidential candidates, Remengesau and Polycarp Basilius. Although disavowed by the two candidates, the claims are consistent with reports about Taiwanese money going to presidential candidates in the Marshall Islands and Kiribati (Norris 2004, 20). On the vice-presidential front, Chin did not hold any fundraisers but relied on his personal finances and some donations, as did Pierantozzi.

The presidential race involved a wealthy, experienced politician coming out of retirement to challenge a youthful incumbent. Basilius used the Internet, media, and money, but began his campaign late, whereas Remengesau had superb grassroots organizing, a clear message, and raw energy. Remengesau won by a sizable margin, taking 66 percent of the vote (6,494 votes) to Basilius's 34 percent (3,268 votes). Pierantozzi, despite the advantage of being the incumbent, allowed uncertainty, tardiness, and overconfidence to weaken her chances of regaining office. She was soundly defeated by the very energetic, serious, down-to-earth Chin, who took 71 percent of the vote (6,919 votes) to her 29 percent (2,812 votes). Chin began his campaign early, about two years before the election, while Pierantozzi was questioning whether she should challenge Remengesau or concentrate on reelection to the vice presidency. The 2004 race was the third time in seven national elections that the winning vice-presidential candidate gained a greater number of votes than the victorious presidential candidate. It was the first time that an incumbent vice president failed to regain office.

In the race for the 25 National Congress seats, Palauan voters refused to put women in either the Senate (9 seats) or the House of Delegates (16 seats). The niece of former President Kuniwo Nakamura, Imelda Nakamura-Franz, was the top woman finisher with 3,102 votes in the Senate race, but that was more than 1,100 votes behind the ninth-place man. However, at thirty-five years of age, Nakamura-Franz should be a viable future contender. Surprisingly, four incumbent senators were replaced by business and social leaders: Alan Seid, Alfonso Diaz, Santy Asanuma, and medical doctor Caleb Otto. The members of the House of Delegates represent rather small constituencies —oddly called "states"—that range from 349 to 4,583 registered voters. Generally, competition for office in the states is a matter of who has the larger number of relatives. This means there is little turnover in House membership from election to election. In 2004, just one incumbent lost, another won by just one vote, a third by just eight votes, and a fourth by [End Page 115] nine. In three states, the incumbent ran unopposed, reflecting the villages' desire to avoid divisive competition.

As in the past six national elections (the first of which was held in 1980), voter turnout was high, some 76 percent for 2004. Besides choosing candidates, voters had six constitutional issues to tackle. Five issues had been strategically maneuvered onto the ballot by President Remengesau through a voter petition drive that garnered the required 25 percent, and a sixth was placed there by the National Congress. This had elements of shrewd politicking. The voters gave Remengesau most of what he sought by approving four of the five constitutional initiatives: dual citizenship, a three-term limit for members of the National Congress, a requirement that the presidential and vice-presidential candidates run on a joint ticket, and a requirement that congressional members be given a uniform fee in compensation for each day they attend an official session. Remengesau's initiative calling for a one-house legislature failed by a few votes when five of Palau's sixteen states turned it down by narrow margins (for example, Angaur went 150-yes to 152-no and Ngaremlengui voted 205-yes to 210-no). In addition, Palau's electorate approved a constitutional convention (ConCon) to review the 1979 document. Not to be outmaneuvered by the president, the National Congress placed the call for a ConCon on the ballot. Remengesau opposed this effort, claiming it would be politically and socially destabilizing. The convention issue was approved by 53 percent of the voters, although this count included 844 persons who left their ballots blank on this question. This was also the case with all the initiatives and indicates some confusion on the part of a sizable minority of Palau's voters.

Both before and after the national election, the National Congress and Remengesau found other issues to disagree on. The first debate concerned important details in the oil bill, which Remengesau argued must attend to the environmental and socioeconomic impact of oil-well drilling and include a spill mitigation plan, insurance, and limitations on a proposed national energy authority. He said he was opposed to any "super agency" that would take on regulatory functions for which it had no legal basis, capacity, or expertise (TBN, 10–17 Sept 2004, 15). On the last day of 2004, the National Congress passed a joint resolution supporting oil exploration north of Kayangel Atoll in the so-called Palau North Block. The deadline to drill an exploratory well is 15May 2006. The only company interested in prospecting is Palau Pacific Energy Inc, whose real corporate identity remains unknown.

Second, the constitutional amendment requiring uniform compensation for members of the National Congress passed, but the congress and Remengesau took months to get agreement on this issue. The pay issue was highly controversial, and, according to former House Speaker Antonio Bells, Remengesau was the most appropriate person to introduce the legislation. In the exchange of proposals, the president turned down retirement pay for congress members, but in mid-March he finally signed uniform compensation legislation allowing [End Page 116] them to be paid a maximum of $50,000, or $500 for each of the one hundred required sessions during 2005.

Third, as this issue was being sorted out, the National Congress and president began wrangling over the contents of the constitutional convention (Con-Con) bill. Basically, the congress wanted 31 to 37 members and a May starting date, whereas the president wanted 25 members and an October beginning. A compromise resulted in Public Law 7-4, which called for a 26 April election of 25 delegates to begin deliberations on 17May.

Fourth, seven months into fiscal year 2005, Remengesau and the National Congress were still debating the 2005 national budget bill. The budget began at $56 million, was cut to $55 million, then further cut to$52 million by Delegate Bells and Senator Asanuma, both fiscal conservatives. In his State of the Republic address, Remengesau attempted to patch up the differences by calling for cooperation and unity, emphasizing Palau's 2.5 percent economic growth. However, the budget battle continued and turned mean as each side slashed funds from the other's areas of responsibility. All this was going on amid factional skirmishes in both the House and Senate. Finally, on 18 May, President Remengesau signed a $52.6 million budget for 2005, using his veto authority to reduce funding for various state projects and grants.

President Remengesau achieved a number of other significant accomplishments. The Palau Constitution allows the chief executive to introduce legislation, and the president was the top bill author with twenty-two of his bills becoming law. The best the National Congress could do was six each by delegates Tony Bells and Kerai Mariur, and Senator Yukiwo Dengokl. Remengesau led the tsunami-relief effort, with Palau contributing some $50,000. He also led Palau's tenth Independence Day celebration and the impressive inauguration of the seventh constitutional government in late January 2005. Remengesau was able to persuade Taiwan's president, the Honorable Chen Shui-bian, to attend the inaugural ceremonies. Accompanied by extremely tight security, Chen spoke to a joint meeting of Palau's leaders—the first such address by a visiting head of state. In April, Remengesau made a return visit to Taiwan for talks with President Chen regarding the two countries' bilateral relationship and economic projects. He also participated in the opening ofthe new Royal Hotel Chiao Shi Resort, the sister of the Palau Royal Resort Hotel (TBN, 22–29 April 2005, 15). Palau's Royal Resort is a five-star, $25-million-dollar structure underwritten by the Hotel Royal Group. In June, Taiwan Vice President Annette Lu made a three-day visit to Palau forthe grand opening of the Royal Resort, receiving state visit treatment. Besides opening the new six-story hotel and planting a tree of friendship, Madame Lu announced an increase of direct flights from Taiwan to Palau and additional scholarship opportunities in Taiwan for young Palauans. She, too, moved about only under heavy security protection.

In other promotional activities, Remengesau visited Darwin, Australia, and Japan, to drum up business [End Page 117] for Palau. In Darwin, the push was for passengers to fill up Palau's homegrown airline, which would make weekly roundtrip flights there, and to begin reciprocal trade. In a short time, however, these initiatives flopped. In Nagoya, Japan, Remengesau spoke about opportunities for investment, tourism, and retirement. The short-term prospects for a retirement "town" in Palau are uncertain, though, now that Japanese retirees have attractive, low-cost options in Thailand and Malaysia.

During the period under review, President Remengesau received three new ambassadors: Stanislav Slavicky of the Czech Republic, Damien Gamiandu of Papua New Guinea, andAxel Weishaupt from the Federal Republic of Germany. Palau also expanded its ties with four additional foreign countries—Greece, Argentina, Iceland, and Austria. Palau now has diplomatic relations with 37 of the United Nations' 191 countries. In other international business, Remengesau met for two days of consultation with Secretary General Greg Urwin of the Pacific Island Forum, who sought Palau's input on the Pacific Plan designed to strengthen regional cooperation and integration. That matched up well with the president's call for a united Pacific. Soon after, Remengesau visited the US Territory of Guam for the fourth meeting of the Western Micronesian Chief Executives, which included Palau, Yap, Guam, and the Commonwealth of the Northern Marianas. These talks centered on issues of recycling and disposing of solid waste, protecting coral reefs, increasing jet airline service, building a regional medical center, jointly negotiating for medical referral rates with Philippine hospitals, and joint tourism marketing.

Palau's new vice president, Elias Camsek Chin, 55, holds the minister of justice portfolio, a position he also held during the administration of former President Kuniwo Nakamura. Early in his term Chin attended an environmental conference in Mauritius, an island nation in the Indian Ocean. After that, Chin met with high-ranking US officials to review implementation of compact provisions. Topics of special concern were a saltwater desalination unit, maintenance of the Compact Road, security at Palau's airport and seaport, and terrorism response and preparedness. Chin also traveled to Japan to deliver a guest address at the opening of the Global Linkage Forum on disaster management. The forum was held immediately after a ceremony Chin attended for the tenth anniversary of Japan's Hanshin-Awaji earthquake.

Palau's home airline, Palau Micronesia Airline (PMA), went out of business (diplomatically called "a suspension of flight operations") in December 2004 after five months of financial struggle. The founding investors had not realized the high operating costs of jet airliners (especially when they are nearly empty), the fierce competition for passengers, and the unprecedented acceleration in fuel costs. After a company restructuring, there were hints of service resuming in May 2005, but that did not happen. However, one of the original PMA investors, Senator Alan Seid and his company Midcorp, reportedly bought the domestic airline Palau TransPacific Airline Inc, also [End Page 118] known as PAir, which had been flying the Taiwan-Palau route since 2002. Seid announced that with the Palau-Taiwan bilateral air agreement, PAir will resume four flights per week to Taiwan in July 2005. Hopefully, PAir under Seid will have a longer life than Palau Micronesia had. In the meantime, it is not known who will bear the financial losses of the PMA demise. As reported last year (Shuster 2004, 181), the founding five individuals provided the start-up capital of half a million dollars, stock sales brought in $3 million, the Pohnpei State Legislature invested $500,000, and Yap State invested $1 million dollars. Furthermore, the National Development Bank of Palau provided a $1 million loan from a $5 million loan obtained from the International Commercial Bank of China. It appears that the bank provided a second $1 million based on collateral in the form of land put up by each of the airline's founding members.

Golf-course proposals for Airai and Aimeliik (states near Palau's airport) remained stalled during the year. However, other megaprojects have emerged. The most outlandish is the $2.1 billion Nautilus City being proposed for southern Peleliu. The so-called city would include an airport (built on the World War II fighter strip), 3,000 hotel rooms, villas, recreation facilities, a golf course, a casino, and a marina. Being advocated by Peleliu Governor Jackson Ngiraingas and foreign investors from Malaysia who call themselves UK Investment Holdings Limited, the project faces obstacles in terms of land availability, antigambling legislation, environmental protection regulations, and freshwater availability. President Remengesau advised the chief executive of UK Investment that he should obtain additional assurances regarding the abilities and identities of some the principal investors and stop claiming that the Palau government and Remengesau have endorsed the project. In spite of the obstacles, Palau's sixteen state governors have unanimously endorsed the grandiose Nautilus proposal.

Another megaproject, valued at $400 million, is being proposed for Melekeok State (earlier to Ngiwal State) by the Shimao Group of the People's Republic of China. This project would be constructed over the period 2006–2010 and would consist of 300 hotel rooms, casino, golf course, aquarium, yacht club, and shopping center, as well as seaside and hillside villas. The Shimao Group project has been presented to Melekeok's leaders, and some members of the National Congress were wined and dined in Hong Kong and Shanghai during May trips sponsored by the investors. In a semi-official May visit to Hong Kong, Remengesau met with the Shimao Group for a briefing about the Melekeok proposal. He also met with Hong Kong Air and tourist officials and obtained assurances for direct flights between Hong Kong and Palau beginning in mid to late 2005. Such flights would take only four and a half hours. Taiwan's new Palau Royal Resort and the older Palau Pacific Resort (built with Japanese backing) would be ready to receive the visitors.

The Shimao Group is calling its Melekeok project "Blue Dream" and has been quite explicit about what [End Page 119] Palau needs to do to land it: extend land leasing from 50 to 99 years; provide exemptions to some environmental requirements; allow a fifty-year exclusive casino license; grant a foreign investment permit; and provide adequate water, power, wastewater, and telecommunication services. The Shimao Group is reportedly a Shanghai-based real estate company that specializes in developing high-end properties. Its leader is Hui Wing Mau (also known as Xu Rongmao), supposedly China's third richest man. In addition to the resort, Shimao wants to build 1,000 housing units for foreigners, also in Melekeok (TBN, 3–10 June, 1–15 July, 1–8 July 2005). The Chinese Communist Party-State under Deng Xiaoping, Jiang Zemin, and now Hu Jintao has relaxed its direct control of the economy except when a business becomes large and powerful. One must wonder if the Shimao Group in league with the Chinese Communist Party-State has the covert goal of displacing Taiwan in Palau. An astute local businessman even speculated that Palau's local politics might stimulate an international incident involving Taiwan and the People's Republic.

The second constitutional convention (ConCon 2) began with an election of delegates in April 2005. Legislation called for 16 state delegates (one per state) and 9 at-large delegates. Competition within the states was not as keen as for the at-large race, which had 34 candidates vying for just 9 seats. Attorney Johnson Toribiong was the top vote getter and became the convention president. This was an indication of the high esteem the delegates had for Toribiong, who served as vice president of Palau's first ConCon in 1979 and delegate to the Micronesian Constitutional Convention in 1975. Six other delegates to Palau's first ConCon won seats, bringing considerable continuity and experience to this convention. Further, the delegates chose the recording secretary of ConCon 1, Jonathan Koshiba, to serve again in this position for ConCon 2—another move toward continuity. In an effort to share prestige, the delegates elected other officers: Dr Stevenson Kuartei and Sinton Soalablai as vice presidents; attorney Raynold Oilouch as parliamentarian; Bonifacio Basilius as spokesperson; Laurentino Ulechong as floor leader; Palau Community College President Patrick Tellei as secretary; and former Palau Vice President Sandra Pierantozzi as treasurer. The convention was visited by many community groups, some with specific proposals for the delegates to consider and others simply to show support for the important work the convention was doing. The delegates also held public hearings in Koror and in all the rural states. The convention ended its deliberations in mid-June, concluding its work with 251 proposals. The delegates decided by majority vote that just twenty-two of these proposals will be presented as amendments to the republic's electorate during the 2008 national elections, as required by the constitution. A highly symbolic and emotional amendment-signing ceremony was held in the National Congress building on 15 July 2005, bringing ConCon 2 to a close (ph, 22–25 July 2005, 4).

Transparency International, a non-governmental [End Page 120] organization active in some ninety countries with the key mission of supporting good governance and transparency, gave Palau a generally positive report in 2004 (TIA 2004). The report noted that Palau's Office of Special Prosecutor and Office of Public Auditor were essential and important pillars of good governance. These offices, especially that of the special prosecutor, stayed busy during 2004–2005. Five former and current members of the National Congress either settled, were charged, or had court judgments rendered against them for misuse of travel funds, misconduct in public office, or both. Each of these cases was aired publicly, with a positive impact on legislative conduct generally. The national treasury has received over $300,000 in settlement payments or court fines resulting from successful suits against members of the National Congress. Prior to the China travel sponsored by the Shimao Group mentioned earlier, the House legal counsel reminded delegates that off-island junkets paid for by foreigners who have business interests in Palau might be problematic in terms of Palau's Code of Ethics law. Other legal action concerned the extradition of a Palauan who formerly worked at the US Embassy in Palau, and a group of people who were charged with operating Koror-town businesses—known locally as fronts—without foreign investment certificates. Furthermore, three state governors were under scrutiny by the special prosecutor and public auditor. The public auditor told Governor Tadashi Sakuma of Ngaraard State that he was not following the mandated procurement procedures. Peleliu Governor Jackson Ngiraingas was being hauled to court to answer the special prosecutor's charges of misconduct in office and violations of the Code of Ethics and Foreign Investment Acts. These charges concern Ngiraingas's allegedly illegal support of the Nautilus City mega-resort project. Ngiwal Governor Elmis Mesubed appeared before the Palau Supreme Court in June to answer 175 charges of criminal activity concerning the alleged misuse of nearly $23,000 of public funds.

Potentially the most serious problem for Palau is money laundering and its connection to terrorism. In September, both President Remengesau and Palau's Financial Institutions Commission urged the National Congress to strengthen the republic's financial institutions and anti–money-laundering legislation. This was in response to the Hong Kong and Shanghai Bank's decision to stop honoring wire transfers out of Palau, and the International Monetary Fund's deep concern that Palau was not strengthening its regulatory and supervisory mechanisms. While foot-dragging by congress members continued, Palau and Taiwan signed an agreement to cooperate in the fight against money laundering and the related financing of terrorism. The agreement calls for the sharing of information on the identity and movement of bad money, and the provision of technical assistance to improve Palau's investigative capacity.

At the United Nations, Stuart Beck has served as Palau's ambassador for nearly two years and Palau's profile has increased, although that has not [End Page 121] been easy. On behalf of the Palau government, Beck received a sizable monetary contribution from the Greek UN ambassador, but in February 2005 Beck commented on the difficulties of delivering UN assistance to Palau and other Pacific Island states. He urged that the United Nations station a representative in Palau and other small island states as the best way for the governments to access developmental opportunities and resources. Regarding the issue of expanding the Security Council, Beck stated that Palau supported Japan's bid for permanent membership. This subject was earlier broached by then Vice President Sandra Pierantozzi in an address to the fifty-ninth session of the General Assembly in September 2004. As a signatory, Palau was pleased to see the Kyoto Protocol come into force in February 2005. As a nation just meters above sea level, Palau will be drastically impacted if global climate change is not slowed and reversed. In other UN business, Palau gave notice of its withdrawal from the Group of 77 and China. The decision to withdraw from the Group of 77 was based on the realization that Palau was spreading its resources too thinly, and that its positions on environmental issues could be more effectively expressed through the Alliance of Small Island States.

Foreign nations continue to assist Palau, especially Japan, the United States, and Taiwan. Japanese assistance is broadly based and mainly channeled through the Japan International Cooperation Agency (JICA), which has an active office in Koror. JICA assistance consists of volunteers, youth invitations, technical cooperation projects, and grant aid. Presently, Palau has three JICA resident experts, eleven senior volunteers, JICA staffers, and twenty-four Japan Overseas Cooperation Volunteers. The volunteers serve two-year terms and are involved in teaching, research, museum, and hospital work. Ongoing infrastructure projects include major improvements to the three causeways leading from Koror to Airai, Meyuns, and Malakal. This work will significantly improve the safety of these roadways. Future work will include construction of an interisland access road, and resurfacing and reconstructing Koror's twenty miles of road, now nearly twenty-five years old. Furthermore, officials from both Palau and Japan signed papers agreeing to complete a solid-waste management project. Apparently this effort will include the development of a national plan to reduce the amount of solid waste, improve waste disposal, improve Koror's landfill at M-Dock, and provide training in waste management.

The Taiwanese have been interested in Palau ever since 1981, when, for the inauguration of the first government, the visiting delegation from Taiwan went through the airport receiving line twice to assure they were noticed by the local VIPs. When in Palau for the January 2005 inauguration of the seventh government, President Chen Shui-bian addressed the National Congress, and his message to the people of Palau was printed in the local newspaper. He mentioned basic infrastructure, agriculture, fisheries, education, and medicine as cooperative programs. He stated that tourism and investment [End Page 122] were mutually beneficial and "can only grow stronger and more enduring with the passing years." Also, he complimented Palau on its beauty and keen political leadership, and thanked Palau for its voice of support for Taiwan at international organizations such as the United Nations and the World Health Organization. In his message, President Chen did not mention the "one-China" versus "two-China" issue except indirectly: "With unwavering courage and determination, Taiwan will absolutely continue to fulfill its rights and duties within the international community, and contribute to the common good with vigor." Also, he claimed that the "universal value of self-determination is a common conviction of both nations, and serves as the foundation for our cooperation in the international arena" (TBN, 28 Jan–4 Feb 2005, 14).

Besides the $20 million loan a few years ago from Taiwan's International Commercial Bank of China for phase two of Palau's national capital project in Melekeok, Taiwan this year provided grants for short roads—$640,000 to Aimeliik for a 500-yard-long road, $130,000 to Ngchesar for a road/causeway project, and $1.1 million for a connecting road—as well as another $409,000 for a water system in Melekeok. The capital's need for a wastewater system was also met by a $2.4 million grant from Taiwan. This system will recycle the treated wastewater instead of discharging it into the ocean.

The Taiwanese "Fleet of Friendship," consisting of a frigate, a supply ship, and 530 navy officers and graduating cadets, visited Palau in June 2005 without comment from the United States. Tia Belau News carried a full double-page description of resident Chen—his life, career, and vision—and outlined the Palau-Taiwan political relationship. The early May 2005 issue had two full pages celebrating twenty years of agricultural cooperation. In October 2004, leaders from both republics had celebrated "Double Ten"—the ninety-third anniversary of the founding of the Republic of China—with much feasting and toasting. On 29 December 2004, on the fifth anniversary of the establishment of diplomatic relations, President Remengesau and Ambassador Clark Chen unveiled four postage stamps commemorating this event. The stamps recognize the Taiwan Technical Mission, the grand Ngarachamayong Cultural Center, a goodwill visit of the "Fleet of Friendship," and the Belau National Museum. The center and museum were built with large grants from Taiwan.

In a meeting of the Palau Rotary Club, Deborah Kingsland, chargé d'affaires at the US Embassy in Koror, outlined US objectives in the Pacific, including creating stability, ridding the region of terrorism, positively integrating China into global and regional institutions, and irreversibly dismantling North Korea's nuclear program. She also noted that the freely associated states are key allies for the United States, as are Australia, Japan, South Korea, Thailand, and the Philippines. Kingsland did not mention the tension in the Taiwan Straits or the US refusal to sign the Kyoto Protocol, but she did state that climate change was a high priority [End Page 123] issue for the United States. US total direct payments under the compact for Palau government operations for fiscal year 2005 declined by about $2million to $12.7 million. The fifty-three-mile compact road around Babeldaob is nearly 50 percent paved, and Daewoo, the main contractor, stated that the project will be completed by December 2005—weather permitting.

US Interior Department Deputy Secretary Lynn Scarlett and Assistant Secretary David Cohen led a fifteen-person trade mission to Palau in May. The objective of the mission was to explore business opportunities in Palau, and the group was made up of business executives, college administrators, and hoteliers such as Manfred Pieper of the Guam Hilton Resort Hotel. No doubt the visitors noted that, with just 20,000 people, Palau represents a small market in a very distant location, but one that is just three hours from most of the major capital cities of Asia.

VIPs cut ribbons for the $3.6 million Malakal Natural Wastewater Treatment Park, built with grants from the United States. The new facility doubles the capacity of the old one and combines mechanical and natural methods of treating wastewater. However, the resultant fluid is discharged into the ocean, and no one knows what it will do to the ecology of Malakal Harbor. A three-year technical assistant grant for $640,000 was provided to Palau's Ministry of Resources and Development. The grant will complete the Palau Automated Lands and Resources Information System (PALARIS), which gives Palau the capacity to inventory, support, and manage its cultural, economic, human, and natural resources. The development of PALARIS has been ongoing for twenty years with several million dollars of support from the US Interior Department. The US Federal Aviation Administration made a huge grant of $26 million over three years to upgrade the Palau International Airport in Airai. Some $19 million will go to resurfacing the runway and repair the apron and taxiway; $2.5 million will be used for aircraft rescue and firefighting (ARFF) equipment as well as a building; the remainder of the funding will be used for ARFF trucks, loading bridges, perimeter security fencing, and an airport master plan. The US Department of Agriculture will make $1.4 million of grant funds available to Palau for a wide variety of needs at the Ministry of Education, Bureau of Public Safety, and Environmental Quality Protection Board.

Australia also continued its assistance to Palau in important ways. The first was "Operation Island Chief," consisting of joint sea patrols to catch fish poachers. This was a combined effort on the part of Australia, Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands, using fast patrol boats donated by Australia. It resulted in twenty-seven boardings and over $310,000 in fines meted out to four illegal vessels. Other assistance included several days of basic police training, equipment and training for environmental monitoring, computer software for the [End Page 124] Ministry of Health for supplies inventory, and help to the community centers at Peleliu and Ngarchelong.

Palau has yet to establish diplomatic relations with Indonesia, its huge neighbor to the south. Minister of State Temmy Shmull stated that there are boundary issues that need to be resolved. During its brief period operating to and from Darwin, Palau Micronesian Air apparently had approval to fly through Indonesia's airspace, but that was later questioned in terms of bureaucratic procedures. Fortunately, the overflights ended before problems escalated.

Palau lost some important people during the year. Particularly tragic was the death of twenty-four-year-old US Marine Jay Gee Ngirmidol Meluat. He was Palau's first casualty in the Iraq war. Currently Palau has other young men and women in the US military in both Iraq and Afghanistan. Expert carpenter and teacher, Isidoro Polloi, 63, drowned in a freak boating accident while fishing. Tkedesau (chief) Asao Rengiil passed away in September 2004. He was a ranking chief in two states and worked for the Palau government for over thirty years. Masami Asanuma, who was a contemporary of Roman Tmetuchl, Indelecio Rudimch, and Ngiratkel Etpison, passed away at nearly 90 years of age. Asanuma held the distinguished chiefly title of Sechalrraimul. He began a small store in 1947 and built it into the fifth largest retailer in Palau, which his son, Senator Santy Asanuma, carries on. Former Congressman Mengiraro Ngiratechekii, a longtime teacher at Palau's Seventh-Day Adventist High School, died at the relatively young age of 65. Another important Palau businessman, Tmilchol Bechesrrak, passed away at 88. Like Asanuma, Bechesrrak exemplified the values of hard work, discipline, and determination. He held the chiefly title of Remeliik. Lastly, a unique and Socratic-like person, Jonathan Olsingch Emul, died at age 78. Well known, outspoken, and quick-witted, Emul had a long career in public service that included political and educational leadership. He was often sought out by both local and visiting researchers for his clear memory of events spanning the Japanese and American periods in Palau.

Leading women of Palau assembled in their fourteenth annual Mechesil Belau Conference. As at past meetings, the women were deeply concerned with social problems and changes in customs. The social problems included sexually transmitted diseases, prostitution, suicide, domestic abuse, and disobedience among the youth. The women were also concerned that proper customs regarding funerals were not being followed. In addition they complained about foreign workers and lobbied for changes in the laws and regulations covering such workers. The women addressed many of their concerns to government leaders and requested their support.

The Supreme Court lost Justice Barrie Michelsen to resignation after eight years of service. President Remengesau appointed Judge Mary Lourdes Materne as Michelsen's replacement. She joins Associate Justices Larry Miller and Kathleen Salii, and Chief Justice Arthur Ngiraklsong, balancing the court with two women [End Page 125] and two men. Palau Community College was accredited for six more years after being evaluated by the Junior Commission of the Western Association of Schools and Colleges. The college received $20,000 from UNESCO to assist in implementing a new associate degree in library and information services; it also began free classes in Mandarin language in January.

Palau's connection to Japan is both contemporary and historic and the sixtieth anniversary ceremony of the Battle of Peleliu reinforced that truth, as has the impressive work over the years of the BentProp Project, led by Dr Patrick Scannon of San Francisco. Scannon brought Mr Tommy Doyle to Palau in 2005. With President Remengesau, they used scuba gear to visit the crash site of the US B-24 bomber that carried Doyle's father, Sergeant Jimmie Doyle, to his death after a 1 September 1944 bombing run on Japanese facilities and forces in Palau. The aircraft is in about seventy feet of lagoon water and was miraculously found in January 2004 by Scannon and his team, aided by an elderly Palauan fisherman. A few years earlier, BentProp found a US Navy Avenger aircraft on Peleliu. This plane had carried three airmen. Based on BentProp's search work, both crash sites were excavated in early 2005 and remains were recovered at the sites by navy specialists working closely with specialists from the Joint POW/MIA Accounting Command (JPAC) located at Hickam Air Force Base, Hawai'i. Scannon had the honor of being invited by the military to accompany the remains recovered from the B-24 site to the JPAC facility, where they will be identified. David Major of Post Star Productions filmed the entire event. The recovery and transportation teams received the full cooperation of President Remengesau and his staff, High Chief Reklai, and Senator Surangel Whipps and his son, Mason.

Almost exactly a year after the Festival of Pacific Arts, Palau welcomed more than 2,100 Pacific Islander athletes and officials for the Seventh South Pacific Mini Games, 25July–4 August 2005. Twenty Pacific Island nations and territories were represented. It is anticipated that the games will be as successful as the "Bestibal."