Palau

The purpose of this Country Strategy Paper (CSP) is to provide a framework for EC co-operation with Palau under the Cotonou Agreement. The framework is based on global objectives of EC-ACP co-operation, country’s own development policy, an analysis of the political and economic situation in the country, and an assessment of the past co-operation programmes of the EC and other donors. It concludes with the proposed EC response strategy of the 10th EDF and an Indicative Programme.

Palau is an archipelago comprising over 586 islands and is located approximately 250 kilometres north of the Equator and about 340 kilometres east of the Philippines. Palau has a combined land area of approximately 525 km2 and an exclusive economic zone (EEZ) of 600,000 km2. Its population is around 20,200.

Palau became signatory to the Cotonou Agreement on 23 June 2000. Under the 9th EDF the focal sector was renewable energy.

Palau achieved independence from the United States in 1994 when it signed a Compact of Free Association by which Palau will continue to receive direct financial assistance of around US$ 27 million a year until 2009. With a per capita GDP estimated at US$ 7,600 in 2006, Palau has one of the highest standards of living of the Pacific island countries. However, wealth and development are unevenly spread throughout the country, with the more isolated areas lagging behind.

Palau has a unique ecosystem which is in relatively good condition, even though it can no longer be called pristine in some areas. The Biodiversity Convention considers Palau a biodiversity ”hotspot“. Given the major economic role of tourism, sustained economic development is dependent on the integrity of an environment under increasing pressure from development, which is potentially incompatible with fragile island ecosystems.

Under the 10th EDF Palau has chosen to target the Water and Energy sector (especially the identification and use of new and renewable energy sources) to be implemented, if deemed feasible and desirable, via a Multi-country Programme. The A envelope (programmable funds) for Palau is € 2.9 million and the B envelope (funds for certain unforeseen needs) is € 0.3 million.

It is proposed to allocate 85 percent of the A envelope or € 2.47 million for the development of renewable energy. Non State Actors will be encouraged to participate in the implementation of the programme. The remaining 15 percent (€ 0.43 million) will be to establish a Technical Co-operation Facility from which necessary Technical Assistance, studies and other EDF-related activities will be funded.