25 October 2011 Last updated at 11:56 ET

Palau profile

More than 200 volcanic and coral islands, many of them surrounded by a single barrier reef, make up the northern Pacific nation of Palau.

The scenery ranges from white sandy beaches with an abundance of marine life to dense jungle. Palau favours sustainable tourism, which along with foreign aid is the mainstay of its economy.

Palau became independent in 1994, after being part of a United Nations trust territory administered by the US for 47 years.

It relies on financial aid from the US, provided under a Compact of Free Association which gives the US responsibility for Palau's defence and the right to maintain military bases there. Direct aid was set to wind up in 2009, but the US agreed to an additional package of $250 million in January 2010.

At a glance

Politics: Became independent in 1994 after being run by the US
Economics: Heavily dependent on US aid. Some tourism. Fishing by foreign fleets contributes to national income.
International: One of few countries to recognise Taiwan

Country profiles compiled by BBC Monitoring

Tourism is low key, though growing in economic importance. Many visitors come from Taiwan, with which Palau has diplomatic ties. Taiwanese aid boosts the economy. The government is Palau's largest employer.

Monoliths and other relics are reminders of an ancient culture that thrived on the islands, and despite Western trappings many Palauans identify strongly with their traditions and rites.

Palau's recent history has been dominated by outside influences from Spain, Britain, Germany, Japan and the US. Palau saw some of the region's fiercest fighting in World War II.

There is concern that the low-lying islands could be badly affected by rising sea levels due to climate change.