Flag of the Republic of Palau

Palau, officially the Republic of Palau, is an island country in the Micronesia subregion of Oceania in the western Pacific Ocean. The Republic of Palau consists of approximately 340 islands and is the western part of the Caroline Islands, while the eastern and central parts make up the Federated States of Micronesia. It has a total area of 466 square kilometres (180 sq mi), making it the sixteenth smallest country in the world. The most populous island is Koror, home to the country's most populous city of the same name. The capital, Ngerulmud, is located on the largest island of Babeldaob, in Melekeok State. Palau shares maritime boundaries with international waters to the north, the Federated States of Micronesia to the east, Indonesia to the south, and the Philippines to the northwest. The country was originally settled approximately 3,000 years BP by migrants from Maritime Southeast Asia. Palau was first drawn on a European map by the Bohemian missionary Paul Klein based on a description given by a group of Palauans shipwrecked on the Philippine coast on Samar. Palau islands were made part of the Spanish East Indies in 1885. Following Spain's defeat in the Spanish–American War in 1898, the islands were sold to Germany in 1899 under the terms of the German–Spanish Treaty, where they were administered as part of German New Guinea. After World War I, the islands were made a part of the Japanese-ruled South Seas Mandate by the League of Nations. During World War II, skirmishes including the major Battle of Peleliu were fought between American and Japanese troops as part of the Mariana and Palau Islands campaign. Along with other Pacific Islands, Palau was made a part of the United States-governed Trust Territory of the Pacific Islands in 1947. Having voted in a referendum against joining the Federated States of Micronesia in 1978, the islands gained full sovereignty in 1994 under a Compact of Free Association with the United States. Politically, Palau is a presidential republic in free association with the United States, which provides defence, funding, and access to social services. Legislative power is concentrated in the bicameral Palau National Congress. Palau's economy is based mainly on tourism, subsistence agriculture and fishing, with a significant portion of gross national product (GNP) derived from foreign aid. The country uses the United States dollar as its official currency. The islands' culture mixes Micronesian, Melanesian, Asian, and Western elements. Ethnic Palauans, the majority of the population, are of mixed Micronesian, Melanesian, and Austronesian descent. A smaller proportion of the population is of Japanese descent. The country's two official languages are Palauan (a member of the Austronesian language family) and English, with Japanese, Sonsorolese, and Tobian recognised as regional languages.