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the EEZ is rich and under-exploited.
The country receives substantial US assistance
(US$23 million of a US$132 million economy)
and her citizens have visa-free entry to the USA.
Exports are mostly tuna, copra and garments.
The drug of local choice is marijuana, which
is grown locally and exported to Guam and
other Micronesian states due to its high quality.
Methamphetamine is a growing issue and is
the narcotic of choice in Palau. There have
been murders associated with it (the first being
in 2003 when a missionary and his wife were
killed by two users) and there has been a steady
number of cases progressing though the legal
system. The drug comes from two streams, high-
grade and expensive ‘crystal meth’ brought in by
courier and parcel post from the Philippines, and
lower-grade drug (shabu) also brought in from
the Philippines by sea and in cargo. There is, to
date, no evidence suggesting local manufacture.
It is easier to import it, indicting a breakdown in
law enforcement function. Palau forms a node
from which methamphetamines are exported to
Guam and other Micronesian states – and this
helps explain the establishment of a TCU there.
Significantly, law enforcement efforts against
methamphetamines declined between 2001 and
2006 due to a combination of sophisticated
smugglers and corruption of law enforcement
personnel. The number of arrests has risen
since, as has the scale and nature of the problem.
Aside from the usual postal and body-pack
smuggling methods, methamphetamines are
also smuggled into Palau and from there to other
Micronesian destinations in ‘ice chests’. These
are normal plastic domestic cold boxes. They are
frequently part of checked baggage, transporting
frozen seafood for family gifts or celebrations.
Small volumes of methamphetamine inside a
mass of frozen fish are very difficult for local law
enforcement to detect.
This indicates that there is a profitable
Palauan ‘trade’ in this drug. It is by its nature a
transnational criminal activity as it originates
in the Philippines and Japan (‘ice’ dissolved in
Saki has been found transiting from Japan to
Palau to Hawaii) and is then retailed in Palau or
re-exported. This is a complex and sophisticated
activity and must include money laundering as
profits are repatriated.
Other illegal activities occurring in Palau
include people trafficking. About 25% of the
population are Filipinos. Prostitutes from
that country are used in Palau, as are people
employed in near-forced-labour conditions.
They live in barracks, routinely working 12-14
hours per day, seven days per week for pay of
US$250 or less.
Chinese and Filipinos also dominate small
retail. This has led to the usual problem of
cheap counterfeit goods being smuggled in.
The Chinese fishing fleet plays a role in this
smuggling, but the majority of smuggling is
done in bulk, using fraudulent documentation.
The primary seizures relate to cigarettes, alcohol
and counterfeit medicines although normal
consumer items have also been seized. Under-
valuing of export and import goods is rife. This
is especially true of high-quality tuna exports.
Undervaluing denies the government revenue
and indicates a degree of corruption in the
The Palauan law enforcement community
is under-staffed and not especially well paid,
although they do have a degree of social respect
in Palauan society and are held to high standards.
Their inter-agency cooperation has been poor in
the past but is improving.
Australian, US and Canadian engineers providing assistance to Nauru
Credit: USN / Joshua Valcarcel
Cocaine wash-ups do occur and Kiribati officials have heard
many tales from locals in the northern area of the country
about suspicious cargo transfers between merchant ships,
fishing vessels and yachts
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