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.
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.
* Full name: Republic of Palau
* Population: 20,500 (UN, 2010)
* Capital: Melekeok
* Largest town: Koror
* Area:508 sq km (196 sq miles)
* Major languages: Palauan, English
* Major religions: Christianity, Modekngei (indigenous belief)
* Life expectancy: 66 years (men), 72 years (women) (UN)
* Monetary unit: 1 US dollar = 100 cents
* Main exports: Fish, garments
* GNI per capita: US $6,470 (World Bank, 2010)
* Internet domain: .pw
* International dialling code: +680
President: Johnson Toribiong
Mr Toribiong was elected in the presidential poll of November 2008, beating outgoing Vice-President Elias Camsek Chin. The previous president, Tommy Remengesau, had served his maximum two consecutive terms and could not run again.
A US-educated lawyer, Mr Toribiong served as ambassador to Taiwan before standing for president.
Like his predecessor, President Toribiong has said Palau must end its dependence on US aid and diversify its economy beyond tourism. He was inaugurated on 15 January 2009.
From : BBC News