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In the late 19th century, possession of Palau was claimed by Britain, Spain, and Imperial Germany. The dispute was brought to Pope Leo XIII for a decision in 1885. The Pope recognized the Spain's claim, but granted economic concessions to Britain and Germany. Palau then became part of the Spanish East Indies, along with the Mariana Islands, the Marshall Islands. and the rest of the Caroline Islands. The islands were administered from the Philippines including Palau.
Palau currently has an embassy in Manila while the Philippines has an embassy in Melekeok. There are 5,000 Filipino workers in Palau. 60 percent of all foreign workers from Palau came from the Philippines and they compose of 20 percent of Palau's total population. Palau's Medical Referral Program which was in force for almost 20 years, sends 100–150 patients annually to the Philippines for medical treatment. Many of Palau citizens goes to the Philippines to study in colleges and universities for higher education.
The exact boundaries of Palau and the Philippines is remained to be defined by delimitation talks. A final agreement has not been made regarding the issue.
Filipinos fishing in Palau's EEZ
Filipinos fishing within Palau's Exclusive Economic Zone (EEZ) remains an irritant to the relations of both countries. Palau's waters, especially near its southern reefs is currently threatened by over-fishing from boats from China, Indonesia, Philippines and other countries. Diplomatic relations between Palau and the Philippines reached its lowest point when Palau President Kuniwo Nakamura threatened to sever ties with the Philippines due to repeated violations of Palau's EEZ by Filipino fishing vessels in January 1999. However in the recent years, Palau prefers to work on a fishing agreement with the Philippines rather than to file diplomatic protest against its neighbor.
Philippine Embassy closure
On January 25, 2012, the Philippines announced the termination of 10 of its diplomatic missions by the end of July 2012 due to budgetary constraints. Palau President Johnson Toribiong requested President Benigno Aquino III to reconsider the government's plan to close the embassy in Palau. Palau was "extremely disheartened" to learn the Philippines intention to close the embassy in Palau. The Palau president reiterate the significance of the embassy. According to Toribiong the embassy is essential in the delimitation talks on the two countries' maritime border and that the embassy serves about 5,000 Filipino workers, which compose of 60 percent of Palau's foreign work force and 20 percent of the country's total population. The closure of the Philippine embassy in Melekeok will also affect Filipinos in neighboring countries such as Micronesia and the Marshall Islands.
However, according to the Filipino Department of Foreign Affairs, that they have not disclosed the list of embassies and consulates they are planning to close and are informing affected governments and the closure of a particular embassy or consulates are unofficial reports. The Philippine embassy in Koror closed on July 31, 2012. The Department of Foreign Affairs' Office of Asian and Pacific Affairs made an official mission to Palau from February 27 to March 1, 2013 following the closure of the Philippine embassy.
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- Palau Country Review. CountryWatch Incorporated. 2013. p. 48.
- Go, Marianne V.. (2010-10-25) Palau studying new fishing scheme for RP vessels | Business, News, The Philippine Star. philstar.com. Retrieved on 2013-09-01.
- "10 PH embassies, consulates to be closed; Palau appeals | Inquirer Global Nation". Globalnation.inquirer.net. 2012-01-25. Retrieved 2012-06-02.
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