In 1986, the governments of Palau and the USA agreed the terms of a Compact of Free Association, similar to those reached with other Micronesian Trust members, which allows for virtual independence under a US defence umbrella. The Palau Compact however, remained unsigned, because of a crucial clause forbidding the presence of any nuclear weapons on the islands, including visits by ships equipped to carry them. At the presidential election of November 1992, Kuniwo Nakamura won a narrow victory. Nakamura served a second term between 1996 and 2000, after which he was replaced by the current president, Tommy Remengesau.
Executive authority is vested in the president, who is elected for a four year term.
Legislative authority rests with the bicameral National Congress, the Olbiil era Kelulau . In 1994, Palau achieved independence under the Compact of Free Association.