HISTORY. Spain acquired sovereignty over the Palau Islands in 1886, but sold the archipelago to Germany in 1899. Japan occupied the islands in 1914, and in 1921 they were mandated to Japan by the League of Nations. Captured by Allied Forces in 1944, the islands became part of the UN Trust Territory of the Pacific Islands created on 18 July 1947 and administered by the USA. Following a referendum in July 1978 in which Palauans voted against joining the new Federated States of Micronesia, the islands became an autonomous republic from 1 Jan. 1981, but acquisition of a free-association status with the USA was delayed by disputes over US intentions to base nuclear weapons on the islands. At a referendum in Nov. 1993 (the ninth of a series) 68% of votes cast favoured a Compact of Free Association with the USA, which provides US$450m. over 15 years in return for military facilities.