The Palau Government operates as a democratic republic, where the President serves as both the head of state and government. The government is divided into three branches: the executive, legislative, and judicial. The Palau National Congress consists of two houses, the Senate and the House of Delegates, responsible for making laws. Palau's political system is based on a compact of free association with the United States, which provides financial assistance and defense. The government emphasizes local governance, with each of the 16 states having its own elected officials and authority over local matters, promoting community involvement in decision-making.