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Australian support for Palau's maritime security and its economy would strengthen the Pacific region, a leading national security expert says.
Foreign Minister Penny Wong this week visited Palau, Vanuatu and the Federated States of Micronesia as part of a bipartisan Pacific tour that included her opposition counterpart Simon Birmingham.
In Palau, Senator Wong praised the leadership of President Surangel Whipps for his commitment to regional unity as China flexed its muscles in the Pacific.
Australian Strategic Policy Institute senior fellow Anthony Bergin said the nation needed to deepen its economic and security ties with Palau through new business opportunities and defence exercises.
"Bolstering the economic resilience of the country is not about writing a cheque," he said.
"The arms of tourism, business and defence should be working together to strengthen Palau."
Dr Bergin said Palau's recognition of Taiwan meant Beijing was keen to draw the small island nation away from the US.
He said Australia had for too long ignored the importance of the Micronesia region, which includes Palau, and needed to focus its Pacific policy to include the area.
"The north Pacific is the centrepiece of strategic competition between China and the US," Dr Bergin said.
"It will play a particularly important role in any conflict involving Taiwan."
Senator Wong also noted a solar project the delegation would visit - financed through an Australian government program for Pacific island countries - wouldn't saddle the nation with more debt.
Her comments contrast Australia's approach with Beijing's development loans, which have been criticised as a debt trap for poorer countries that are unable to pay the money back.
