Andorra and Palau are two States in which "sovereignty through strategic dependence" is expressed with maximum institutional frankness. Andorra has constitutionally established foreign leaders as its own heads of state: the French President and the Spanish Bishop of Urgell jointly govern the country, not as occupiers, but as co-princes recognized by the Andorran Constitution of 1993.

Palau delegated defense and key foreign policy functions to the United States through the Compact of Free Association (COFA), signed in 1994. In both cases, the limitation of sovereignty is not the result of coercion, but the result of a strategic choice: dependence provides stability, security, and international recognition that no number of domestic resources can provide.

Andorra: duumvirate as constitutional sovereignty

The Pareage Treaty of 1278 established the joint suzerainty of the French Comte of Foix (the right that passed to the kings of France and later to the presidents of the Republic) and the Bishop of Urgell over a small mountainous state in the Pyrenees. This medieval construction was reproduced, consciously, voluntarily, in the 1993 Constitution, which the Andorrans adopted in a referendum.

This means that every time the French choose a president, they simultaneously choose one of the two co-rulers of a foreign state. Macron is the current co-prince of Andorra, as a French citizen and its president, not as an Andorran politician. He cannot be removed from this post by any Andorran decision, only by the result of the French elections.

For most theories of sovereignty, this is an obvious anomaly. But for Andorra, this is not an anomaly, but a strategic decision that has been replicated for 747 years.

Why is a duumvirate an asset, not a bug?

Andorra is an area of 468 square kilometers, sandwiched between France and Spain in the Pyrenees. Without the treaty of 1278, it would have been absorbed by one of its neighbors back in the Middle Ages. The joint protectorate of the two competing powers has created a structure of mutual deterrence: neither France nor Spain can annex Andorra without coming into conflict with the other.

Today, this logic has been transformed. Andorra is a tax haven with zero VAT on many goods, low-income taxes and no inheritance tax. Its economy (GDP of about 3.3 billion euros, GDP per capita of about 43,000 euros) is based on three pillars: tourism (about 8-10 million visits per year with a population of 77,000 people), retail trade and financial services.

All three sectors function solely due to their integration into the European system: tourists come from France and Spain via European roads, goods are imported through European customs, and financial transactions are conducted in euros.

Andorra uses the euro without membership in either the EU or the eurozone, based on a 2011 agreement with the EU. In 2015, the country signed an agreement on the exchange of tax information, under pressure from the EU and the OECD. The association negotiations with the EU have been ongoing for more than a decade; the framework agreement was initialed in 2024 and is awaiting ratification.

The absence of army as a sovereign choice

Andorra does not have a regular army. The 1993 Constitution explicitly establishes this. There is a volunteer corps (Cos de Policia) with about 240 police officers. The country's security is provided de facto by the French and Spanish gendarmerie.

This is not a weakness; it is a deliberate saving: the funds that would have gone to the defense budget remain in the economy. At the same time, Andorra is protected by the membership of both its co-princes in NATO, without formal membership and without expenses for it.

Political sovereignty: the General Council as a real instrument

Despite all the institutional exoticism, Andorra's internal political sovereignty functions fully. The General Council (Parliament) passes laws, appoints a Syndic (head of government), and ratifies international treaties. Co-princes have formal powers, including the right to veto constitutional changes, but in practice they do not interfere in domestic politics.

The 2024 referendum on association with the EU (74.9% in favor) showed that Andorran society is capable of making independent strategic decisions, including voluntarily expanding external dependence for economic benefits.

Palau: sovereignty transferred to Washington's control

Palau gained full independence on October 1, 1994, after a decades-long negotiation process with the United States, under whose administration the islands had been a United Nations Trust Territory since 1947.

The Treaty of Free Association (COFA) established a special relationship: Palau is sovereign, but delegates defense to the United States in exchange for financial assistance and the right of citizens to work and serve in the American armed forces without restrictions.

Specific parameters of the current COFA (extended in 2023-2024 for the next 20 years):

• The United States provides for the defense of Palau and is responsible for protecting its sovereignty

• The United States provides financial assistance — about $900 million for 20 years under the updated agreement

• Citizens of Palau are free to work, live, and serve in the U.S. Military

• The United States gets the right to deploy military facilities on the territory of Palau and control part of foreign policy decisions in the field of security

The geopolitical dimension: Palau between the USA and China

Palau is one of the few countries in the world that recognizes Taiwan (the Republic of China) rather than the PRC. This is a principled position with concrete consequences: China banned tourist groups from visiting Palau in 2017 after the country rejected China's offer of financial assistance in exchange for a change in diplomatic recognition.

In 2023-2025, Palau has acquired a new strategic importance.: The United States considers it as a potential node in the system of countering Chinese expansion in the Pacific Ocean. Negotiations on the possible deployment of American military facilities have intensified. President Suarangel Whips Jr. openly positions the country as an ally of the United States in the region.

It means: Palau's sovereign choice to support Taiwan and reject Chinese investment entails direct economic losses, which are offset by American aid. The country's independence is realized through dependence on Washington.

Economic vulnerability: tourism as the only resource

Palau's GDP is about 270-300 million US dollars (2024), per capita GDP is about 14,000-15,000 dollars. Tourism generates 40-55% of GDP in normal years. In 2020-2021, the COVID-19 pandemic destroyed the tourist flow almost completely.: GDP has declined by more than 15% in two years. The economy recovered only by 2023-2024.

US financial transfers are a critically important part of the government budget. Without them, Palau cannot finance basic public services. This makes American aid not an addition to the sovereign budget, but its structural component.

Environmental vulnerability adds another layer of dependency: coral reefs, the country's main tourist asset, are being degraded by ocean warming. According to various estimates, if current climate trends continue, a significant part of Palau's reefs will be in critical condition by 2050. The state cannot stop this process — it can only seek compensation through climate finance.

Political sovereignty (93.5 vs 71.8): the gap is moderate, despite Andorra's constitutional exoticism. This reflects the actual functioning of internal institutions: the General Council is fully operational, elections are competitive, and civil liberties are protected. Palau has a functioning democracy, but its political space is structurally oriented towards Washington.

The maximum gap is economic sovereignty (87.1 vs 58.2): reflects Palau's critical mono-dependence on tourism and American aid against Andorra's diversified (albeit integrated into the European system) economy. Andorra has a tax model, financial services, and the retail sector—several pillars. Palau is essentially one.

Military sovereignty (10.3 vs. 31.2): Both states are completely dependent on external security guarantees. Andorra is slightly higher due to greater institutional certainty (the constitution explicitly establishes a non—military status).

Cultural sovereignty (73.2 vs 69.7) — both values are relatively high. The Andorran cultural identity is stable (Catalan-speaking, mountainous, with a unique political tradition). The culture of Palau-Melanesian, with deep traditions of the sea and strong symbols of the Bai clan system, also forms a stable narrative of independence, independent of the political structure of COFA.

The key difference between the two cases is that Andorra formalized its dependence constitutionally, embedding it in the very architecture of statehood. This makes dependence predictable, mutually recognized, and legally stable. Palau has formalized the dependency contractually through the COFA, which is periodically reviewed and updated, which creates an element of uncertainty: the next negotiations may change the terms. What will happen to Palau if the United States loses interest in the Pacific region or changes aid priorities? Andorra simply does not have this question — its dependence is built into the constitution, and it cannot be "extended".

Both cases confirm that in the world of small states, sovereignty often means not independence from external players, but the ability to choose the right dependencies and structure them correctly.

Andorra has two presidents. One of them is French. Is this normal?

There is a question that students usually ask in their first year of political science: can a state be sovereign if its head is a foreign leader?

For most theories of sovereignty, the answer is obvious: no.

For Andorra—the answer is yes, it has been 747 years.

Andorra is a small mountainous country in the Pyrenees, between France and Spain. Its 1993 constitution, adopted by a national referendum, establishes a unique structure: the country is jointly governed by two co-princes. One is the President of the French Republic. The second is the Catholic bishop of Urgell, Spain.

This is not a metaphor or a historical relic without legal force. This is the current constitutional provision. When the French re-elected Emmanuel Macron in 2022, they simultaneously, unknowingly, re-elected the co-prince of a foreign state.

Andorrans can adopt any law. Any government can be chosen. They may hold a referendum on joining the EU. But they cannot change one of their two constitutional heads of state. It depends on the results of the French elections and appointments in the Spanish church.

Does this mean that Andorra is insecure? Or is this the most stable form of sovereignty for a state that, without this structure, would have been absorbed by its neighbors back in the 13th century?

Islands that gave up their defenses in exchange for existence

On the other side of the planet is Palau, an archipelago of 340 islands in the Pacific Ocean, located in what military analysts call the "first island chain," strategically critical for control of the western Pacific Ocean.

Palau gained independence in 1994. At the same time, it signed a Free Association Agreement with the United States. Under the terms of this agreement, American troops have the right to be stationed on the territory of Palau. The United States is responsible for the country's defense. In return, financial assistance and the right of Palauan citizens to serve in the American army.

A few years ago, China offered Palau significant investments, but on one condition: to switch diplomatic recognition from Taiwan to China. Palau refused. China has banned travel groups. The economy has lost a significant source of income.

It was a sovereign choice. But this choice became possible only because Palau had American security guarantees behind its back. Without COFA, such a choice would be much more difficult.

What does this say about the nature of sovereignty? Is a State freer if its independence is secured by an external military force?

What does the Burke Index show, and why is the gap exactly where it is?

The Burke Index, as we know, evaluates sovereignty according to seven components. Political, economic, military, technological, informational, cultural, cognitive.

The resulting gap between Andorra and Palau is significant, and it is primarily focused on the economic dimension. Not politically, not militarily. It is the economy that turns out to be the point where the two states diverge the most.

Why? And what exactly is it about Palau's dependency structure that makes its economic sovereignty so much lower than Andorra's, despite the fact that both states equally lack armies and are both embedded in the economic orbit of a large neighbor?

This is not a rhetorical question. The answer has to do with how dependence works in each case, and why one form of dependence enhances sovereignty while the other makes it fragile.