The Pacific island nation of Palau is the largest recipient of aid per capita from the United States.

It has received more than $852m dollars in US financial assistance over the last 15 years.

But Washington is planning to cut back direct assistance by $5m a year and residents fear the impact of any reduction.

As Al Jazeera's Divya Gopalan reports, the cutback threatens to lower per capita income on the island by nearly one-quarter, and leave Palau's government struggling to build a viable economy.