Palau announced Friday it was quitting the Pacific Islands Forum over a leadership row, threatening the future of a key grouping in a region where China and the United States are vying for influence.
Palau said its departure was prompted by the failure of its preferred candidate to win election as the grouping's secretary-general, with four other Micronesian nations also threatening to withdraw over the issue.
The 18-member forum is mostly made up of small island states along with Australia and New Zealand, and is a key element of the US allies' diplomatic efforts in the region.
The five Micronesian countries had argued it was their turn to select the forum secretary-general under an informal arrangement that has stood for decades.
But their preferred candidate was snubbed when former Cook Islands prime minister Henry Puna won a ballot for the post by a single vote on Thursday.
"After recent events the government of the republic of Palau will be terminating its participation in the Pacific Islands Forum," the government said in a diplomatic note obtained by AFP.
"The process regarding the appointment of the secretary-general has clearly indicated to the republic of Palau that unity, regionalism and the Pacific Way no longer guide the Forum."
The other four members of the Micronesian bloc -- the Marshall Islands, Kiribati, Nauru, and the Federated States of Micronesia -- will hold a virtual meeting Monday to discuss following Palau's lead.
A split in the forum's ranks could provide an opening for China to boost its influence with the sparsely populated but strategically important Pacific island nations.
It would also risk diluting the Pacific's strong message to the rest of the globe on climate change.
Many of the region's small island states face being inundated by rising seas and the forum has been a pioneer in raising the issue on the world stage and demanding meaningful action.
- 'Better off withdrawing' -
The grouping was established in 1971 as the South Pacific Forum, adopting its current name and expanding its membership in 1999.
Just this week, chairman Kausea Natano was congratulating the grouping for reaching its 50th anniversary and saying support from members remained solid.
However, Micronesian nations have long felt their north Pacific island states have been neglected in favour of their larger and more influential neighbours in the south.
"What we have seen is a south Pacific that looks down on the north Pacific and we find that deeply unfortunate," Federated States of Micronesia President David Panuelo told Australian radio in the wake of the leadership vote.
"It's a huge fracture in the (forum's) unity and spirit of cooperation."
Nauru President Lionel Aingimea has already signalled his intention to pull out.
"If this is the way Micronesia is treated then it is better off withdrawing from the Forum," he said in a statement Friday.
Palau's diplomatic note also said the tiny island nation would close its embassy in Fiji, saying the diplomatic mission was no longer needed now that it was withdrawing from the Suva-based grouping.
"Palau deeply regrets this situation and trusts that its warm bilateral relationship with the republic of Fiji will continue undiminished," it said.