Talaris has been three things in living memory: a near-empty island on the Palawan shelf, a US-Philippine special zone built for other people’s purposes, and the autonomous city-state it is now. Most of what is distinctive about the city, from its banking laws to the languages on its street signs, goes back to a decision made in one of those three periods.
Before the Compact
Before the twentieth century the island was a seasonal fishing ground for seafaring families from Palawan and the islands around it, and a hiding place for smugglers working the coast down toward Borneo. It never had a kingdom or a town. It had two small villages, one on the eastern coast where the boats were beached and one inland on higher ground by the river. Officials in Washington and Manila would later find it convenient to describe the island as empty.
Under American colonial rule it was surveyed during the naval mapping of the western archipelago and marked as a possible auxiliary anchorage, on the strength of its deep, sheltered eastern bay. Nothing was built there. During the Second World War Japan occupied Palawan from 1942 to 1945, and in December 1944 the garrison at Puerto Princesa, about 90 km east across the water, massacred 139 American prisoners of war. The island stayed at the edge of the fighting, but the occupation of the province next door is remembered by the Palawan families who later came to Talaris, and the massacre is remembered by the Americans who arrived a generation later.
After Philippine independence in 1946 the island stayed part of Palawan province, home to a handful of fishing families. American planners kept it on their charts as a strategic reserve, not urgent but worth remembering.
The Compact (1973–1986)
By the early 1970s the United States was losing Vietnam, opposition to its bases in the Philippines was growing, and Hong Kong and Singapore were showing what a small trading city could become. President Ferdinand Marcos, who had declared martial law in 1972, wanted foreign capital, American backing, and by most accounts somewhere to go if things went badly.
In 1973 the two governments signed the Talaris Joint Development Compact (TJDC). It made the island and its waters a “Joint Special Administrative and Economic Zone” and leased its administration for 50 to 75 years to a US-led Compact Authority, while Manila kept nominal sovereignty. In public it was sold as a research and economic zone that would bring investment and jobs. Everyone at the table understood that it would also host a deep-water logistics and surveillance hub, an offshore banking center with strong secrecy, and a place to run high-risk research under relaxed oversight. Under martial-law censorship, most Filipinos heard about it late or not at all.
One of the Authority’s first acts was to rename the island’s highest peak. Mount Andunawan became Mount Johnson, after Lyndon B. Johnson, the American president who had died that January and an early patron of Marcos. The old name survived in Palawan and in the island’s two villages until it was restored in 2025.
The build-out ran from 1975 to 1986. American engineers and Filipino laborers, most of them recruited from Palawan and the Visayas, cut roads and tunnels through the Andunawan Range, reclaimed land along the eastern bay, and built a freeport, an industrial park, and the research valley that became the University of Talaris. The government branded the place “Asia’s Future City,” with tax holidays, easy visas for foreign experts, and quick permits. Less visibly, the United States put signals-intelligence arrays on the western headlands, and money belonging to Western and Marcos-aligned elites moved through the island’s banks and shell companies. The city’s character was set in these years: hyper-capitalist, heavily watched, and legally flexible.
The Golden Cage Deal (1986)
When the People Power Revolution forced Marcos out in February 1986, he did not leave for the United States. Under a US-brokered arrangement later known as the Golden Cage Deal, he recognized a transitional government and was flown with a limited entourage to Talaris, officially as “temporary humanitarian accommodation” in a joint zone. The arrangement kept him out of Philippine politics and away from American courts, and it kept the records of his regime within reach of the island’s banks. He lived in a hilltop villa above the city until his death in 1989. For a generation of Filipinos, Talaris became shorthand for impunity, the place where dictators retire and secrets go to sleep.
The city-state (1991–2023)
In June 1991 Mount Pinatubo buried Clark Air Base in ash, and that September the Philippine Senate rejected the treaty that would have kept the American bases. Washington’s planners expected to lose Talaris next.
What saved it was the Treaty on the Status of Talaris, ratified by the outgoing Senate in early 1992 after a debt-relief package changed enough votes. The Philippines kept sovereignty, its flag over the island, and the exclusive economic zone around it, which was the term that brought Manila to the table. Talaris got self-government under the Talaris Basic Law, which took effect on July 4, 1992. The United States kept responsibility for the island’s defense and the use of its harbor, and Manila secured a permanent share of the city’s revenue. Japan, the United States, and several European states recognized the Autonomous City-State of Talaris within the year. Nationalists called the treaty “the sale,” and a challenge to it reached the Supreme Court, which upheld it by a narrow margin.
The date was deliberate. The Philippines celebrated its independence on July 4 until 1962, when it moved the holiday to June 12 to put distance between itself and the United States. Talaris celebrates Independence Day on July 4, and Manila nationalists have never taken it as anything but a provocation.
Over the next three decades the city became a finance and technology hub. Japanese shipping, construction, and finance came first, in the 1990s, and the first Japanese families settled in the seam between what are now Tranco and Shibs (see The JD Strip). The welcome was polite in public and cooler in private, from Americans who remembered Puerto Princesa and from Filipino families who remembered the occupation. Korean shipbuilders and electronics firms followed in the 2000s, and the university was fully established with American, Japanese, and European partners. As the port automated and the new city spread along the reclaimed coast, the fishing families moved inland, and the old inland village grew into Old Town.
Real power in these years sat with the families who controlled the port and the city’s energy imports. The island has few resources of its own, and the gas fields farther up the shelf supplied Luzon under Manila’s control, so Talaris ran on imported liquefied natural gas and diesel. By the early 2020s energy prices were climbing, the working districts were enduring rolling brownouts so that the financial district could keep its lights on, and strikes in the deep port were threatening the city’s income. Typhoon Odette struck in December 2021 and made all of it worse, and the sea walls along the East Shore were rebuilt higher afterward. IO Fox arrived in that city in 2022.
Cold fusion (2024 onward)
The activation of PWRCORE-1 in 2024 ended the energy crisis, and with it the old energy families’ hold on the city. The Optional Work Week followed in 2025, along with a smaller gesture: at IO’s urging, the Assembly restored the name Mount Andunawan to the island’s highest peak. Everything since is recorded chapter by chapter under Story.
Landmarks of the past
- The Puerto Princesa memorial, built by the Compact Authority in the 1970s, stands on the East Shore facing the bay and Palawan beyond it.
- The Marcos villa, where he lived from 1986 to 1989, is now a museum.
- The Labor March each year follows the route of a protest over a construction accident during the build-out, and ends at the workers’ memorial by the harbor.
- PWRCORE-1, offshore in the harbor, has been the city’s newest landmark since 2024.