The Palau government says it's reconsidering an agreement to have the conservation group Sea Shepherd patrol its waters after receiving a counter offer from Japan.
The President Johnson Toribiong says Japanese officials at ministerial level have offered to send their own patrol vessel, and described the conservation group as terrorists.
The Sea Shepherd Conservation Society has regularly clashed with Japanese whalers and earlier this year forced them to cut short their annual Antarctic hunt.
Mr Toribiong says he's weighing up the options and wants to make sure he resolves potential diplomatic issues.
He says although an agreement authorising the Sea Shepherd to patrol the Palau marine area has been signed, it's not final until reviewed by the Attorney General's Office.