Bermuda Premier Alexander Scott is hoping to persuade his countrymen to seek independence from Great Britain. His opponents argue this will be expensive and ultimately destabilize the colony. Naysayers forecast outright doom. Why would anyone risk shaking up a system that is the most financially productive in the history of the world?
Underpinning Bermuda's stability is the world's most dynamic insurance and reinsurance community, armed with more than $60 billion in capital, much of it unencumbered by legacy issues. Bermuda's insurance industry is mostly owned by foreign capital, but operated with Úlan in Bermuda's sensible regulatory environment.
Government opponents fear it won't be for much longer, if Premier Scott and his ruling Progressive Labour Party (PLP) have their way. Scott opened a public debate on independence by explaining that it is his government's intention to seek independence from the United Kingdom if the party is re-elected at the next general election, which can be held no later than September 2008.
Britain says it won't stand in the way. "The United Kingdom has long supported the principle of self-determination for its Overseas Territories," says Gov. Sir John Vereker, Britain's top envoy.
Despite Bermuda's small size and population, independence probably is a realistic option, with a population of 65,000 and Gross Domestic Product approaching $4 billion.
Of course, the cost of running an independent country would be greater than Bermuda's present $650 million a year budget. Defense, for example, is provided by the United Kingdom for free. After independence, it would have to be bought. So would a United Nations ambassador and his staff, representatives in the major foreign cities to which Bermudians regularly travel, and diplomatic stand-ins in smaller communities around the world. No serious cost/benefit assessment of the price of independence has been made for some time.content
SUBJECTS OF THE QUEEN
Whatever the benefits or the costs, the majority in Bermuda does not seem to want independence right now.
"We knew (in 2003) that most Bermudians were not in favor of independence and, of far greater concern, half of our supporters were not in favor of independence," former PLP cabinet minister Arthur Hodgson told a public forum last year.
"What we had hoped was that the party could win power and introduce independence in spite of the electorate." PLP thinking at the time was that the people did not know what was good for them, so they should not be asked for their opinion, Hodgson added.
When last asked for their input, in a 1995 referendum, Bermudians voted three-to-one against independence. The United Bermuda Party (UBP), in power at the time, and now in the minority, held the referendum. Today, the party is against independence unless another referendum is held and voters approve.
"Who decides whether we should go independent, and how should the decision be made?" asks UBP leader Grant Gibbons. "To go down the road to debating one of the most important issues Bermuda faces, without knowing up front if the people of Bermuda will really have an opportunity to make a decision on this, is just ludicrous."
A group called the Bermudians for Referendum is seeking 20,000 signatures for a petition with which they hope to influence the United Kingdom government to hold a referendum. "We are not trying to influence people regarding how to vote on the issue of independence, merely suggesting that a referendum is the only democratic method or process by which to decide, in particular, major issues such as independence," says a spokesman. The pro-referendum lobby has set up 20 signature centers around the Island.
The British government will have the final say as to whether a referendum or a general election is the preferred process.
Whichever method is chosen, Bermuda's international companies do not want independence. In an extraordinary departure from protocol, the Association of Bermuda International Companies (ABIC) wrote Premier Scott late last year to express its doubts on independence, saying it offered "almost no positives" and "a number of potential negatives." ABIC called for a referendum on the issue after wide consultation and cautioned the premier against forcing independence on Bermudians.
ABIC's contribution to the debate was loudly frowned on by the PLP intelligentsia. By tradition, Bermuda's international companies never say a word in public about the way Bermuda is run, other than to provide input on proposed legislation. The fear that independence might sour the atmosphere for insurance, banking and trust is endemic among the foreign business community.
"What Bermuda chooses to do is entirely its own business," the CEO of a major company says, on condition of anonymity. "However, if what Bermuda chooses to do endangers the security of the insurance companies, you can be damned sure that the insurance companies will have an opinion, and they will want to make it heard."
Saying that he had discussed the matter privately with Premier Alexander Scott, the CEO admitted that his company had a plan to relocate to Dublin, should matters in Bermuda turn against the vast army of corporate interests. "We've had that plan since the day we started in Bermuda, and we have a similar plan in every other jurisdiction in which we operate," he added. "It would be irresponsible not to."
Without revealing his position on independence, another Bermuda CEO, IPC Holdings' Jim Bryce, told Risk & Insurance« last year that should Bermuda's insurance companies feel the urge to relocate, many companies would only need to put their management and some CD-ROMs on an airplane, and they would be able to start again elsewhere the next morning. The reality would unfold a little more slowly, and be a little more regulation-bound than that, but the end result would probably be much as Bryce described.
No other jurisdiction in the world offers today the mix of advantages that Bermuda enjoys. The insurance sector, if it ever felt it had to leave Bermuda, might indeed migrate to Dublin, or dissipate to several locations, but it would do so with great reluctance, and only if all means of staying put were exhausted.
Perhaps for these reasons, the Council of Hemispheric Affairs, a Washington D.C.-based independent think tank, weighed in on the subject in December. "Premier Scott's failure to adjust to the hard fact that the majority of Bermudians have shown no inclination for independence is a handicap which could seriously jeopardize his political career," said the Council's Ashley Rasmussen.
There are some who want independence. They include members of the ruling PLP--"every single one of (the party hierarchy), without exception, wants it," former PLP senator Calvin Smith said recently--and probably (British Prime Minister) Tony Blair.
Britain would not object to Bermuda becoming an independent nation, if it were done correctly, says Gov. Vereker. (For more information, please read sidebar below.)
"Each of the remaining territories has the right to remain British if that is what they want," said Vereker. "In return we expect, and are committed to ensuring, high standards of probity in governance, the maintenance of law and order, sustainable economic development, and adherence to relevant international agreements, including those which relate to offshore financial services. But we will give every help and encouragement to those territories who wish to proceed to independence, where that is a realistic option."
The PLP has had independence as the central plank of its political program since it was first written in 1963. Successive leaders have bayed for independence, largely from the wilderness, since the PLP was not elected until 1998. Both PLP premiers who have served since then have found reasons for keeping independence off the agenda in the party's first two terms of office, but now the leadership has decided that the time is right.
Although Premier Scott says he "would not force independence on the people of Bermuda," he has made plain that his government wants it, and will have it, sooner or later, once people have been educated as to its benefits.
What are the benefits? Bermuda already has its own flag (albeit with the Union Jack in the corner), and is self-governing in most areas other than security and the airport. "Independence will bring us together under one flag, one theme, and one commitment, one country, one abiding belief that this point of geography in the Atlantic is our nation," Premier Scott says. The move could even help tourism, he says, since as a full member of the United Nations, Bermuda might host U.N. delegations.
The leadership of the PLP believes that Bermudians are not comfortable with the status quo, because for 400 years, the status of Bermuda's community has been one of inequality. Segregation between blacks and whites only ended in 1959.Independence would draw a line under the unhappy past and allow the country to go forward onto the world stage with justice for all. The PLP was elected on a platform of changing the status quo;independence is the ultimate change.
Scott has appointed a commission to look into the subject. The opposition United Bermuda Party, however, has declined to serve on it.
Independence is an emotional issue. Not having it is a precondition to understanding its importance.
Like teenagers longing to stand on their own two feet, the PLP leadership and their supporters on this subject would argue that it is time for Bermuda to leave the nest and stand tall among the global community of nations.
"Throughout history, great men and women have fought great battles for statehood," one PLP leader told Risk & Insurance«. "We may not be great men and women, but we share the desire for statehood, the need to say 'this is my country.' And we are the first men and women in 400 years with the desire to say it, the ability to say it, and the opportunity to make saying it possible."
a Bermuda-based writer, editor and former accountant, is a regular columnist for Risk & Insurance«, and also covers issues on alternative risk.
March 1, 2005
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