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Bahamas, The (01/02


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For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
The Commonwealth of The Bahamas

Geography
Area: 13,939 sq. km. (5,382 sq. mi.); slightly larger than Connecticut and Rhode Island combined.
Cities: Capital--Nassau, New Providence. Second-largest city--Freeport, Grand Bahama.
Terrain: Low and flat.
Climate: Semitropical.

People
Nationality: Noun and adjective--Bahamian(s).
Population (2000): 304,913.
Annual growth rate (2000): 1.7%.
Ethnic groups: African 85%, European 12%, Asian and Hispanic 3%.
Religious affiliation: Baptist predominant (32%), Roman Catholic, Anglican, Evangelical Protestants, Methodist, Church of God.
Language: English; some Creole among Haitian groups.
Education: Years compulsory--through age 16. Attendance--95%. Literacy--93%.
Health (2000): Infant mortality rate--17.0/1,000. Life expectancy--73.9 years.
Work force (2000): 157,640; majority employed in the tourism, government, and financial services sectors.

Government
Type: Constitutional parliamentary democracy.
Independence: July 10, 1973.
Branches: Executive--British monarch (nominal head of state), governor general (representative of the British monarch), prime minister (head of government), and cabinet. Legislative--bicameral Parliament (40-member elected House of Assembly, 16-member appointed Senate). Judicial--Privy Council in U.K., Court of Appeal, Supreme Court, and magistrates' courts.
Political parties: Free National Movement (FNM), Progressive Liberal Suffrage: Universal over 18; (2000) 140,000 registered voters.

Flag: Bahamas flag

Economy
GDP (2000): $4.92 billion.
Growth rate (2000): 5.0%.
Per capita GDP (2000): $15,850.
Natural resources: Salt, aragonite, timber.
Agriculture and fisheries (2000; 3% of GDP): Products--vegetables, lobster, fish.
Tourism (2000):60% of GDP.
Banking (2000): 15% of GDP.
Manufacturing (2000, 3% of GDP): Products--pharmaceuticals, rum.
Trade (2000): Exports ($766.1 million)--salt, aragonite, chemicals, lobster, fruits, vegetables. Major markets--U.S. (50%), U.K., other EU countries, Canada. Imports ($2.28 billion)--foodstuffs and manufactured goods; vehicles and automobile parts; hotel, restaurant, and medical supplies; computers and electronics. Major suppliers--U.S. (70%), U.K., other EU countries, Canada.
Exchange rate: Bahamian dollar 1=US$1.

Note: Bahamas' export statistics do not include oil transhipments or the large transactions from the PFC Bahamas (formerly Syntex) pharmaceutical plant located in the Freeport free trade zone.

PEOPLE
Eighty-five percent of the Bahamian population is of African heritage. About two-thirds of the population reside on New Providence Island (the location of Nassau). Many ancestors arrived in the Bahama Islands when they served as a staging area for the slave trade in the early 1800s. Others accompanied thousands of British loyalists who fled the American colonies during the Revolutionary War.

School attendance is compulsory between the ages of 5 and 16. The government fully operates 158 of the 210 primary and secondary schools in The Bahamas. The other 52 schools are privately operated. Enrollment for state and private primary and secondary schools amounts to more than 66,000 students. The College of The Bahamas, established in Nassau in 1974, provides programs leading to bachelors and associates degrees. The college is now converting from a 2-year to a 4-year institution. Several non-Bahamian colleges also offer higher education programs in The Bahamas.

HISTORY
In 1492, Christopher Columbus made his first landfall in the Western Hemisphere in The Bahamas. Spanish slave traders later captured native Lucayan Indians to work in gold mines in Hispaniola, and within 25 years, all Lucayans perished. In 1647, a group of English and Bermudan religious refugees, the Eleutheran Adventurers, founded the first permanent European settlement in The Bahamas and gave Eleuthera Island its name. Similar groups of settlers formed governments in The Bahamas until the islands became a British Crown Colony in 1717.

The first Royal Governor, a former pirate named Woodes Rogers, brought law and order to The Bahamas in 1718, when he expelled the buccaneers who had used the islands as hideouts. During the American Civil War, The Bahamas prospered as a center of Confederate blockade-running. After World War I, the islands served as a base for American rumrunners. During World War II, the Allies centered their flight training and antisubmarine operations for the Caribbean in The Bahamas. Since then, The Bahamas has developed into a major tourist and financial services center. Bahamians achieved self-government through a series of constitutional and political steps, attaining internal self-government in 1964 and full independence within the Commonwealth on July 10, 1973.

GOVERNMENT AND POLITICAL CONDITIONS  
The Bahamas is an independent member of the Commonwealth of Nations. It is a parliamentary democracy with regular elections. As a Commonwealth country, its political and legal traditions closely follow those of the United Kingdom. The Bahamas recognizes the British monarch as its formal head of state, while an appointed Governor General serves as the Queen's representative in The Bahamas. A bicameral legislature enacts laws under the 1973 constitution.

The House of Assembly consists of 40 members, elected from individual constituencies for 5-year terms. As under the Westminster system, the government may dissolve the parliament and call elections at any time. The House of Assembly performs all major legislative functions. The leader of the majority party serves as Prime Minister and head of government. The cabinet consists of at least nine members, including the Prime Minister and ministers of executive departments. They answer politically to the House of Assembly.

The Senate consists of 16 members appointed by the Governor General, including nine on the advice of the Prime Minister, four on the advice of the Leader of the Opposition, and three on the advice of the Prime Minister after consultation with the Leader of the Opposition.

The Governor General appoints the Chief Justice of the Supreme Court on the advice of the Prime Minister and the Leader of the Opposition. The Governor General appoints the other justices with the advice of a judicial commission. The Privy Council of the United Kingdom serves as the highest appellate court.

For decades, the white-dominated United Bahamian Party (UBP) ruled The Bahamas, then a dependency of the United Kingdom, while a group of influential white merchants, known as the "Bay Street Boys," dominated the local economy. In 1953, Bahamians dissatisfied with UBP rule formed the opposition Progressive Liberal Party (PLP). Under the leadership of Lynden Pindling, the PLP won control of the government in 1967 and led The Bahamas to full independence in 1973.

A coalition of PLP dissidents and former UBP members formed the Free National Movement (FNM) in 1971. Former PLP cabinet minister and member of parliament Hubert Ingraham became leader of the FNM in 1990, upon the death of Sir Cecil Wallace-Whitfield. Under the leadership of Ingraham, the FNM won control of the government from the PLP in the August 1992 general elections. Winning again in March 1997, the ruling FNM controls 35 seats in the House of Assembly, while the PLP controls four seats and serves as the official opposition. A PLP member of Parliament split from the party and created the Coalition for Democratic Reform (CDR). The CDR holds one seat in Parliament. The next general elections are to be held by May 2002.

The principal focus of the Ingraham administration has been economic development and job creation. Many of his government's policies are aimed at improving the image of The Bahamas and making it an attractive place for foreigners to invest. In 2000, in response to multilateral organizations concerns, the government passed stronger measures to prevent money laundering in the country's banking sector.

The FNM has made considerable progress in rebuilding the infrastructure, revitalizing the tourism industry, and attracting new investment to The Bahamas. A good start has been made to mitigate crime and provide for social needs. The Bahamian economy, heavily dependent on U.S. tourism, has been deeply affected by the U.S. economic downturn. The resulting recession will be the principal challenge for the next government.

Other challenges are to privatize The Bahamas' costly, inefficient national corporations, provide job retraining for hundreds of workers who will be affected by the change, and to continue creating jobs for new entries in the employment market.

Currently, Bahamians do not pay income or sales taxes. Most government revenue is derived from high tariffs and import fees. A major challenge for Bahamians as the next century approaches will be to prepare for hemispheric free trade. Reduction of trade barriers will probably require some form of taxation to replace revenues when the country becomes a part of the Free Trade Area of the Americas (FTAA). The advantages may be hard for the government to sell since The Bahamas exports so little.

Principal Government Officials
Governor General--Dame Ivy Dumont
Prime Minister--Hubert A. Ingraham, P.C., M.P.
Deputy Prime Minister, and Minister of National Security--Frank H. Watson
Minister of Foreign Affairs--Janet Bostwick
Ambassador to the United States and to the OAS--Joshua Sears
Ambassador to the United Nations--Anthony Rolle
Consul General, Miami--Franklyn Rolle
Consul General, New York--Calvin Johnson

The Bahamas maintains an embassy in the United States at 2220 Massachusetts Ave., NW, Washington, DC 20008 (tel: 202-319-2660) and Consulates General in New York at 767 Third Ave., 9th Floor, New York, NY 10017 (tel: 212-421-6925/27), and in Miami at Suite 818, Ingraham Building, 25 SE Second Ave., Miami, FL 33131 (tel:305-373-6295/96).

ECONOMY
The Bahamian economy is almost entirely dependent on tourism and financial services to generate foreign exchange earnings. Tourism alone provides an estimated 60% of the gross domestic product (GDP) and employs about half the Bahamian work force. In 2000, over 4 million tourists visited The Bahamas, 83% of them from the United States.

A major contribution to the recent growth in the overall Bahamian economy is Sun International's Atlantis Resort and Casino, which took over the former Paradise Island Resort and has provided a much needed boost to the economy. In addition, the opening of Breezes Super Club and Sandals Resort also aided this turnaround. The Bahamian Government also has adopted a proactive approach to courting foreign investors and has conducted major investment missions to the Far East, Europe, Latin America, and Canada. The primary purpose of the trips was to restore the reputation of The Bahamas in these markets.

Financial services constitute the second-most important sector of the Bahamian economy, accounting for up to 15% of GDP, due to the country's status as a tax haven and offshore banking center. As of December 1998, the government had licensed 418 banks and trust companies in The Bahamas. The Bahamas promulgated the International Business Companies (IBC) Act in January 1990 to enhance the country's status as a leading financial center. The act served to simplify and reduce the cost of incorporating offshore companies in The Bahamas. Within 9 years, more than 84,000 IBC-type companies had been established. In February 1991, the government also legalized the establishment of Asset Protection Trusts in The Bahamas. In December 2000, the government enacted a legislative package to better regulate the financial sector, including creation of a Financial Intelligence Unit and enforcement of "know-your-customer" rules. Since enactment of new regulations, many of the IBCs have closed shop in The Bahamas.

Agriculture and fisheries industry together account for 5% of GDP. The Bahamas exports lobster and some fish but does not raise these items commercially. There is no largescale agriculture, and most agricultural products are consumed domestically. The Bahamas imports more than $250 million in foodstuffs per year, representing about 80% of its food consumption. The government aims to expand food production to reduce imports and generate foreign exchange. It actively seeks foreign investment aimed at increasing agricultural exports, particularly specialty food items. The government officially lists beef and pork production and processing, fruits and nuts, dairy production, winter vegetables, and mariculture (shrimp farming) as the areas in which it wishes to encourage foreign investment.

The Bahamian Government maintains the value of the Bahamian dollar on a par with the U.S. dollar. The Bahamas is a beneficiary of the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), Canada's CARIBCAN program, and the European Union's Lome IV Agreement.

Although The Bahamas participates in the political aspects of the Caribbean Community (CARICOM), it has not entered into joint economic initiatives with other Caribbean states.

The Bahamas has a few notable industrial firms: the Freeport pharmaceutical firm, PFC Bahamas (formerly Syntex), which recently streamlined its production and was purchased by the Swiss pharmaceutical firm Roche; the BORCO oil facility, also in Freeport, which transships oil in the region; the Commonwealth Brewery in Nassau, which produces Heineken, Guinness, and Kalik beers; and Bacardi Corp., which distills rum in Nassau for shipment to the U.S. and European markets. Other industries include sun-dried sea salt in Great Inagua, a wet dock facility in Freeport for repair of cruise ships, and mining of aragonite--a type of limestone with several industrial uses--from the sea floor at Ocean Cay. The Hawksbill Creek Agreement established a duty-free zone in Freeport, The Bahamas' second-largest city, with a nearby industrial park to encourage foreign industrial investment. The Hong Kong-based firm, Hutchison Whampoa, has opened a container port in Freeport.

The Bahamian Parliament approved legislation in 1993 that extended most Freeport tax and duty exemptions through 2054. The Bahamas is largely an import, service economy. There are about 110 U.S.-affiliated businesses operating in The Bahamas, and most are associated with tourism and banking. With few domestic resources and little industry, The Bahamas imports nearly all its food and manufactured goods from the United States. American goods and services tend to be favored by Bahamians due to cultural similarities and heavy exposure to American advertising.

Business Environment
The Bahamas offers attractive features to the potential investor: a stable democratic environment, relief from personal and corporate income taxes, timely repatriation of corporate profits, proximity to the U.S. with extensive air and telecommunications links, and a good pool of skilled professional workers. The Government of The Bahamas welcomes foreign investment in tourism and banking and has declared an interest in agricultural and industrial investments to generate local employment, particularly in white-collar or skilled jobs.

Despite its interest in foreign investment to diversify the economy, the Bahamian Government responds to local concerns about foreign competition and tends to protect Bahamian business and labor interests. As a result of domestic resistance to foreign investment and high labor costs, growth can stagnate in sectors which the government wishes to diversify.

The country's infrastructure is best developed in the principal cities of Nassau and Freeport, where there are relatively good paved roads and international airports. Electricity is generally reliable, although many businesses have their own backup generators. In Nassau, there are two daily newspapers, three weeklies, and several international newspapers available for sale. There also are six radio stations.

Both Nassau and Freeport have a television station. Cable TV and satellite also are available locally and provides most American programs with some Canadian and European channels.

Areas of Opportunity the best U.S. export opportunities remain in the traditional areas of foodstuffs and manufactured goods: vehicles and automobile parts; hotel, restaurant, and medical supplies; and computers and electronics. Bahamian tastes in consumer products roughly parallel those in the U.S. With approximately 85% of the population of primarily African descent, there is a large and growing market in the Bahamas for "ethnic" personal care products. Merchants in southern Florida have found it profitable to advertise in Bahamian publications. Most imports in this sector are subject to high but nondiscriminatory tariffs.

FOREIGN RELATIONS
The Bahamas has strong bilateral relationships with the United States and the United Kingdom, represented by an ambassador in Washington and High Commissioner in London. The Bahamas also associates closely with other nations of the Caribbean Community (CARICOM). The Bahamas has diplomatic relations with Cuba, although not with resident ambassadors. A repatriation agreement was signed with Cuba in 1996, and there are commercial and cultural contacts between the two countries. The Commonwealth of The Bahamas became a member of the United Nations (UN) in 1973 and the Organization of American States (OAS) in 1982.

The Bahamas holds membership in a number of international organizations: the UN and some specialized and related agencies, including Food and Agriculture Organization (FAO), International Civil Aviation Organization (ICAO), International Labor Organization ILO), International Monetary Fund (IMF), International Telecommunication Union (ITU), World Bank, World Meteorological Organization (WMO), and World Health Organization (WHO); OAS and related agencies, including Inter-American Development Bank (IDB), Caribbean Development Bank(CDB), and Pan-American Health Organization (PAHO); the Caribbean Community (CARICOM), excluding its Common Market; the International Criminal Police Organization (INTERPOL); Universal Postal Union(UPU); the IMO (International Maritime Organization); World Intellectual Property Organization (WIPO); and obtained observer status in the World Trade Organization (WTO) in 2001.

U.S.-BAHAMIAN RELATIONS
The United States historically has had close economic and commercial relations with The Bahamas. Both countries share ethnic and cultural ties, especially in education, and The Bahamas is home to 7,000 American residents. In addition, there are about 110 U.S.-related businesses in The Bahamas and, in 2000, some 83% of the 4 million tourists visiting the country were American.

As a neighbor, The Bahamas and its political stability are especially important to the United States. The U.S. and the Bahamian Government have worked together on reducing crime and reforming the judiciary. With the closest island only 45 miles from the coast of Florida, The Bahamas often is used as a gateway for drugs and illegal aliens bound for the United States. The U.S. and The Bahamas cooperate closely to handle these threats. U.S. assistance and resources have been essential to Bahamian efforts to mitigate the persistent flow of illegal narcotics and migrants through the archipelago. The U.S. and The Bahamas also actively cooperate on law enforcement, civil aviation, marine research, meteorology, and agricultural issues. The U.S. Navy operates an underwater research facility on Andros Island.

The Bahamas hosts U.S. preclearance facilities (U.S. Customs, Immigration, and Agriculture) for travelers to the U.S. at international airports in Nassau and Freeport.

Principal U.S. Officials
Ambassador--J. Richard Blankenship
Deputy Chief of Mission--Daniel Clune
Administrative Officer--Andrew Oltyan
Consul--Karin King
Political-Economic Section Chief--Brian Bachman
Public Affairs Officer--Brian Bachman

The U.S. embassy is located at 42 Queen Street, Nassau (tel. 242-322-1181;telex 20-138); the local postal address is P.O. Box N-8197, Nassau, The Bahamas.

Other Contact Information
U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution, NW
Washington, DC 20230
Tel: 202-482-0704; 800-USA-TRADE
Fax: 202-482-0464

Caribbean/Latin American Action 1818 N Street, NW, Suite 310
Washington, DC 20036
Tel: 202-466-7464
Fax: 202-822-0075



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