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Diplomacy in Action

Bermuda (05/96)


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

PROFILE

Official Name:
Bermuda

Geography
Area: 58.8 sq. km. (22.7 sq. mi.).
Cities: Capital--Hamilton (pop. 1,100). Other city--St. George (pop. 1,650).
Terrain: Hilly islands.
Climate: Subtropical.

People
Nationality: Noun and adjective--Bermudian(s).
Population: 56,600.
Annual growth rate: 0.7%.
Ethnic groups: Black 58%, white 36%, other 6%.
Religions: Non-Anglican Protestant 39%, Anglican 27%, Roman Catholic 15%, other 19%.
Language: English.
Education: Years compulsory--to age 16. There is no formal measure of literacy.
Health: Infant mortality rate--10/1,000. Life expectancy--men 70 yrs., women 78 yrs.
Work force: Clerical--23.5%. Services--23%. Laborers--18%. Professional and technical--14.5%. Administrative and managerial--11.5%. Sales--7%. Agriculture and fishing--2.5%.

Government
Type: Parliamentary British colony with internal self-government since 1620.
Constitution: June 8, 1968; amended 1989.
Branches: Executive--British monarch (chief of state, represented by a governor).
Legislative--Senate (upper house), House of Assembly (lower house). Judicial--Supreme Court. Subdivisions: Nine parishes.
Political parties: United Bermuda Party (UBP), Progressive Labor Party (PLP), National Liberal Party (NLP).
Suffrage: Universal at 18.

Economy (1993)
GDP: $1.8 billion; 34% of GDP comes from tourism and 28% from international companies.
GDP growth rate: 2.4%.
Per capita GDP: $26,600.
Inflation rate: 2.5%.
Natural resource: Limestone, used primarily for building.
Agriculture: Products--semitropical produce, dairy products, flowers.
Industry: Types--finance, insurance, structural concrete products, paints, perfumes, furniture.
Trade: Exports (includes re-exports)--$35 million: semitropical produce, light manufactures. Imports--$535 million: chemicals, food and live animals, machinery/transport, miscellaneous manufactures. Major suppliers--U.S. 70%, U.K. 7%, Canada 4%, Caribbean countries 4% (mostly oil from Netherlands Antilles).
Official exchange rate: Bermuda $1= U.S.$1.

U.S.-BERMUDIAN RELATIONS
Because Bermuda is a British colony, U.S. policy toward the United Kingdom is the basis of U.S.-Bermudian relations. In the early 20th century, as modern transportation and communication systems developed, Bermuda became a popular destination for wealthy U.S., British, and Canadian tourists. In addition, the tariff enacted by the U.S. against its trading partners in 1930 cut off Bermuda's once-thriving agricultural export trade--primarily fresh vegetables to the United States--and helped spur the colony to develop its tourist industry, which has grown to become its principal economic asset.

During World War II, Bermuda became important as a military base because of its location in the Atlantic Ocean. In 1941, the United States signed a lend-lease agreement with the United Kingdom giving the British surplus U.S. Navy destroyers in exchange for 99-year lease rights to establish naval and air bases in Bermuda.

The bases consisted of 5.8 square kilometers (2.25 sq. mi.) of land largely reclaimed from the sea. The U.S. Naval Air Station was on St. David's Island, while the U.S. Naval Air Station Annex was at the western end of the island in the Great Sound. Effective September 1, 1995, both bases were closed and the land returned to the Government of Bermuda. Only a tracking facility of the National Aeronautics and Space Administration (NASA) remains in Bermuda, at Copper's Island in St. David's.

An estimated 3,000 U.S. citizens lived in Bermuda in 1991, but that figure has been substantially reduced following the 1995 closure of the U.S. military bases there. Nearly 350,000 American tourists visited Bermuda in 1995.

In 1994, some 70% of Bermuda's imports came from the United States. Bermuda has heavy import duties, but no income, sales, or profit taxes; there is a small real estate tax. Foreign, including U.S.-owned, companies are exempt from Bermuda's stringent ownership and employment regulations. Areas of opportunity for U.S. investment are principally in the re-insurance and financial services industries, although the former U.S. base lands also may present long-term investment opportunities.

Principal U.S. Officials
Consul General--Robert A. Farmer Director, NASA--Steven Stompf Customs Officer--Robert Colbert USINS Officer--Pat Moore Agricultural Officer--Alexis Agostini

The U.S. consulate general is located at "Crown Hill," 16 Middle Road, Devonshire, just outside Hamilton; tel: 441-295-1342; fax: 441-295-1592.

HISTORICAL HIGHLIGHTS
Bermuda is an archipelago consisting of seven main islands and many smaller islands and islets lying about 1,050 kilometers (650 mi.) east of North Carolina. The main islands--with hilly terrain and subtropical climate--are clustered together and connected by bridges; they are considered to be a geographic unit and are referred to as the Island of Bermuda.

Bermuda was discovered in 1503 by a Spanish explorer, Juan de Bermudez, who made no attempt to land because of the treacherous reef surrounding the uninhabited islands. In 1609, a group of British colonists led by Sir George Somers was shipwrecked and stranded on the islands for 10 months.

Their reports aroused great interest about the islands in England, and in 1612 King James extended the Charter of the Virginia Company to include them. Later that year, about 60 British colonists arrived and founded the town of St. George, the oldest continuously inhabited English-speaking settlement in the Western Hemisphere. Representative government was introduced to Bermuda in 1620, and it became a self-governing colony.

Due to the islands' isolation, for many years Bermuda remained an outpost of 17th-century British civilization, with an economy based on the use of the islands' cedar trees for shipbuilding and the salt trade. Hamilton, a centrally located port founded in 1790, became the seat of government in 1815.

Slaves from Africa were brought to Bermuda soon after the colony was established. The slave trade was outlawed in Bermuda in 1807, and all slaves were freed in 1834. Today, about 60% of Bermudians are of African descent.

In the early 20th century, Bermuda's tourism industry began to develop and thrive; Bermuda has prospered economically since World War II. Internal self-government was bolstered by the establishment of a formal constitution in 1968; debate about independence has ensued, although a 1995 independence referendum was defeated.

ECONOMY
Bermuda has enjoyed steady economic prosperity since the end of World War II. Most Bermudians derive their livelihood, directly or indirectly, from tourism. In 1994, more than 588,000 tourists--of whom nearly 60% were from the United States--contributed an estimated $524 million to the economy. A further source of foreign exchange for Bermuda is the roughly 1,700 foreign companies there, many U.S.-owned.

Bermuda has little in the way of exports or manufactures. Between them, tourism and international companies account for more than 60% of GDP. Job opportunities in these sectors plus retailing ensure minimal unemployment (4.5% in late 1994), and many Bermudians hold more than one job.

In 1991, about 25% of workers were union members. The influence of unions extends beyond their membership because, under the Agency-Shop Act, a majority of a company's employees may vote to have a union represent them without a majority of the employees being union members. The major companies have union contracts. The Bermuda Industrial Union, Bermuda's largest labor organization, is an affiliate of the International Confederation of Free Trade Unions.

Because of a lack of domestic production, almost all manufactured goods and foodstuffs must be imported. Excluding imports into the small free port--which are subsequently re-exported--1994 imports were $551 million, up from $535 million in 1993. Imports from the U.S. in 1994 were about $400 million. The United Kingdom, Canada, and the Caribbean countries (mostly the Netherlands Antilles) also were major trading partners. Exports amounted to just over $35 million in 1993; revenue from tourism and other expenditures by foreigners more than offset imports.

In fiscal year 1994, the government obtained slightly more than $128 million, or about 34% of its revenue, from import duties. As noted, although it imposes no income, sales, or profit taxes, a small real estate tax is levied. Heavy import duties are reflected in retail prices, which by 1994 had risen by almost 50% since 1984 and by 150% since 1978. Even though import duties remain high, wages have kept up with the cost of living, and poverty--by U.S. standards--appears to be practically nonexistent.

In addition to resident Americans, nearly 4,800 immigrants from the British Isles live in Bermuda, along with some 1,500 people from the British Commonwealth Caribbean nations, about 1,600 from Canada, and more than 2,100 from Portugal and the Azores. Of the total 1991 population, about 73% were born in Bermuda and 27% were foreign-born.

In February 1970, Bermuda converted from its former currency, the pound, to a decimal currency of dollars pegged to the U.S. dollar.

Bermuda has 140 miles of private paved roads; 136 miles of public paved roads; 25 miles of historic, unpaved railroad trail, used as scenic trails; three ports, including the former U.S. Naval Air Station and Naval Air Station Annex; and one airport, located at the former U.S. Naval Air Station. It has seven radio stations, three television stations, and a small cable microwave system.

GOVERNMENT AND POLITICAL CONDITIONS
Bermuda is the oldest self-governing colony in the British Commonwealth and has a great degree of internal autonomy. Its 1968 constitution provided the island with formal responsibility for internal self-government, while the British Government retained responsibility for external affairs, defense, and security. The Bermudian Government is always consulted on any international negotiations affecting the colony. Bermuda participates, through British delegations, in the UN and some of its specialized and related agencies.

Government Structure
Queen Elizabeth II is chief of state and is represented in Bermuda by a governor, whom she appoints. Internally, Bermuda has a parliamentary system of government.

The premier is head of government and leader of the majority party in the House of Assembly. The cabinet is composed of 14 members selected by the premier from among members of the House of Assembly and the Senate.

The 40-member House is elected from 20 electoral districts (two representatives from each district) for a term not to exceed five years. The Senate, or reviewing house, serves concurrently with the House and has 11 members--five appointed by the governor in consultation with the premier, three by the opposition leader, and three at the governor's discretion.

The judiciary is composed of a chief justice and associate judges appointed by the governor. For administrative purposes, Bermuda is divided into nine parishes, with Hamilton and St. George considered autonomous corporations.

Political Conditions
Bermuda's first political party, the Progressive Labor Party (PLP), was formed in May 1963 with predominantly black adherents. In 1965, the two-party system was launched with the formation of the United Bermuda Party (UBP), which had the support of the majority of white voters and of some blacks. A third party, the Bermuda Democratic Party (BDP), was formed in the summer of 1967 with a splinter group from the PLP as a nucleus; it disbanded in 1970. It was later replaced by the National Liberal Party (NLP).

Bermuda's first election held on the basis of universal adult suffrage and equal voting took place on May 22, 1968; previously, the franchise had been limited to property owners. In the 1968 election, the UBP won 30 House of Assembly seats, while the PLP won 10 and the BDP lost the three seats it had previously held. In the elections of 1972, 1976, and 1980, the UBP continued to maintain control of the government, although by decreasing margins in the Assembly.

Unsatisfied aspirations, particularly among young blacks, led to a brief civil disturbance in December 1977, following the execution of two men found guilty of the 1972-73 assassinations of Governor Sir Richard Sharples and four others. In the 1980s, the increasing prosperity of Bermudians, combined with limited land area, caused severe pressure in housing. Despite a general strike in 1981 and poor economic conditions worldwide during 1981-83, Bermuda's social, political, and economic institutions showed resilience and stability.

John Swan replaced David Gibbons as premier in January 1982. The 1983 election issues centered on housing and social problems and Swan's leadership. The UBP reversed the trend of prior elections, increasing its majority in the House. In the October 1985 election, the UBP again increased its majority; 1989 saw a sharp increase in PLP power, although the UBP still dominated. In the most recent elections in 1993, the UBP retained its 22 seats, while the NLP and independents combined with the PLP for 18 seats.

Bermuda's positive experience with internal self-government has led to discussions of possible complete independence or a more flexible type of association. However, an independence referendum held in the summer of 1995 was resoundingly defeated, due primarily to division within the UBP and to the boycott called by the opposition PLP. Premier and UBP leader John Swan was the major casualty of the referendum, as he fulfilled his promise to resign should the referendum fail.

Following Swan's resignation, David Saul was elected by UBP members as the new party leader and premier. The opposition PLP has put the island on notice that independence continues to be a major priority on its agenda. Bermuda's current government can be characterized as politically moderate and fiscally conservative.

Principal Government Officials
Chief of State--Queen Elizabeth II
Governor--Lord Waddington
Premier--David Saul

Bermuda's interests in the United States are represented by the United Kingdom, whose embassy is at 3100 Massachusetts Avenue, NW, Washington, DC 20008; tel: 202-462-1340; fax: 202-898-4255.

The Bermudian Government's Department of Tourism has offices in New York, Atlanta, Chicago, and Boston. 



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