Walking the plank: Bermuda leaders, looking to put their stamp on a unified nation, push for independence. Critics claim the governing Progressive Labour Party is committing political suicide. Neither voters nor big business support independence. One CEO says his firm is ready to move to Ireland should unfavorable political winds buffet his corporation

Risk & Insurance, March, 2005 by Roger Crombie

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 elan 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."