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World : North America : Bermuda
 
Bermuda

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, connected by bridges, and are considered to be a geographic unit, 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. When representative government was introduced to Bermuda in 1620, 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' endemic 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 55% of Bermudians are of African descent. The establishment of a formal constitution in 1968 bolstered internal self-government; debate about independence ensued, although a 1995 independence referendum was defeated. The current government re-opened the independence debate in 2004.

Tourism to the island to escape North American winters first developed in Victorian times. Tourism continues to be important to the island's economy, although international business has overtaken it in recent years. Bermuda has developed into a highly successful offshore financial center. A referendum on independence was soundly defeated in 1995.

CIVIL DISORDER

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 black voters. 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), which currently holds no parliamentary seats. 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 seats and the BDP lost the 3 seats it had previously held. The UBP continued to maintain control of the government, although by decreasing margins in the Assembly, until 1998 when the PLP won the general election for the first time. 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 a housing shortage. Despite a general strike in 1981 and economic downturn in the early 1980s, Bermuda's social, political, and economic institutions remained stable. Both political parties have discussed the possibility of complete independence. An independence referendum called by a sharply divided UBP in the summer of 1995 was resoundingly defeated and resulted in the resignation of the premier and UBP leader, Sir John Swan. Just over 58% of the electorate voted in the independence referendum, which had to be postponed one day due to disruptions caused by Hurricane Felix. Of those voting, over 73% voted against independence, while only 25% voted in favor. Vote results may have been distorted by the Progressive Labor Party (PLP) call to boycott the referendum. Independence has been a plank in the platform of the PLP since the party's inception in 1963. In February 2004 Premier (and PLP party leader) Alex Scott announced his decision to commence an open and objective debate on the subject of independence from the U.K. Since that time, there has been only minimal discussion, with the focus more on the pros and cons of autonomy than on the mechanics of delivering independence. The international and local business communities appear to be taking a wait-and-see attitude. Currently citizens of Britain's overseas territories, including Bermuda, are entitled to British citizenship. The British Overseas Territories Bill, passed in February 2002, provides automatic acquisition of British citizenship, including automatic transmission of citizenship to their children; the right of abode, including the right to live and work in the U.K. and the European Union (EU); the right not to exercise or to formally renounce British citizenship; and the right to use the fast track European Union/European Economic Area (EU/EEA) channel at the airport, free of U.K. immigration controls. A March 2002 poll conducted by the Bermuda Sun, a local semiweekly newspaper, showed support for British citizenship. Of the 356 persons surveyed, 66.9% were interested in accepting British citizenship and only 18% said that they would refuse it. There are no conditions attached to the grant of British citizenship to the overseas territories, a fact of particular importance to Bermuda where the issue of independence lies dormant. A 1999 U.K. government White Paper states: "The new grant of British citizenship will not be a barrier, therefore, to those Overseas Territories choosing to become independent of Britain. Our Overseas Territories are British for as long as they wish to remain British. Britain has willingly granted independence where it has been requested; and we will continue to do so where this is an option." Bermuda's most recent general election was held in July 2003, when the PLP was re-elected to its second term. Following the election, the more moderate Alex Scott replaced Jennifer Smith as premier and party leader in a leadership challenge.

ECONOMY

Bermuda has enjoyed steady economic prosperity since the end of World War II, although the island experienced a mild recession in 2001-02, paralleling the recession in the U.S. Bermuda enjoys one of the highest per capita incomes in the world. Its economy is based primarily upon international business and tourism. The Bermuda Monetary Authority (BMA) estimated that those two sectors represented 75% of the total balance of payments current account receipts of foreign exchange in the first three quarters of 2003. However, the role of international business in the economy is expanding, whereas that of tourism is contracting. Bermuda is an offshore financial center with a robust financial regulatory system. The government cooperates with the United States and the international community to prevent money laundering and terrorist financing and continues to update its legislation and procedures in conformance with international standards. Bermuda first enacted specific money laundering legislation in 1997, passing the Proceeds of Crime Act (PCA) to apply money laundering controls to financial institutions such as banks, deposit companies, trust companies, and investment businesses, including broker-dealers and investment managers. Insurance companies are covered to the extent that they are judged susceptible to the risk of money laundering abuse. Amendments in 2000, effective June 1, 2001, expanded the scope of the legislation to cover the proceeds of all indictable offenses, including tax evasion, corruption, fraud, counterfeiting, theft, and forgery. In December 2002, Parliament passed the Bermuda Monetary Authority Amendment Act 2002, expanding the list of BMA objectives to include action to combat financial crime. It underpins the BMA’s existing role in checking systems and controls in financial institutions and paves the way for the BMA to expand its role in administering UN sanctions and other measures on a delegated basis. In order to implement provisions of relevant UN Security Council antiterrorism resolutions, the act—among other provisions—prescribes the manner by which the finance minister may delegate to the BMA the power to block accounts. Bermuda enacted the Investment Business Act (IBA) in 1998 to regulate the island's financial services industry. In response to international directives, the government passed the Investment Business Act 2003 to further refine its terms. The act creates a balance between government regulation on the one hand and the competitive needs of Bermuda's most important industry--international business--on the other hand. By updating its regulatory framework, Bermuda has enhanced its reputation globally as an international standard-bearer. In return, international businesses registered in Bermuda are recognized as having met or surpassed the most stringent international criteria. Bermuda is currently considering additional legislation to further enhance its compliance with international financial standards. The Bermuda Monetary Authority Amendment (No. 3) Act 2004 will clarify the authority of the BMA to respond to requests from overseas regulators for information about clients. The Collective Investment Scheme Act will institute a formal licensing regime for investment schemes. By the end of 2003, 13,509 international companies were registered in Bermuda, many U.S.-owned. They are an important source of foreign exchange for the island, and spent an estimated $1.05 billion in Bermuda in 2002. The growing importance of international business is reflected in its increased share of GDP, up from 12.6% in 1996 to 16% in 2002 (provisional). Historically important for employment and tax revenue, Bermuda’s tourism industry is continuing to experience difficulties, although both the government and private sectors are working to improve it. In 1996, Bermuda welcomed 571,700 visitors to the island. By 2003, that figure had dropped to 482,673. Occupancy rates for 2002 averaged 55.1%, and were higher in the smaller hotels than at larger properties. Visitors contributed an estimated $475 million to the economy in 1996, but that figure declined to $342.5 million in 2003. Although per capita spending by air visitors rose to $333.5 million in 2001, the trend reversed in 2003, dropping to $291.8 million. Hurricane Fabian in September 2003 dealt another blow to the tourism industry. Bermuda has little in the way of exports or manufacturing; almost all manufactured goods and foodstuffs must be imported. The value of imports rose from $551 million in 1994 to $746 million in 2002. The U.S. is Bermuda's primary trading partner, with $567.5 million in U.S. imports in 2002. The U.K., Canada, and the Caribbean countries (mainly the Netherlands Antilles) also are important trading partners. Exports from Bermuda, including imports into the small free port that are subsequently re-exported, increased from $35 million in 1993 to $57 million in 2002 (provisional). Duty on imports is a major source of revenue for the Government of Bermuda. In 2003-04, the government obtained $187.1 million, or 27%, of its revenue base from imports. Heavy importation duties are reflected in retail prices. Even though import duties are high, wages have kept up for the most part with the cost of living, and poverty--by U.S. standards--appears to be practically nonexistent. Although Bermuda imposes no income, sales, or profit taxes, it does levy a real estate tax. Bermuda is home to immigrants from other countries. According to the 2000 census, 79% of the population is Bermuda-born and 21% is foreign-born. U.K. immigrants comprise 28% of the immigrant population; U.S., 20% (although the U.S. Consulate estimates that the figure is closer to 40%); Canada, 15%; Caribbean, 12%; and Portugal/Azores, 10%. In February 1970, Bermuda converted from its former currency, the pound, to a decimal currency of dollars pegged to the U.S. dollar.

Bermuda enjoys one of the highest per capita incomes in the world, nearly equal to that of the US. Its economy is primarily based on providing financial services for international business and luxury facilities for tourists. The effects of 11 September 2001 have had both positive and negative ramifications for Bermuda. On the positive side, a number of new reinsurance companies have located on the island, contributing to the expansion of an already robust international business sector. On the negative side, Bermuda's tourism industry - which derives over 80% of its visitors from the US - was severely hit as American tourists chose not to travel. Tourism rebounded somewhat in 2002-04. Most capital equipment and food must be imported. Bermuda's industrial sector is small, although construction continues to be important; the average cost of a house in June 2003 had risen to $976,000. Agriculture is limited, only 20% of the land being arable.

INCIDENCE OF CRIME

The crime rate in Bermuda is high (especially for burglary) compared to industrialized countries. An analysis was done using INTERPOL data for Bermuda. For purpose of comparison, data were drawn for the seven offenses used to compute the United States FBI's index of crime. Index offenses include murder, forcible rape, robbery, aggravated assault, burglary, larceny, and motor vehicle theft. The combined total of these offenses constitutes the Index used for trend calculation purposes. Bermuda will be compared with Japan (Bermuda with a low crime rate) and USA (Bermuda with a high crime rate). According to the INTERPOL data, for murder, the rate in 1997 was 3.30 per 100,000 population for Bermuda, 1.02 for Japan, and 6.8 for USA. For rape, the rate in 1997 was 31.0 for Bermuda, compared with 1.31 for Japan and 35.92 for USA. For robbery, the rate in 1997 was 100.63 for Bermuda, 2.23 for Japan, and 186.05 for USA. For aggravated assault, the rate in 1997 was 188.06 for Bermuda, 15.29 for Japan, and 382.04 for USA. For burglary, the rate in 1997 was 2043.95 for Bermuda, 175.70 for Japan, and 919.57 for USA. The rate of larceny for 1997 was 1481.41 for Bermuda, 1117.08 for Japan, and 2886.55 for USA. The rate for motor vehicle theft in 1997 was 61.04 for Bermuda, compared with 27.34 for Japan and 505.8 for USA. The rate for all index offenses combined was 3909.39 for Bermuda, compared with 1339.97 for Japan and 4922.73 for USA.

LEGAL SYSTEM

Bermuda is the oldest self-governing overseas territory in the British Commonwealth. Its 1968 constitution provides the island with formal responsibility for internal self-government, while the British Government retains responsibility for external affairs, defense, and security. The Bermudian Government is consulted on any international negotiations affecting the territory. Bermuda participates, through British delegations, in the UN and some of its specialized and related agencies. Queen Elizabeth II is head 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 ministers selected by the premier from among members of the House of Assembly and the Senate. The 36-member House is elected from 36 electoral districts (one representative from each district) for a term not to exceed 5 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.

ACKNOWLEDGEMENTS

Internet research assisted by Kathrina Pestano

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