Bermuda: Government

Principal Government Officials

Chief of State: Queen Elizabeth II represented by Governor Sir Richard Gozney
Head of Government: Premier Paula Cox

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.

Government Structure
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.

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 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 has since disbanded. In the fall of 2009 several UBP parliamentarians broke away from the party and in November formed a third party, the Bermuda Democratic Alliance (BDA).

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.

Following a bitter and divisive general election on December 18, 2007--which many predicted would be very close--the PLP under Premier Ewart Brown was returned to power with the same number of seats as it had going into the election. The opposition UBP lost its third successive election. The UBP elected member of parliament Kim Swan as opposition leader and Cole Simons as deputy. Mr. Swan is a first-time member of parliament whose previous public service was as a UBP senator.

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 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.

The PLP and UBP have both 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, John Swan. Just over 58% of the electorate voted in the independence referendum, with over 73% voting against independence and only 25% in favor.

Eventual independence from the United Kingdom (U.K.) has been a goal of the PLP since the party's inception in 1963. In February 2004 then-Premier (and PLP party leader) Alex Scott announced his decision to commence an open and objective debate on the subject of independence. The government-appointed Bermuda Independence Commission held hearings island-wide where there was considerable focus on the mechanics of deciding independence, whether through an independence referendum, a general election, or some combination of the two. However, several recent polls indicated little support for independence.

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 European Union/European Economic Area (EU/EEA) channel at the airport. The U.K. has indicated that citizens of an independent Bermuda would no longer be automatically entitled to British citizenship and the EU benefits that accrue to it by this method.

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 is being debated. 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."

FOREIGN RELATIONS
The United Kingdom is formally responsible for Bermuda's foreign and defense policy. U.S. policy toward the U.K. is the basis of U.S.- Bermuda 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. While the tariff enacted in 1930 by the U.S. against its trading partners ended Bermuda's once-thriving agricultural export trade--primarily fresh vegetables to the U.S.--it helped spur the overseas territory to develop its tourist industry, which is second only to international business in terms of economic importance to the island.

During World War II, Bermuda became a significant U.S. military site because of its location in the Atlantic Ocean. In 1941, the U.S. signed a lend-lease agreement with the U.K. 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.

Both bases were closed in September 1995 (as were British and Canadian bases), and the lands were formally returned to the Government of Bermuda in 2002.

The Government of Bermuda has begun to pursue some international initiatives independent of the U.K. in recent years pursuant to a General Entrustment Agreement. Bermuda signed a cultural memorandum of understanding with Cuba in 2003. The island also joined the Caribbean Community (CARICOM) as an associate member in 2003.

The U.S. Coast Guard (USCG) provided search and rescue assistance immediately following Hurricane Fabian in September 2003, but Bermuda declined subsequent offers of reconstruction assistance from the U.S. and U.K., preferring to accept assistance from its Caribbean neighbors. The USCG continues to provide search and rescue assistance as needed.

Bermuda executed its first Tax Information Exchange Agreement (TIEA) in 1986 in a treaty between the United States, the United Kingdom, and Bermuda. As of spring 2011, Bermuda had signed 23 TIEAs and one Double Taxation Agreement. On January 12, 2009, the United States and the Government of Bermuda signed a Mutual Legal Assistance Treaty (MLAT), authorizing authorities in the U.S. and Bermuda to request and obtain assistance from each other in criminal investigations and prosecutions and related administrative and other proceedings. The MLAT provides for cooperation between the U.S. and Bermuda in combating a wide variety of crimes, including economic crimes and money laundering, by facilitating the collection of evidence needed by authorities in one country but located within the other country.

In 2009 the Government of Bermuda offered asylum to four former Uighur Guantanamo Bay detainees, without consulting the U.K., on the basis that the decision was an internal immigration matter. The U.K. countered that security is a matter for which it has jurisdiction. As a result, the U.K. is reviewing the General Entrustment Agreement.

An estimated 8,000 registered U.S. citizens live in Bermuda, many of them employed in the international business community. There also are a large number of American businesses incorporated in Bermuda, although no actual figures are available. Despite the trend of American businesses moving to Bermuda, Bermuda maintains that the island is not a "tax haven" since it taxes both local and foreign businesses equally.

U.S. visitors are critical to the island's tourism industry, but overall the number of U.S. visitors to Bermuda has been declining. In 2010, 483,264 Americans visited. Another 3,046 Americans sailed to the island via private yacht in 2010, an increase from 2,222 in 2009. Air arrivals in particular have dropped, down to 166,016 in 2010, compared to 172,648 in 2009. To some extent that shortfall has been made up by an increase in American cruise ship visitors--314,202 in 2010 compared to 286,819 in 2009.

Areas of opportunity for U.S. investment are principally in the reinsurance and financial services industries, although the former U.S. base lands also may present long-term investment opportunities.

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