Despite its great success in the international re/insurance arena, Bermuda is looking at other sources of growth - and possibly cutting the apron strings of the UK

Not since 1998, when the Progressive Labour Party (PLP) "historically" won the general election, has Bermuda had such a turbulent year in politics as 2003. Last year saw another general election victory for the PLP, followed within days by the ousting of Jennifer Smith as Premier, and her replacement by Alex Scott. Then came a pre-Christmas ding dong over the appointment of a new Chief Justice, highlighting the somewhat fractious relationship between the Bermudian Government and Governor Sir John Vereker. This discord was further evidenced in Premier Alex Scott's call for Bermuda's independence from the UK, and admission to Caricom (the Caribbean community) and accession to the World Trade Organization (WTO).

Bermuda's success on the business front has brought new pressures on to the island. Although it basks in the highest per capita income in the world, according to 2002 figures from the World Bank, the post-9/11 growth spurt in the international re/insurance sector has added to the infrastructure pressures on an island just one mile wide and 20 miles long.

Bermuda-based companies are encouraged to operate as "good corporate citizens", promoting the employment and development of Bermudians wherever possible. In return, these good corporate citizens can apply for waivers from work permit restrictions (currently for six or nine years) for what the government agrees are "key" employees or categories of job where there are "severe shortages of staff". Such categories include actuaries, butchers, chefs, finite re/insurance modeling analysts and nurses. The first applications under the programme were made in November, although at that point the hopefuls seemed unsure exactly what the designation entailed and the benefits it brought.

It is probably fair to say the re/insurance sector has shown certain philanthropic tendencies towards its motherland. The success of the Bermuda Foundation for Insurance Studies' (BFIS) scholarship programme is clear - 24 scholarship students are now working in the industry, while another 15 are currently studying - and the commitment of the re/insurance sector, both in funding the scholarships and in employing the programme graduates seems genuine.

But this still doesn't resolve the problem of 21 square miles of landmass and 63,000 citizens and residents - and rising. Tourism, Telecommunications and E-commerce Minister, Renee Webb, sees the development of the e-commerce sector as an opportunity for business growth without the need for a significant number of people to run it. This isn't the first time Bermuda has tried to position itself as a technophilic centre. At the end of the last decade and very beginning of this one, Bermuda was the self-proclaimed 'convergence island', with re/insurance, investments and technology all set to come together in a single Utopian melting pot. But the dot.com bubble burst, and Bermuda's e-commerce aspirations deflated accordingly. According to Ms Webb, there is now a new point of focus, one which was highlighted by the World Trade Center losses. "Post 9/11, companies realised they needed to look at disaster recovery," she explained. Bermuda, she added, has the infrastructure brought in by the telecoms and data companies to build upon, in order to be able to host such business. "It is simply something we could build upon; there has definitely been a change in shift in e-business opportunities."

On the face of it, it could appear strange that an island situated 700 miles from the nearest landfall and on the periphery of the Atlantic hurricane zone would be positioning itself as an ideal location for business continuity operations. But Ms Webb points out that last September's Hurricane Fabian attested that the island can withstand extreme events. "Fabian, in a way, was very positive," she said. "It proved that our telecoms infrastructure is very robust - international access in and out was maintained throughout the hurricane." Hamilton remained with electricity throughout the duration of the hurricane, since the power lines are buried underground in the city, though other parts of the island were blacked out for several days because of downed overhead power lines. Nevertheless, Fabian was, she said, "what we were expecting in terms of business continuity."

So the elements have tested the proposition and appear not to find it wanting. The next step is the legal framework. In fact, much of this was put in place when e-business was first identified as a potential growth area for Bermuda. The Electronic Transactions Act (ETA) of 1999 and the Standard for Electronic Transactions or Code of Conduct of 2000 were designed to reflect the United Nations Commission on International Trade Law (UNCITRAL) model law on e-commerce, the EU Parliament and Council legislation for electronic signatures, the EU safe harbour principles for data protection, and 'best practice' legislation found in other jurisdictions. Ms Webb said that the Government is currently finalising data protection legislation, and has developed a national plan, "which sets out what Bermuda will do, and what steps will be taken to get there."

Part of this plan is an e-government portal, the first phase of which was rolled out recently. It is, according to Ms Webb, "one of our boldest initiatives", and "is aimed at making life easier". Educational applications are also high on Ms Webb's agenda, and her ministry is looking at the prospect of delivering the curriculum online.

So the Government is leading where it hopes business will follow, and Ms Webb acknowledges that businesses without a physical presence on the island will help relieve the strains on the infrastructure.

At the same time, the tourism side of her remit is undergoing a marketing boost. Currently, she said, international business is responsible for about 60% of Bermuda's GNP, with the balance coming from the tourism sector, though some would suggest that the scales are tipped further in the favour of business. There is, said Ms Webb, "much activity" in improving the tourism profile of the island, though its efforts to join the World Tourism Organization have been blocked by Spain, since Bermuda is a crown colony of the UK. This touches on a raw nerve with the Bermudian Government, which recently has restated its intention to gain full independent status.

"We will go independent," said Ms Webb categorically. "It is not a matter of if, but a matter of when." Her comments echo those of the Premier, although the UK's Foreign and Commonwealth Office is much more reticent about the issue, saying that any talks are in their very early stages.

From the Bermudian politicians' point of view, "the time has gone" for being a British territory. "Bermuda has always been self-sustaining," said Ms Webb. Its legal system is familiar, based as it is in the English system, and it has a recognised regulatory infrastructure. "Bermuda is in a very privileged position," she explained. "We have our cake and eat it. We are self-governing and self-funding. So in terms of independence, I don't know whether there would be any real changes ... Bermuda wouldn't change significantly. But we would lower the British flag and raise our own."