Roger Crombie

The winning song in the 1994 Carnival King competition in St. Lucia was called "Alien." It began, "Like an alien/in we own land/I feel like a stranger/and I sensing danger." The cause of this alienation was "all-inclusive tax elusives/and truth is/they sucking up we juices."

The subject was expatriates buying land on which to create gated communities, from which St. Lucians were excluded: aliens "in we own land."

Some Bermudians feel the same way, although restrictive land title provisions make fewer than 300 properties available for foreign ownership. Silvio Berlusconi has one, as do Michael Bloomberg and Michael Douglas.

St. Lucians lacked access. What Bermudians feel they lack, and covet, is senior management positions ha the international capital markets, and insurance in particular. Their cries have not gone unheeded. A government program is in place to force out expatriate workers and vault Bermudians to the top. The program limits expatriates to six, or at most nine years, in office. The first wave, including myself, will leave Bermuda March 31,2007.

Golden geese perforce live shortened lifespans. Bermuda's efforts to solve what turns out to be a nonproblem could well lead to the demise of its world-beating insurance sector. Other jurisdictions in the Caribbean are rubbing their hands, and building suitable infrastructure in anticipation.

The problem the Bermuda government wanted to solve--it was seeking re-election as this was written is that of foreign long-term residents. Bermuda has some 8,000 foreign workers among its workforce of 39,000. Being selected from the best in the world, work permit holders routinely outperform and out-earn their hosts who, generally speaking, are less educated, less experienced and less ambitious. The Bermudian philosophy toward expatriates has, therefore, become: if you can't join them, beat them.

Bermuda has traditionally renewed the permits of its expatriates annually, provided they broke neither the law nor their wedding vows. The result is a few hundred souls who have spent their working lives in Bermuda. After three or four decades, they feel as if they belong. But belong they cannot. Bermuda has not accepted any new citizens for more than a decade.

Although hardly a real problem--anyone who works in Bermuda for 40 years is likely to save a dollar or two and be able to retire almost anywhere, even in Bermuda--the issue has been seized upon by a rainbow coalition of the disenchanted. The environmentalists have been the most vocal, as the physical development of Bermuda has matched its robust economic growth.

Government chose to simultaneously assuage the Greens, the xenophobes and the jealous. The law now limits expatriates to six years in Bermuda, period. An exemption for ill-defined "key" employees of "good corporate citizens" was assumed to be the loophole through which the status quo would be maintained. Government's campaign bombshell, however, was that few would qualify as "key" and even they will be forced out after an absolute maximum of nine years. No exceptions. Many of the biggest Bermuda players will be gone by 2007.

Insurance is a long-term venture. What prudent investor or executive would hand the company over to total strangers after six years?

An eerie historical parallel exists. In the 1950s, the Bahamas had the lead in international offshore business. Its long-term United Bahamian Party was unseated by the proto-socialist Progressive Liberal Party. In no time the white elite known as the Bay Street Boys was dispossessed, and international capital was chased out.

As a result, in economic terms, it is not better in the Bahamas.

Ignoring history, as we know, can be dangerous. In the risk capital of the world, you would think we would know better.

Roger Crombie, our regular Bermuda correspondent, can be reached at crombie@northrock.bm

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