Because Bermuda is a British overseas territory, U.S. policy toward the U.K. is the basis of U.S.-Bermudian 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 on the island. Unresolved issues concerning the withdrawal of U.S. forces--primarily related to environmental factors--delayed the formal return of the base lands to the Government of Bermuda until 2002.

Bermuda has collaborated with the U.S. in the wake of the September 11 terrorist attacks on New York and Washington, assuring the U.S. and the world that Bermuda offers neither physical nor financial hiding places for terrorism. The BMA searched its databases against a list of hundreds of names provided by the FBI, looking for any connection between the terrorists and companies that have incorporated in Bermuda, and no connections were found. Following through on their promise of full cooperation in any investigation, the BMA worked with the island's financial institutions looking for terrorism connections and also placed the listed individuals on a watch list.

The Government of Bermuda signed a cultural memorandum of understanding with Cuba in 2003. The island also joined the Caribbean Community (CARICOM) in 2003, and only accepted offers of assistance from Caribbean countries following the devastation of Hurricane Fabian in September 2003. There appears to be a growing tendency for Bermuda to align itself with other islands in the Caribbean while distancing itself somewhat from the U.K. and the U.S.

An estimated 7,500-8,000 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 figure are available. Despite the fact that American businesses are increasingly moving to Bermuda or other offshore jurisdictions to escape U.S. taxes, Bermuda maintains that the island is not a "tax haven" and that it taxes both local and foreign businesses equally.

While U.S. visitors to Bermuda are very important to the island's tourism industry, the number of U.S. visitors to Bermuda is declining. Air arrivals from the U.S. declined by more than 30% between 1990 and 2000 and, in 2002, only 77% of air arrivals originated from the U.S. compared to 83.9% in 1990. The number of air and cruise passengers from the U.S. totaled 464,000 (excluding private ship, air, and yacht passengers) in 2000. That number fell to 390,000 American passengers in 2001 due to a general decline in tourism and the events of September 11.

In 2002, 77% of Bermuda's imports came from the U.S., down from 84% in 2000. Areas of opportunity for U.S. investment are principally in the re-insurance and financial services industries, although the former U.S. base lands also may present long-term investment opportunities.

The U.S. Consulate General is located at "Crown Hill," 16 Middle Road, Devonshire, just outside the City of Hamilton; tel: 441-295-1342; fax: 441-295-1592.