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Honolulu Weekly
September 27, 1995, p. 5
By Ian Hodges
August 1995 was a watershed month for Hawaii. In the economic arena, layoffs of 600 state workers went into effect, record numbers of visitors from Asia were reported and Hawaii's banks enjoyed their last month of safety from the threat of interstate banking. In events of significance to sovereignty, the State Supreme Court reaffirmed the right of access by Native Hawaiians to private property, the deadline passed for filing individual claims for breaches of the Hawaiian Homes trust and Nation of Hawaii leader Bumpy Kanahele was arrested by the federal government for allegedly "harboring a tax fugitive" and then denied bail -- twice.
Although economics and sovereignty may sometimes seem only peripherally related, they are actually fundamentally connected. Amidst the controversy over Kanahele's arrest, Maui Mayor Linda Lingle expressed her concerns that the sovereignty movement is creating a level of uncertainty that may be hurting Hawaii's economy. While blaming Hawaii's economic problems on the sovereignty movement is definitely an exaggeration, it is true that questions raised by sovereignty are inextricably linked to the economic future of Hawaii.
Hawaii is certainly not unique in facing the issue of sovereignty. Quebec has been considering secession from Canada for some time now. The current uncertainty over sovereignty there is cited as a major reason that Quebec lost out to Salt Lake city in its bid to host the 2002 Winter Olympics. A referendum on the issue is expected this fall and recent polls show that it will pass if provisions for economic association with the rest of Canada are included.
Uncertainty comes into play in various questions about sovereignty around the world. This is due to concerns regarding heritage, property rights, legal systems, control over natural resources, citizenship status and sovereign immunity.
On August 16 voters in Bermuda, fearing the loss of offshore investment, rejected independence and chose to remain a British crown colony by a margin of nearly 3-to-1. Their uncertainty, however, was minor compared to the anxiety that is occurring in Hong Kong. Many Hong Kong investors are now inserting clauses in new partnership contracts declaring that the agreements will not be subject to Hong Kong court jurisdiction after sovereignty is transferred to China in 1997. By June, close to half of the companies listed on the Hong Kong stock exchange had shifted their legal domiciles to Bermuda in order to take of advantage of the island's corporate attractions.
The link between sovereignty and economics is perhaps most vividly demonstrated by the current situation in the Falklands. It seems that after losing a brief but bloody war with Britain over the Falkland Islands in 1982, Argentina is still eager to claim the islands as its own. Earlier this year the Argentine government went so far as to consider paying each of the Falkland Islands' 2,000 residents $100,000 if they would vote to transfer sovereignty from Britain to Argentina.
What makes control over the desolate Falklands worth some $200 million? The answer lies in the waters surrounding the Falklands where geologists have recently discovered the existence of late Jurassic/Early Cretaceous anoxic marine claystones -- certain signs of oil. So far Falkland residents have rejected the idea that their sovereignty is for sale and their local government announced last month that it would open bidding for oil exploration rights on October 3. Argentina has threatened to hold a competing bidding round, also claiming rights to the Falkland's coastal waters.
Back home in Hawaii, another sovereignty dispute is scheduled for a showdown on October 3 -- Bumpy Kanahele's trial for "harboring a tax fugitive." Given the extraordinary decision to hold him without bail, the validity of Kanhele's claim that he's a political prisoner has been recognized by persons ranging from the managing editor of the Star-Bulletin to the director of the national Interfaith Prisoners of Conscience Project.
In order to maintain its sovereignty, a government needs to be the "supreme legitimate authority within a territory," and the actions of Mr. Kanahele and the Nation of Hawaii have certainly challenged the supremacy and authority of both the state and federal governments in Hawaii. Challenges such as these tend to undermine confidence that the current government is capable of securing and protecting property rights. Whether or not one agrees with Kanahele and the Nation of Hawaii is almost irrelevant. The questions raised by their assertions of sovereignty will not just go away and it is the lack of satisfactory answers to these questions that poses the greatest threat to economic stability.
Whether one is looking at Hong Kong, the Falklands, Bermuda, Quebec or Hawaii, the eventual resolution of sovereignty questions can have immediate economic benefits. A prime example of this can be found in South Africa. Foreign investment in property there has gone up dramatically since the country held its first all race elections in April of 1994. In the month leading up to the elections, agreements were reached to protect the right to self-determination of white Afrikaners and to assure a level of sovereign status for the Zulu monarchy. Since a model of sovereignty for all South Africans has been established, uncertainty has decreased and the pattern of divestment has been reversed.
In the United States, a recently resolved sovereignty dispute has led to predictions by both sides of future economic benefits. In 1991 the Chickasaw Nation sued the state of Oklahoma over the state's gasoline tax. Three months ago, on June 14, the U.S. Supreme Court ruled unanimously that a fuel tax imposed on gas stations located in the Chickasaw Nation improperly interfered with the tribe's sovereign right to self-government. Within weeks of the supreme court's decision, both the president of the Oklahoma State Chamber of Commerce and the governor of the Chickasaw Nation were pointing to the potential competitive economic benefits of having a sovereign nation in Oklahoma. Among the advantages highlighted were the opportunity for companies to "move offshore while staying at home" and the Chickasaw Nation's ability to create a regulatory environment from scratch -- one that would be friendly to businesses, people and the natural surroundings.
Although the Chamber of Commerce here in Hawaii remains somewhat apprehensive about sovereignty, both the Hawaii Hotel Association and the Hawaii Visitors Bureau claim to be sovereignty supporters who view the creation of a Hawaiian nation as economically beneficial. In the interests of its own economic survival, Hawaii's business community is beginning to learn about sovereignty. From a purely economic point of view, supporting the creation of a sovereign nation is a strategy that is certainly preferable to jailing the movement's leaders.
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