Warm Springs Indian Reservation, Ore. — An isolated 1,000-square-mile chunk of American wilderness, the Warm Springs Reservation, doesn't look like a hotbed of economic activity. There are no supermarkets in the vast expanse of scrub brush, no movie theaters, not even a McDonald's.
But as American Indian reservations go, this one is doing well enough to be touted by the Reagan administration as a model of free enterprise that other reservations should try to imitate.
Traditionally fishermen and hunters, Indians on the reservation are now in the business of running a resort, a lumber mill, and a hydropower plant. A gross annual revenue of $50 million is squeezed annually from land that was considered worthless when the white man forced the Wasco and Warms Springs Indians from their rich fishing territory on the Columbia River. (Paiutes from southeast Oregon also share the land.)
Although most of the Indians here don't work directly for these operations, their tribal government runs the enterprises like a corporation. So, like shareholders, each of the 2,300 tribe members receives dividends of about $75 a month.
Kenneth Smith, who lived on the reservation all his life, was general manager of the tribe when the Reagan administration plucked him away from here to head the Bureau of Indian Affairs as assistant secretary of the Interior. He's the first BIA head ever to come directly from a reservation, and he believes the Warm Springs approach to economic development should be adopted by tribes throughout the country.
''It's not a new concept, but I'm pushing it harder than it has been,'' says Mr. Smith. ''What they've tried to do in Warm Springs is separate politics from day-to-day business decisions.''
Separation of business and politics, he says, is the key to economic success. He says management turnover at reservations is usually high because it's tied to tribal politics and frequent elections. But at Warm Springs, the general manager is hired by the Tribal Council and doesn't have to answer to individual tribe members. This concept was first introduced in the 1950s, when a $4 million award from the federal government for lost fishing areas was invested instead of being divided up by the tribe. Vern Jackson, the first tribe member to get a college education, shepherded the program along with Smith. The two were the only general managers the tribe hired during a 30-year period in which other reservations likely had many general managers, Smith says.
''We hire quality people to run administration and services. We wouldn't hire an Indian if he isn't qualified. On other reservations there's too much pressure to hire local Indians. I was criticized for a few years because I went out and tried to hire the best-qualified people . . . not necessarily Indians. There are just more jobs than employable Indians,'' he explains.
But he notes that a strong business base must come first, so there is a job base for Indians as they become skilled.
Less than half of the 334 sawmill employees are tribe members, but most of the hauling and cutting of trees is done by Indian contractors on Indian land. Within the past five years, Bob Macy became the first Indian to run the mill. Similarly, at the Kah-Nee-Ta resort - a multimillion-dollar hotel, restaurant, and hot-spring complex catering to an upper-income clientele - Indian employees are a minority. But management is Indian.
To say things are going well at Warm Springs is a relative statement. For example, BIA statistics place reservation unemployment at 39 percent - astoundingly high by standards for other racial groups, but comparatively low when compared with the 51 percent unemployment average of all the nation's reservations.
Suspended in cultural and economic isolation, Indian reservations have been pockets of extreme poverty. During the 1950s and '60s the federal government's approach to the problem was to assimilate the Indians, to force them off reservations and into the urban job market.
The Indian unrest of the late 1960s and early '70s brought a new focus - economic development on the reservation. That approach sparked yet another struggle for Indians who had to adjust to the imposition of the white man's economic mentality. The economies that developed consisted largely of federally funded jobs, so that with the Reagan budget cuts, up to half the reservation jobs across the country may have been eliminated.
''That was an exciting time (the evolution of the '60s and '70s), but then the plug was pulled (with Reagan cuts). But we were left with something from that. We were left with a greater image of ourselves . . . the way we view ourselves and the future is much more optimistic. And if that's all we gained, that's enough,'' says Elizabeth Lohah-Homer, deputy director of Americans for Indian Opportunity in Washington.
She says budget cuts have left Indians on their own to be more creative in economic development.
But she and other Indian affairs experts stress that the Warm Springs approach is not necessarily going to work for all tribes. There are 253 federally recognized tribes and 260 reservations scattered across the US, with cultures as diverse as the geography. Not all are blessed with the same moneymaking resources as the Warm Springs Reservation, nor do they necessarily have the same cultural views needed for a Warm Springs-style government.