Virgin Island Winds - Hugo and Political Change

THE 100,000 residents of the US Virgin Islands are still recovering from the devastation of Hurricane Hugo. St. Thomas, the tourist center and site of the capital, has only 70 percent of its electric power back. In industrial St. Croix, the figure is less than 40 percent. Roughly 10 to 15 percent of the population remains homeless.

The slowdown in tourism and manufacturing caused by damaged facilities has been only partially offset by the vast rebuilding efforts under way.

In the wake of the catastrophe, the referendum on the future political status of this United States territory, slated for last month, has been postponed.

This is not the first time that a major decision on the islands' status has been delayed by natural disaster. Early negotiations for the US purchase of the islands from Denmark were aborted after another massive hurricane in 1867. The transfer to the US did not take place until 1917, one-half century later.

But questions about the Virgins' status have been put aside only temporarily. They will resurface soon after Hugo's devastation is repaired.

The Virgins are one of the most affluent island groups in the Caribbean and remain the dominant tourism leader among the smaller destinations. Much of this affluence is due to their proximity to and political affiliation with the United States. Mainland citizens might wonder why the status issue is surfacing now, what the options are, and which way the islanders will decide.

Since 1960 over 50 territories worldwide have become either independent or freely associated with an independent state. These winds of global decolonization have affected the evolution of nearly all US territories.

Despite persistent federal neglect and the ambiguous ``no-man's land'' associated with the status of an unincorporated territory (as opposed to an incorporated territory with a built-in direction toward statehood), both Pacific and Caribbean US Off-shore Insular Areas have achieved civil government, an elected governor, a nonvoting representative in Congress, significant internal autonomy, and, except for Guam and the Virgins, a locally drafted constitution.

During the past decade, pressures for greater autonomy have accelerated, and status change has become common. The US Trust Territory of the Pacific Islands has begun to dissolve as the Northern Marianas have negotiated for commonwealth status and Micronesia has opted for free association. Guam has recently presented Congress with a commonwealth covenant, and Puerto Rico has scheduled a status referendum for 1991.

In the Virgins, the 1980s have witnessed two status commissions, widespread public education on the issues, and the completion of several status-impact studies.

Virgin Islanders' choices boil down to three options. The first is ``status quo plus,'' permitting the retention of existing economic privileges - such as territorial retention of all federal income taxes paid by islanders, duty-free access to the US, and state-like federal aid programs - and further extension of local control over land and shoreline resources and other internal matters.

The second involves US integration, either fully as a state or partially as an incorporated territory en route to statehood. The third involves separation, either fully through independence or partially through free association.

Along a spectrum of economic versus political benefits, the options lie one, two, three respectively. Any movement away from the lucrative but dependent status quo would involve an expensive tradeoff of economic advantage for increased insular political control.

Statehood, for example, would entail the loss to Washington of substantial federal taxes, slicing island revenues by nearly two-thirds. Independence would also involve the sacrifice of federal grants and aid roughly equal to local taxes, plus the loss of easy access to US markets and investment capital.

How the electorate decides will hinge in great part on the economic effects of the various status choices. My own analysis of the long-run implications suggests that, exclusively on economic criteria, the status quo is clearly preferable.

As with previous status studies done on Puerto Rico and the Pacific territories, the results further indicate that independence is clearly the worst case and statehood falls in between, despite the fact that both scenarios include a 10-year phase-in period involving roughly $1.5 billion in federal assistance.

If these US island citizens resemble their mainland counterparts, such findings provide a strong clue that they, too, will vote their pocketbooks and opt for some politically enriched economic blend of the existing territorial status quo. This view seems in line with Virgin Islanders' historical conservatism in constitutional matters and their traditional middle-class suspicion of radical reform. But one can never be too confident in political forecasts, particularly in the hurricane corridor of the Caribbean.