military chiefs said they had no money or plans to remain in the Island beyond September 1995.

Statements by Admiral Frank Kelso, the US Navy's top officer, and Admiral Paul Miller, NATO's Supreme Allied Commander for the Atlantic, left the Premier saying Bermuda was facing the "biggest single challenge in its history''.

The Base withdrawal, he said, could mean the loss of more than six percent of the Island's gross domestic product -- a development that could force cuts in Government services "unless we find an alternative way to get the economy growing''.

Sir John said Bermuda would be challenged to absorb the costs of air operations now managed and paid for by the US Navy.

In addition, the Island would need to meet the costs of maintaining Base facilities and finding an "industry'' to generate revenues now earned from the Base.

Government is expected almost immediately to set up committees to handle aspects of the Base shutdown.

Deputy Premier the Hon. Irving Pearman, who heads the Cabinet Base committee, said working committees would likely be established to negotiate the shutdown of the Base with the Americans, to plan the takeover of air operations and to investigate future money-making business possibilities.

At the end of day, the Premier said with finality: "The Base is gone. It's gone. The only thing we've done is to buy some time.'' Until yesterday's meetings there was talk at the highest levels of the UK and US governments, as well as in NATO, of possibilities beyond 1995.

But the first dose of new reality yesterday came during a 40-minute morning meeting at the Pentagon, where Admiral Kelso told the Premier that Bermuda and the US Department of Defence had to begin negotiating the transfer of Base operations, to meet Congress' September 1995 shutdown date.

To negotiate together, he said, Bermuda must secure UK authorisation as quickly as possible.

Only then could negotiating committees be set up to get on with the work. The Admiral underlined his stark message by saying that any Navy operation in Bermuda after September 1995 would be paid for by the Navy on a user basis.

The second reality message occurred in the afternoon at NATO headquarters in Norfolk, where Admiral Miller said Bermuda had absolutely no military role to play in the foreseeable future.

His presentation appeared to kill any hopes for a shared cost arrangement whereby the US, UK, NATO and Bermuda would commit money to maintain a military presence on the Island.

After the second meeting, Base commanding officer Capt. Tim Bryan, who was invited to the meetings by Premier Swan, said: "There is no illusion of some cavalry riding to Bermuda's rescue.'' All members of the Bermuda delegation said they appreciated the frank and constructive spirit of the talks.

Both admirals went out of their way to say they wanted to make sure Bermuda's interests were well treated during negotiations.

And Admiral Miller even urged the Premier to call him any time if things weren't going right.

Despite the clear positions outlined by the admirals, yesterday's meetings raised a host of questions that suggest the Base will remain a big issue for years to come.

One of the more immediate questions will be the effect of the shutdown on the US-UK (Bermuda) Bases Agreement, which gave the US a 99-year lease on the land at St. David's.

For example, the US could sub-lease its land back to Bermuda, thereby holding onto the option for a return to the Island, or it could give up the land.

In addition, the 1995 deadline might not provide enough time to complete the shutdown, particularly the environmental clean-up.

The Bermuda delegation yesterday said it was vital to appoint the most powerful teams to the negotiating committees, for what promises to be a complex, long-haul challenge.

"We can make right or wrong decisions about the future of this Country,'' Mr.

Pearman said of the Base issue. "That's what we've got to consider when we sit down to think this through.'' Sir John said the Base issue represents "a profound challenge for us''.

"We've now got to start thinking of making our Country attractive to others as the rest of the world moves away from us.

"We've got to ask God to help us understand what we can't do, to give us the courage to do the things we must do and to have the wisdom to understand the difference.

"By working together successfully on this we can make a significant and positive difference to the future of Bermuda.''