The Gulf War brought George Bush to the electorate in a way he had never been seen before. The world saw a leader capable of negotiating an international coalition and marshalling combined forces into a weapon that could not be stopped. All of us marvelled at the objectives achieved with an incredibly low loss of life. Here was true leadership. And we saw all of it on a minute by minute basis. We could see the pain and the agony. We could see the management style and the determination. We admired and respected but we also had our expectations raised, for if George Bush could defeat an enemy 6,000 miles away, we were convinced there was no problem we could not face, no challenge he could not meet. We were confident and proud.

In the past, a demonstration such of this would have ensured a decade of respect and popularity. Any politician associated with this effort would have been guaranteed election prospects well into the future. But as much as the process of instant communication won hearts and loyalty, it also set up an expectation level that demanded equal success for any problem presented in the future. It thus opened up a pit, into which any administration was doomed to fall as soon as the next major challenge arose. And along came the recession.

The advent in this instant communication process sealed the fate of the Soviet Union. It resulted in the changes in the other Eastern bloc countries, it fired change and problems in Southern Africa. It challenged each of us in our leadership. We welcomed instant communication but must now recognise that while this allows us to get out voice rapidly to anywhere in the world, it also poses serious challenges to us as it demands response. Indeed it is the need for rapid response in today's world that threatens us most. The need for rapid response challenges our decision-making ability to its utmost. Quite often, the need for such reply is demanded far faster than our decision-making process will allow. We have no time to think and little time to consult.

We have thus created a quite impossible situation. We have expectations far higher than we can satisfy, we have demands for instant solutions to complex problems and there is very little tolerance for delay. We are also faced by problems which defy the quick fix approach.

But there is a way out of this complex problem. The key we in Bermuda have discovered is to reach into the community with a genuine will to understand and empathise with the people we serve. To grasp what their issues are and to make their agenda the Government's agenda.

This is a reversal of the classic power pyramid. Traditionally initiatives have been top conceived and top driven. Foreign affairs is an excellent example. In Bermuda, and I suspect all over the world, the electorate is demanding that its issues, its needs and its concerns, be reflected in the national agenda. The leadership of the future must recognise this and be seen to be responsive in a real and effective manner.

The current turmoil in US politics is being motivated by a gut feeling in the electorate that neither party is addressing the issues they, the electorate, want addressed. They feel bereft, betrayed and abandoned. If this cannot be corrected, if the historical leadership structure cannot respond with a meaningful and relevant plan of action addressing the real agenda of the people, then that same leadership faces the real prospect of being victims of a grass roots driven demand for change.

Our people are frustrated but they are also feeling empowered. They will not hesitate in using this new found sense of power in evoking change if they remain convinced that the system itself is incapable of providing that needed change. In short, they will change the system itself if it continues to be unresponsive.

I was so concerned by this juxtaposition of demands in Bermuda that I created a brand new ministry in our administration. This new entity carries the joint responsibility of ensuring effective communication with the community and of changing the way we, as a government, manage and operate. It was designed to effect real change in a meaningful way and to communicate the nature of that change to the electorate. We recognise that we had to serve the agenda of our population and also had to be seen serving that agenda.

The United States has changed dramatically over the past half century. When the depression of the '30s faced the leadership of North America they had a human resource that was a much more cohesive force. While languages varied, the actual ethnic and cultural base was very similar. In essence, the United States has moved from a country being fundamentally based on a mono-ethnic structure to a multi-ethnic one. While this adds tremendous variety and richness it also poses much more significant challenges to the task of implementing national change and creating national purpose. It also adds tensions that simply didn't exist before. These tensions are complex. They are racial, ethnic, social, economic and culturally driven and prevent a uniform, blinkered and single minded approach to problem solving.

In Bermuda, we have always been biracial. While it has only been in the last three decades that we have seriously attacked the segregation of our community, we have always had to contend with at least two cultures and two ethnic backgrounds. This has created a national purpose in a more consistent manner.

This fact has also helped us to recognise the need for change in the way we do business. It assisted us in determining that we risked being infected with what has become a western disease. The collective failure to accept the reality of the fact that our societies are no longer based on excellence. Many other nations are producing superior products utilising superior labour systems and relationships, better utilisation of sophisticated technology and much improved standards and methods of management.

For years, our western culture has accepted that a preponderance of our intellectual equity will be invested in defence and military development.

While we have been doing this, many have been taking that same intellectual capacity and investing it in productivity and research. We have also been failing to make the necessary capital reinvestments. Japan for instance is reinvesting in capital equipment and R & D at double the rate of the US.

As much as there has been a failure to invest in research and development and this a lack of preparation to meet the challenges of the future, there has also been a fundamental change in our culture, our values. There has been a real reduction of expenditure in education, at a time when the exact opposite should have been taking place. The historical devotion to the broadening of the mind has eroded. How many families spend meaningful time in discussion? How insistent are we that our young people devote themselves to homework as opposed to television, video games, or the mall gatherings? How much do parents, today, participate in the homework experience? I suggest very little and certainly far less than generations before.

In Bermuda, our quality of life surveys recognised that the family structure was failing. The family unit was ceasing to be the cohesive force it had been to date. Illegitimacy, divorce rates and the numbers of single parent households were all up. Even our economic culture was being diverted away from direct contribution to our country and we were failing to provide meaningful direction to our young people. Part of this can be traced, again, to global communications. The example our people were witnessing suggested that the new culture favoured a different approach, a different ethic.

This new western culture has spawned a whole new breed of economic participants who do not contribute to the national wealth of our economies.

The North American education system has encouraged consultants instead of professional managers who can fix the problems themselves. There are, for instance, far more lawyers per capita than any other country in the world. At the same time, there is a glut of teachers, managers and production orientated, equity creating, individuals. The criterion for excellence has also shifted away from intellect and academic to sports. Just look at how sports personalities are rewarded compared to scientists, managers and engineers. Yet, the continued success of media hyped entertainment orientated entities are totally dependent on our countries having the intrinsic wealth necessary to be able to support these activities.

The western economies have moved from a quantitative and empirical strength based on industrial production to ones based on very little. Junk bonds and leveraged buy-outs no longer have the popularity they once did. To some extent our heroes of today are the deal makers not the creators of assets. We have travelled far from our stated objective of sharing the wealth of our respective countries. Indeed, in the US alone, between the years of 1981 and 1987, the exact opposite took place. In 1981, one percent of the US population was taking about 8.1 percent of the nation's income. That same one percent was taking 14.7 percent six years later.

While in Bermuda, we have been far more fortunate and have succeeded in creating the largest proportionate middle class in the world, we still must now concentrate on further spreading our national equity. We all know that owners work harder and believe more in their product. We are determined to create a country of owners who all share in the national equity and who all have a real interest in the success of that country.

Governments are traditionally slow to move. Historically we have viewed the sluggish response of the bureaucracy as somewhat healthy. It somehow protected our nations from ill conceived, badly thought out policies. It ensured consistency, if not vibrancy. It gave us something solid to cling to. We did not expect tremendous innovation from government but we did expect that it would take care of the more mundane, but no less essential, matters of daily life. Suddenly, the talent drain we have all experienced has hit government.

Administrations no longer have the resources, the talent or the revenues to do all that we have traditionally expected them to do. The age of instant communications have also produced another phenomenon that we, as political leaders, had better recognise and respond to.

As the activities of the world have been brought into every home, our populations have become much more aware of what is happening. They have become much more knowledgeable and much more qualified to participate in and understand the decision making process. They have truly become empowered. It is that empowerment that has led to the mass presences in Red Square, in Warsaw, in Prague and even in Beijing. Throughout the world the people themselves are feeling more qualified and more free to express their concerns and needs. Unfortunately, in our headlong pursuit of freedom, we have failed to explain that empowerment means accountability.

Thus, when Mr. Gorbachev, Mr. Walesa or even Mr. Bush failed to produce, instantly, the wealth and prosperity promised, or failed to meet the perceived needs of their domestic agendas, the reaction was one of rage, frustration and bitter disappointment. Instant change should result in instant benefits. When it didn't the same population who created the heroes was equally swift in finding new ones and discarding the old. Anyone who can promise easy solutions will be sought out. Those who cannot perform by these harsh standards will be discarded. It is this syndrome which is not transforming the political landscape of this country. It is that same demand for participation, involvement and accountability that has threatened our government in Bermuda and which has motivated us to make some fundamental changes in the way we do business.

We have complex challenges to face, but we have the means at our disposal to meet them and cause the needed revolution.

It is arrogant of me to stand before you and attempt to analyse the problems of the United States. I come from a country of only 60,000 people and only 21 square miles. We have no natural resources beyond the natural beauty of our country and the inherent intellect of our people. Our success is totally bound to that of the United States. Certainly, I have no answers which have not already been discussed around the world. I can only offer for your examination and review what we are doing in our tiny Island. It is possible that our very size makes it easier for us to evoke change, to take the needed steps.

Our GNP is smaller than many large corporations. Our entire economy only produces some $1.6 billion. The Bermuda Government takes about 20 percent of that to run the country and that is a figure lower than any other jurisdiction I know of. Despite this, our people are as resistant to tax increases as anyone else. My Government's challenge was to continue to provide the level of affluence that we enjoy. Our per capita income has been one of the top three for a decade, while providing the social infrastructure that ensured we let no member of the population fall through the cracks. Our size will not allow the existence of ghettos, slums or poverty. Our dependence on tourism necessitates that our country is well run and has no tattered shadows hiding behind the curtains.

We, too, experienced a boom in the '80s and, while this was happening, our people were largely satisfied. But, as the recession started to bite, then the more basic issues started to emerge.

We are a biracial community with about 65 percent black and the balance white.

The fact that 30 percent of our workforce is imported and predominantly white, as are our tourists, actually produces a society that is almost exactly racially balanced. Perceptually, therefore, we have no minorities. However, as I have said before, we were a segregated society. Up until the mid '60s our schools, our theatres, many of our public facilities were racially segregated.

We made great strides in the '70s and superficially we integrated well.

Indeed, today's Bermuda is more integrated than any other country I know of.

As we integrated, we also began to widen the economic base.

While this was happening, we were educating our people at an impressive rate.

Today, well over 30 percent of the population are educated to degree or diploma level. This has almost doubled over the last decade. Thirty two percent of our population has education to certificate high school level which is 63 percent more than a decade ago. We have virtually no illiteracy. Our home ownership rate has increased by 31 percent in the same time period. The amount of people per dwelling unit has fallen from about three to just over 2.5, reflecting a dramatic improvement in housing conditions.

These are all impressive figures and compare well with any other country. But we are also faced with problems. In the boom period of the '80s, we created an enormous expectation level. Workers became conditioned to above inflation increases and owners experienced growing profits with very little effort.

Government expanded its level of support to where people demanded an ever increasing government infrastructure. Government became a provider and many saw this as an opportunity to shelve individual responsibility and replace it with expectations of government.

Our demand for material benefits increased and our dependency on instant entertainment leaped. In short, we became a typical western society.

But, because Bermuda is so dependent on external markets, we began to recognise that we were becoming too expensive. Indeed, many of our people were earning more, enjoying greater material benefits, and had a higher standard of living than the market we were trying to serve. The cost of doing business in Bermuda grew tremendously and we were faced with burgeoning levels of competition.

Perhaps, in microcosm, we were not unlike what was happening around the world.

But our electorate had no tolerance for international comparisons. Our political survival demanded extraordinary steps and we started to plan for the future like we had never done before. To be continued tomorrow.