Senator Barack Obama has thrown Bermuda's status as a "tax haven" into the spotlight in a high-profile advertising campaign.

Drawing attention to rival Senator John McCain's comments in a Royal Gazette interview while on a trip to the Island last year, the TV ad attacks Sen. McCain for pledging to protect tax breaks for American firms which "hide their profits" offshore.

It features a photograph of Sen. McCain clad in sunglasses superimposed on a beach, while a voice-over says: "Bermuda: it's more than just a vacation destination for John McCain.

"While he was there he pledged to protect tax breaks for American corporations that hide their profits offshore. And grateful insurance company executives and their lobbyists who benefit from the tax scheme, gave McCain $50,000. John McCain. He took a vacation, and so much more."

Sen. Obama has already raised concerns in some parts of the business community with his campaign promise to "close down the tax havens", while Bermuda is named in the Stop Tax Havens Abuse Act legislation he co-sponsors.

Business leaders last night said they were confident that after the election the States will appreciate the benefits of the current set-up.

Premier Ewart Brown said he was disappointed Bermuda was singled out by Sen. Obama but believes the Island's good relationship with the US will continue.

Sen. McCain said in last August's interview with this newspaper: "The industry, the reinsurance that's had such phenomenal success has been good for both nations. I would oppose any measures that would upset that."

Responding last night, Bermuda International Business Association CEO Cheryl Packwood said: "Bermuda has become part of the US campaign rhetoric as it does with every important US campaign.

"It is our experience that once the dust of the election season settles and elected officials are able to evaluate the role Bermuda plays in the global markets and recognise our historic contributions which go back 400 years to the American economy that we are seen quite differently.

"The US tax code is a very complicated and massive document and will not be dismantled overnight."

Chamber of Commerce president Philip Barnett said: "Senator Obama's campaign has taken Bermuda's extremely complex and mutually beneficial position as an offshore centre of International Business, and attempted to package it up into a 30-second attack on the premise that Bermuda's domiciled international businesses are 'hiding profits' by being located here.

"Sadly it is utterly misleading, as one of the benefits of Bermuda becoming to a certain extent the 'World Risk Capital' is that your average Joe and Mary Smith, perhaps in Galveston, Texas, might be able to secure property insurance, and at a reasonable price, in the aftermath of a major hurricane."

Dr. Brown said: "Bermuda upholds high international regulatory standards and we have a long track record of effectively managing and regulating our international business environment.

"It was our insurance and reinsurance industry that was able to pay claims in the wake of September 11 when other insurance firms could not. It is thanks to Bermuda that struggling homeowners in America's coastal communities, like the Gulf Coast, can keep their insurance premiums from rapidly escalating.

"While we believe Senator Obama didn't mean to hurt our Island's sterling reputation, we are disappointed that Bermuda was singled out. Bermuda has long been a friend and ally of the United States and we look forward to continuing good relations with the next President of the United States."