George W. Bush?s re-election as President of the United States yesterday contains both good and bad news for Bermuda.

The good news is that his re-election, coupled with Republicans? consolidation of power in the US Congress could reduce the pressure on so-called tax havens, for whom Bermuda has been made the poster boy.

That?s because much of the pressure for ending corporate inversions and other efforts by US corporations to reduce the tax burden has been driven by Democrats, who lost four seats in the Senate and several seats in the House of Representatives.

The White House has never shown great interest in the corporate inversion issue, or tax havens generally, generally taking the line that Bermuda has echoed; that reducing the US corporate tax burden is the best way to stop US companies moving offshore.

The Bermuda insurance industry is also like to benefit from a Republican administration, especially in the area of ?tort reform?, which aims to reduce the scale of punitive damages awarded by US courts in civil cases involving wrongdoing or negligence.

In the short term, Bermuda may benefit too from the weak US dollar, which should help the tourism industry, although there has been little evidence of that to date.

The weak US dollar is caused in part by the large budget deficit the US government is carrying.

The deficit and the generally weak US economic recovery should be of some concern to Bermuda in the longer term. It is not unreasonable to think that the global economy may well weaken within the next year or so both for these reasons and for others, such as the high price of oil and the possibility that the booming Chinese economy will overheat and bust.

Should the US economy falter, that will affect Bermuda both in terms of tourism and international business and this is of some concern as it will bring the Island?s lack of competitiveness ? and its failure to control local inflation ? into sharper relief.

So it is to be hoped that President Bush will make greater efforts to improve US economic growth rather than merely depending on tax cuts.

Politically, the Bermuda Government must recognise that it is facing four more years of Republican government in the US, and it is entirely possible that this election will mark a period of sustained Republican dominance of the US political scene.

The bad news for Bermuda is that while the Progressive Labour Party likes to make great play of its strong friendships with Democratic politicians, it is likely that the Democrats will have very little say in the direction of the US federal government for the next two years at the very least.

Bermuda has allowed ? and some would say has deliberately caused ? its once once strong ties with the Republicans to wither. These must be improved if it wishes to have any voice at all in Washington.

That means that ill-advised forays into relations with pariah states like Cuba have to stop, as do intemperate remarks by Government Ministers about US policy.

They are, of course, perfectly entitled to have those views ? and this newspaper has grave concerns about many of the policies of the Bush administration as well ? but it needs to take care that these concerns are addressed in the right places.

Bermuda cannot forget that it needs the US far more than the US needs Bermuda. And that means that any Bermuda lobbying or diplomacy must take heed of the current policy directions that the US is going to go in.