military pull-outs.

And the Island stands isolated like never before.

The stark warning was delivered yesterday by Premier the Hon. Sir John Swan.

"The future depends on what we do, not what others do,'' he declared.

Sir John said proposed withdrawals by the Americans, Canadians and British left Bermuda facing huge challenges in 1994.

They had propelled Independence on to the political agenda. And a New Year referendum on the issue could not be ruled out.

But Sir John voiced optimism the Island could pull through triumphantly.

The key was to capitalise on the return of Base lands to Bermuda.

He also underlined the 1993 "watershed'' year had brought reasons for hope: The recession had ended; A 10 percent tourism boom was on the cards for next year; International business was flourishing; The lid had been blown off the racism debate; The Prison and Tynes Bay incinerator projects were nearing completion; and, The war on drugs had been launched.

On October 5 Bermudians chose the United Bermuda Party to lead the Island into the future.

"I thank them for that,'' said Sir John.

Sir John told The Royal Gazette a new Bermuda was being shaped by events.

"It has been a year of change, a year that leaves us with a lot of unanswered questions.

"A year that has defined the political landscape.'' He added: "1993 has been a watershed year.'' Of 1994 Sir John said: "It will be one of transition, which calls upon participation by all Bermudians.

"It offers many unique challenges, and we have reached the point as a society where we are appraising ourselves.'' He continued: "Bermuda is growing up. We are at the stage where we are asking fundamental questions.

"What are we? Where are we going? And why are we here?'' Sir John's focus was on the planned military withdrawals. America, Canada and Britain had acted in their own interests.

The British move to close the Royal Navy's HMS Malabar Base further cut ties with the motherland.

It meant Bermuda would have to make tough New Year decisions. For it was clear Bermuda was becoming increasingly isolated.

"We are no longer a follower, but a leader. I believe the late 90s will be a real maturing period for Bermuda,'' he said.

Sir John said Government would look at the Independence issue, although he he refused to commit himself to a time-frame.

"Our position has always been clear. We won't just rush into Independence.

"We will go to the people in the form of a referendum.'' Sir John, however, said no decision on whether to have a referendum had been taken.

"We have not agreed on the methodology. We are still at a very early stage.

"There is no doubt however Independence is something which is being talked about more and more on the streets.

"It is back on the political agenda.'' Sir John said ways had to be found to cover the loss to Bermuda's economy brought on by the military pull-outs.

Committees looking into this, and how to use the land, would be reporting next year.

Sir John continued by pointing to rays of economic sunshine following the end of the recession.

Tourism was recovering, and a 10 percent boost next year was Government's target.

"International business has also been on the up. New trust businesses have been coming.

"There have also been a large number of reinsurance companies coming.'' Sir John stressed Bermuda's twin economic pillars were not in competition.

1993 had seen international business equal tourism as a revenue-earner.

"But international business is good for tourism. The two complement each other, they are not in competition.'' On racism, Sir John said: "We are slowly reaching the stage where we are no longer denying the problem.

"It is incumbent on all people to work together to solve it.'' Sir John said he had spoken with employers -- including bankers -- about racism.

There was now a commitment from whites to tackle it head on, and smash the "glass ceilings'' thwarting the prospects of blacks.

Curing institutionalised racism required changes in attitudes.

Sir John said the United Bermuda Party had discussed racism long and hard.

The party had accepted the need to address the issue.