A leading American economist gave the Island's regulatory regime a thumbs up last week after meeting with Government officials during a brief stay.

But he cautioned that changes to regulatory legislation should not be retroactively imposed but only made to bear on future business.

Dr. Irwin Stelzer, a senior fellow with Washington-based think tank Hudson Institute and a self-declared supporter of free trade policy, spoke out on the Island's regulatory regime after meeting with Premier Alex Scott and Legislative Affairs Minister Michael Scott last Thursday evening.

Dr. Stelzer ? who is credited with being one of the top three American economists and weekly political and economic columnist for The London Sunday Times ? said it was the first time he had visited Bermuda but said his impressions had been favourable.

"This was my first trip. It was quite an eye opener, but in a good way," said the man who travels in political circles both in Washington and in the UK, saying he had spent "a lot of time with Tony Blair".

Dr. Stelzer, who was on the Island from last Tuesday to Saturday, told : "Before I came here I did an awful lot of reading on the place." Although saying that did not make him an expert on Bermuda, he pointed out that as an economist he was also not "your average tourist".

"One thing I am always interested in is public regulation," he said, pointing out he had been following this area for 40 years.

He praised the Island's regulators at the Bermuda Monetary Authority (BMA) for having a regime that upheld fiduciary responsibilities (specifically protecting the public who invest in companies) while not being oppressive to the business environment.

He said he knew that balance, after a long career of analysing regulation, was a difficult thing to achieve. Indeed, Dr. Stelzer said Bermuda ? as far as he could tell through his research and observations during his five-day stay ? had done just that.

"Somehow Bermuda has struck that balance," he said, adding that he would spend more time looking at how that had been accomplished.

"I don't know if it is that the weather is so nice and people just sit down and work things out, or if people here are sensible," he said.

Dr. Stelzer said the Island's regulation of its financial services industry was in marked contrast to the US where regulation is a state-by-state affair, "which was more difficult to operate".

And he said the UK, where Dr. Stelzer lives 'part-time', was going the same way with increasing regulation by British regulatory body the Financial Services Authority (FSA) as well as increasing pressure around Europe from EU authorities in Brussels.

"I'm not a big regulation fan," he said, of highly-regulated regimes that bear negatively on corporations operating in those jurisdictions. Dr. Stelzer would not be drawn on whether or not Bermuda should tighten so-called 'secrecy laws' to give the BMA the undisputed right to demand that a Bermuda-based company turn over client information to foreign regulators.

The issue has been front and centre recently with Government's plans to push through an amendment to the BMA Act this summer to clarify "beyond doubt" that the Authority can make such demands.

One Bermuda company, Lines Overseas Management, which is currently at the centre of a US Securities and Exchange Commission (SEC) probe for not turning over this kind of information, has also launched a legal challenge against the BMA's right to demand it share confidential client information.

Dr. Stelzer said he was not familiar enough with the issue nor could he speak about a specific case. But he did allow that any changes to legislation should be imposed from that time onward, not retroactively.

Although Dr. Stelzer praised the balance Bermuda had achieved in regulation, he cautioned that the Island would also have to strike a balance between the growth of its international business sector and "preserving the amenities of Bermuda".

He added that there was also the problem of meeting the needs of two diverse groups on the Island; the very affluent population on the Island as a result of Bermuda's success as a business jurisdiction and its native population.

"It seems to me that is a situation one has to think about. But it also seems to be that there are solutions. Someone has to reason through these issues" he said.

But Dr. Stelzer said he was confident the Island would do that after meeting with both Mr. Alex Scott and Mr. Michael Scott.

He said that over dinner Thursday at the Harbourfront, where he met with both Government officials and leaders in the Island's business sector, there seemed to be "a lot of goodwill".

He said both Government leaders had come across as "smart" but without any arrogance.

He praised both for a genuine desire to "puzzle through the issues. There was the feeling that they had to solve (problems) for everybody. I found this very encouraging."

Dr. Stelzer added: "There was no posturing," which he cited as a refreshing change from the airs thrown around by some politicians on Capitol Hill.

Dr. Stelzer, who supports the free trade policies espoused by American president George Bush, said he did not sense that Bermuda was getting a bad rap with US legislators after the Island has been blamed by presidential hopeful Sen. John Kerry as being a magnet for companies that move their place of incorporation overseas to trim the taxes they pay in the US.

Being close to the two political centres that bear most on Bermuda ? the US and UK ? Dr. Stelzer said he had a good sense of what were the big political issues.

He conceded that there has been much talk about controversial Bermuda-based conglomerate Tyco in Washington but said he did not feel there was an automatic association drawn with the Island when the subject was raised.

"I'll bet if you asked 90 percent of Congress where Tyco was based they would have to think about it. It is not a specific Bermuda problem, but a problem."

Although Dr. Stelzer said there is currently a big push by politicians to be seen to be doing the right thing, but added that to put limits on corporations choice of where to operate was not the way to go.

"It is easy to see that no one will benefit from inefficient firms being in America.

"It is interesting that Bush is holding that (free trade) line," he said, after previously having praised Mr. Bush, in a recent column, for his "commendable courage by defending free trade as a creator rather than a destroyer of jobs and ridiculing calls to end outsourcing".

Dr. Stelzer said he was a "free trade person" but not at all costs.

"If it affects people adversely, there ought to be something done, " he said, citing the example of training workers into other areas when they were displaced by the industry they had worked in outsourcing jobs elsewhere.