ONE of Bermuda's elder statesmen of business and politics is advocating a "new paradigm" for the island in the face of a downturn in tourism and the threat of international companies leaving: reinventing ourselves as a haven for the very wealthy.

Former Premier Sir John Swan believes Bermuda should diversify in the face of a worsening recession by embracing those looking to live tax-free here, offering long-term residencies if necessary.

Sir John sees Bermuda's return to the economy of the mid-20th century, before the onset of tourism and before the international business boom, as a tried and true option amid financial uncertainties.

"We have to become a wealth management country," Sir John told the Mid-Ocean News.

"We did this in the 1940s and 1950s, before the real advent of tourism and international business.

"We have to get the word out that people with great wealth who do not want to pay high taxes can come here. We might have to give them long-term residency."

The former United Bermuda Party politician and long-time commercial real estate developer believes we are in danger of following Dubai's lead if we continue to build large hotel and timeshare developments without the promise of a tourism increase. The Middle Eastern emirate is struggling to fill its luxury hotel rooms due to a stagnating economy reliant on tourism, while huge condo developments sit half-built and without financial backing.

"We know tourism is down, and it will continue to drop," Sir John said. "We don't want what has happened in Dubai to happen here – you cannot depend on the notion that 'if you build it they will come'. You can build five star hotels, and people might not come."

He sees the offer of long-term residency to wealthy expatriates as a more pragmatic answer to our economic troubles than the sale of fractional ownerships, which has become increasingly popular in recent years.

He also believes that Bermuda's transformation into a "wealth management country" will pay dividends for our own infrastructure, providing capital for future public sector projects and creating jobs for Bermudians.

"We've been dependent on international business – insurance and reinsurance, and financial services – to a degree whereby it makes up over 80 per cent of our gross domestic product," he said.

"International business is not necessarily going to leave, but it's changing forms. It's consolidating. We have to ask ourselves, if we want to build an infrastructure that enhances our well being for locals and visitors, how do we create a critical mass of income? We need a new Causeway, a new airport, a new hospital, new docks – we need to do massive projects to arrive in the 21st century in a meaningful way.

"We have to look at other sources of income. We need to expand the city limits and let these people own their own apartments within the city limits. We need to give them long-term residency to ensure they are able to manage their affairs here.

"They would create wealth: when they bring in cars, for example, they pay duty on them. They would create employment. This should be the next new paradigm for Bermuda; it is better than selling time-shares to foreigners who come for two weeks each year."

Sir John believes Bermuda could "be onto a very good thing" by seeking to attract wealthy tax exiles to the island, but only if the Government and international business sector can agree on a plan of action.

"An adversarial approach works fine in a boom time," he said.

"We need to come together with a plan – a critical path. The big test will be when adversity comes because of changing circumstances. Will we rise to the occasion and be seen to be a place that is a safe haven for capital, and to do business, and to come and find civility? That is the $64,000 question.

"We have to embrace ideas, ideals and conditions that are not part of our historic psyche. We've traditionally depended on one form of business and might have to switch to other forms. We need to embrace people of great financial means to reduce the social repercussions of a downturn.

"Countries are bailing out their economies. We might be onto a very good thing, and we must let it be known that we will make that change. We should look to areas without tax reach – Australia, parts of Asia and the Middle East – as a new horizon.

"This is not a quick fix for the recession, to bounce back. It's a fundamental change. What is hanging in the balance is this: do we become protectionist, or an open market global economy and take down barriers? We need to stop focusing on adversities and focus on opportunities."

"We've allowed ourselves to get to the stage where we sound and act like we're a Caribbean country rather than like Bermuda," he added.

"I do not mean to denigrate the Caribbean, but we were not a farming community, we were a financial services, tourism and business community in a way that gained Bermuda kudos. I feel as though we need to get back in that category."