agreed to extend a $100-million arms credit to Canada in compensation for the environmental mess it left behind at four military installations.

The deal was reached last October after five years of tough negotiations and has the support of the Clinton administration; it must now pass the US Congress.

In it the US Department of Defense has agreed to compensate Canada with the arms credits in exchange for the cost of cleaning up pollution -- some of it consisting of heavy metals, polychlorinated biphenyl (PCBs), and fossil fuel -- left behind at Argentia and Goose Bay, Newfoundland, 21 Distant Early Warning sites, and a US Army base in British Columbia.

Minister of Finance Grant Gibbons meanwhile told The Royal Gazette both Argentia and the former US Naval Air Station here were the first bases to be transferred to US control by the British under the Second World War's Lend Lease agreement.

The agreement with Canada, he said, breaks new ground because it is not based on any predetermined aspect of the original 99-year lease.

"If the agreement is approved (in the US Congress) then I think that bodes well for Bermuda.

"We've joked about what we'd do with an F-16 fighter,'' said Dr. Gibbons, who added Bermuda's demands were more down to earth. "We're not necessarily looking for a financial settlement, we're simply asking for American help to remediate the pollution they've left behind.

"We're also looking for the US Navy to follow up on its commitment to maintain Longbird Bridge, which as you know is always breaking down and is now subject to weight restrictions. We'd be happy if they maintained it -- or even rebuilt it,'' he said.

"The issue is remediation does cost money and we would be quite happy if the Americans would fulfill their obligation to help with the clean-up.'' Those modest demands, he said, were put to Secretary of the Navy John Dalton and other top US officials when he and Premier Pamela Gordon visited Washington over the weekend.

"The Premier put forth the particular difficulties facing small island states such as Bermuda and I think they listened carefully to what we had to say.

"On that aspect we feel we have a stronger case than Canada because Canada at least has the expertise to handle the clean-up and has the land mass and landfills needed to dispose of the pollution.'' Topping the list of concerns was the disposal of tons of asbestos collected from abandoned base buildings and the disposal of underground storage tanks, which have been found to be leaking petroleum products.

Reports out of the US capital, however, indicate the Canada-US deal is considered to be an exception to current Pentagon policy.

In the April 23 issue of Inside Washington, the Department of Defense's environment chief Ms Sherri Goodman -- who also sat in on last weekend's talks with Premier Gordon and Dr. Gibbons -- acknowledged the Canadian deal ran counter to Pentagon policy.

The agreement was largely struck, said Inside Washington, a publication of the Washington-based Defense Environment Alert group, to maintain good military and political relations with Canada.

According to Inside Washington, current US policy allows for remediation only if "the environmental damage constitutes substantial endangerment to human safety and health'' and that only applies to active installations. Regardless, Bermuda has advanced similar arguments said Dr. Gibbons.

For example, he said, there is a high-potential for asbestos particulate -- sprayed over a number of pipes throughout the Navy installation -- to become airborne and possibly breathed in.''