IV.  POLITICAL ENVIRONMENT:

The Bahamas is a constitutional multiparty parliamentary democracy
and a member of the Commonwealth of nations.  Queen Elizabeth II is the
nominal head of state and is represented in The Bahamas by an
appointed Governor General.  The Government is headed by an elected
prime minister and parliament.  Since 1992, the Government has been
controlled by the centrist Free National Movement (FNM) of Prime
Minister Hubert A. Ingraham.  The Opposition center-left Progressive
Liberal Party (PLP) is led by Sir Lynden O. Pindling, who was Prime
Minister from Independence in 1973 until 1992.  Since the August 1992
general elections, which saw a peaceful transfer of power between the
two major political parties, the FNM has held 32 seats in the 49-member
House of Assembly, with the other 17 held by the PLP.  Under the
Constitution, the next general elections must be held before August,
1997.  The country's three major daily newspapers and a small number
of weeklies are all independent, although most tend to favor one
political party or another.

The Bahamian legal system is derived from British common law and
colonial legislation, although American and other models have been
used for some business legislation enacted since Independence.  The
judiciary is independent, appointed by the executive branch on the
advice of the Judicial and Legal Services Commission, and conducts fair
and public trials with the ultimate right to appeal judicial decisions to
the Commonwealth Privy Council.  A large and competent legal
community, most of whom have received some training in Great Britain,
Canada, or the United States, is avaiable to assist foreign business
clients.  While fair, the Bahamian judicial process tends to be slower
than the norm in the United States, primarily due to overcrowded court
dockets in an underfunded system.  Although there have been
instances of Bahamian businessmen attempting to take advantage of
delays in the judicial process and their physical proximity to gain
advantages in commercial disputes with foreign firms, there is no
evidence that the Bahamian judiciary has favored local firms over
foriegn ones in its final adjudication of disputes.  The Bahamian
government began a process of upgrading its court system, in part
with American government aid, in 1993.

Both major political parties have enjoyed good relations with the
business community, and no serious political movement in Bahamian
history has ever advocated the nationalization of foreign property.
There is no Bahamian history of political violence or instability, and
politics tend to follow the British model of combining sometimes intense
rhetoric with courtly manners.  The political issues of most interest to
the business community are bank secrecy and openness to foreign
investment.  Both political parties favor maintaining the Bahamian
tradition of strict bank secrecy, believing this policy to be essential to
the maintenance of a thriving financial services sector.  The current
Government, however, pledged in 1994 to introduce new legislation,
which it believed was necessary to maintain the reputation of the
Bahamian banking system, tightening regulations against money-
laundering.  American businesses are reminded that the absence of
Bahamian taxes on incomes or corporate profits does not absolve them
of their obligation to pay appropriate American taxes.  Both political
parties have stated that reducing unemployment is their major
priority, and both have said they welcome foreign investments which
would employ large numbers of Bahamians.  Both parties, however, have
proven very responsive to local constituencies in instances where local
businesses or labor unions have charged that a particular foreign
project either failed to employ a sufficient number of Bahamians or
represented possible future competition to a Bahamian enterprise.

Bilateral U.S.-Bahamian relations are excellent.  Although the Bahamian
Islands lie along the most direct air route between South America and
the Southeastern United States, Bahamian government cooperation with
U.S.. law enforcement agencies under "Operation Bahamas-Turks &
Caicos" ("Op-Bat") has significantly reduced the level of drug
trafficking through The Bahamas.  Bilateral cooperation in narcotics
interdiction operations is more extensive than that which the United
States enjoys with any other country.  In 1994, The Bahamas strongly
supported American efforts to end military rule in Haiti.  A common
language, cultural similarities, family and personal ties dating back to
the days of the American revolution (when the ancestors of many
modern Bahamians first came to the islands from the southeastern
United States), and the enormous number of visitors every year
between the two countries have engendered a level of familiarity and
ease of communication unusual even between neighboring countries.  In
July 1994, the Smithsonian Institution and the Bahamian government
co-sponsored an extensive display of Bahamian culture on the mall in
Washington, DC as part of the Smithsonian's annual festival of American
folklife.