The year's biggest political story was undoubtedly the dramatic ousting of former Premier Jennifer Smith by rebels in her own party just days after she had led the Progressive Labour Party to victory in the July 24 election.

But the very public stand-off between the PLP Government and Britain over the appointment of a foreign Chief Justice will have more profound ramifications as both sides flexed their muscles to see who has supremacy in a recast relationship between London and Bermuda.

Britain won this battle when Foreign Secretary Jack Straw backed Governor Sir John Vereker in appointing Englishman Richard Ground, but Premier Alex Scott may win the war as the row stoked tensions and increased calls for independence.

Mr. Scott accused Britain of reverting to a "colonialist" model by setting up a panel which selected Mr. Ground rather than his preferred choice of Puisne Judge Norma Wade Miller.

Mr. Scott said, in this day and age, these decisions should not be taken in London, and characterised the row as "an important footnote in Bermuda's history".

Britain stood firm, with Overseas Territories Minister Bill Rammell reasserting the message hammered home in the Overseas Territories Consultative Council meeting in London at the beginning of December.

Mr. Rammell said that as long as the Island remains a colony, Governors must play a "key role" in protecting the independence of the judiciary, integrity of the public service, and ensuring there is sound financial management.

While Mr. Scott carried out his constitutional high-wire act, Opposition leader Grant Gibbons accused him of having double standards ? noting the number of occasions under the PLP when qualified Bermudians have been passed over for top public service jobs such as in the prisons, Hospital Board, and Director of Public Prosecutions.

Bermuda went to the polls on July 24 under 36 single seat constituencies for the first time after the PLP delivered on a pledge to abolish the 20 dual seats based on parishes.

The PLP's election campaign was so low key as to be almost invisible. Having called the election on June 10 ? catching those outside her tight cabal by surprise ? Ms Smith waited until three days before the poll to publish the party manifesto, which was woefully thin on specifics.

Two days before the election, the PLP candidates put on a mock show of unity to supporters at a rally in Bernard Park.

Even as they stepped forward to pledge allegiance to Ms Smith's leadership, 11 of them knew ? as coup leader Dr. Ewart Brown later admitted ? that they would betray her after the polls closed.

Dr. Brown said later that the rebels had to lie to PLP supporters to ensure a victory. "We did mislead you before Thursday by posing as a united front. We misled you because we had to ? because our greatest goal before Thursday was for the party to win the election," said Dr. Brown.

Although the PLP took 22 seats to 14, a swing of just 80 votes in key constituencies would have resulted in an 18-18 stalemate. In the popular vote, the PLP took 51.65 percent to 47.98 percent. Widely seen as haughty, Ms Smith's unpopularity seemed confirmed to her opponents when she scraped in at St. George's North with just eight votes.

As the party began celebrating victory at Alaska Hall, the dissidents boycotted the festivities and sent Ms Smith a letter demanding a meeting to discuss her future. For three days, Bermuda was in constitutional turmoil as Ms Smith tried to cobble a Cabinet together from the rump of 11 MPs who remained loyal to her.

But with Ms Smith unable to be sworn in again as Premier because she could not command the support of a majority of MPs in the House of Assembly, Bermuda was effectively without a government.

Following a second extraordinary and tense meeting of PLP delegates at Devonshire Recreation Club on Sunday July 27, the coup was complete with a compromise hammered out which saw rebel leader Dr. Brown as deputy Premier, and Smith loyalist Alex Scott as the Premier.

Immediately afterwards, Mr. Scott said: "We have had a challenge the over the past few days. We have managed it, come together. That's politics and now we put this behind us and (look to) the work ahead of us."

The aloof Ms Smith was consistent to the end, sweeping past reporters after the meeting and refusing to comment. But in her farewell speech on July 28, she seemed relaxed as she recalled the irony that it was "friendly fire" from within her own party, not the UBP, which finished her off.

"I would have written this last chapter somewhat differently, but I depart this office in the knowledge that my commitment has been unwavering, my sacrifice real, and my dedication to the people of Bermuda unquestionable," she said.

Ms Smith refused an offer from Mr. Scott of a Cabinet post, but she was later elected Deputy Speaker of the House of Assembly. Former Health Minister Nelson Bascome ? heavily criticised for failing to deal with the Bermuda Housing Corporation scandal ? was the highest profile victim of the reshuffle.

Popular backbencher Dale Butler finally made the Cabinet as Minister for Cultural Affairs.

The Opposition ? rebranding itself as the New United Bermuda Party ? made steady progress in rebuilding itself after the 1998 election wipe-out, making extensive efforts to be truly representative of all Bermuda's races.

This prompted the overtly racial slur during a PLP rally about UBP members having 'suntans'. While failing to regain power, the UBP ran an impressive election campaign, with its plans for mortgages at less than $2,000 a month almost swinging it for them. After the poll, UBP leader Dr. Gibbons said: "We are on our way. Like a Phoenix, we have risen from the ashes.

"The Premier should have gotten the message that the Bermudian people are looking for fair, honest and open government. Our message of exclusivity resonated with the people we spoke to."

But this week, former UBP Premier Sir John Swan ? who held the party together for a record 13 years ? said his party was still run by a white elite, and questioned whether it understood the changes it needed to attract black voters and make it truly representative.

"I think the UBP needs to go through some very fundamental changes which I don't think it recognises," he said. "It needs restructuring and recognising the cultural and racial and intellectual dynamics of the country.

"It has to have the consent of the masses and have the perception of moral integrity. Bermuda has changed. Can it do it with the present structure of the UBP? That is the $64,000 question."

The long-awaited Department of Health report into allegations that former PLP backbencher Arthur Pitcher endangered his staff and residents by removing asbestos in a dangerous way from Southside, confirmed the company did indeed flout safety rules. It took three-and-a-half years to produce the epic three-page report, but after all that time, there was still no mention of whether Mr. Pitcher's firm should be prosecuted for the breaches.

With Mr. Scott, a former public relations guru, as Premier came an immediately more relaxed approach, and the barriers Ms Smith thrown up to keep out the Press were quickly thrown down.

His biggest challenge in the coming year will surely be how he manages what will surely be growing pressure from within his party to finally break the ties with Britain ? and the possibly highly embarrassing prosecutions which might emerge from the Police inquiry into BHC.