Bermuda entered 2002 on a wave of uncertainty and anxiety as the reverberations of the September 11 terrorist attacks placed the Island's economy and sense of security on a delicate footing.

But by the end of the year, Bermuda had good reason to look forward to the future with hope, although it faced several challenges.

Economically, Bermuda emerged in a stronger position than many would have hoped for. Unsurprisingly, tourism remained weak, but there were small signs of improvement, while hotel renovations came on line during the year and news that several properties had found buyers indicated confidence in the sector.

The first new advertising campaign in several years, targeted at wealthy Americans, received general support suggesting 2003 would open with new hope.

International business went from strength to strength, as new insurance companies were formed after September 11 to meet a shortage of capacity. Bermuda got the lion's share of the new companies, which expanded rapidly in the course of the year.

The strong growth in international business sparked continued growth in construction as well, with several new buildings going up around Hamilton.

Government fared less well in the construction field, as scandals surrounding the Bermuda Housing Corporation and the new Berkeley Institute project dominated headlines from March onwards.

"Bermuda's Enron", the BHC scandal, claimed the job of general manager Raymonde Dill, and Housing Minister Nelson Bascome was replaced by Sen. David Burch in an October reshuffle.

At the end of the year, a Police investigation into the allegations was still ongoing while there were growing public complaints about the lack of affordable housing.

An ugly war of words between Works Minister Alex Scott and Bermuda Industrial Union president Derrick Burgess on the one hand and Auditor General Larry Dennis on the other broke out over a management audit of the Berkeley project which raised questions about how the contract was award to Pro-Active Construction, whether a performance bond had been properly lodged and about delays in the multi-million dollar project.

While both scandals had political dimensions, the purely political stories of the year surrounded Premier Jennifer Smith's leadership and the passage of electoral reform.

Through the spring, Progressive Labour Party backbenchers tried to oust the Premier, but in November, she was re-elected as party leader unanimously. She also lost a friend and major ally with the death of Tourism Minister David Allen in late September.

During the year, the Boundaries Commission met and issued a report recommending the Island have 36 single seat constituencies. The report was passed by Parliament and, pending approval by the British Government, the next election, likely to be in 2003, will be fought under the new system.

Socially, the Island faced several challenges. Perceptions of rising crime and a lack of Police on the beat grew during the year, while in education, disruptive students and teacher unrest over pay and conditions tended to overshadow notable improvements in test scores and at CedarBridge Academy.