There is no such thing as an inherently unviable small state in today?s world, Governor Sir John Vereker told members of Rotary International this weekend.

But he said building and maintaining relationships with other countries were key to Bermuda?s future prosperity.

Speaking at Rotary?s 100th anniversary banquet on Friday, Sir John noted that an increasingly interdependent world created benefits for all but created new problems, ranging from terrorism to potential global financial instability.

Just as Iraq had shown how much even a superpower like the US needed friends and allies, ?so the forces of globalisation intensify the need for small countries to build and maintain alliances?, he said.

Because Bermuda was a ?small and economically vulnerable island? whose economy rested on the twin pillars of international financial services and providing tourist services for visitors, ?it is no exaggeration to say that our external relationships are the key to our future prosperity?.

?There is nothing inherently unviable in a small state in this new world, he said, adding that there were 40 fully-fledged countries with a gross national product smaller than Bermuda?s.

In addition to developing a more adaptable workforce and a willingness to engage with the growing array of international institutions that set standards, apply rules and regulate behaviour across much of the world?s economic life countries like Bermuda ?will need to work out who their friends are, and maintain those friendships in good order so as to face the challenges that the 21st Century will undoubtedly bring?, he said.

?International relationships, like personal relationships, have to be built up carefully,? he added. ?Relationships may change over time but sometimes a positive effort has to be made to establish new ones as the older ones fade away.

?Relationships should be chosen selectively but you cannot announce out of the blue that you want to be someone?s friend.

?You have to have something to offer in a relationship and you have to be careful not to let a chance remark or episode damage it. You have to stick with your alliances through good times and bad. Such, I believe, is the relationship between the UK and the US.

?Such, I believe, can be the relationship between Bermuda and its chosen partners, whoever they may turn out to be.?