The future of Bermuda's financial industry is most likely secure, despite threats from Senator Barack Obama that he will shut down tax havens if elected to the White House.

Government believes the island's healthy relationship with key politicians in the United States and its favourable classification by the Organisation for Economic Co-operation and Development (OECD) are likely to benefit Bermuda should the US launch an initiative targeting offshore financial centres.

And US Consul General Gregory Slayton, America's most senior representative here, believes US politicians now have a better understanding of Bermuda than they did in 2004, when presidential candidate John Kerry was citing the island as a poster child for tax improprieties.

Although Senator Obama has not made direct reference to Bermuda, he has waged a formal campaign against tax havens ¿ a status widely attributed to this island.

His platform, 'Make the Tax System More Fair and Efficient, End Tax Haven Abuse', explicitly states: "Building on his bipartisan work in the Senate, Obama will give the Treasury Department the tools it needs to stop the abuse of tax shelters and offshore tax havens and help close the $350 billion tax gap between taxes owed and taxes paid."

The "bipartisan work" the Illinois Senator has promised to build on is the 'Stop Tax Haven Abuse Act' he introduced with Democrat Sen. Carl Levin and Republican Sen. Norm Coleman last year.

"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system, robbing the Treasury of more than $100 billion each year, and shifting the tax burden from high income persons and companies onto the backs of middle income families," said Sen. Levin.

"We can shut down a lot of these abuses if we have the political will. That's why I am introducing today, along with Senators Norm Coleman and Barack Obama, the 'Stop Tax Haven Abuse Act', which offers powerful new tools to do just that.

"We all know there are billions of dollars in taxes that are owed but not paid each year. It's called the tax gap. The latest estimate is $345 billion in unpaid taxes each year owed by individuals, corporations, and other organisations willing to rob 'Uncle Sam' and offload their tax burden onto the backs of honest taxpayers.

"We also estimate that, of that $345 billion annual tax gap, offshore tax haven abuses account for as much as $100 billion. Abusive tax shelters, both domestic and offshore, account for additional billions in unpaid taxes per year. To pay for critical needs, to avoid going even deeper into debt, and to protect honest taxpayers, we must shut these abuses down."

Finance Minister Paula Cox (pictured) yesterday played down the threat, but expressed her confidence in lobbyists working to protect the island's interests should action become necessary.

"Those around the world are keen observers in the current US presidential election process," the Deputy Premier stated.

"Such comments, if said, are not unusual during times of US elections. I believe that in the particular case that you refer, the US presidential candidate, Senator Obama's comments were not a direct aim at Bermuda at all. However, as always we maintain through our Washington representation and lobbyist a watchful eye on issues and monitor and take action as and when required in Bermuda's national economic interest.

"That said, I wish to state without equivocation that we are very proud of our US/Bermuda relationship. Such dialogue is ongoing and continuing. Given the structure of a US open economy; the multilateral focus and recognition of how interdependent the global economy is, and the understanding that the world is now borderless from a trade and commerce perspective, I would anticipate that despite rumblings to the contrary, Bermuda is well-placed within the global framework. It is our strong belief that should any concerning issue arise or changing circumstances warrant it, the strong bilateral relations that we have customarily enjoyed with the US will stand us in good stead."

Mr. Slayton expressed similar confidence.

"Sen. Obama has been very forthright about his intent to crack down on overseas tax havens although to my understanding, he has not mentioned Bermuda specifically," he stated. "But in general, over the last two and a half years, we've worked hard to establish a better understanding of the strong partnership between the US and Bermuda on a variety of fronts."

State Department visits and high-level talks have left Bermuda better placed to represent its interests than in the past, the Consul General added.

"The story had not been told, I believe, very effectively going back a number of years as Bermuda's emergence as a centre of reinsurance. There had been no one who really helped to keep the understanding of Bermuda and the Bermuda/US relationship current.

"I felt it was an opportunity for our office. So I've worked closely with the Premier and the Deputy Premier, with the former Premier Alex Scott and with various trade associations and a variety of other organisations.

"Everyone knows of the State visits I've hosted ¿ we're planning another in May ¿ and there have been many other ways we've been working to get the message across. The Premier and the deputy Premier have friends in Washington, DC and have worked in helping people understand what Bermuda is. But our general focus has been helping Washington leaders of both parties understand the 21st-century partnership that exists between Bermuda and the US."

American politicians now have a better understanding of all the island contributes to their country, said Mr. Slayton.

"The overriding perception of Bermuda a few years ago was sun, sand, and a couple of military bases. John Kerry specifically called out Bermuda as a tax haven. And when he did, there were not a lot of facts to contradict what he was saying.

"I'm not taking issue with Senator Kerry I'm just saying that there are other facts in evidence which need to be talked about ¿ 50 per cent of reinsurance coverage in America is written in Bermuda, $22 billion has been paid to American insurance holders since 9/11.

"Policy is not made in a vacuum. The Premier, the Deputy Premier, myself and delegates met briefly with Senator Obama. And now, when you look at the Bermuda visit from (Republican presidential candidate) John McCain and a variety of congressmen, I think that has brought, in general, a much better understanding of the mutual benefits. So we'll see how things go but I think there is a much better understanding of the vital role Bermuda plays in the international arena."

The Finance Minister suggested reports highlighting the respect Bermuda has earned as a jurisdiction in recent financial press clippings are just as helpful.

"Bermuda has enjoyed several decades of good relations with the US when compared to other small overseas jurisdictions. When we entered into a Tax Information Exchange Agreement, commonly referred to as a TIEA, with the US 20 years ago our relations have only grown in cooperation and mutual benefit.

"We cherish our well-regarded reputation, and for this reason in 2000 when Bermuda gave a commitment to the OECD standards of transparency and exchange of tax information, we essentially reiterated our stance that we do not adopt measures that have been characterised as harmful, such as embedding in legislation measures that prevent any form of disclosure. Instead, we take measures to ensure that any exchange of information for tax purposes is well defined by statute.

"As a final note, your review of the global financial press over the past weeks will no doubt reveal that in fact Bermuda is viewed as a well regarded jurisdiction set aside from many others.

"In particular, the OECD favourably mentioned Bermuda among other jurisdictions which have signed tax information exchange agreements with OECD countries as a means of assisting those countries in the area of their need for access to tax information of their taxpayers."