The Premier believes Bermuda will fall victim to US legislation to shut down 'offshore tax havens' but says the country will be ready.

Ewart Brown spoke on the potential threat as he addressed Sandys Rotary Club on international relations and the global economic downturn.

Asked to comment on US President Barack Obama's pledge to close down tax havens Bermuda is named in the Stop Tax Havens Abuse Act legislation which he co-sponsors the Premier said Government was keeping a close eye on the situation.

Dr. Brown said: "We know there is such a thing as campaign rhetoric and then there's the reality of government, however, I wouldn't want to dismiss President Obama's concern about those areas that he referred to in less than flattering terms, and I think Bermuda was referred to during the election campaign as one of those tax havens.

"I believe once he gets through with his major agenda to get the US economy on track he will pay some attention to the relationship between business and offshore tax. And we are not making the assumption he will be busy for so long we don't need to do something."

Dr. Brown said Government was monitoring events in Washington DC via its representatives and lobbyists. It also held a series of meetings in December with the international business sector and its lobbyists from the US, "to focus on the potential downside for Bermuda".

Commenting on the legislation being proposed, such as the Neal Bill, Dr. Brown said: "We concluded at the present time neither of those bills have the relevant support, but the President is a persuasive politician. If those bills are revved up again we will have to come together again and rev up our strategy."

He added: "We do have some very capable people in Washington monitoring the playing field and letting us know exactly where things stand.

"I believe it will eventually happen and I believe we should prepare for that.

"It would be speculative for me to go much further as to what the US might do but I would not be surprised that after 30 years with the model in place, that model is changed. But it doesn't mean that Bermuda will not continue to do well."

The Premier also spoke on fears of international financial and insurance companies relocating in other jurisdictions such as Switzerland.

He said he had recently met the CEO of XL Capital (Michael McGavick) who has given reassurances the business will stay on the Island.

"He has committed to Bermuda even though there's been a slight staff reduction," said the Premier. "He has also ordered many of his top level executives to move to Bermuda and I think that is a wonderful indicator that XL will stay.

"I think most of them (businesses) will stay."

Commenting on the work permit limit of six years, the Premier said research had shown that international business staff only stayed an average of three years in Bermuda.

"Some of the noise we heard about term limits, when you look at the research the average length of stay for a person in international business on a work permit is three years so why all the noise over six?" he said.