The islands were annexed by the British in 1672. Two hundred years later, they were incorporated into the British colony of the Leeward Islands. The governor of the Leewards continued to run the Virgin Islands until 1960, at which point direct responsibility was assumed by an administrator (later restyled governor) appointed from London. The 1967 constitution (see Government) gave the islands internal self-government.
As Virgin Islands politics evolved, two parties initially dominated – the Virgin Islands Party (VIP) and the United Party (UP) – although a strong influence
has also been wielded by unaffiliated independents. The VIP has been led throughout most of its lifetime by H Lavity Stoutt. As it has more often than not held a majority on the Legislative Council, Stoutt served four terms as Chief Minister, ending only with his sudden death in 1995. Stoutt was succeeded by his deputy, Ralph O’Neal. The election of February 1995 was notable for the first challenge to the duopoly of VIP and UP in the form of the Concerned Citizens’ Movement. The Movement grew out of public anxiety about the growing incidence of drug trafficking and drug use in the Virgin Islands. To some extent, this was an inevitable consequence of the islands’ efforts to boost their ‘offshore’ finance industry. At least one high level investigation has been carried out jointly by the US Drug Enforcement Administration and the British police.
In May 1999, the islands’ politics had fragmented still further, with the formation of the National Democratic Party (NDP). The party performed spectacularly well, although it fell narrowly short of the 38 per cent vote attracted by the VIP, under the leadership of Ralph O’Neal. Nonetheless, by winning five seats on the Legislative council, the NDP eclipsed both the Concerned Citizens’ Movement (with just one seat) and the United Party (which won no seats at all), to become the main opposition to the VIP. These gains were eventually transformed into a win, when Orlando Smith of the NDP won the most recent general elections in 2003, and succeeded in bringing closure to VIP rule since 1986.
Government Under the 1977 constitution, the British monarch appoints a governor to take responsibility for defense, foreign affairs and internal security. The governor also chairs the executive council, which has five other members. The Legislative Council has 13 directly elected members, one ex-officio member and a speaker.
Economy Tourism and financial services are the islands’ main economic activities. Tourism employs around one-third of the working population directly or indirectly and accounts for about 45% of GDP.
The offshore financial sector, which has been operating since the mid 1980s, has been a spectacular success, by virtue of the British connection, benign legislation and political uncertainty in rival centers (notably Hong Kong and Panama). However, in the last few years, the government has been forced to respond to international pressure to tighten its regulatory regime in order to prevent money-laundering.
Agricultural production is limited by poor soils, and relies mainly on livestock rearing, but some fruit and vegetables are produced for export. Rum is an important export commodity, and its distilling is the principal industrial activity.
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