Economics Special: Taking economic development to the next level


UNCASVILLE, Conn. - While planning business deals with tribes across the country, Mohegan Chairman Mark F. Brown keeps in mind a recent conversation with U.S. Sen. John McCain, R.-Ariz.

"Prove to me IGRA works," McCain said. He was referring to a notorious TIME Magazine cover story criticizing the Indian Gaming Regulatory Act (IGRA); the article claimed that the wealth from tribally owned casinos benefited only a handful of super-rich tribes, such as Brown's Mohegan Indians in southeastern Connecticut.

Brown disputes TIME's conclusion by word and deed. His tribal leadership is currently reviewing a number of economic development projects throughout Indian country, as well as technical assistance to non-casino tribes closer to home. He says to watch for announcements in several months.

Brown says his planning is driven not only by the bottom line but also by criticism of the Mohegan success. "I feel I have something to show to Sen. McCain," he said.

This response to such criticism exemplifies a growing current of economic thinking across Indian country. Tribes that have begun to accumulate capital through the gaming sanctioned by IGRA are increasingly looking beyond their own confines not only for sound investments but also for chances to share the wealth. To many, inter-tribal trade is the next level of Native economic recovery, as well as an expression of tribal sovereignty.

Although many in mainstream culture, and the press, see only casinos when they think of Indian economies, IGRA itself describes gaming as a means, not an end. The casinos were meant to promote "tribal economic development, self-sufficiency and strong tribal government." For years, far-sighted tribal leaders have strenuously urged diversification to guard against a day when political backlash might cut off casino revenue.

As Lance Morgan, chief executive officer of the Winnebago Tribe's Ho-Chunk Industries warns elsewhere in this issue, "I believe in the near future Indian country will be divided into the "'Have's,' the 'Used-to-Have's' and the 'Never-Had's.'"

The Winnebagos are among a handful of tribes that have succeeded in broadening their base. The Mississippi Band of Choctaws under the long-time leadership of Phillip Martin had actually established successful manufacturing businesses before getting into casinos. The Southern Utes of Colorado, the first tribe to gain a Triple A, highest investment grade rating for its bonds, won its superlative financial reputation because of its energy holdings, as well as the steady hand of the recently deceased Leonard Burch.

Tribes like these are often the largest employers in their regions, creating two to three jobs for non-Indians for every one held by Natives.

But many more tribes have been left behind, particularly western nations with large populations and land bases but remote locations. Although private entrepreneurship is stirring even in some of the poorest counties, some of the largest nations are lagging because of lack of outside investment, cultural decisions to forego gaming and self-inflicted wounds like tribal government instability and erratic judicial systems with undeveloped business codes.

The disparity between rich and poor tribe provides plenty of ammunition to critics in the press and Congress who have not shown great sympathy for any Native economic growth.

Indian country has increasingly focused on overcoming this disparity at least since last year's National Summit for Emerging Tribal Economies, held in Phoenix under the sponsorship of then BIA head Neal McCaleb. The Summit provided a sounding board for increased inter-tribal trade, technical assistance and purchasing consortiums to pool the buying power of tribal casinos and resorts.

The recent mid-year meeting of the National Indian Gaming Association (NIGA) continued the discussion. Chairman Ernest L. Stevens Jr., announced formation of the American Indian Business Network, designed to promote Indian-owned businesses, either tribal or individual.

Joe Perez, president of Initial Impressions, and Valerie Spicer, vice president of Borrego Springs Bank, co-chair the initiative. "We have to stimulate our own economy - do business with each other and lead by example," said Spicer.

Even though inter-tribal trade is just beginning to revive, it has very old roots. Archaeologists have turned up flint from what is now Michigan in Central America. Wampum, made from the purple edge of oyster shells by Long Island tribes, provided a medium of exchange throughout the northeast woodlands. Indian trade spanned the continent long before European contact.

Citing this history, some tribes have already reopened contact with the indigenous peoples of Mesoamerica. Mayan farmers' cooperatives in the highlands of Guatemala have begun exporting coffee through a vendor to the Oneida Indian Nation of New York, under the brand name Mayan Gold. Coffee shops run by Shinnecock tribal members and the Unkechaug Nation on Long Island feature other "fair trade" native-grown coffees, exported by non-Indian but pro-cooperative middlemen.

Purchasing consortia for casinos have yet to emerge, although the Mohegan Indians and the Mashantucket Pequots in southeastern Connecticut have launched a joint laundry venture for their luxury hotels. The potential extends beyond the mundane supply of soap and toilet paper, however. There is occasional talk of a tribal booking agency that would set up a circuit of acts through the burgeoning number of casino venues, and possibly increase the exposure of Native entertainers.

Several tribes have begun to market their experience with successful casinos to newcomers, setting up deals through tribally owned management companies. The Morongo Band of Mission Indians in fact recently purchased a non-Indian casino management firm.

Non-gaming trade has produced some big success stories as well, but these are also proving to be major battlefields with state governments. The Winnebago's Ho-Chunk Industries runs a tribally incorporated petroleum supply company HCI Distribution, based in Nebraska, which ships fuel to gas stations owned by neighboring tribes, including three in Kansas.

HCI purchases fuel from non-reservation pipeline stations in Nebraska and Iowa and then blends in an alcohol additive in a plant on the Winnebago's Nebraska reservation. For several years, it has sold the end product to Kansas gas stations on the territory of the Sac and Fox Nation, the Iowa Tribe of Kansas and Nebraska and the Kickapoo Tribe of Indians. The Winnebagos refused to pay the Kansas gas distribution tax on the grounds that tribe-to-tribe transactions could not be taxed by states. In March 2002, Kansas seized HCI fuel tankers and brought state criminal charges against Winnebago chief John Blackhawk and HCI's Lance Morgan.

The Winnebagos and Kansas tribes brought the case to federal court and so far have won hands down. On Aug. 28, the federal 10th Circuit Court of Appeals unanimously upheld a lower court injunction against the state of Kansas, which suspended the criminal cases and returned the trucks to the tribal business. The tax issues still have to be litigated, but the federal court's action shows it takes them seriously.

Because of the conflict, however, one tribal attorney urges that tribes formalize their trade agreements in government-to-government treaties. These treaties could "consist of generalities," Eric Facer of the Washington, D.C. firm of Facer and Stamoulas, told the recent annual meeting of the National Intertribal Tax Alliance, but the fact they existed would strengthen the tribes' hands in dealing with state tax authorities.

Trade treaties would also return to the basic principle behind IGRA, tribal sovereignty, which too many in and out of Indian country is proving to be the bedrock of Native economic success.