Economic development attitudes must change

GREAT FALLS, Mont. – Larry Wetsit, former chairman of Montana’s Fort Peck Tribes, would like to do more business with fellow American Indians. But unless tribal leaders change their attitudes about economic development, he thinks reservations will continue to miss out on prosperity.

“Tribes are most worried about what they can get from us up front,” said Wetsit, now a top manager with Nemont Telephone Cooperative Inc., a multifaceted communications firm that serves the Fort Peck and Crow reservations and other outlying areas.

“Every time we do anything, they want money from us.”

Wetsit spoke at a recent Tribal Economic Development Summit in Great Falls, where some 300 tribal leaders, state and federal representatives, investors and private business owners gathered to discuss ways to improve reservation economies.

The event was sponsored by Sens. Max Baucus, D-Mont., and Mike Enzi, R-Wyo., the Montana-Wyoming Tribal Leaders Council and various private and nonprofit entities.

Wetsit said he believes tribal governments need to stabilize their operations, clean up their court systems, create more meaningful incentives to entice new businesses and streamline regulations that govern commercial enterprises. Otherwise, private entrepreneurs will continue to locate elsewhere.

“Tribes tend to over-regulate, terribly,” said Wetsit, who also serves as board chairman for A&S Tribal Industries, an Assiniboine and Sioux manufacturing firm based on the Fort Peck Reservation. He added that in general, governments should not run businesses because they are not properly structured to make the ventures successful.

“I have yet to see a government successful in business,” Wetsit said. “They should be the last people who we talk to for advice.”

Wetsit said it pains him to be critical of his own people, but the criticism is meant to be constructive. Without fundamental changes in the way tribal governments deal with the private business sector, high unemployment rates, severe poverty and related social ills will continue to engulf Native Americans, he said.

For example, Wetsit told the group that when his company recently made plans to build a new $3 million building, the decision was made not to locate it on the Fort Peck Reservation because of concerns about tribal jurisdiction. The firm has been around for more than 50 years, serves about 30,000 customers and is growing rapidly – just the type of operation that could provide a significant shot in the arm to any struggling community.

“We don’t know what the tribal council is going to do,” Wetsit said of the decision to keep the company’s headquarters off the reservation.

“American businesses are very insecure. They need stability and predictability. There’s a whole bunch of businesses that vote with their feet,” and that often means that money gets siphoned away from tribes.

Wetsit said he’s often amazed at how few incentives tribes are willing to offer to attract a new firm to locate within their boundaries. Off-reservation communities, even if they’re in dire economic straits, usually are willing to give tax breaks, supply buildings, help with infrastructure needs and take other steps to keep entrepreneurs on the hook.

“You have to involve the non-Indian community,” he added. “They also have a vested interest. If you’re successful, they’re successful. That’s how America does business, and that’s how tribes need to do business.”

“All business people abhor uncertainty,” Baucus added in a later interview. “They want to know who’s on first, who’s calling the shots. They need a dispute-resolution process that has integrity.”

Stephen Cornell, director of the Udall Center for Studies in Public Policy at the University of Arizona, noted there’s enormous frustration among tribal leaders about the slow pace of change on reservations. Cornell, a co-founder of Harvard University’s Project on American Indian Economic Development, said tribes want sustainable, self-directed growth, but several key issues stand in the way.

For one, he explained that many jobs in Indian country are government related, whether they’re tribally based and federally funded or supplied directly by the federal government. That means there’s little diversity in reservation economies, which increases dependence on often-fickle congressional appropriations.

“That’s a risky economy,” Cornell said. “It’s a cyclical thing. It’s a kind of dependence you want to escape.”

That doesn’t mean tribal leaders shouldn’t seek federal and state funding wherever they can, he added. But if the government sector dominates the economy, the main way new jobs are created is if government grows, which it isn’t in most cases.

Government jobs indeed make a huge financial impact. Robert Swan of RJS & Associates, a firm contracted by the Montana State-Tribal Economic Development Commission to complete a study on tribal needs and contributions, said his preliminary figures show tribal and BIA salaries alone pump nearly $200 million a year into the state’s economy. Since every dollar turns at least five times in a local economy, the total annual contribution may reach $1 billion, he said. Throw in private-sector wages on Montana’s seven reservations, as well as goods and services purchased by tribal and BIA entities, and the contribution could reach $3 billion to $5 billion a year.

Greg Dumontier, president of S&K Technologies on the Flathead Reservation, said tribal governments also can help shore up private businesses. He said the Salish and Kootenai Tribal Council was a key factor in SKT snagging a new $325 million Air Force contract. Without the council being willing to put its financial weight behind the firm, the contract would probably not be finalized, he said.

Anthony DeLuca, director of Air Force small-business and minority programs, said the military has plenty of contract work for tribal companies, but tribes must ensure that performance is high once contracts are awarded. If performance is shoddy, for whatever reason, additional work will not likely come their way.

Changes in the federal welfare system are driving the need for more private-sector jobs because the Temporary Assistance to Needy Families program, or TANF, is steadily pushing more people off public assistance rolls. Cornell said those displaced clients have only a few choices – give up, relocate to find a job, or get employment on their home reservations.

Jonathan Windy Boy, a Chippewa-Cree leader and chairman of the two-state Tribal Leaders Council, noted that Montana Indians still make up about 47 percent of the state’s welfare rolls. With new workers coming off public assistance every day, the new motto must be, “Not hand-outs, but hand-in-hand.”

Western states, as well as tribes, can no longer wait for whatever jobs fall in their laps, added Wyoming Gov. Jim Geringer, a Republican. States, tribes and private businesses need to team up to create new opportunities that utilize advances in telecommunications. Hungry energy markets are also a venue where tribes can prosper.

“We have to build on trust,” Geringer said, adding that the federal government tends to treat states and tribes like colonies. “A colony is just there for someone else to take advantage of,” he warned.

“We are willing to come to the table,” Montana Gov. Judy Martz, also a Republican, told the mainly Democratic crowd. “I want to work with you.”

Cornell agreed that tribes must create more joint enterprises and encourage more lower-tier firms to open their doors on and near reservations. Some tribes have been successful in this arena, he said. In 1982, about 13,000 small businesses generated about $5 million in revenues on the nation’s reservations. In 1992, those figures grew to 102,000 small firms generating about $8.5 billion.

However, he said there are many reasons reservation businesses fail. Most are far away from major markets, many tribal members lack adequate education and training, poor leadership and corruption dig into profits, and tribes typically aren’t equipped to help with technical support.

When reservation businesses succeed, he explained there usually are five main factors.

First, successful tribes exercise their sovereignty steadily and dependably.

“Development is a political problem,” Cornell said. “Political interference consistently torpedoes business development in Indian country. Sovereignty has to be backed up by good government,” which means the “rules of the game” are clearly stated and fairly enforced. “The rules send a message to investors.”

Strategic, long-term planning is also critical to success, as well as having the tools and resources to make reservation locales attractive and affordable. That means, in part, having efficient permitting processes and establishing “a bureaucracy that gets things done,” Cornell said.

“It’s not an easy road, but I believe we’re going to overcome it,” said Fort Peck Tribal Chairman Arlyn Headdress.

But Majel Russell, a Crow tribal member and Billings-based attorney, said she believes tribal leaders are sometimes unfriendly to outside ventures because their main responsibility is to protect their constituents, who are often impoverished, as well as keeping tribally controlled assets secure. For example, many pending business contracts Russell reviews include waivers of sovereign immunity, mandatory outside arbitration of disputes, tribal court exemptions and easements and right-of-way provisions that undermine tribal sovereignty.

On the other hand, Russell said tribes must fine tune their constitutions, modernize their court systems, and do all the other hard work to be ready to accept new business.

Some summit speakers also discussed the fact the capitalist model doesn’t really fit for many American Indian people. Tradition teaches that communality keep tribes whole, while capitalism pushes individuals to climb on the backs of others to succeed.

“Business and who we are as Indians often clashes,” observed Michelle Henderson, executive director of the Montana-based National American Indian Business Leaders organization.

But American Indians can hold onto their culture and still be successful entrepreneurs, said Pete Homer, head of the National Indian Business Association. What they can’t do is keep “feeling sorry for ourselves and cursing the white man.”

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