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Subject: Economist.com
Date: Thu, 10 Apr 2008 13:35:00 -0500
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<BR><FONT face=3D"verdana, geneva, arial, sans serif" color=3D#cc0033=20
size=3D-1><B>Business in the Navajo Nation</B></FONT> <BR><BR><FONT=20
face=3D"verdana, geneva, arial, sans serif" size=3D+1><B>Capitalism's =
last=20
frontier</B><BR></FONT><FONT face=3D"verdana,geneva,arial,sans serif"=20
color=3D#999999 size=3D-2>
<DIV>Apr 3rd 2008 | WINDOW ROCK, ARIZONA <BR>From The Economist print=20
edition</DIV></FONT><BR><BR><FONT face=3D"verdana,geneva,arial,sans =
serif"=20
size=3D-1><B>America's biggest Indian reservation tries to stimulate =
private=20
enterprise </B></FONT><BR><!--back-->
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>JUST outside =
the=20
south-east border of the Navajo Nation, along highway 264 in New Mexico, =
there=20
is a string of shops. It is not much=97a bank, a couple of fast-food =
outlets, a=20
petrol station and a garage. Compared with what lies across the border, =
though,=20
it feels like a boom town. Cross into the Navajo reservation and the =
shops=20
abruptly disappear, to be replaced by a scruffy trailer park. As Mike =
Nelson, a=20
Navajo entrepreneur, puts it: =93This is the last frontier for free =
enterprise in=20
America.=94</FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>When =
Americans talk=20
about Indian businesses, they generally mean casinos. Since 1988, when =
the=20
Supreme Court ruled that states could not ban gambling on Indian lands, =
a few,=20
mostly coastal, tribes have become stupendously rich. But most big =
Indian=20
reservations are in the interior, miles from potential punters. More =
than twice=20
the size of Massachusetts, and with a growing population of about =
200,000, the=20
Navajo Nation is the biggest of the lot=97and the most in need of =
private=20
enterprise. </FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>There are =
only about 400=20
businesses in the Navajo Nation. With a few exceptions, such as a coal =
mine,=20
they are tiny. The official unemployment rate is about 50%, and the =
median=20
income is less than half the American average. What little money is =
generated in=20
the reservation tends to leak out. Three times a month=97when the =
welfare cheques=20
arrive, and when government workers are paid=97Navajos stream out of the =

reservation to stock up on groceries, car parts and alcohol in border =
towns. The=20
local joke goes that the tribe's biggest export is dollars.</FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>The =
reservation has=20
produced plenty of entrepreneurs. Navajo silversmiths and weavers are =
justly=20
famous. But the tribe's division of economic development lists more =
Navajo-run=20
outfits off the reservation than on it. One of these is the garage on =
highway=20
264. Its owner, Donald Dodge, did not want to leave the Navajo Nation. =
He did so=20
because he could not afford to wait years to obtain a business licence.=20
</FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>Anybody who =
wants to set=20
up shop in the reservation must conduct an archaeological survey, obtain =
a=20
letter of support from the tribe's president and jump through up to a =
dozen=20
other hoops. These regulations, put in place to protect Indians from =
white=20
traders, now bind native entrepreneurs large and small. Timothy Halwood =
recently=20
obtained a permit to take small groups of tourists into the Canyon de =
Chelly.=20
The process took two years. </FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>Another =
problem is land.=20
Like other reservations, most of the Navajo Nation is held in trust by =
the=20
federal government. Because Navajos do not own their land, they cannot =
use it as=20
collateral to finance a business. To make matters worse, almost 8,000 =
people=20
claim grazing rights over land that often extends into towns. These =
rights have=20
no paper value and so cannot normally be sold to developers. The result =
is a=20
paradox: a vast, underpopulated area where it is hard to find a =
commercial site.=20
</FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>A third =
problem is=20
politics. The Navajo Nation has an 88-member legislature and 110 local =
chapters.=20
=93It's a lot of chiefs,=94 says Joe Shirley, the Navajo president. This =
is a big=20
reason the Navajos have been slow to get into the casino business. Plans =
to do=20
so were approved in 2001, but feuds over how to divide the spoils =
between tribal=20
and local governments led to delays. The Navajos' first casino is =
expected to=20
open this autumn, some 150 miles from the nearest big city, in a market =
that has=20
been saturated by smaller, nimbler tribes. </FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>The =
dysfunctional=20
politics of the Navajo Nation does have one good effect: it forces the =
tribe to=20
concentrate on private enterprise. In other reservations almost all =
businesses=20
are run by the tribe, either directly or through a corporation. Although =
such=20
firms can be profitable, they are as susceptible to political meddling =
as any=20
nationalised industry is (see <A=20
href=3D"http://www.economist.com/business/displaystory.cfm?story_id=3D109=
71063">article</A>).</FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>Under Mr =
Shirley, the=20
first president to serve two consecutive terms since the 1970s, the =
Navajo=20
government is steadily hacking away at the red tape. In 2006 it took =
control of=20
business-site leases from the Bureau of Indian Affairs. As a result, it =
now=20
takes a year or two to obtain a lease=97down from as many as five years =
in the=20
1990s. Alan Begay, who is in charge of economic development, reckons it =
will=20
eventually be possible to grant a business lease in about a =
month.</FONT></P>
<P><FONT face=3D"verdana,geneva,arial,sans serif" size=3D-1>Some of the =
Navajo=20
Nation's local governments are going further. Since 2002 the town of =
Kayenta,=20
near Monument Valley, has levied a 5% sales tax and spent much of the =
proceeds=20
on housing and infrastructure. The town has a land-use plan and a =
long-term=20
strategy for attracting businesses. All of which would be taken for =
granted=20
outside Indian country, although it seems radical here. But nothing =
happens very=20
fast in Navajo country. Ask a bureaucrat how he intends to remove one of =
the=20
many obstacles to business, and the first answer is usually =
=93slowly=94.=20
</FONT></P><BR clear=3Dall><BR clear=3Dall>
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if(url.city_id) {
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var vF =3D '';
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var vNamePairs =3D '';
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var vAdvertDataViews =3D "";
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if (getReportingCookie("entryultra") !=3D null) {
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if (getReportingCookie("ultraviewed") !=3D null) {
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}
vNamePairsArray =3D "";
var undefined;
if (window.NPdata !=3D undefined) {
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