Tribal sovereignty called crucial to economic development

ST. PAUL -- American Indian tribes that exercise greater sovereignty in creating strong tribal government are doing a better job of developing their economies, several business leaders said Wednesday.

Crucial ingredients include strong institutions, such as courts, and clear distinctions between the role of tribal councils and Indian corporations.

"We set in place a system that the tribal council can respect," said Lance G. Morgan, a member of the Winnebago Tribe in Nebraska and chief executive of Ho-Chunk Incorporated, the tribe's business development arm.

Six years ago, Ho-Chunk began using gambling proceeds as seed money for hotels and other businesses that this year employed 250 people and reaped $15 million in revenue. One key to Ho-Chunk's success was the creation of a corporate code, drafted with the state of Minnesota's code as its model, Morgan said.

Several Indian business leaders shared their strategies for economic growth Wednesday at the National Congress of American Indians, a weeklong conference that has drawn leaders and officials from more than 200 tribes to a convention center here.

A recurring theme, based on anecdotes and academic studies: Indians do better when they make their own decisions, control reservation resources and craft regulations that allow companies to operate apart from tribal governments.

"Anytime you rely on someone from the outside, their interests always come first. And your interests come second," said Martin Jennings, director of development for the Mille Lacs Band of Ojibwe Corporate Commission.

It's not unusual for investors to treat Indian reservations with the same skepticism they apply to developing countries in eastern Europe, said Stephen Cornell and Joseph P. Kalt, co-founders of the Harvard Project on American Indian Economic Development.

"You can have all the natural and human resources in the world, but it won't do any good unless you can establish that you have a rule of law that makes investors feel safe," said Kalt, a Harvard professor.

But the business climate is changing, several leaders said.

In addition to drafting commercial codes, some tribes are also reforming their constitutions and creating dispute resolution mechanisms. Federal oversight of reservations has also changed -- from the top-down, assimilation model created in the 1930s to more self-determination for tribes, Cornell and Kalt said.

The Mille Lacs Band of Ojibwe used its corporate commission to create a small business development program.

Besides arranging loans, the program provides entrepreneurs with training at existing businesses, access to computer resources and technical assistance, said Sharon James, the corporate commission's business development coordinator.

Since 1997, the program has provided loans for 35 businesses, including a sign-making company, a gift shop and a hotel. Nineteen of the businesses are still operating and last year had combined gross sales of about $1 million, James said.

"This is a program that is very easily adaptable to any reservation," she said.