Hunting for dividends

The virtues and shortcomings of Eskimo capitalism

ALASKANS like to talk about how distant the rest of America feels. In downtown Anchorage, with its familiar fast-food restaurants and hotel chains, this line can sound a little affected. Not so in rural Alaska, the swathes of frozen tundra that the state's inhabitants call the bush. In Napaskiak, a village of 400 people on the west coast of the state, it is not unusual to see a black-robed Russian Orthodox priest riding a four-wheeled motorbike with two children and a wife perched on the back.

After the discovery of America's biggest oilfield at Prudhoe Bay in 1968, the government needed access to land claimed by the Eskimos in order to build a pipeline, so it made them an offer. They were given 44m acres of land, 1 billion and shares in 12 regional and over 200 village corporations that were created under the deal.It was agreed that the corporations would be favoured for government contracts. These companies now provide a range of services, from running deportation facilities in Texas to providing support for operations in Afghanistan.

The work has been lucrative. The value of contracts awarded to native corporations rose from 508m in 2000 to 5.2 billion in 2008, according to a report from the Senate subcommittee on contracting oversight. Three of the companies—Arctic Slope, Bristol Bay and NANA—now have annual revenues in excess of 1 billion. The dividends from the shares have not turned all Eskimos into rentiers, but they provide most with enough money to pay their large heating bills.

The companies were also charged with stimulating economic development and ameliorating social ills in Eskimo villages. Here, they have been less successful. Some of the problems faced by Eskimos, such as high suicide rates, are common in other isolated northerly places. But other ills are distressingly specific—like the prevalence of domestic violence. Alcohol is partly to blame. Booze cannot be bought or sold in Bethel, the regional hub, but there is a vibrant black market. Alcohol-related injuries are common. Bethel's prison, which has exceeded its capacity, is full of hungover felons.

The smaller villages around Bethel are emptying out. Some of them only became permanent settlements when Alaska's Supreme Court ruled that the government was obliged to educate Eskimo children where they lived, rather than send them off to boarding school. When a school has fewer than ten pupils it closes, taking with it a source of employment. Another reason for the exodus is the price of petrol which, at 10 a gallon in the villages, makes heating a house through the winter and running a snowmobile expensive.

Yet rural Alaska is doing better than these developments suggest. More than 10% of its inhabitants may not have plumbing, but it is not as poor as many other parts of America. Besides, poverty feels different in a place where summers are spent fishing for wild salmon and autumn is moose-hunting season. Other indicators auger a bright future. The Yupik Eskimos, in Western Alaska, are in the midst of a baby boom: nearly 36% of the people in the area around Bethel are under 18. In the four decades following the Prudhoe Bay find, Alaska's Eskimo population doubled in size. Demographers reckon it will increase by a further 10% by the end of this decade.、

This complicates the way native corporations spread their wealth around. Many Eskimos who were born after the initial distribution of shares own none. About half of the 13 regional corporations have opened their rolls to “born-afters”, but doing this requires a vote from other shareholders that, in effect, dilutes their dividends. The migration of villagers also means that many shareholders no longer live in the places that the corporations were set up to benefit.

The companies are facing challenges in Washington, too. Claire McCaskill, a senator from Missouri who chairs the contracting subcommittee, has criticised the way in which the law allows native corporations to fulfil contracts, some of which attract no other bidders, with subcontractors that do not employ any Eskimos. In one case a native company won a 2 billion contract to manage a satellite programme for the Department of Defence, which it promptly farmed out to Lockheed Martin, BAE Systems and General Dynamics. Companies owned by other minorities also receive preferential treatment, but the size of the contracts they can bid on is capped. This is a source of tension between black-owned businesses and their Alaskan competitors.

The aim of the corporations, says Ana Hoffman, a Stanford-educated Yupik speaker who runs the Bethel Native Corporation, is to let people choose how they want to live. Some will continue to be subsistence hunters; others will choose to move away. So long as the money from the corporations makes its way back to the Eskimos, the race of their employees should not matter.