Navajo future bleeding away
Dollar flow from reservation drains its economic stability

Editor's note: This is the first in a three-part series looking at economic problems that plague the Navajo Nation.

By John Christian Hopkins
Diné Bureau

WINDOW ROCK — Every year, millions of dollars flow from the Navajo Nation to surrounding towns, and much less comes back across the border. It has been estimated that 85 percent of all the money that comes to the reservation each year, ends up being spent in the border towns and off-reservation.

Last year, Patrick Sandoval, chief of staff for Navajo Nation President Joe Shirley Jr., told a group of community leaders: "If we were a country, the borders would be closed because of the unfair trade deficit."

The two biggest imports to the Navajo reservation are cars and liquor; the single largest export , Sandoval said at the time, "is cold, hard cash."

The trade imbalance in Navajoland
"Trade deficit is an interesting way to put it. I've also heard it called 'capital flight'," said George Hardeen, spokesman for Shirley. "It's a fairly complicated, interrelated explanation to answer (the) question, but simple and logical at the same time."

It exists because there are so few businesses on the Navajo Nation that tribal members spend their money on large and small purchases in border towns, such as Gallup.

"Jobs and businesses equal a robust economy. Here, the jobs are primarily government, which doesn't produce a product or service the consumer purchases. It provides income to employees, yes, but not something a consumer can turn around and buy," Hardeen explained.

Big ticket items, such as cars, mobile homes and large appliances must be purchased off-Navajo. So, too, must medium ticket items such as electronics, computers, DVDs, CDs be purchased off the reservation. Smaller items such as clothes, shoes and food are generally also purchased off-Navajo.

Even miscellaneous stuff that adds up, like livestock feed, tack, trailers, appliances, furniture, building and construction supplies, auto parts, and on and on all must be purchased off-Navajo.

That means the Navajo economy itself is exported. The solution is to bring the economy back to the reservation. But how could that be accomplished?

"First, produce businesses and create a business-friendly environment," Hardeen said.

Shirley recently urged the Navajo Nation Council to streamline the business site leasing process.

"It's not something the president can do alone, although he is a strong supporter of free enterprise," Hardeen said. "Business is contagious if land is available. That's a local issue. Local chapters must first get the first step of the Local Governance Certification accepted by the Transportation and Community Development Committee, which is their land use plan certification. That will free them to declare which areas can be business sites."

Another part of that problem is more complex: the historical use of land allows a single person to invoke a "customary use area" to scuttle land use if the person claims he wants to use it for grazing, whether he actually grazes it or not, Hardeen said.

"That's a ubiquitous problem on Navajo which will require land reform which no delegate will sponsor. It's untouchable and has been for years," Hardeen said. "Without land, a prospective business cannot build a building. Instead, they must lease a storefront from an existing Navajo Nation shopping center, if one exists and if a shop exists. So that's a long way to say there are limitations to open a traditional kind of business."

Capital Improvement Plan
One of many reasons those who support President Shirley's $429 million Capital Improvement Plan are frustrated with the Nation's council's seeming disinterest in it is the immediate positive effect it would have on the current lackluster Navajo economy, Hardeen said.

"The most immediate impact would be the production of construction jobs all over Navajoland. Not only would large general contractors get contracts to build the buildings called for in the plan, innumerable small Navajo independent contractors electrical, plumbing, carpentry, masonry would get subcontracts. All of them have workers and office staff. Then there are the ancillary businesses that are created freighters, food services, rentals right down to the burrito ladies in the morning.

"The CIP would create 10 years of construction projects, large and small. It would be a huge investment in the economy and provide jobs for people now, as well as the high school graduates over that time period who otherwise will be forced to leave Navajo to find work," Hardeen said.

Casinos will bring revenue to the Navajo Nation and create some ancillary business as well, but not on the same scale and probably not enough to stimulate the Navajo economy itself to bring balance to the trade deficit.

"The key remains business, local jobs so people have a place to spend moneylocally," Hardeen said.

Hardeen also pointed to another factor: the Non-Intercourse Act which prevented anyone without a BIA license from doing business on Navajoland.

"That was supposed to be a solution to the corruption and exploitation of Navajos in the 1800s and was needed at the time. But the laws and regulations were never repealed and created a huge hindrance to business development, which, of course, is so powerfully felt now long after anyone remembers those old laws," Hardeen said. "So, as usual, the BIA had a huge role increating the conditions which exist now."

State of the Nation
The National Congress of American Indians, based in Washington D.C., claims that, at 26 percent, Native Americans have the highest poverty rate of any ethnic group in the U.S. NCAI also says Indians' health care, education and income statistics are the worst in the country.

Locally, nearly half of the Navajo people are unemployed.

According to the 2000 census, mining is the major source of Navajo reservation income, bringing in about 51 percent of it. With approximately three million visitors a year, tourism accounts for 17 percent of the tribal income. Taxes generated by tribal business account for 32 percent.

Major employers on the reservation include the states of New Mexico and Arizona, Navajo Area Indian Health Services and Office of Indian Education Program.

The Navajo population is more than 180,000 people, with the median age being 24. The median household income is $20,005. Forty-three percent of the tribe lives below the U.S. poverty line.

Education is also key, as only a paltry 7 percent of Navajos earn college degrees.