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Governor Walter Hickel; how Alaska's new governor will address economic and business issues.

There are some who are convinced that when Walter Hickel first went to Juneau in 1966, he really had his sights on the presidential appointment he accepted two years later. This time around, there seems to be no doubt the new governor will have four years to hatch economic, social and political ideas he has been incubating for a quarter century or more.

While Hickel maintains he fully expected to govern a full term the first time around, he has stated that the two people with the most influence over the state's development are the governor and the secretary of the U.S. Department of Interior. Having held both jobs, Hickel's economic and environmental legacies to date are difficult to pin down. Although Hickel proudly states his philosophies haven't changed over the years, his first term as governor provides few concrete clues as to how his political vision will translate into actual economic initiatives.

In an interview with Alaska Business Monthly just before his swearing-in, Hickel said his first actions to improve the Alaskan business climate would be those arising from his administrative prerogatives as an incoming executive: First, pick a cabinet that generates confidence; second, address the budget, signaling that we mean real business; and third, create the attitude and atmosphere of "can do" from the governor's office."

Observers in and out of the new team predict that preoccupation with such beginnings will keep Hickel from advancing other economic proposals immediately. "I think we're going to focus on the government side," says Vivian Hamilton, Hickel's communications chief.

Although many of the voters who gave Hickel another lease on the governor's mansion were not in the state from 1966 to 1968, some analysts who were remember a preoccupation with petroleum. "The main impact of Hickel's first administration was vigorous pursuit of opening Alaska up to oil development. That was a very major thrust,"says Vic Fischer, an economist, former state legislator and delegate to the constitutional convention that led to statehood. He remembers that leasing of state lands at Prudhoe Bay was "pushed very hard by the Hickel administration."

But attempting to predict the governor's policies on the basis of past performance is difficult for a number of reasons. First, his initial hitch was so brief that he barely had time to stoke a head of policy-making steam. And Hickel's time in Washington was foreshortened by his highly publicized dispute with Nixon over the war in Southeast Asia. Second, Hickel now assumes the state's helm in a world vastly altered in some important ways since 1966.

Hickel, a longtime Alaskan real estate developer, surprised some of his early detractors in Washington by advancing environmental policies considered progressive for a man arriving in the capital with such a boomer reputation. Yet Hickel's avowed environmentalism never has been completely above suspicion for some observers. His oft-repeated credit-taking for inspiring the first Earth Day seems extravagant to some, downright ridiculous to others.

"Hickel has never completely lived down what economist Fischer calls the disastrous results" of the original ice road built during Hickel's first term to supply the oil exploration activities at Prudhoe Bay.

"According to historians Claus-M. Naske and Herman Slotnick, the road melted with the spring thaw of 1969, eroding the underlying permafrost and causing the biggest screwup in the history of mankind in the Arctic."

Compounding his image problems, or at least confounding those trying to predict the future, Hickel to this day is unrepentant about the ice road that bore his name. In a pre-election interview for a journal published by BP Exploration, Hickel said: "I will never apologize for that. I won't apologize if Lewis and Clark walked across the country and left a trail. They had to do that before something else could happen. That's the way we did it in Prudhoe."

The governor enjoys a certain following of Americans, even outside Alaska, who are undeniably concerned about environmental problems, but uncomfortable with the stridency of some environmental organizations. Regardless of how Hickel came by his views about balancing development with environmental protection, he seems eager to preserve the image that he occupies moral high ground in the debate.

Beyond the image factor, a greater dilemma for Hickel may be the concern, felt by many, that today's environmental crisis is far more grave than it was 20 years ago. In a world showing unmistakable signs of global economic, environmental and social distress, Alaska's vast wilderness has become a national and international battleground where development and environmental interests frequently clash.

Given that Alaska's economic destiny is inevitably tied to resource development of one form or another, no amount of Hickel rhetoric or antifederal litigation will diminish the perception held by millions of Americans that world-class environmental values are at stake in almost any major economic initiative the new administration might contemplate.

In a nutshell, Hickel's challenge is how to make his brand of "ecological economics" work in a policy-making climate heavily populated with skeptics, without an overwhelming public mandate and without making major mistakes. There is no question that Hickel's second administration will be much more closely watched than the first because the world today is more used up, more degraded, less naive, and far more possessive and protective of Alaska than ever before.

Hickel himself uses the word "challenge" when talking about the future, but seems completely unburdened by the thought. In fact, he's bursting with trademark enthusiasm. He is counting heavily on his commissioners to take firm charge of their departments with professionalism and zeal.

"I try to hire the best," says Hickel. You can't negotiate with an elephant using a mouse. A mouse is the same color; it's got four legs. That's what the state's been doing with this whole thing."

The context for state government operations and policy-making will be what Hickel sees as the duties of the "owner state" - asserting the leadership of state government to create prosperity by encouraging safe development of land assets.

"America is a democracy, a free society. It has a capital-intensive, incentive monetary system, and it's run privately. Now how do you make that work where the government owns everything? This is a big company, the state of Alaska. We own a hundred million acres and all the resources. It isn't quite as much like running a business as it is understanding the obligation of ownership," Hickel says.

"We're stockholders; we own it. And you can't just be a regulatory thing. If you are, nothing happens. That's the reason nothing has really happened in Alaska since Prudhoe Bay. In Alaska, some government has to say yes before you can do anything. That's not true in the rest of the country. Saying yes is foreign to government - it's been taught that mentality. I think entrepreneurially."

One issue with considerable economic implications that Hickel will meet early on is what to do with the state's unexpected oil revenue windfall. As a result of Iraq's invasion of Kuwait, rising oil prices have deposited about a billion dollars in the treasury. Hickel has wasted no time advancing ideas of how to spend the surplus, suggesting that up to two-thirds be used for major capital projects, such as a port facility at Fire Island or ferry system expansion.

But others have ideas of their own, and dealing with the windfall may prove considerably more difficult than appointing commissioners and setting a cap on the number of state employees. Budget issues have always created legislative and administrative divisiveness, and the question of how to split the billion-dollar pie will put Hickel's leadership to an early test.

While Hickel's team will probably enjoy a reasonable honeymoon, fiscal passions are difficult to manage as the legislative session progresses and lawmakers feel pressure not only from constituents suffering the effects of last year's budget vetoes, but also from the realization that this is a onetime windfall.

Among other options, there is probably considerable legislative sentiment for putting all or most of the money in the bank. In one of his parting shots, former revenue commissioner Hugh Malone wrote: "We need to confront the fact that Alaska's oil production in a dozen years will be one-fourth the present level. Unless production increases fourfold or the price for oil quadruples (to $80), we are at the precipice."

If Hickel is going to prevail over legislative conservatism and significantly reduce the role of the state's operating budget as an economic engine by fueling private enterprise with state capital and encouragement, he's got to hammer his far-reaching ideas into a far-reaching plan, complete with nuts and bolts and realistic objectives.

If it were a matter of enthusiasm alone, there would be no doubt about Hickel's chances for success. But whether enthusiasm can be translated into dialogue and dialogue into consensus is a question even the confident new governor can only speculate about. Whether commissioners and advisors can mold Hickel's apparently genuine personal concern for Alaskan land and people into workable policies that fulfill the governor's promises remains to be seen.

Hickel takes pride in the fact that speeches and articles he authored on economic and environmental issues more than 15 years ago still reflect his thinking today. "My philosophy doesn't change," he boasts with a winning smile as he hands the reporter a reprint of a 1973 Reader's Digest article entitled The Day of the Arctic Has Come."

To some, such an attitude represents virtuous consistency. Others fear that unchanged thinking, however broad it may appear superficially, may be narrow, rigid and dogmatic.

Economist Fischer has watched Hickel in action in many arenas and has been a close observer of Alaska's executive and administrative branches of government. Speculation about the course Hickel will plot is risky, but he hazards a guess and sounds a caution: "I have a hunch that Hickel will look with favor on any initiative, any effort, to expand any aspect of resource development or international trade anything that would expand the economy, expand jobs.

"The question in my mind is to what extent will the new administration look at the cost of economic and business development rather than just the benefit side."


While Hickel's intention to reduce the size of state government and his desire to open the Arctic National Wildlife Refuge to oil and gas exploration are widely recognized planks in his economic platform, Alaska Business Monthly sought the governor's views on a number of other economic topics over which his administration may have direct control. Here are his views on some specific business subjects:

Economic diversification: "We will play to our natural strengths, our resources, but not just oil. We will take advantage of our unique geographic location. Value-added is one of the keys, especially for timber."

Timber: "Timber is one of our greatest renewable resources. It will be part of the program. Whether the Mat Valley or the Interior or someplace else is what we will find out. Whatever is done has to consider the other uses of the area."

Oil and gas leasing on state lands: "We will take a look at that, but this isn't just an oil and gas state. We want to catalog all our resources so we know what we have."

Agriculture: "I want to work with those people who have dedicated their lives to agriculture, to see what is real, what is attainable."

Environmental regulation: "We will do a thorough review of all regulations. I

am for strict regulations. What I have a problem with is overlapping duplication of regulations that frustrates even those who want to do it right."

International trade: "The Pacific Rim is our natural trading partner. I've been saying that for 30 years. President Nixon called after the election and said, You were talking about the Pacific Rim before most of us knew what it was." My emphasis will be the Pacific Rim. It is time we took a look at a united Europe, at Russia - but it is different, they don't have money."

Tourism: "It's true that marketing Alaska is controlled by the big Outside cruise companies, and there's some discrepancy there. Yes, they're dominant now, because they're in the business. We have to be sure that Alaska gets the benefits of that on a more value-added basis."

"They're going to have the next big Alaska trade show Outside someplace. Why don't they have it here - get 'em used to the idea here?"

Small business development: "We will say yes. Then we will get out of the way."

The Governor On Style And Substance

The following is an excerpt from Hickel's interview with

Alaska Business Monthly's Jeff Richardson.

You have to know what I did to know what I'll do. In the Kenai when I was governor, there was nothing down there. I went to Otto Miller, Standard of California, and I said, "I want a refinery down there." He said, We have a good refinery in Los Angeles."

Long story short, we only had 20,000 barrels of crude then, no Prudhoe Bay. I was the first governor in history, ever. I said, Keep your money. I'm takin' the oil." I took that oil. We were getting $2.87 a barrel. I said, "I'm going to put it out for bid and the highest bidder has to build a refinery. We can do that." I did it.

They boycotted me. They said, The governor may not get anything for that oil. He may get only a dollar a barrel." I took that heat; I know what I can do. They didn't bid - I should have had an anti-trust case. But a little refinery out of Texas came in and bid three dollars and four cents that's more than we were getting - and built a refinery.

And who built a second refinery? Otto Miller, who said it didn't make sense. This isn't the way I blabber and talk, this is what I do.

I look at the governor as the foreman of the ranch. I've talked about this for over 30 years. The foreman of the ranch has to take maybe 40 acres, that's where he wants his house - going to build it by the creek, going to keep that and the trees in a natural state. Another 40, he's going to plant corn. Another 40, he'll keep in pasture land. Another 40, whatever.

Well, that's Alaska. You just can't lock it all up. It's got to have an economic base. Now, some economic base can be in its natural state, like Prince William Sound is probably one of the world's greatest water recreational areas. Shouldn't be in wilderness. It's got to fit that category.

So the regulations cannot be to just stop everything. It's to see that certain natural things are protected and to allow man to use them.
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Title Annotation:includes related article on the governor's specific intentions
Author:Richardson, Jeffrey
Publication:Alaska Business Monthly
Date:Feb 1, 1991
Previous Article:Staking retail claims in Juneau; increasing business activity and building consumer confidence are attracting new retail business to Juneau.
Next Article:Short-term fix masks long-term perils.

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