No one involved with the split between the Alaska Federation of Natives (AFN) and Alaska’s most profitable company – Arctic Slope Regional Corp. (ASRC) – is publicly saying much of anything of substance about the reasons why, but this parting was clearly inevitable.
Alaska Public Media reporter Nathaniel Herz, a relative newcomer to the 49th state, Friday tied the issue to oil, observing that “tribal governments and nonprofits say they’re being saddled with climate change’s costly impacts, while some regional corporation leaders see greenhouse gas regulations as a potential threat to their bottom line.”
That is part of the story, but the differences between the state’s Native corporations and AFN are deeper than that and trace back to well before political interest groups and some of the media declared a “climate crisis.”
One might well credit a 1993 decision by U.S. Department of the Interior for this breakup.
That one simple act immediately created dueling political power structures – on one hand the corporations dependent on success in the world of business and on the other the tribes largely dependent on government funding.
And government funding is most available to those in need.
That is where climate change enters the picture today. Tribes have embraced it in the hopes of obtaining government help to relocate villages, boost community services and more.
Before climate change, the need was for schools, public water and sewer systems, airports, public housing, health centers, law enforcement and more that villages lacked because they didn’t have the economies or population base to support such services on their own.
And the corporations never made enough money to provide those things, which largely only served to fuel the idea the corporations were providing for the select few while many suffered in substandard housing in need of various services in struggling villages.
The division in some ways parallels the philosophical differences that pit those on the right and the left in the U.S. today.
For decades now, this has been the complex dynamic in a world with no clearcut good guys and no real bad guys. It’s a world of grey. The Claims Act hasn’t helped everyone, but it has boosted the lives of thousands if not tens of thousands of Alaskans and made Alaska Native-owned companies power players in the 49th state.
The companies are widely credited with helping Sen. Lisa Murkowski, R-Alaska, win an unprecedented victory as a general election write-in candidate after her 2010 loss to Joe Miller in the Republican primary.
On Alaska Business Magazine’s list of the most successful companies in the state in 2019, Native-owned businesses dominate. Four out of five of the state’s most successful companies are Native-owned, nine rank in the top-10, and collectively they occupy 17 of the top-20 positions.
On their own and through a vast network of subsidiaries, those companies employ tens of thousands of people both Natives and non-Natives in Alaska and across the country.
“With administrative and subsidiary offices located in Anchorage and throughout the United States. ASRC, along with its family of companies, is the largest Alaska-owned and operated company, employing approximately 13,000 people across the state and Lower 48,” according to Forbes, which ranks ASRC #138 among the country’s most successful businesses.
No other Alaska Native corporations make the Forbes list of 220, but most are now doing well financially. The problem is the flood of success the Claims Act brought after its near-failure in the 1980s did not lift all boats.
Much of rural Alaska today remains poverty-stricken.
Propublica and the Anchorage Daily News are in the midst of an expose’ on the “lawlessness” of the region. For reasons unknown, they have willfully sidestepped the key, economic part of that issue. Rural Alaska has crime problems for the same reasons Chicago’s South and West sides, Baltimore’s Fairfield Area and North St. Louis have crime problems.
“What is also notable is that the young people, based on their knowledge and experience, explicitly make the connection between violence and jobs…asserting, ‘more jobs, less violence.’
“In the words of the young people:
- “Jobs solve violence. If you are busy working, you don’t have time for violence.
- “There are so many people who don’t have a job, and they get into the wrong things.
- “Bring youth employment… everyone wants drugs and violence to stop, well then…get us off these streets and get us in some work clothes and you will see the change.
“Young people tell us, based on their experiences and knowledge, that they believe there is a connection between joblessness and crime in their neighborhoods. While not everyone who is without a job engages in violence, these quotes suggest that of those who do, economic reasons are often a motivating factor. Further, they suggest that providing jobs deters them from seeking economic solutions that may involve them in illegal activities.”
The problem of joblessness is much the same on some of the country’s poverty-stricken Indian reservations.
“…The lack of job opportunities is a critical problem on reservations. The hope of many observers is that economic development will someday provide jobs for reservation residents who need them, but we cannot afford to wait on the promise of economic development. What is needed is a large-scale public jobs program,” Gary Sandefur, a member of the Chickasaw Nation and former director of the American Indian Studies Program at the University of Wisconsin-Madison has observed.
“This program could be modeled after existing workfare programs in that individuals who receive public assistance would be expected to participate. To provide a sufficient number of jobs, new public service jobs would have to be created. The most important lesson to be learned from the reservations may be that it is economic, social, and physical isolation from the majority society that produces what we have come to call underclass behavior.
“This isolation has produced extreme poverty, high unemployment, unstable families, low rates of high school graduation, and high rates of alcoholism and/or drug abuse and crime on reservations and in central cities. These effects occur even, as is the situation on the reservations, where other aspects of social organization, such as kinship and community systems, seem strong. So the key to improving life for members of the underclass may lie in reducing their physical, social, and economic isolation.”
ANCSA was to have helped Alaska sidestep the disaster of the Lower 48 reservations while resolving legal issues as to aboriginal land ownership in the 49th state.
Instead of isolating Alaska Native people in enclaves as elsewhere in the country, Alaska Native leaders and the U.S. government cut a deal to integrate into the capitalist economy of the United State the ancestors of the residents in control of the Alaska landmass at the time of white contact.
In exchange for the Native leaders dropping legal claims to all of Alaska, the government agreed to grant them title to 44 million acres of their choosing in the 49th state, help them set up 12 regional corporations and myriad village corporations through which to do business, and seed those businesses with $962 million in capital – almost 134 times the $7.2 million the U.S. government paid Russia for the Alaska territory in 1867 but only about 48 times the purchase price when adjusted for inflation.
The Claims Act was a noble social experiment designed to help Alaska Natives negotiate their own path into an unknown and always evolving future. The late Gov. Wally Hickel, who in his first term helped establish the groundwork for the deal, later summed things this way:
“Property lines are foreign on the Arctic commons, but they were needed if we were to carve out pieces of Alaska that Natives could own. For their part, the Native leaders wanted enough land both to generate income and to continue their traditional lifestyles. How many acres would they need for their trap lines, or to live off the great caribou herds that roam the Arctic and interior of Alaska? How many acres would they require to support new mines and logging operations that could employ their people.”
That was in 1967 and both mining and logging were viewed somewhat differently than they are now in a state prone to a fair bit of NIMBYism. And by the time the Claims Act became law in 1971, Hickel was gone from Alaska to Washington, D.C. to serve as President Richard Nixon’s Secretary of the Interior.
Nixon would eventually fire Hickel for telling him to listen to young Americans protesting the War in Vietnam, but on other fronts, Hickel saw Nixon in a kinder light than many.
Of the Claims Act, Hickel later wrote, “This was the positive Nixon who enjoyed doing things that were innovative and right, the side of him which, tragically, was lost later in his administration.
“Before he would sign the bill, President Nixon wanted to know if the settlement was agreeable to the Native community; so the AFN called a special meeting on December 16, 1971. Two days later the Native representatives present voted 511 to 56 to accept the terms, in which they would receive title to one-ninth of Alaska and nearly $1 billion. I was present as President Nixon was connected by telephone to a meeting hall at Alaska Methodist University (now Alaska Pacific University) in Anchorage to receive the news of the Natives’ vote.”
Author and attorney Donald Craig Mitchell, the one-time general counsel for the AFN, would later discover that the entire episode was fake news. Nixon signed the Claims Act into law half a day before the AFN vote and then flew to New York City with his wife to see a play. The president’s phone call to AMU was but theater. After the AFN vote, AMU’s Ken Bass, who had an open line to Washington, D.C. from a payphone in the university lobby, told the White House press office to cue an audiotape prerecorded by Nixon congratulating AFN on the vote.
Nixon would not be the last president to use the state and its people as a prop. Democrat President Barack Obama did the same on his climate change/global warming tour in 2015. It included a visit to a mock fishing site and a totally fictional, made-for-TV meal of bear-killed salmon with a reality star Bear Grylls. The salmon had been sourced at a Seward fish processing plant, but the mainstream media gobbled up the Grylls-Obama fairy tale about the actor finding the carcass along an Alaska stream.
The AFN board in the lead up to ANCSA was made up of representatives of what would come to be the 12 regional corporations resident in the state. That would change as the corporations fought to fend off early complaints that they weren’t doing enough to help average Alaska Natives.
“By the late 1980s, folks in the villages had come to realize that ANCSA wasn’t going to do jack shit for most of them, but had created a small cadre of individuals inside the regional corporations (and larger village corporations) who were quite financially prosperous,” observed one of those deeply involved in AFN at the time.
It didn’t help that the corporations were struggling to learn to play in the game of business and made some bad decisions. Several of them might have gone under if not for the late Sen. Ted Stevens and others who came up with the idea for legislation allowing the corporations to sell their net operating losses to other companies looking for tax breaks.
A crafty politician, Stevens attached a rider to a Senate bill that opened the door for sales, and David Rubenstein of the Carlyle Group quickly began marketing them to major U.S. companies.
The sale of NOLs as they came to be called basically allowed the corporations to recapitalize without asking the government for more money and helped Rubenstein build a fortune that eventually turn him into one of the country’s richest men.
Stevens would later help develop the so-called 8A contracting preference for Native corporations doing business with the federal government as well. The contracting has reportedly been worth billions to the corporations.
But corporate leaders recognized early on they were never going to be able to pick up the costs of supporting all jobless shareholders, something that left some of those shareholders resentful that they weren’t getting their fair share.
To try to tamp down the growing resentment, the AFN decades ago brought into the fold private, nonprofit entities thought to be more representative of the interests of village people. Among them were the Bethel-based Association of Village Council Presidents, the Fairbanks-based Tanana Chiefs Conference, and the Juneau-based Tlingit Haida Central Council.
Largely social service organizations, those entities and others like them are dependent on government contracts and grants.
The “board member expansion is when the Rubicon was crossed,” an observer from those days said. The growing tribal movement just added fuel to the embers.
“Before the sovereignty movement got completely up and running,” one source said, “the AFN board was expanded a third time to add 12 more members who each purportedly represented the ‘villages’ in each region.”
Meanwhile, insiders say, the corporations have continued to cover most of the costs of AFN even as they quietly started to pull away. The corporations formed their own ANCSA Regional Association in 2011. It has gone largely unnoticed though it is active behind the scenes.
The organization’s website says it exists “to promote and foster the continued growth and economic strength of the Alaska Native regional corporations….that in fiscal year (FY) 2017…had a combined revenue of $9.1 billion. Alaska Native regional corporation revenues affect the overall Alaska economy, providing jobs and wages that circulate in the Alaska economy. In FY 2017 Alaska Native regional corporations employed more than 15,000 people in the state of Alaska with a combined statewide payroll of more than $950 million.”
The corporations fully understand business realities.
At the AFN conference in Fairbanks in October, ASRC opposed a climate change resolution warning that it could threaten Alaska resource development that generates a significant part of corporate revenue.
“The conflict illustrated philosophical differences between Native communities relying on natural resource development for an economic base and infrastructure, versus communities who see it as a threat to subsistence lifeways,” Tripp Crouse reported in High Country News.
“They need it. And they did it eloquently and in a good way. Let’s stop the debate and give them what they want.”
Julie Maldonado, a consultant for the Institute for Tribal Environmental Professionals, later told Crouse that this is part of a trend of organizations turning to young people for answers to global problems.
“We have a whole lot to learn from them, And they can also see things much more clearly and be informed in ways that we don’t understand,” said the instructor in environmental studies at the University of California Santa Barbara.
Letting youth lead would mark a significant change for an Alaska Native community which has long prided itself on honoring the wisdom of elders.
Whether other corporations will now follow ASRC in using their pocketbook to suggest their opposition to this new idea remains to be seen.
Correction: The story was edited after publication to reflect that David Rubenstein’s involvement with NOLS came after they were created, not before, and to include the entire history of Nixon’s involvement with the signing of ANCSA.