Analysis

Dutch Caribbean Islands on the Brink

Aruba, Curaçao and Sint Maarten will run out of money in weeks.

Willemstad Curaçao
View of Otrobanda from across the Saint Anna Bay in Willemstad, Curaçao (iStock/Flavio Vallenari)

Time is running out for the autonomous Dutch islands in the Caribbean to do a deal with their former colonizer.

Coronavirus has brought tourism, the mainstay of the island economies, close to a standstill. Tax revenue has dried up while unemployment has soared. Without support from the European Netherlands, the governments of Aruba, Curaçao and Sint Maarten will run out of money in weeks.

The Dutch are willing to help, but only if the islands accept temporary Dutch administrators to manage reforms. For most of the Caribbean politicians, this goes too far.

Aruba

Medical personnel on Aruba, whose salaries have been cut 12.5 percent, warn that the health system is on the brink of collapse. Of the three islands, it has had the most cases of COVID-19: more than 2,400 on a population of 105,000.

The government expects to run out of money halfway through September. It needs €320 million to plug its shortfall this year and €270 million next year. Debt as a share of GDP is projected to rise from 63 to 93 percent.

Aruba has met most Dutch demands, excepting capping public-sector wages at 130 percent of the prime minister’s salary. A similar rule was introduced in the European Netherlands in 2013.

Employers and the Aruba Chamber of Commerce have urged the government to comply.

Curaçao

Although Curaçao has only 92 known infections of coronavirus disease, the economic situation on the largest of the three islands is dire. The government must already choose between paying civil servants and suppliers. Its deficit is projected to equal 43-46 percent of GDP this year. Economic output is projected to shrink between 20 and 24 percent. 50,000 of the island’s 160,000 residents are dependent on food aid. Half are unemployed.

Curaçao has so far received €180 million from the European Netherlands. Another €50 million is on hold, pending approval of Dutch demands for economic reform.

The government expects it will need another €250 million next year.

Sint Maarten

Sint Maarten, which shares an island with French Saint-Martin, was still recovering from Hurricane Irma when COVID-19 hit. It has some 500 cases on a population of 40,000. Government revenues have fallen 50 percent. The economy is projected to shrink by a quarter.

Sint Maarten has received €26.5 million in COVID aid from the Netherlands, but it doesn’t yet meet the requirements for the next round of support.

Dutch demands

The islands have already agreed to cut wages in the public sector, including the salaries of politicians. Companies are required to pay one-fifth of wage subsidies for the unemployed.

Terms for additional aid include cutting red tape, lowering the cost of doing business and speeding up permits.

The islands aren’t opposed to these conditions per se. Aruba has put together a comprehensive plan that calls for harmonizing employment regulations between the public and private sectors, investing in education and retraining, simplifying the tax code and shifting to e-government to reduce bureaucracy.

What they cannot accept is that the reforms would be monitored by Dutch officials, who would answer to The Hague rather than the local parliaments.

Falling short

The Dutch argue the islands have time and again fallen short of their commitments, and appointing Dutch administrators is the only way to guarantee the reforms will be made.

Recent events give some credence to that argument.

While Aruba was drafting its reform plan, politicians on Curaçao were playing political games. Opposition lawmakers — the majority of whom want complete independence from the Netherlands — tried to use the death of a ruling party lawmaker to change the majority in parliament. They failed, but not before encouraging riots.

The Netherlands gave Sint Maarten €470 million in support after the hurricane, but three years later less than 6 percent of the aid money has been spent.

Chris Johnson, the Dutch representative on the island, and Gwendolien Mossel, Sint Maarten’s ombudswoman, agree a dearth of local government expertise is to blame. Since Sint Maarten became a separate country within the Kingdom of the Netherlands in 2010, it has held five elections and gone through nine governments.


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26 comments

  1. Your articles fails to mention the fate of Bonaire, another Dutch Caribbean Isand. What is the status of Bonaire?

  2. Thanks for your comment, Corey!

    Bonaire, Saba and Sint Eustatius are overseas municipalities of the Netherlands. They don’t have to negotiate anything; they receive the same financial support municipalities in the European Netherlands do, and residents and businesses on the islands qualify for the same unemployment subsidies, loans, etc.

    I wrote something about the Dutch COVID-19 stimulus program here. It’s not specifically about Bonaire, Saba and Sint Eustatius, but the policies mentioned in there apply to those three islands.

  3. Nick, what do you think based on your expertise, is the best decision needed for these islands to make in order to come out of their predicament?

  4. Good question! I think the Dutch reform demands in themselves are reasonable. The island economies have been too reliant on tourism and there is too big of a divide between the wealthy few and the rest of the population. So cutting public-sector wages and encouraging entrepreneurship are good things.

    I’m ambivalent about the proposal to put Dutch officials in charge. On the one hand, I do understand the Dutch frustration that the islands have been slow to reform in the past and often failed to make good on their commitments. On the other, it does circumvent their autonomy, and it feels rather like the Netherlands is taking advantage of their desperation to push its will through.

  5. Nick, Did you get the sense that the Netherlands wants to keep hold of these three autonomous nations within their Kingdom forever? It seems like they just want to help set them up for success when they do become independent from the kingdom. Decolonization is not new for the Dutch, English, French etc.

  6. Nick, I live in Curacao, and I am not sure where your analysis of the situation in this island or the others has merit. When was your last visit to these islands? Have you done interviews with anyone here?

  7. Hi Roxanne, thanks for your comment!

    I’ve been to Curaçao twice, but it’s been a few years. I get my information from Antilliaans Dagblad, Curaçao Chronicles (which appears to be down at the moment?) and the Caribisch Netwerk of the NTR, in addition to the NOS and NRC in the Netherlands.

    I’m not a reporter, so I don’t conduct interviews. I write analysis and opinion.

    If you think I got something wrong, or if there are relevant issues I left out, please let me know!

  8. Lee, some of the political parties in the Netherlands wouldn’t mind if the islands became completely independent, but that’s not a majority opinion in parliament.

    I don’t think there’s been any (recent) polling of Dutch people on the question. I suspect most would feel the same way I do: that we’re happy to have the islands in the kingdom, but that if the people living there want independence they should have it.

    I did find a survey conducted on Curaçao in 2016, which found that only a quarter of the population wanted independence at the time.

  9. Thank you for this article. Very interesting; with social-political divides i was unaware of.

    What other diversity can an island like Sint Maarten develop for foreign exchange?

    The recommended Dutch administration in exchange for the needed funds; is that over a set timeline, which will expire? Doesn’t that continue the legacy of neo-colonialism?

    Can these islands even afford to be ‘independent’?

    How can the Netherlands protect the future of the islands from rogue governments, that are unfortunately very common in the Caribbean spaces?

    Lastly; what do you think is the medium to long term fate of tourism in the Caribbean?

  10. I’m more familiar with Aruba and Curaçao than Sint Maarten, Arienne, so I can’t answer all of your questions.

    The proposed aid, and Dutch administration, would be for six years.

    The Dutch argue that, because the islands would enter into the agreement with the European Netherlands voluntarily, and because the proposed authority would be independent, it’s not a violation of their autonomy.

    Of course, you can debate how “voluntary” such an arrangement would be when the islands have nowhere else to turn…

    The islands can become independent, but they would almost certainly be worse off financially. Private Dutch investments would probably decrease. Borrowing costs would surely go up without the guarantee of the Netherlands behind them. Foreign banks would charge higher interest rates.

    The European Netherlands can intervene on the islands when democracy or the rule of law is threatened. They did in 2017.

  11. Please say who are these, “common rogue governments”, found in Caribbean spaces. Lol. Where do you get this material from? You just stereotyped an entire region in one paragraph.

  12. Yes really when you do analysis of a situation and the actors involved one main starting point is background check ,benchmarks, succes stories, criminal records, and so on….lets only take a few examples of the book full.. when the islands were economically financially flourishing in 80’s early 90’s the Dutch closed down their Shell refinery and stole their Offshore business transfer it to Holland and closed down development aid and as such economical war destruction and famishing them that led to the destruction and dissolution of the Netherlands Antilles…then the Dutch undemocratic annexed and integrated Bonaire and Sint Eustatius under UNEQUAL RIGHTS against the will and referendum decision of their peoples in the Dutch constitution creating Aoartheid 2nd class citizens in the Caribbean the BES islands….now it is turn of Curacao Aruba and St Maarten to be annexed imposing a non-democratic ruler above their governments erasing their outonomy…how it happen same economic war tactics abuse of natural disaster huricane Irma devastating St Maarten and with Curacao and Aruba joining USA in economical blocade against Venezuela and forcing closing of Curacao refinery under PDVSA once more….

  13. I fully agree that the Public sector wages are way too high. Politicians elected to office are grossly overpaid where it’s embarrassing for citizens in the Dutch Caribbean that a requirement of the Dutch is to lower it.

    Side story- Growing up in the Islands, I always thought it was in everyone’s interest to try to run for Government at some point in their lives. In Sxm for example, there’s elected officials who got in with only 210 votes. Get 210 votes and be able to earn somewhere around 12k+ a month for a few years is well worth the investment in running for election. Even if the Government dismantled in a year (a frequent occurrence in the Sxm’s past) and re-elections are up, that 1 year salary wise is more than 5 years of work for most people. Experience doesn’t matter AT ALL so everyone should try it out at least once.

  14. Can the ABC islands not agree to the Netherlands conditions for a stipulated term, say two or three years, with a revisiting of the agreement at expiry? That would give the local officials time to get their house in order with the help and guidance of the Dutch officials while protecting their autonomy.

  15. Bonaire saint Eustacia and Saba are part of Noort Holland province and are directly uner the auspices of that province.

  16. Tell also that all the money goes to a few family’s at Aruba. The government have devide the money beteren the family’s that have the power. That is the season why the Netherlands want to controle the money. Or else all the money just goes to the powerfull family’s. They do not want to dogs because the Netherlands will see where the money really goes.

  17. Aruba is one of the few Caribbean Islands including the Cayman Islands, Cuba, Dominican Republic, Saint Kitts and Nevis, Saint Vincent and the Grenadines and Turks and Caicos that still have some form of HIV related travel restriction.

    Mandatory HIV testing and bans on entry, stay and residence based on HIV status not only do not protect public health but undermine HIV prevention and treatment efforts. For millions of people living with HIV around the world, these are repeated violations of their right to privacy, equality and non-discrimination and a constant reminder of HIV-related stigma.

    The Dutch Government should have these restrictions removed as part of the condition of receiving financial aid. Most people will not see this as a pressing issue, but Aruba has been violating human rights by discriminating against persons with HIV. Until we start treating people living with HIV without fear and prejudice we cannot progress as a society.

    “For many of the millions of people living with HIV around the world, travel restrictions are a daily reminder that discrimination continues to be entrenched in harmful policies,” said Luisa Cabal, UNAIDS Director, a.i., of the Community Support, Social Justice and Inclusion Department. “They deny people’s freedom and, even worse, force people to abandon their workplace, school and home.”

  18. Well if the Fact that Aruba was also named in the ICIJ as Barbados also corrupt as hell uses it . The country is doomed the Pandemic in the Aruba is the same as Barbados Corruption. So the little man will never prosper or the Country .

  19. “There is too big of a divide between the wealthy few and the rest of the population. So cutting public-sector wages and encouraging entrepreneurship are good things.“. This statement is totally contradictory … there is no evidence anywhere in the world that cutting public sector wages reduces inequality … it will reduce demand and further inequality.

  20. Thanks for your comment, Gabriel.

    I do believe that cutting high salaries in the public sector and making it easier for people to start a business (both!) will reduce inequality.

    From what I understand, there are people on high, sometimes very high, incomes in the public sector while there’s a lot of paperwork involved in starting a business. It’s easier if you know someone in the right place who can get things done for you. Usually that someone is in a high-paid, public-sector job.

  21. Many of my friends are not going to Aruba this year because of the 72hr rule foe results .
    Difficult guarantee results in that time frame. Possible solution is to change the time frame to 5 days

  22. The dutch enslaved many of the Black inhabitants of those islands ancestors. Kidnapped them from their homes in Africa to those tiny islands. Of course they do not want Dutch officials coming over there to “watch over them”. Hell, The Netherlands owes them! They built their empire off the backs of their ancestors!

    I pray in my lifetime, I see the caribbean islands join together and become more self reliant. Europe and America have been so harmful.

  23. Thank you for the update and insight. HOW I wish in the USA we had some grown-up to clean-up! Corruption is the pandemic!

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