Abundant caution

By saying he sees no role for them in the proposed Caribbean Reform Entity (CRE), Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops (see related story) practically closed the door on any chance of the Dutch Caribbean countries agreeing to such. Aruba appeared closest to finding common ground but saw Parliament pass a unanimous motion rejecting the plans.

The Wever-Croes Cabinet has its back against the wall because the financial picture with a looming 1.1-billion-florin-deficit there is perhaps even worse than for Curaçao and St. Maarten. In addition, the tourism economy’s recovery is being hampered by a new COVID-19 outbreak, leading the Netherlands, Germany and the United Kingdom (UK) to require quarantining for travellers from the island, something several US businesses too have started asking of vacationing employees when they return.

St. Maarten is in a similarly vulnerable position and at the – normally already quiet – height of the Atlantic hurricane season, while Curaçao, which is still not admitting American visitors but relying on its main Western European market, must contend with a recently-shut-down oil refinery on top of the coronavirus-related socioeconomic crisis. To say the three islands are in a major bind would be an understatement.

Their legislatures seem to be on the same line by opposing the CRE that is to supervise and enforce structural reforms of the so-called “packages” in areas that normally fall under the sole responsibility of the local government. Curaçao’s Council of Advice asked to safeguard the country’s autonomy, but one wonders if doing so is remotely possible within the current setup.

The biggest problem may be tying all this to continued liquidity support, the spending of which will be controlled by the same CRE. Keep in mind that it regards loans at favourable conditions, not grants.

Nevertheless, this money is very much needed for – among other things – payroll subsidies to prevent widespread business closures and mass layoffs, particularly in the dominant hospitality industry. Relief aid paid for by the Netherlands certainly helps, but cannot feed everybody and people have other expenses, so the more are still able to make a living of their own, the better.

Although there has been talk of a “Plan B”, floating a bond via the Central Bank or seeking alternative financing as mentioned still depend on cooperation from The Hague. A motion was passed in Philipsburg to study selling government-owned company shares to raise cash. However, the idea of having Social and Health Insurance SZV buy these has meanwhile raised concern with the opposition faction of Party for Progress (PFP) about a possible impact on the AOV old age pension and other funds SZV manages.

And rightly so. Abundant caution should be exercised in this matter especially where it involves essential services with a de-facto monopoly like SZV and utilities provider GEBE.




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