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Sint Maarten is no longer viable as an autonomous country

16 Oct 2017 - 15:23
Photo: Sam Gao / Flickr
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Hurricane Irma has inflicted deep wounds in Sint Maarten. Organised relief efforts in the European and Caribbean parts of the Netherlands gave proof of deeply felt empathy. Nonetheless, the question arises as to whether Sint Maarten is able to face natural disasters in the future. That comprises considerations on the position and role of Sint Maarten within the Kingdom, viewed from a common interest of the Caribbean and European Netherlands. A plea for a new status of Sint Maarten.

Since 10 October 2010, Sint Maarten has been an autonomous country in the Kingdom of the Netherlands, after a dismantling process of the Netherlands Antilles.1

 It led to the enlargement of the number of autonomous countries from one (Aruba) to three autonomous countries (with Curacao and Sint Maarten). It also meant the incorporation of three islands (Bonaire, Sint Eustatius and Saba) into the European Netherlands as special municipalities.

In economic terms, Sint Maarten appeared to go full steam ahead under the status of autonomy. It enjoyed four consecutive years of economic growth after 2012, whereas Curacao did not resume growth until 2015. Both countries benefited from substantial debt relief offered by The Hague. GDP per capita in 2015 of Sint Maarten – over $26,000 – exceeded that of Curacao by a good thirty per cent.

With posh port facilities, viewed also as a maritime hub for mega yachts owned by multimillionaires, as well as a service sector tailored to receiving tourism, Sint Maarten’s attractions worked like magnets. Its prosperity appeared to be only briefly interrupted by the previous hurricanes Donna (1960) and Luis (1995).  What could go wrong? Three fault lines may illustrate why Sint Maarten’s development path had become rather vulnerable.

What went wrong? Three fault lines

One: transparency of information
In the country Sint Maarten, carrying out research within an academic or policy framework is far from easy. People and companies are hard to trace, due in particular to incomplete and inexact information in the public domain. Few organisations are equipped to collect data on a reliable basis. Other complicating factors are the no less than five spoken languages, as well as an often perceived lack of trust between researchers and researched individuals.

Also the IMF has observed that from a quality point of view Sint Maarten’s statistics are substandard.2For instance, the balance of payment position can only be determined with aggregate statistics from the Central Bank (of Curacao and Sint Maarten); subtracting the figures for Curacao from the aggregate results in an estimate of Sint Maarten’s current account. In broad strokes, the impression prevails that economic transactions with the country – at least by country or sea – are minimally or simply not recorded for statistical purposes.

man at work
After the dismantling of the Netherlands Antilles, the economy has become increasingly based on tourism. Source: Paul Sableman / Flickr

In the absence of good data registration, a culture of transparency becomes more difficult. A report recently issued by Transparency International3 on Sint Maarten, explains that the pillars for the legal certainty of the country show rather uneven strength. The legislative and oversight institutions are robust. However, weaknesses are reported in the public sector, civil society and the business sector. This regards the checks and balances for the protection of citizens and companies. Those are needed for enabling them to speak out and seek redress where necessary. After 2010, checks and balances in Sint Maarten have been far from complete.

Two: short falling market building and economic uncertainty
After the dismantling of the Netherlands Antilles, the local economy became ever more focused on the tourist sector, in particular the handling of cruise ships, the latter accounting for close to two million visiting tourists per year. Some setbacks were reported in 2016, when two cruise lines withdrew and tourists became fearful following the Zika virus outbreak. Bottlenecks had already emerged in managing tourist arrivals, with daily crowds of more than 5,000 visitors. Saturated Philipsburg was no longer able to absorb the 40,000 vehicles in circulation, double the size of the pre-2010 car fleet.4 Vehicle imports were tax free, which in the end made urban area traffic jams worse, as these became part of the daily street scene.

For the other two Dutch Leeward Islands, Sint Maarten remained the unavoidable spider in the cobweb of economic life. It was not feasible for companies to only conduct business locally on Saba or Sint Eustatius. Merchandising, property registries, notary and bank services remained available solely through providers operating in Sint Maarten. More entrepreneurs felt the higher burden since the changes of 10-10-’10. Although new taxes had been introduced by the central Dutch Government, they became more onerous as the Sint Maarten government imposed an additional sales duty on its own territory. On paper, double taxing might be avoided, but in practice things turn out to be different. Customs controls have been put in place at the borders of Sint Eustatius and Saba, staffed by civil servants flown over from far away Bonaire.

Meanwhile, the Dutch Leeward Islands also had to contend with three distinct currencies. On the French part of the island, the Euro had already been brought into circulation, the same as in nearby St. Barths. As the country Sint Maarten is locked in a currency union with Curacao, it has continued to use the Antillean Guilder. On Saba and Sint Maarten the US Dollar has become legal tender, as it had previously already been in circulation.

To accountants, ATM operators and entrepreneurs, the practice was reminiscent of Western Europe in the 20th century. Banks operating on the Dutch Leeward Islands - all under foreign ownership - started downscaling the supply of credit and insurance. Liquidity surpluses were the outcome.

airplane landing in Sint Maarten
The territorial planning of the country is problematic. Source: Intiaz Rahim 2015 / Flickr

In short, Sint Maarten on the one hand, and Saba and Sint Eustatius on the other, had started to operate with one another as foreign economies. Ridderikhof in his assessment of Dutch Caribbean financial sector regulation, made the following observation: ‘It is remarkable that this border, despite being run within the Kingdom, is even harder [to cross] than the one between the Netherlands and Belgium.’5 Such fragmentation of the market also contributed to worsening problems of loan collection, since the clients could only be dealt with from ‘abroad’. The banks saw their returns on assets steadily falling by half. In 2016, Moody’s had issued a reduction in the creditworthiness of Sint Maarten, referring to falling growth figures and its critical state of public finance.6

Three: environment and climate
Sint Maarten represents an insular strip of land that is part of the smallest inhabited island in the world, shared by two states. With 34 square kilometres and approximately 40,000 inhabitants, it can both in terms of surface area and population size be compared to European-Dutch municipalities like Harderwijk, Tiel, Vlissingen and Zutphen. All share picturesque marinas, as well as visits paid by the Dutch Queen Wilhelmina in the early twentieth century.

But there the parallels run out fast. Sint Maarten in 1950 had a population of less than 1,500 that would start doubling over each of the following four decades, numbering more than 24,000 inhabitants by 1990. Over the last quarter century, it would further increase by well over half. In the Caribbean, Sint Maarten now has the highest population density of 1,200 inhabitants per square kilometre.

Sint Maarten, together with Curacao, is in the world’s top ten countries ranked for carbon dioxide emissions

Utility services for water, power and waste disposal were becoming more difficult to obtain. Payment rates for water and electric power are sky-high in the Dutch Caribbean: a small company operating on the Dutch Leeward Islands has monthly bills of more than $250 for water and $400 for electricity. Stores and small hotels sometimes pay ten or even twenty times that amount of money. In Sint Maarten, almost ten kilos per capita of daily waste is generated and discarded, more than the total per capita average of the other five Dutch Caribbean islands combined, putting the country among the first in the Caribbean. Together with Curacao, Sint Maarten is in the world’s top ten countries ranked according to carbon dioxide emissions, annually accounting for 20.8 tons per person.

Problems of territorial planning are also getting worse. In 2014, the Sint Maarten Nature Foundation reported that some six island bays, the Queen Juliana Airport, and the capital Philipsburg would run growing risks of inundation. An increase in sea level may cause more than a quarter of the territory, now on average twenty meters above sea level, to become uninhabitable, in particular the economic key areas.

Ongoing processes of ocean acidification and the bleaching of coral reefs around the island’s shores have started to inflict increasing damage to maritime flora and its associated herbivore fauna.7 Until recently, the coast of Sint Maarten offered a guarantee for biodiversity and ecological equilibrium. But ecologists recently observed that due to the growth in tourism as well as unbridled urban expansion, close to 80 percent of near shore coral reefs have disappeared. Even so, the Ministry of Public Housing, Environment, Spatial Development and Infrastructure (VROMI) undertook little action to recalibrate spatial planning policies.

Two, three, many hurricanes….
The most pressing threat that materialised on 6 September has yet to be mentioned: the location of the Leeward Islands in the Atlantic Hurricane Belt. On average, Sint Maarten has to deal with a hurricane once every six years. Before Hurricane Luis (1995), the even stronger Donna had overwhelmingly struck in 1960. Between Donna and Luis there were 35 years, but only 21 between Luis and Irma, which may be a coincidence. But climate research by North-American meteorologists indicates that, in the course of this century, future hurricanes will not necessarily occur more often, but they could be much stronger, as they will also contain more water. Within a constant number of hurricanes, those in the strongest categories 4 and 5 will occur more often.


There is a risk the aid provided for reconstruction after Irma will get lost in the event of a direct hit by another hurricane  

The geographically ‘perfect’ location of the Leeward Islands is precisely what makes them even more vulnerable than before. It is expected that periods of drought, already prevailing in the north-eastern Caribbean during 2016, will last longer. By and large a climate cocktail emerges that consists of long droughts, incidental rainfall of many inches of rain, and extensive flooding accompanied by winds of more than 130 miles per hour, all this on a tiny land surface that is diminishing yearly: a horrifying picture of the future. In comparison to the era of Donna and Luis, the climate prospect for Sint Maarten after Irma changes everything.

What are the options?
As a country, Sint Maarten is facing a bleak future. In economic terms, the Leeward Islands have fallen prey to a state of fragmentation that has been impeding a rational process of upscaling and market building. From a climate perspective, the existing threats were known before 2010, but they remained out of sight to policy makers in the transformation of the Dutch Caribbean. There is a risk the aid provided for reconstruction will get lost in the event of a direct hit by another hurricane.

Many alternatives are not at hand, or the most far-reaching option may well be the only resort: the exit of the Dutch Caribbean from the Kingdom. Through an amendment to the Statute of the Kingdom, Sint Maarten might first obtain complete independence. Nonetheless, a rather cynical pulling of the plug by the Dutch – some sort of Caribbean ‘smexit’ – would be comparable to the withdrawal of the US from the Paris Climate Agreement. Considerations related to strictly national and financial considerations do play a role in that.

However, there is also another option: the transformation of Sint Maarten into a special municipality of the Netherlands, the same as Bonaire, Sint Eustatius and Saba. Advantages related to the status of a special municipality would, in the first place, materialise for the Sint Maarteners themselves. They and future generations, stacked together on an overpopulated island, have a right to a sustainable and ‘climate-worthy’ livelihood. The rights of citizens, in one legal and economic area, including Bonaire as well as Sint Eustatius and Saba, would be better guaranteed. The country role of Sint Maarten as a superfluous, complicated and often uncontrolled part in the chain of the BES-islands would cease to exist.

Beach Sint Maarten
As a country, Sint Maarten is facing a bleak future. Source: Jean-François Renaud / Flickr

Secondly, the present cloud of threats deserves a well-considered set of public policies, thoroughly concerted with Sint Maarten’s civil society, and feasible at the local level. These would relate to the issues of spatial and infrastructural planning, strengthening of levies and coastal water works, public utilities, tourism policy, and conservation of aquatic and terrestrial biodiversity. The reconstruction of Sint Maarten goes way beyond that of previously existing roads and buildings. It is directly linked to zones that qualify from a technical and environmental perspective, including the question – if, and under what conditions – of reconstructing the capital Philipsburg. Such a project will in any case be expensive and risky.

Thirdly, there is a case to make for envisaging cooperation in the European and island context. Many services on the island – including aviation, transport, public utilities, waste management, education and medical services – depend on coordination between French and Dutch institutions. At stake is the issue that the entire island needs an integrated plan for sustainable reconstruction, which inevitably raises the question of the status of the island in the EU: outermost region, overseas territory or both, ambiguous as it is at present.  A Franco-Dutch cooperation has a cost saving potential.

In the fourth place, the reconstruction of the island needs to be crafted in accordance with long-term objectives. The first one is sustainability: the island needs a hurricane-resistant reconstruction that allows for lasting human residence but that is also financially feasible. That would not only serve European taxpayers but also the Caribbean community. Hurricane-resistant buildings for hospitals, shelters and information centres will have to be made with a view to upscaling as well as lasting use, also for citizens of other northern-Caribbean islands.

Fifth, at stake is a fresh approach in Dutch policies for development cooperation in the Western Hemisphere. Climate policy and the protection of civil populations, their habitats and ecosystems in the Grand Caribbean, belong indissolubly to that approach. At present, too many communities reside in conditions that are too vulnerable, and they are falling victim to hurricanes and inundations too quickly. The Netherlands needs a new role in the domains of coastal protection works, water management, and strategies to combat as well as prevent poverty. All this can be achieved in cooperation with regional institutions.

Sint Maarten’s future: three scenarios
The virulent hurricanes in the Caribbean of September 2017, hitting so many islands including Sint Maarten may, for this country, be extrapolated according to three scenarios. The first is one of business as usual (BAU), which amounts to generous emergency aid and later on the reconstruction. As time goes by there will be a repeat of moves and actions, each time with a shorter follow-up due to the higher frequency of hurricanes. The political status of Sint Maarten will remain unchanged, whereas – owing to its unsustainable path of development – the cost of reconstruction will rise disproportionately with every new disaster. In the present political state of the Euro-Netherlands, this scenario will remain in place as the most likely.

A better, second scenario is a political transformation of Sint Maarten into a Dutch special municipality, as a matter of course subject to the process of democratic decision making. A major benefit would lie in a new and equal partnership within the Kingdom, in principle in the same way that Euro-Dutch municipalities are being treated. The long-term goals of such reform would be to achieve strong institutions, fair market building and a serious approach in addressing climate change.

The third scenario, a ‘smexit’, is in late 2017 to many people not so much a dream as it is a nightmare. That said, it may be in vogue in the years to come, especially when policy makers keep sticking to the BAU-scenario. It will become a hot issue when Sint Maarten will no longer or only partly be rebuilt, its debts will soar, and its population will emigrate while others stay behind – ageing, sinking into poverty, or both. It is the path the US territory of Puerto Rico has been trying to get rid of, without success, in past decades.

The three scenarios may invite a revision of the publication of Oostindië and Klinkers, Parted Kingdom (Gedeeld Koninkrijk)8. Irma can turn out to be the first chapter in a chronicle of a climate catastrophe foretold, for Sint Maarten and with it for the Kingdom. So, a revised book version might bear a fresh title such as ‘Sloshing Kingdom’ (Klotsend Koninkrijk), for those who will remember the deeply unequal relationship of late 2017.

The article is partly based on research carried out on twelve Caribbean islands at the request of the EU and the Programme COSME, the latter with headquarters on Tortola (BVI). The Programme has been preliminarily suspended, as hurricane Irma also heavily hit the island of Tortola on 6 September 2017.

 

  • 1. The dismantling process is extensively described in: Gert Oostindie & Ineke Klinkers, Gedeeld Koninkrijk. De ontmanteling van de Antillen en de vernieuwing van trans-Atlantische relaties , Amsterdam: Amsterdam University Press, 2012.
  • 2. See: IMF, ‘Kingdom of the Netherlands, Curacao and Sint Maarten. Staff Report for the 2016 Article IV Consultation’, Washington, July 2016.
  • 3. Cora de Wit, ‘St. Maarten 2015. National Integrity System Assessment’, Berlin: Transparency International, 2015.
  • 4. For more information about recent vehicle fleet size, see: Real Motor Japan.
  • 5. Marijn Ridderikhof, ‘Regulering van de financiële markten van Caribisch Nederland en het toezicht door DNB’, in: Jaarboek Compliance, Capelle aan den IJssel: Nederlands Compliance Instituut, 2013, pp. 285-297, in particular p. 286.
  • 6. Moody’s Investment Service, ‘Government of Sint Maarten – Baa2 Stable’, Annual Credit Analysis, New York, 2016.
  • 7. Additional reporting on coral reefs in: Reef Resilience Network (TNC)
  • 8. See Gert Oostindië & Ineke Klinkers, Gedeeld Koninkrijk. De ontmanteling van de Antillen en de vernieuwing van trans-Atlantische relaties, Amsterdam: Amsterdam University Press, 2012.

Authors

Hans Nusselder
is an economist working with the Foundation Rural Development Consult (CDR) in San José, Costa Rica.