The Hague – With the Kingdom Council of Ministers on Friday in the offing, State Secretary Knops (BZK) leaves no misunderstanding in a letter to the House of Representatives today that the conditions set by the Netherlands for new loans to Curaçao, Aruba and St. negotiating falls.
The minister acknowledges that his approach is ‘unorthodox’, but adds in the same breath that the situation requires it. He admits that the establishment of a Caribbean reform entity limits the autonomy of the countries, but argues that this applies to more consensual kingdom laws, such as those on financial supervision.
“Unorthodox does not mean that the proposal transgresses constitutional boundaries. The Statute for the Kingdom leaves the countries a great deal of scope, both procedurally and materially, in drawing up regulations to address cross-national issues. That space is used in this proposal ”, says Knops, who points out that Parliament remains undiminished the right to reject proposed reforms. In that case, it warns, the Netherlands can stop providing further financing.
On Friday, the Dutch proposal (an ‘voluntary offer’) will be on the agenda of the Council of Ministers for the third time. Although the treasury of Curaçao, Aruba and Sint Maarten is virtually empty, none of the countries has hinted so far that they agree to the conditions this time. READ LETTER BELOW:
State of affairs of the draft Kingdom Act on the Caribbean Reform Entity
I would like to inform you about the current state of affairs regarding the draft Kingdom Act for the Caribbean Reform Entity. With this update, I also answer the questions from members Diertens (D66) and Kuiken (PvdA) about conditions of emergency aid and the letter to the KR parliamentary committee (11 August 2020) about the draft consensus statute containing rules on the establishment of the Caribbean reform entity (CHE) in Aruba, Curaçao and Sint Maarten (2020Z15229).
Constitutional impact on Aruba, Curaçao and Sint Maarten
In the past period, concerns have been expressed from various sides about the constitutional impact of the present bill of law on the countries. In news comments, advice from the Advisory Councils and by the House itself, questions have been raised about the proportionality of the proposal and the extent to which this relates to the local democracy and autonomy guaranteed by the Statute. These concerns and question marks are not unexpected for me. The regulation contained in the legislative proposal shows an unorthodox approach in several respects. The cabinet has always been well aware of this when drawing up the proposal. However, it was also clear to all concerned that the well-trodden paths of cooperation and assistance are inadequate to meet the enormous challenge now facing the Caribbean countries as a result of a combination of negligent governance since 10/10/10 and the Corona crisis. see. This challenge requires a solid legal foundation as soon as possible, which on the one hand offers future prospects for the populations of Aruba, Curaçao and St. Maarten and, on the other hand, gives the Netherlands confidence in the successful use of the financial support provided.
‘Unorthodox’ does not mean that the proposal crosses constitutional boundaries. The Statute for the Kingdom leaves the countries a great deal of scope, both procedurally and materially, in drawing up regulations to address cross-national issues. That space is used in this proposal. The Netherlands requests the Caribbean countries to agree to the establishment of a Dutch ZBO that supports and monitors them, independently of the Dutch government, without taking over formal powers vested in the bodies of the countries. This also applies to Parliament’s budget right. This will remain intact after the entry into force of the Kingdom Act, as well as other parliamentary rights in the field of administration and regulations. If, for whatever reason, the States of a country are not willing to agree to a particular reform or to finance it from their own budget, they can block it. The consequence of this may be that the entity or the Dutch cabinet will stop providing financial support in whole or in part. That would not be a restriction of the Caribbean democracy, but rather related to the presence of a democratic system on the Dutch side.
In the government’s opinion, the institution of the Caribbean reform entity does not violate the autonomy of Aruba, Curaçao and Sint Maarten. Autonomy is a concept with a broad meaning. It includes the above-mentioned principle of democracy. But it also means that the countries themselves look after their own affairs. The countries cannot bear their autonomy now. The Netherlands wants to help the countries to fully bear that autonomy again. The entity will deal with these matters when the Kingdom Act enters into force. This could give the impression that the statute violates the autonomy of the countries. However, this is not the case. It is not uncommon for a consensus kingdom law to allocate tasks to bodies other than national ones. Consider the Financial Supervision Act, in which the Cft and the Kingdom Government are granted powers with regard to Curaçao and Sint Maarten in the field of financial governance, a national matter. This limits the autonomy of these countries in this area, but does not violate it. That is an essential distinction.
In the case of the proposal of the Kingdom Act on the Caribbean Reform Entity, it should be borne in mind that the act has an explicitly temporary character. It will automatically expire six years after its entry into force, unless countries choose to extend the scheme by mutual agreement. In doing so, the proposal responds to another important legal principle: that of proportionality. A limitation of the autonomy of a country within the Kingdom must be in proportion to the goal it pursues. According to the Dutch cabinet, the Caribbean countries cannot overcome the current crisis and its underlying phenomena without a multi-year, joint effort, which is tightly and layered at the front and in which the Netherlands actively participates. Time is needed for that effort, but it must also have a clear horizon. After all, the aim of this entire enterprise is that Aruba, Curaçao and Sint Maarten will have laid a foundation by the year 2027 on which their constitutional autonomy can optimally flourish.
Meaning consensus requirement and advice Council of State
In the questions that your House has addressed to me, it is furthermore informed as to what, in my opinion, is the content of the consensus requirement that is necessary for a Kingdom Act under Article 38 of the Statute, in view of the principles discussed above. In this context, I would like to refer to my answer to the questions that I sent to your House on 27 August (reference 2020Z13853). In it I have explained that the Statute does not prescribe any special process or protocol to be followed by consensus kingdom law, except that the countries participating in such legislation must consent to it. Ideally, the development of a proposal – as has happened in the past – is preceded by an extensive joint editing and negotiation process. However, there was no time to do so in this case. In addition, the aim in the design phase was not to immediately deliver a jointly supported product. This commitment was to design a legal construction with which – taking into account past experience – the necessary reforms and investments can be carried out in an effective and responsible manner. Ultimately, that should be the goal.
Article 38 paragraph 2 of the Statute is the means to achieve this goal. Of course, it is true that the countries cannot be forced to commit themselves to the proposal against their will. This consent requirement can manifest itself at different points in the legislative process. Now agreeing to the decision to send the proposal to the Council of State of the Kingdom for advice does not mean that the countries are bound by this. That is why I do not see much in the suggestion to ask the Council of State of the Kingdom for information prior to this decision-making. This causes additional delay and does not necessarily add anything to the regular consultation process. After the Council of State of the Kingdom has issued advice, a new moment has arrived when there must be consensus; namely when drawing up the further report. In order to ensure that the Council reflects on certain questions regarding the proposal, I agree with the House that it may help to incorporate these questions into the request for advice. I had already decided to do this following discussions about the proposal with one of the countries.
In view of the urgent situation in the countries, it goes without saying that I am prepared to submit the advice of the Council of State of the Kingdom on the proposal to the Reich Council of Ministers as soon as possible after receipt. As mentioned, however, a further report will first have to be drawn up in consultation with the participating countries.
Nature and objectives of the support provided
I share the view that on some fronts the need is so great that it is impossible to wait to provide immediate aid. That is why the cabinet has now released approximately 41 million euros for food aid to the Caribbean countries. This aid is provided directly and unconditionally to the most vulnerable residents through the efforts of the Red Cross and local aid organizations. Support is also provided in the medical field. The number of covid-19 infections is increasing rapidly in the Caribbean parts of the Kingdom and is a cause for concern on some islands, while the Ministry of Health, Welfare and Sport provides assistance and constantly monitors the situation. The assistance varies per island, but focuses on strengthening covid-19 care by: deploying additional IC staff, supplying personal protective equipment (PPE), testing capacity,
I do not share the view that the conditions attached to liquidity support would lead to greater social and economic inequality in the Kingdom. The reforms aim to remove this inequality and to provide a social and economic impulse. In addition, these reforms must ensure that the countries can really bear their own autonomy. Naturally, when working out the country packages, careful consideration will have to be given to the coherence and sequence of the aforementioned reforms. This will be reflected in the implementation agendas and action plans, which will be drawn up together with the Caribbean countries. There will be room for customization per country.
The Kingdom Act offers possibilities to provide targeted support for the reforms in the land packages through projects, investments or otherwise. This may also include initiatives aimed at stimulating economic activity. There is currently no provision for setting up a specific Guarantee Company Financing scheme (GO scheme) for the countries, as it is currently available for the BES islands. The usefulness and necessity of such a scheme can be further explored in the broader context of necessary reforms and investments in the economic field.
Your House inquires about the willingness to establish a certain percentage of the budget support as a donation. First of all, it is important that the most vulnerable are not left out in the cold. The Netherlands provides the necessary humanitarian aid unconditionally and in the form of a gift. In addition, it is important that countries are financially supported so that they can continue to meet their obligations, while at the same time reforming their economies and collecting taxes, so that a sustainable effect can be generated and the countries become more resilient. Only then can it be seen what the effects of this are on the debt positions of the countries.
Relationship between the Caribbean Reform Entity and C (A) ft
Finally, the question was asked what the relationship between the Caribbean reform entity and the C (A) ft will be. Would it not be advisable to transfer the intended tasks of the entity to the C (A) ft by means of an amendment to the Financial Supervision Act and the Aruba Financial Supervision National Ordinance? I must answer that last question in the negative. The bill provides for a varied and comprehensive range of tasks. The C (A) ft is not equipped for this and, more importantly, it could hinder the proper performance of its pre-existing tasks. This does not alter the fact that the C (A) ft plays an important role within the system that is set up with the proposal, for example in the provision of information about the financial position of the countries. The proposal also allocates new powers to C (A) ft, in particular the exercise of stricter financial supervision, should the entity advise the Council of Ministers to this end. Good cooperation between the entity and the C (A) ft is therefore of obvious importance. In order to facilitate this cooperation, the proposal obliges both authorities to conclude a cooperation protocol.
State of affairs Aruba
On July 10, 2020, the three Caribbean countries of the Kingdom did not agree with the proposal submitted to the Council of Ministers of the Kingdom. Aruba was the only country that announced the same day through Prime Minister Wever-Croes that it wanted to enter into talks with the Netherlands on the basis of this proposal, aimed at reaching agreement in the short term. Subsequently, intensive official contact was initiated about the modalities of the consensus Kingdom Act, the legal anchoring of financial supervision and the national package aimed at Aruba. During this process I have been in regular contact with Prime Minister Wever-Croes. Despite efforts on both sides of the ocean, these consultations, although at an advanced stage, are still ongoing. It is therefore not possible for me to inform your House in detail at this time.
State of affairs Sint Maarten
In the months after the Reich Council of Ministers on 10 July 2020, there was no response from Sint Maarten showing that there is political support for this proposal. Sint Maarten did, however, make a counter-proposal for the proposed Consensus Kingdom Act, which was discussed during the Council of Ministers of the Kingdom of 14 August. However, the starting point remains the package as presented during the Council of Ministers of the Kingdom of 10 July. This is a well-considered package, which has been established with the involvement of various Dutch departments, and as long as Sint Maarten does not agree with the core of this package, a fruitful conversation are not possible. In addition, during the Council of Ministers of 14 August it became clear that the Cft was again unable to establish that Sint Maarten had met the conditions for the second tranche of liquidity support. That is why the Council of Ministers of State has decided not to start any talks with Sint Maarten about the provision of a third tranche of liquidity support. If Sint Maarten still wants to have this conversation, the country will first have to demonstrate to the Council of Ministers via the Cft that all the conditions set for the second and third tranches have yet been met.
State of affairs and travel report Curaçao
On 2 and 3 September I paid a working visit to Curaçao. I would also have liked to visit the other (islands) countries, however this was not possible due to the applicable travel restrictions. The working visit to Curaçao was in the light of the socio-economic consequences of the Covid-19 crisis. The main purpose of the program I followed was to also know the effects of the crisis from my own observations and to hear what is going on in contacts with residents, companies and civil society and to explain the Dutch efforts. This commitment is aimed at increasing the resilience, together with Curaçao, with which the country can better support autonomy. This requires that the reforms that have been required for some time now are actually implemented.
During my visit I spoke with the bishop of the diocese of Willemstad. I also expressed my appreciation for the Church’s commitment to support vulnerable groups in society. This need for support was also evident from the visit I paid to the Santa Rosa food bank and in conversation with the Red Cross. Various NGOs provide food packages and vouchers under the coordination of the Red Cross. About 20% of the population of Curaçao is now dependent on this support. I am impressed by the work of all those organizations and volunteers who make food aid possible.
I also paid several neighborhood visits where I spoke with residents who are dependent on food aid. These were all impressive conversations. Unfortunately, I had to observe dire poverty. The seriousness of the problems also became apparent to me from conversations with stakeholders from the business community and civil society. Those conversations strengthened my belief that the strength that is present in the society of Curaçao should make it possible to work on a better future for Curaçao. A future in which autonomy can actually be fulfilled. For this it is necessary to create the right preconditions. It became clear to me from the visit I paid to the Corendon Mangrove resort, which was recently opened, that investments are also possible that create employment.
During my visit I also received petitions from the trade unions. The trade unions are against discounts on working conditions and do not want to interfere with the autonomy of the country. In my contact with the trade unions, I have indicated that everyone should contribute where possible and that workers should have solidarity with the many who are now out of work. I have also emphasized that precisely because of the hand offered by the Netherlands to implement the necessary reform together with Curaçao, Curaçao will be better able to bear its own autonomy. During the many media contacts that I had, I explained the efforts of the Netherlands, answered many questions that arise and shared my impressions of the various conversations and visits.
As usual, I also visited the Governor. She informed me about the situation in Curaçao. Following on from my previous contacts, I also spoke with Prime Minister Rhuggenaath and spoke with Minister of Economic Development Martina. In those conversations we discussed in more detail the voluntary offer made by the Netherlands and that was on the table in the Council of Ministers of the Kingdom of 10 July last. From these conversations it appeared to me that the government of Curaçao is currently not yet able to say yes to the offer from the Netherlands and that the talks (also officially) are being continued within the frameworks that were preceded by the Reich Council of Ministers on 10 July.