Netherlands Antilles and Aruba
NETHERLANDS ANTILLES AND ARUBA
LOCATION AND SIZE.
The Netherlands Antilles are a federation of 2 Caribbean island groups some 806 kilometers (500 miles) apart. The first group, known as the Dutch Leeward Islands, comprises Curaçao and Bonaire, and is located about 81 kilometers (50 miles) off the northern coast of Venezuela. The second group, known as the Dutch Windward Islands (confusingly, because they are part of the larger Leeward Island chain), is about 242 kilometers (150 miles) east of Puerto Rico, and includes Saba, Sint Eustatius, and Sint Maarten (the southern half of the island of Saint-Martin). The combined area of the 5 islands is 958 square kilometers (370 square miles), or about 5 times the area of Washington, D.C.
Curaçao is the largest island (461 square kilometers, or 178 square miles) and home to the federation's capital, Willemstad (pop. 24,235 in 1992), the islands' commercial and industrial center. Blessed with the world's seventh largest natural harbor and the largest in the region, Curaçao was once the base for Dutch trade activity in the region and the site of a major slave market. Since the early 20th century it has been sustained by its oil refining industries, which include 1 of the largest refineries in the world. Its terrain is volcanic and semi-arid, and its climate tropical.
Bonaire (290 square kilometers, or 112 square miles), some 32 kilometers (20 miles) to the west, is better served environmentally and includes a scenically spectacular coastline and several fine beaches, the bases jointly of its tourist industry. Bonaire's main town is Kralendijk.
In the northern group the principal territory is Sint Maarten (52 square kilometers, or 20 square miles), the Dutch portion of the island of Saint-Martin (96 square kilometers, or 37 square miles), which, since its dual occupation by French and Dutch forces in 1648, has been split into 2 parts. Northern Saint-Martin belongs to French Guadeloupe, and it shares with its Dutch neighbor the Netherlands Antilles' only border, 10 kilometers (6.3 miles) long. The island has the distinction of being the smallest in the world shared by 2 nations. Mountainous and arid, the island's beaches and picturesque scenery have made tourism its main industry. The principal town of Dutch Sint Maarten is Philipsburg.
Sint Eustatius, known by its inhabitants as "Statia," and Saba (21 and 13 kilometers, or 8 and 5 square miles, respectively) are also noted for their rugged scenery. The islands too, unlike Curaçao and Bonaire, lie in the Caribbean hurricane belt and are periodic targets in the July to October hurricane season. All of Sint Eustatius's inhabitants live in the island's capital, Oranjestad. Saba's capital is the tiny village of The Bottom. Its central volcanic cone, Mount Scenery, at 879 meters (2,885 feet) is not only the highest peak in the Netherlands Antilles, but in the entire Kingdom of the Netherlands.
Aruba lies about 65 kilometers (40 miles) west of Bonaire. Its land area is 193 square kilometers (74.5 square miles), slightly larger than Washington D.C., with a coastline of 69 kilometers (42.6 miles). It shares the dry sub-tropical climate of its neighbor the Netherlands Antilles, and like Bonaire and Curaçao relies on desalinated seawater for drinking water. But its geography tends to be flatter; its highest point is Mt. Jamanota at 188 meters (616 feet). The capital and main port is Oranjestad (1991 pop. 20,045).
The Netherlands Antilles' combined population was estimated in 2000 at 210,134. Of these more than two-thirds (146,100 or 69.5 percent) lived on Curaçao, while Bonaire's inhabitants numbered 11,000 (5.2 percent), Sint Maarten's 29,500 (14.0 percent), Sint Eustatius's 1,861 (0.9 percent), and Saba's around 1,100 (0.5 percent). Relatively good health conditions (compared to its Caribbean neighbors) have given Antilleans a life expectancy of 74.72 years.
The Antillean national birth rate of 16.94 per 1,000 has produced a growth rate of 1.01 percent per annum— considerably above its economic growth rate of-4.4 percent (2000). This fact has contributed to the worryingly high rate of emigration , especially in the 17-to-30-year-old age group. The Netherlands, which receives 80 percent of emigrants, has 100,000 Antilleans. For the islands the long-term consequences of emigration are very serious, and it is a problem both Dutch and Antillean governments are concerned to address—especially as the flow shows signs of quickening: 3.0 percent of Antilleans emigrated in 1998, jumping up to 3.5 percent in 1999, and to as much as 4.1 percent (8,420 people) in the first 10 months of 2000 alone. The skewing effect this has on the population can be seen in the islands' age distributions. In the Windward Islands, where employment is high, those over 60 constitute 5 percent of the population; in Curaçao, where emigration has been heaviest, they are 11 percent. By 2017, if the rates of loss remain the same, 20 percent of Curaçao's population could be over 60. The effect of this on the island's already strained social services could be devastating.
Aruba's population stands at 69,539, and its demographic statistics, when compared to the Netherlands Antilles, reflect its generally greater prosperity. The life expectancy is 78.37 years at birth. The birth rate is 13.1 births per 1,000 of population, with a growth rate of 0.7 percent (2000 est.)—well within the economic growth rate of 3 percent (1998). In fact, not only does Aruba enjoy near full employment , it has often been obliged to import additional labor from neighboring islands. Nearly one-third of Arubans live in the capital Oranjestad.
Ethnically the Netherlands Antilles and Aruba are a diverse mix. The mushrooming of the oil industry in the 1920s attracted workers from around the Caribbean, doubling the population and further expanding what was already a broad ethnic base. Around 50 nationalities are represented, with Dutch, African, Spanish, Jewish Portuguese, Lebanese, and Chinese origins being the most common. What survived of the indigenous Arawak Indian community was absorbed in the early 20th century; no full-blooded Indians remain. Religions are similarly diverse, with Roman Catholicism, various forms of Protestantism, Judaism, and Seventh-Day Adventism all represented. The official language of both countries is Dutch, but Papiamento, a hybrid of Spanish, Dutch, English, and Portuguese is also spoken, especially in the (southern) Leeward Group, while English tends to dominate in the (northern) Windwards.
OVERVIEW OF ECONOMY
Mountainous and barren, with few natural resources or advantages, the Netherlands Antilles and Aruba nevertheless enjoy 2 of the more affluent economies in the Caribbean region. This relative prosperity is founded on their one overriding asset: location. In the early 19th century the islands, conveniently poised between the Caribbean islands and the South American mainland, thrived as the clearing house of the Dutch slave trade. When slavery was outlawed in 1863 this industry collapsed. But with the discovery of Venezuela's massive Maracaibo oil reserves in the early 20th century, the islands' advantageous location (just off the Venezuelan coast) again proved to their economic making. In 1918 the world's largest oil refinery was built on Curaçao, and in 1929 another huge refinery was constructed on Aruba. Aruba and the Netherlands Antilles still serve as major refining and transshipping bases for the Venezuelan oil industry, a role that has given the Netherlands Antilles a gross domestic product per capita of US$11,800 (1998 est.).
But in the case of the Netherlands Antilles, this narrow economic focus has also left it vulnerable, and the contraction of the South American oil industry in the 1980s led to increasing economic difficulty. As a service-oriented economy, the Netherlands Antilles relies on its "invisible" earnings from tourism, offshore financial services, and shipping to offset their huge trade deficit , which was US$1,013.7 billion in 1998. The trade deficit has been difficult to manage. In the 1990s, a combination of hurricane damage, weak investment levels, and fluctuating oil prices increased the debt. Plans drawn up in conjunction with the Dutch government and the International Monetary Fund (IMF) aimed at attacking the deficit, raising revenue, and decreasing expenditure. But the price of such plans—reduced government services, privatizations , and redundancies—have made them difficult to implement. Predictions that the country would begin to reemerge in the 2000s from the recession that dogged it in the previous decade have proved to be premature.
Aruba has fared better. Although like the Netherlands Antilles it is heavily dependent on oil refining, transshipment, and service industries such as banking, Aruba has been more successful in developing tourism as an alternative economic base. This combined with more conservative fiscal management—despite some heavy deficits in the late 1990s—has seen the real GDP growth in the 1991 to 1997 period of around 5.6 percent per annum. Its principal sources of income continue to be tourism and oil transshipment, both industries showing solid growth. With Aruba's annual GDP per head at US$22,800—more than 6 times, for example, that of its Caribbean neighbor Jamaica—Arubans are estimated to be among the most affluent people in the Caribbean region.
POLITICS, GOVERNMENT, AND TAXATION
First inhabited by Arawak and Carib Indians, the islands of Aruba and the Netherlands Antilles were taken by the Spanish in the 16th century, falling in turn to the Dutch in the course of the 17th century. The Dutch used them as trading posts, and by the 17th century the mercantile ports of Sint Eustatius and Curaçao were 2 of the 3 richest in the Caribbean (with Port Royal in Jamaica). After multiple changes of hands, the 6 islands were finally secured by the Netherlands under the Treaty of Paris in 1816 and officially constituted as the Netherlands Antilles in 1845. Autonomy from the Netherlands came in 1956.
In 1986 Aruba, resentful of Curaçaoan political dominance, left the federation to seek its own free-standing membershipin the Dutch overseas community. Fears in the 1980s that the Netherlands Antilles might fragment further as other islands sought autonomy were partially resolved in a nation-wide referendum in November 1993 in which all 5 remaining islands opted for continued union. However, a further referendum held in Sint Maarten in June 2000 found 67 percent of its inhabitants in favor of separating from the federation. Such a partition can only be undertaken with the cooperation of the other islands, but it remains a source of on-going uncertainty. The Dutch government is content to let the islands decide their own future but is eager for them to develop economic self-sufficiency. Aruba, according to the provisions of its 1986 secession from the Netherlands Antilles, would have become completely independent of the Dutch kingdom in 1996. In 1995, however, this provision was permanently shelved by the Aruban legislature.
Constitutionally the Netherlands Antilles and Aruba are autonomous parliamentary states within the Kingdom of the Netherlands. Their head of state is the Dutch sovereign (Queen Beatrix), who is represented in each country by a governor, appointed by The Hague, but since the 1960s a native-born islander. The Netherlands also administers the islands' foreign affairs and defense arrangements and appoints their senior judges. Internal affairs— including finance, police, telecommunications, education and health—are left to the prime minister of each country, his cabinet (made up of 9 ministers in the Netherlands Antilles and 7 in Aruba), and the parliament, or Staten, which appoints them (22 members in the Netherlands Antilles and 21 in Aruba). In the Netherlands Antilles each island replicates this system in miniature, with each having a lieutenant-governor to represent the Dutch crown, each with an island council, and each with a regional legislature which appoints it. Elections are by proportional representation , suffrage is universal, and electoral terms are 4 years long.
Politics in Netherlands Antilles tend to be island based. Seats in the Staten are distributed by island: 14 from Curaçao, 3 each from Sint Maarten and Bonaire, and 1 each from Saba and Sint Eustatius. Reconciling the various island interests is an often precarious exercise and made more complicated by the proliferation of parties and the tendency of the federation's proportional representation system to produce coalition governments. Although some stability is afforded by Curaçao's control of the Staten—a consequence of its numerical dominance— this has also generated resentment in the other islands. The 2 main parties are both Curaçao-based: the Antillean Restructuring Party (Partido Antía Restrukturá or PAR) and the National People's Party (Partido Nashonal di Pueblo or PNP). The prime minister as of 2001 was Miguel Pourier, leading a coalition that includes 18 of the 22 Staten members, the country's broadest ever.
Aruban governments also tend to be multi-party. The prime minister as of 2001 was Jan Hendrik Emman, leading a coalition of his own Aruban People's Party (Aubaanse Volkspartij or AVP) and the Aruban Liberal Party (Organisacion Liberal Arubano or OLA). Pressing political issues, as in the Netherlands Antilles, turn on the government's program of fiscal austerity, including health-care reform and its controversial planned privatization of the state telecommunications company, Setar.
Both countries rely heavily on income tax for their revenue collection, with important supplements provided by port dues. Tax reform in the Netherlands Antilles, designed to stimulate business growth, has included the reduction of corporate tax rate to 30 percent in 1999 and the raising of the personal tax threshold. Revenue in 1999 totaled US$707.8 million, of which 88 percent (US$622.6 million) comes from taxes. Aruba's revenue in the same year came to US$361.1 million, of which 83 percent (US$299.1 million) came from taxes.
INFRASTRUCTURE, POWER, AND COMMUNICATIONS
The 5 small islands of the Netherlands Antilles have no railroad and only 602 kilometers (373 miles) of roads between them, of which only 300 kilometers (186 miles) are paved. And yet given their size, they are, in fact, unusually well served. Even the tiny and impossibly precipitous Saba boasts "The Road," 31 kilometers (19 miles) of winding roadway built in early 1940s and one of the region's engineering marvels. Most of this development, however, has occurred since the 1960s. Saba's dock was only built in 1963; until then everything reaching the island had to be rowed ashore through the surf. It was not until the 1960s that all of islands received public electricity and water supplies.
Inter-island traffic has made sea and air connections a vital means of communication, as well as vital parts of the economy. Curaçao is blessed with one of the largest natural harbors in the world, and the port has become not
|Country||Telephones a||Telephones, Mobile/Cellular a||Radio Stations b||Radios a||TV Stations a||Televisions a||Internet Service Providers c||Internet Users c|
|Netherlands Antilles||76,000 (1995)||13,977 (1996)||AM 9; FM 4; shortwave 0||217,000||3||69,000||6||2,000|
|United States||194 M||69.209 M (1998)||AM 4,762; FM 5,542; shortwave 18||575 M||1,500||219 M||7,800||148 M|
|Jamaica||353,000 (1996)||54,640 (1996)||AM 10; FM 13; shortwave 0||1.215 M||7||460,000||21||60,000|
|St. Lucia||37,000||1,600||AM 2; FM 7; shortwave 0||111,000||3||32,000||15||5,000|
|aData is for 1997 unless otherwise noted.|
|bData is for 1998 unless otherwise noted.|
|cData is for 2000 unless otherwise noted.|
|SOURCE: CIA World Factbook 2001 [Online].|
only a major center for the transshipment of Caribbean oil, but an important dry dock for ship repairs. The port annually handles around 850,000 metric tons of cargo, and the foreign exchange earnings it generates are a crucial component of the Antillean economy. Also economically central is the ailing national carrier, Antillean Airlines (ALM), scheduled for privatization. Each of the islands has an airport, with international access via Hato Airport in Curaçao and Juliana Airport in Sint Maarten, both major hubs for their respective regions. There are also plans to upgrade Bonaire's airport to receive international flights. Nevertheless, the federation's fragmentation into widely separated parts, in which separate infrastructures are required for each island and communication between islands is cumbersome and expensive, is a continual economic drain.
The islands boast 76,000 telephones (1995), and 11,727 cellular telephones (1995)—one for each 2.8 and 17.9 Antilleans, respectively. Energy provision is good, and more than 97 percent of Antillean households have electricity (93 percent with a refrigerator). Generating capacity runs to 200 megawatts, all of it produced from imported fossil fuels. In 1999 the islands' final power consumption equaled around 2.67 million tons of oil.
The picture for Aruba is much the same: 802 kilometers (497 miles) of roads, 513 kilometers (318 miles) of them paved (mostly the perimeter coastal roads); 27,000 telephones and 1,718 cellular phones (one for each 2.5 and 40.5 Arubans respectively, as of 1995). Moves are underway to sell the state telecommunications utility, Setar, but these have faced stiff resistance from the country's labor groups. Like the Netherlands Antilles, Aruba relies heavily on its ports and air connections. Its 3 ports are Oranjestad, the main commercial and cruise ship facility; Sint Nicolas, used by the oil industry; and Barcadera, opened in 1962 to serve the industrial zone on the leeward coast. The island has 2 airports, with international facilities at Oranjestad. Deregulation of the air market included the sale in 1998 of 70 percent of the government's share in the bankrupt national carrier Air Aruba. Continued difficulties in the company, however, forced it to cease operations in October 2000.
Aruba's electricity generating capacity of 125 megawatts gives almost universal access to electricity. Like the Netherlands Antilles, power generation relies on fossil fuels. Aruba's total power consumption in 1999 came to the equivalent to 210,000 tons of oil, around 0.02 percent of the island's oil production.
Tourism, offshore financial services, shipping and oil refining are the primary Aruban and Antillean economic sectors. Petroleum processing continues to be central. Having survived the industry's slowdown during the oil glut of the 1980s, its future looks relatively secure. For growth, however, the Netherlands Antilles are obliged to look to tourism, and other service sectors like finance and banking. Industry accounts for 15 percent of the GDP and 13 percent of the Antillean workforce, and services for 84 percent of the GDP and 86 percent of the workforce (with three-quarters of these working for the government). The same constellation of sectors predominate in Aruba.
The rugged, rocky terrain of the Windwards' and the Leewards' poor soil and arid climate leave little scope for agriculture in either group. Various plantation crops have been pursued over the centuries—sugar, cotton, and tobacco especially. But efforts were always a struggle and had been largely abandoned by the 19th century. Aruba and Curaçao were used for ranching in the 18th and 19th centuries, but ranching too could never really compete with the islands' harsh environment. Only 10 percent of the Netherlands Antilles is arable, and its crop production—mostly fruits and vegetables, with some aloes, sorghum, and peanuts—are consumed entirely by the domestic market. Woodlands are almost non-existent and fishing scarce; only Sint Maarten has a small commercial fishing sector. Consequently, both Aruba and the Netherlands Antilles are heavily reliant on food imports. All in all, agriculture contributes less than 1 percent of the Antillean GDP and accounts for 1 percent of the workforce. In Aruba agriculture is even more marginal, occupying only 7 percent of available lands and 0.6 percent of the workforce.
Industrial activity in the Netherlands Antilles is overwhelmingly concentrated on one product: oil. Originally a center for oil refining—the Shell refinery on Curaçao is one of the biggest in the world—diversification in the 1970s expanded operations into transshipment and storage, with the terminal at Bullenbaai becoming one of the largest bunkering ports in the world. But the oil glut in the 1980s, followed by a world-wide recession, hit the island hard when Shell sold its stake in the refinery in 1985. The operation was rescued by the intervention of the Antillean government, which bought the plant and negotiated a lease agreement with the Venezuelan state oil producer, Petróleos de Venezuela. In 1995, after a series of short-term leases, a 20-year agreement was signed. The industry faces heavy competition from the United States and continues to suffer the vagaries of a fluctuating world oil market, but the long-term partnership with Petróleos de Venezuela and strengthening international demand for oil suggest a relatively healthy forecast.
Prospects are even better in Aruba. The reopening by Coastal Oil (U.S.) in 1993 of the massive Exxon refinery at Sint Nicolas at the eastern end of the island, the bedrock of the island's prosperity since it was opened in 1929 and which had been closed in 1985, provided an enormous new source of jobs and foreign exchange and has considerably spurred the economy. Production capacity is around 150,000 barrels per day.
Manufacturing is a limited sector in both countries. In the Netherlands Antilles the industry is concentrated almost entirely on Curaçao and Bonaire, with products including paper, plastics, and textiles. The tariffs that protect the sector, however, are under attack from importers and whether these industries can survive their removal remains to be seen. The 68-acre export-oriented industrial " free zone " around Hato International Airport in Curaçao, founded in 1984, is devoted almost entirely to oil processing. Bonaire's 9,000 acre industrial salt farm is managed by the Antilles International Salt Company and has become a significant part of that island's economy.
Aruba's manufacturing base is more diversified and includes the repair and assembly of machinery and transport equipment, crafts and art collectibles, and animal products. The island's free zone has shown dynamic growth, with exports through the program increasing by 60 percent in the 1994 to 1997 period and reaching an earnings total of US$247 million.
Tourism is a crucial industry for both the Netherlands Antilles and Aruba, and most of their economic growth since the 1960s has come from this sector.
Curaçao's quaint Dutch-style towns and stark, cactus-dotted interior, coral reefs, and brilliantly blue waters draw around 225,000 stay-over tourists per annum, with a roughly equal number from the cruise ship trade (223,788 and 171,675, respectively, in 1995). Around 30 percent come from the Netherlands, 15 percent from the United States, and 14 percent from Venezuela. Most of the island's hotel facilities are luxurious. Sint Maarten, renowned for its beaches and duty -free shopping, is one the Caribbean's top cruise-ship destinations and attracts 2 million visitors annually. Since the first hotel was opened in 1955, development has been rapid and extensive, and the island boasts an array of expensive hotels, restaurants, casinos, and boutiques. Saba's lack of a port has made development difficult, and the tourist trade is low-key, with around 25,000 visitors annually, about 65 percent making overnight stays, the rest being day-trippers (1992). The island's major attraction is the diving at its Marine Park, established in 1987 to protect the island's exceptionally diverse marine environment. Bonaire also relies heavily on its diving attractions, which draw 44 percent of the island's visitors, though wind-surfing and bird-watching are also becoming important. Cruise ship calls are another key source of income, with visits rising from 18 ships in 1998-99 to 61 in 1999-2000. Sint Eustatius's tourist development has long been hindered by its lack of beaches and its poverty; it is the poorest of the Antillean islands. Attempts to capitalize on its diving opportunities have met with mixed success, with tourist arrivals declining from 10,000 in 1994 to around 8,500 in 1997, though showing some signs of recovery in 1998-99.
But Caribbean tourism is a highly contested trade, and the Antillean industry in particular is not without its problems. The Antillean islands are handicapped by having relatively few beaches. Most of the best ones are on Sint Maarten, but Sint Maarten is prone to hurricane damage and was badly affected by severe storms in 1995 and 1998 that seriously disrupted its tourism sector. Competition from other Caribbean islands has also put pressure on tourist arrivals, especially the numbers of cruise ship visitors from the United States. Steps being taken to address this issue include the renovation of Willemstad's port—sponsored by the Netherlands and European Union—and the construction, begun in 1998, of a new pier to handle larger cruise ships. Several new hotel facilities on Curaçao are also planned. Progress is also being made in Bonaire, where the exceptional diving opportunities are starting to attract significant numbers of tourists. The islands' total earnings from tourism in 1998 were US$749.5 million, or 31 percent of the GDP.
Aruba's tourist industry is even more developed. The decision to promote the industry was taken at the IMF's prompting in the wake of the crisis that followed the closing of the island's oil refinery by Exxon in 1985. Since then Aruba has almost quadrupled the number of its hotel rooms (from around 2,000 in 1985 to 7,103 by 1996), becoming one of the most popular tourist destinations in the Caribbean. One-third of the island's jobs are related to the industry, with 14,825 Arubans in 1999 in full-time tourism-related employment. The island attracts around 650,000 stay-over visitors per annum, producing receipts totaling US$715 million, or 41 percent of the GDP (1998).
It was the flight of Dutch business capital offshore during the World War II, much of it to the Netherlands Antilles, that was the beginning of the Antillean offshore banking sector. As of 1995 some 21,000 companies were listed on the offshore register, including 39 international banks. The industry employs around 2,500 Antilleans and is responsible for 23 percent of GDP. The local financial sector has 16 commercial banks, 2 savings banks, 21 savings and credit funds, and 26 credit unions. The remaining 45 banks are exclusively for offshore business.
But here too stresses have been felt. The repeal of a withholding tax by the United States in 1984 removed many of the islands' tax advantages. Shortly afterwards the United States and Britain cancelled their double taxation treaties (allowing U.S. businesses to trade in the euro-dollar market directly, without "diversion" through the Netherlands Antilles), further compounding the damage. The result for the islands was a dramatic slump in their financial services sector. The subsequent deregulation of the industry brought steady recovery in the 1990s, and the islands have sought new business in the captive insurance and mutual funds market. But evidence that the islands may be serving as a money-laundering venue for the illicit drugs trade has strained relations with the United States and placed the industry under something of a cloud. To allay fears a reporting center was established in Curaçao in 1997 to monitor all large banking transactions, and closer cooperation with the U.S. Drug Enforcement Agency has made available funds to allow even closer supervision.
Aruba's offshore banking sector is also important. Targeted for development, the sector was deregulated in the 1980s and more effective legislation was enacted. In an effort, however, to prevent the island from being used to launder drug money, some of the sector's openness was stopped, and in 1998 the State Ordinance on the supervision of the credit system was set in place to consolidate the central bank's powers as the industry's monitor.
Relatively high standards of living and the high concentration of consumers have greatly benefitted the islands' retail sector, especially on the larger islands. Aruba and Curaçao are equipped with a wide variety of restaurants, shops, malls, and supermarkets selling goods from around the world. Tourism has provided an additional stimulus. Sint Maarten's status as a duty-free port—a continuation of its old trading center heritage— has made shopping one its main attractions, and its more than 500 duty-free stores carry a full array of jewelry, perfumes, handbags, leatherwear, and electronic goods.
Lacking a developed agricultural and manufacturing sector, the Netherlands Antilles are wholly dependent on imports for their food, raw materials, and manufactured goods. And typical of the smaller Caribbean island states, such imports significantly exceed the value of exports. In 1998 this imbalance ran to over US$1 billion. The country is especially susceptible to increases in the price of oil, which constitutes 64 percent of its imports; the remaining 36 percent is made up of food and manufactures. Import partners include Venezuela (35.3 percent), the
|Trade (expressed in billions of US$): Netherlands|
|SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999.|
United States (21 percent), Mexico (9.8 percent), Italy (5.4 percent), the Netherlands (4.8 percent), and Brazil (3.1 percent).
Petroleum makes up 98 percent of all Antillean exports. Even more so than with the import market, the export trade is overwhelmingly regional, with customers including the United States (17.5 percent), Guatemala (8 percent), Costa Rica (6.5 percent), the Bahamas (4.6 percent), Jamaica (4.1 percent), and Chile (3.4 percent).
Aruba also leans heavily on imported food and manufactures but has been more successful at containing its deficits. A lowering in the demand for oil in the international market in the 1980s caused the trade imbalance to tilt heavily into deficit, but recovery of sales has seen the import-export gap narrow by a dramatic 80 percent from 1999 to 2000, falling from a trade deficit of US$298.8 million to US$60.3 million. The main customer of Aruban exports is the United States, which in 1998 took 53.2 percent of its goods; other important partners are Colombia (14.9 percent), and the Netherlands (8.8 percent). The United States is also the primary supplier of imports to Aruba (55.5 percent), with the Netherlands (12.3 percent) and Japan (3.5 percent) also significant.
Debt continues to pose a significant problem for the Netherlands Antilles, ballooning by the end of 1998 to a massive US$1.75 billion. An appeal to the IMF produced a structural adjustment program that is heavily geared toward debt reduction, and through a combination of cutting its costs and raising its income the governmental aims by 2002 to reduce its budget deficit , which in 1998 hovered at 5.3 percent of the GDP, to 2 percent of the GDP. But maintaining parity between the country's sizable trade deficit and its invisible services earnings is a juggling act that is easily upset by glitches and ticks in the world economy. Shortfalls usually have to be supplied by borrowing—usually from the Dutch government
|Exchange rates: Netherlands Antilles|
|Netherlands Antillean guilders, gulden, or florins and Aruban florins per|
|Note: Currency rates have been fixed since 1989.|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
and private sector . In 1999 talks began with the Dutch about possible debt restructuring or forgiveness. A 117-percent jump in the price of oil in 2000, which inflated the annual deficit by 13.6 percent, has now made these urgent. Rises in the world prices of oil have also accelerated inflation , which—climbing through the late 1990s—reached 6.6 percent in 2000.
Aruba's debt problems are more manageable. In 1998 the total external foreign debt was US$199.5 million, a rise of 11 percent over the 1998 level of US$180 million. Like the Netherlands Antilles, Aruba is vulnerable to high oil prices, which lift its import bill and inflates its currency. In 1999 inflation sat at 2.9 percent.
Since 1971 both the Netherlands Antilles and Aruba have adhered to the "dollar standard," with each pegging its guilder at US$0.56 (US$1.00=G1.79). Their central banks, therefore, play an important role in ensuring that each country has sufficient foreign exchange reserves to maintain the standard. In 2000 the Central Bank of the Netherlands Antilles held reserves equaling 1.6 months of import coverage, which was 2.4 months below the international norm; the Central Bank of Aruba held 5 months' worth.
POVERTY AND WEALTH
Mounting economic problems are exposing deep rifts in Antillean society. The islands' multicultural composition obscures an ethnic hierarchy, the source of continuing tensions. Traditionally the islands' elite have been its white settlers and administrators, with the largely Jewish Portuguese and Lebanese mercantile class in a secondary position, and the black majority at the bottom. The explosive race riots of 1969 drew critical attention to this division, but even 30 years later Antillean blacks are far from achieving social equality.
The federation continues, in fact, to be ruled by a small circle of political insiders, who monopolize the government, staff its bureaucracy, and control its industry. In Aruba this elite is made up of just a few powerful families.
|GDP per Capita (US$)|
|Netherlands Antilles & Aruba||9,800||11,500||11,800||N/A||11,400|
|Note: Data are estimates.|
|SOURCE: Handbook of the Nations, 17th, 18th, 19th and 20th editions for 1996, 1997, 1998 and 1999 data; CIA World Factbook 2001 [Online] for 2000 data.|
Politics is informal, and appointments are made on the basis of contacts and patronage. The result in both countries has often been ineffective and unresponsive leadership and sometimes even flagrant corruption. Another byproduct has been the unequal distribution of resources. The same elite which controls the islands' politics also controls their wealth. The richest 20 percent Curaçaoans, for example, have an income 9.8 times that of the poorest 20 percent. This discrepancy has greatly contributed to the polarization of politics in the islands.
Of the roughly 66,000 strong Antillean workforce as many as 11,000 are unemployed, a result of the economy's steady slowdown since the 1980s. In 1995 the unemployment rate was posted at 13.1 percent; by 1998 deepening economic difficulties had pushed it to 16.7 percent. And plans to rein in government spending by cutting back the civil service will further add to the problem. Relations between the labor movement and the government have consequently become more tense as the level of social welfare is decreased and insecurity in the workforce mounts.
But conditions on the islands vary markedly. Curaçao is the most industrialized of the islands and home to much of the federation's wealth, but it has also suffered some of its most serious problems. The oil boom in the mid-20th century swelled Curaçao's population from around 33,000 in 1915 to 145,000 in 1975 and transformed the island. But the contraction of the industry in the 1980s, combined with the introduction of less labor-intensive production techniques, has created a serious labor surplus. Economic restructuring, a condition of continued Dutch support, has tended to make the situation—at least for the short-term—even worse. The government is committed to cutting the civil service by 30 percent, while staff losses at ALM are also expected to run to 30 percent. The result is a considerable degree of social stress, accompanied by a widening disparity between those who have been able to benefit from economic deregulation and those who have suffered (such as the unemployed). Emigration has diffused some of the tension, but this is far from being an adequate long-term solution—either for the Antillean economy or for those Antillean immigrants to the Netherlands, many of whom face considerable problems of adaptation and integration. Emigration too is increasingly coming from the Netherlands Antilles' educated middle classes, creating a serious skills shortage at precisely the time when the country is looking to develop new industries and markets.
Sint Maarten's situation is somewhat different. In the space of 30 years tourism development turned this once sparsely populated and sleepy island into a major tourist hub and a source of jobs for Antilleans from throughout the Caribbean. But many of these workers come illegally, forming a growing under-class. The distribution of tourism's proceeds has also tended to be skewed, going mostly to those who own the shops, restaurants, and guesthouses, at the expense of those who work in them. Similar divisions are also developing on Bonaire and Saba, where tourism investment has also been heavy. Sint Eustatius, where tourism remains in its infancy, preserves the atmosphere of the "old" Antilles. But as the poorest of the islands, it is dependent for its income on remittances from the Dutch government and money sent home by former residents forced to leave to find work.
Aruba's problems are less pressing, but here too economic adjustments—a new health insurance program, government divestment, and the failure of Air Aruba—threaten job security and have caused heated debate. Aruba's more robust economy has kept unemployment in its 41,500 strong workforce to a minimum, often requiring it to import labor to meet local demand. But with a population density of 1,142 people per square mile, the influx of foreign workers, combined with poor home mortgage financing availability, has produced a serious housing shortage, especially for those in lower income groups. Addressing this problem is a government priority.
The labor forces of both countries tend to be well educated, as well as multi-lingual. The Antillean government's investment in education is substantial—16 percent of its annual budget in 1994—and has given the Netherlands Antilles a high literacy rate of around 98 percent. The islands also have their own university, an adjunct branch of the University of the West Indies, located in Curaçao. But unemployment has tended to discourage higher education, resulting in poor school retention rates at the secondary and tertiary levels. This situation combined with emigration have contributed to the islands' growing skills deficit. Aruba's investment in education has also been extensive (16.9 percent of the GDP in 1994), with similar results (97 percent literacy). In 1988 the University of Aruba law school was founded; in 1993 courses on finance and economics were added.
COUNTRY HISTORY AND ECONOMIC DEVELOPMENT
1493. Columbus explores Sint Maarten.
1499. Alonso de Ojeda and Amerigo Vespucci visit Aruba, Bonaire and Curaçao.
1499-1634. Spanish dominate the area.
1621. Dutch West Indies Company is founded.
1632. Dutch settle Saba and Sint Eustatius.
1636. The Dutch take Aruba.
1648. The Dutch occupy Sint Maarten.
1792. Dutch West Indies Company is dissolved.
1797. Slaves rebell on Curaçao.
1805-16. Aruba falls under English control during Napoleonic wars.
1845. The "ABC" Islands, Aruba, Bonaire and Curaçao are brought together with the "3 Ss"—Saba, Sint Eustatius, and Sint Maarten—to form the Netherlands Antilles.
1863. Slavery is abolished in the Dutch West Indies.
1954. Autonomy ("status aparte") from the Netherlands is achieved.
1969. Curaçao race riots occur.
1986. Aruba leaves the Netherlands Antilles federation.
1995. Aruba decides indefinitely to postpone independence from the Netherlands, scheduled in 1986 for 1996.
2000. Sint Maarten votes to leave the Netherlands Antilles federation.
Aruba and the Netherlands Antilles still possess a variety of solid assets: a strategic location, stable governments, flexible workforces, and positive tax and regulatory environments. Core sectors—oil refining and transshipment, tourism, and offshore financial services— remain sound, with tourism even showing signs of growth. Although the Antillean government's policy of tight fiscal discipline and public sector restructuring has proved controversial, provoking strikes and demonstrations, the deficit has been reduced by US$3.9 million in 2000 over its US$89.4 million 1999 level.
Nevertheless, problems remain acute. Both countries remain heavily indebted: Aruba carries a debt of US$1.63 billion (41 percent of the GDP), the Netherlands Antilles, US$1.68 billion (73 percent of the GDP). While Aruba has been able to maintain positive growth, in 2000 the Netherlands Antilles economy shrank 4.4 percent. The Antillean government's strict fiscal policy , moreover, has tended to exacerbate rather than improve the country's recession, with unemployment a serious concern and emigration reaching near-crisis proportions. The federation's economic future is highly troubled.
Both countries crucially benefit from their continued connection to the Netherlands, a source of valuable economic aid as well as technical help. The Netherlands Antilles receives US$80 million a year from the Dutch government, as well as the loan of 170 Dutch tax and finance experts. Such dependence has made Antilleans anxious to maintain ties. A 1999 poll showed more than half the population actually wanted greater Dutch involvement; even in Sint Maarten (according to a 2000 survey) only 15 percent were for independence. Whether support will continue indefinitely, however, is unclear. The Netherlands gives more money to the federation than it does to any other nation, and its willingness to continue to do so has been placed under some strain, with The Hague threatening in July 2000 to suspend subsidies if the Antillean government did not contain its deficit. The eventual withdrawal of Dutch support is a contingency both the Netherlands Antilles and Aruba must plan around, making, for the Netherlands Antilles in particular, a grim economic prognosis even grimmer.
Netherlands Antilles and Aruba have no territories or colonies.
Aruba Ministry of Economic Affairs and Tourism. December 1997. <http://www.arubaeconomicaffairs.com>. Accessed 1 March 2001.
Curaçao Chamber of Commerce and Industry. "Key Statistics. 1998." <http://www.iseeyou.com/kvk/kvk5.html>. Accessed 10 April 2001.
Economist Intelligence Unit. "Country Profile: Bahamas, Barbados, Bermuda, British Virgin Islands, Netherlands Antilles, Aruba, Turks and Caicos Islands, Cayman Islands ." 2000. <http://db.eiu.com/report_dl.asp?mode=pdf&valname=CPAAWB>. Accessed 1 March 2001.
Economist Intelligence Unit. "Country Report: Bahamas, Barbados, Bermuda, British Virgin Islands, Netherlands Antilles, Aruba, Turks and Caicos Islands, Cayman Islands ." December 2000. <http://db.eiu.com/report_dl.asp?mode=pdf&valname=CRAAWC>. Accessed 1 March 2001.
Goslinga, Cornelis Christiaan. A Short History of the Netherlands Antilles and Suriname. The Hague and Boston: M. Nijhoff, 1979.
Ministerie van Binnenlandse Zaken en Koninkrijksrelaties. "Aruba en de Nedelandse Antillen ." <http://www.minbzk.nl>. Accessed 10 April 2001.
NRC Handelsblad. Dossier Nederlandse Antillen. <http://www.nrc.nl/W2/Lab/Antillen/inhoud.html>. Accessed 10 April 2001.
Willemstad. Aruba: Oranjestad.
Netherlands Antillean guilder or florin (NAG). One Netherlands Antillean guilder has 100 cents. Notes include 5, 10, 25, 50, 100, and 500 guilders. Coins include 1, 2.5, 5, 10, 25, 50, and 100 cents. Aruba: Aruban guilder or florin (AG). One Aruban guilder has 100 cents. Notes are of 5, 10, 25, 50, 100, 250, and 500 guilders. Coins include 1, 2.5, and 5 guilders and 5 cents.
Petroleum products. Aruba: Transport equipment, live animals and animal products, art and collectibles, machinery, electrical equipment.
Crude petroleum, manufactured and consumer goods, food. Aruba: Machinery and transport equipment, crude oil for refining and re-export, foodstuffs.
GROSS DOMESTIC PRODUCT:
US$2.4 billion (purchasing power parity, 1998 est.). Aruba: US$1.6 billion (purchasing power parity, 1998 est.).
BALANCE OF TRADE:
Exports: Netherlands Antilles, US$303 million (f.o.b., 1998 est.); Aruba, US$1.17 billion (including oil re-exports, 1998). Imports: Netherlands Antilles, US$1.3 billion (c.i.f., 1998 est.); Aruba, US$1.52 billion (1998).