Netherlands Antilles’ Break Up Continues

Netherlands Antilles’ Break Up Continues as Its Geopolitical Importance Mounts

- May 15 referendum in Curaçao crucial for future of the Antilles’ dismantling process
- U.S. military and DEA presence in Curaçao and Aruba likely to grow
- Caracas’ motivations include Chavez’s populism and business interests
- Combating drug trafficking and changing tax-haven laws show improvement
- If dismantling is a success, will independence follow in the near future?
- Even with Amsterdam’s help, Curaçao and Sint Maarten should be wary of sharks

The upcoming May 15 referendum in Curaçao is sure to have important repercussions for the political future of the Netherlands Antilles, a group of islands located in the southern Caribbean, which make up part of the Kingdom of Holland. One of the last remnants of overseas colonial territories in the Caribbean, the population of each island making up the Netherlands Antilles has divergent perspectives regarding what future ties their home-islands should maintain vis-à-vis Holland: autonomy within the Kingdom, or maintaining the status quo.

Devoid of ample natural resources and heavily dependent on tourism, the option of independence for many of these islands represents a paramount challenge. Within an international context, the autonomy of Curaçao and Sint Maarten (which could eventually lead up to full independence), may serve as a catalyst for other overseas territories to also pursue self-rule. Furthermore, the Netherlands Antilles are known for being tax havens and offshore financial centers by international organizations, hence a new political status may, ostensibly, prompt local leaders to agree to disclose the financial secrets of their clients. Finally, the geographical location of Curaçao, the Netherlands Antilles most populous island, makes the island’s politics important vis-à-vis Washington and Caracas, as both are know to have interests there.

Leading up to Today
The Netherlands Antilles consist of the “Leeward” islands, including Bonaire and Curaçao, and the “Windward Islands” which include Saba, Sint Maarten and Sint Eustatius. The islands are self-governing, with Holland overseeing defense and foreign policy matters, (according to the Charter for the Kingdom of the Netherlands Dec 15th 1954, Article 3).

In 1993, a referendum confirmed the status of all islands within the union, despite earlier talks that debated their constitutional basis. Subsequently, the population of the islands realized that the idea of being semi-autonomous territories within the Kingdom was no longer plausible, especially from a political and economic viewpoint. In June 2000, Sint Maarten held a non-binding referendum in which 69 percent of the population voted for status aparte; meaning autonomy from the federation within the Kingdom of the Netherlands. In late 2004, the citizens of Bonaire (59.5 percent) and Saba (86 percent), voted to remain part of the Netherlands.

Moreover, nonbinding referendums were held in 2005, in which, 68 percent of voters in Curaçao chose status aparte, and 76.6 percent in St. Eustatius voted to remain a part of the Netherlands Antilles. The referenda were thus interpreted as the final move necessary for the government of the Antilles to negotiate with the Kingdom. On December 15, 2008, Dutch Prime Minister Jan Peter Balkenende met in a round table discussion with the delegates representing every island.

Mixed Feelings and Objectives
In June 2008 Curaçao residents protested Amsterdam’s plan to oversee the finances of the island after more than 50 years of financial autonomy. Compared to neighboring dependencies making up the Netherlands Antilles, Curaçao, an island of 140,000 inhabitants, seems to be most positioned to seek full autonomy from Holland.

The BES islands (Bonaire, St Eustatuis and Saba) have voted to integrate with the Kingdom. The major reason for this decision is that they believe they would be hard pressed to survive as independent political entities. In turn, they will receive Dutch assistance and the U.S. dollar will be adopted as the national currency.

The question then revolves around what will be the fate of Curaçao and Sint Maarten, both of which are leaning towards autonomy. Holland has essentially propagated an all-or-nothing plan for the aforementioned islands, in which each must be ready to either accept or forgo autonomy. The demands articulated by the Dutch government stipulate that both islands must improve their local economies and have functioning political institutions that will address corruption and other crimes, including human rights violations.

The citizens of Curaçao have protested being “tied up” with Sint Maarten, arguing that this is how Amsterdam aspires to keep both islands under its control. Curaçao officials argue that their island would, in effect, have to assume the role of Sint Maarten’s chief financial guarantor.

The May 15 Election
As part of the autonomy process Holland has negotiated an economic aid package with the Netherlands Antilles to ensure that any island that chooses autonomy will be in sound financial condition. The aid includes financial supervision and a solution to the Antilles’ national debt, estimated at around $2 billion. Other changes include a native police force and amendments to the Constitution and charter. Holland also seems keen to maintain some kind of oversight over Curaçao’s and Sint Maarten’s judicial system.

A referendum will be held in Curaçao on May 15. A “yes” vote will mean relieving the debt and accepting Dutch assistance in helping the island communities; a “no” vote will prompt Holland to demand repayment of the funds which were sent last January as part of the financing to begin assisting the Antilles repay its national debt. Furthermore, Amsterdam has hinted that, should the “no” vote prevail, there will never again be an opportunity to mitigate the islands’ debt, and that the autonomy discussions that have dated back to 1993 will cease. This is particularly troubling since investors, anxious about the political and economic future of the islands, go about assessing the island’s investment viability. The results of the referendum will, therefore, undoubtedly influence such relatively major decisions. “Only in Curaçao is there some resistance to the autonomy process, Sint Maarten will say yes to almost anything,” explained journalist Miriam Sluis to COHA.

Key Point: Drug Trade flowing through the Caribbean
For the prospective nations (most likely Curaçao and Sint Maarten) a key issue prompting autonomy will be the combating of the drug trafficking passing through the Netherlands Antilles en route to European and American markets. This will also test the relationship that The Netherlands will maintain with its by-then, possibly, former semi-autonomous overseas territories. The worst-case scenario is that either Curaçao or Sint Maarten could emulate Suriname, a former Dutch colony ruled for many years by strongman Desire Bouterse, who repeatedly has been accused of being heavily involved in drug trafficking.

In 2007 there was a minor controversy when it was revealed that then Governor of the Netherlands Antilles, Frits, Goedgedrag, had signed a federal decree approving the amnesty of drug couriers on the islands. Instead of jail time, the convicted felons would have their passports revoked for different periods of time, with only individuals who had been awarded prison terms of 30 months or more actually having to serve jail time. Transporting more than 300 grams of drugs seems to be the determining factor as to whether or not a felony would be considered “lite”.

The reason for the decision is that the overcrowded prisons found on these islands have no room for all of the drug “mules” or those found guilty of drug trafficking in the island. Poverty, as well as drug consumption, is pervasive in Curaçao, hence locking up minor offenders would ultimately prove counterproductive. Accordingly, only the island’s most egregious criminals actually receive prison time. The problem is that, if this situation is transpiring while the Netherlands Antilles are still part of Holland and while it is still receiving major financial aid for infrastructure and other projects, it is unclear if islands like Curaçao and Sint Maarten will be able to improve detention centers to any extent after they attain autonomy. “This is a reason why Holland is not keen on dismantling the Antilles,” said Sluis. “Even with autonomy, the Kingdom will want to continue having a say in judicial issues and law enforcement to keep the successful momentum going,” she added.

In an interview with COHA, Dr. Michiel van der Veur, professor of international relations at the University of the Netherland Antilles, explained that “recent figures show that the crime rate is, in fact, decreasing; however, individual crimes committed, have become more violent. As a result of a new radar system, fewer drugs are entering the islands. The Antillean Coast Guard also has stepped up its activity and is patrolling daily and working closely together with the US Coast Guard.” Washington has a presence in Curaçao as it leases part of the airport for anti-drug operations. The detachment stationed there includes U.S. military personnel as well as DEA agents. AWAC aircraft are utilized for monitoring suspicious air and sea traffic in Caribbean waters. Sluis explains that thanks to this anti-drug task force of American, Dutch and Antillean forces battling drug trafficking, “it is still possible to get drugs into Curaçao, but getting them from the island to the markets has become very difficult, hence drugs are being re-routed to the Dominican Republic and other islands.” According to November 2008 article in the daily NRC Handelsblad, in that year 214 tons of cocaine, 166 tons of heroin and five tons of marijuana were intercepted by U.S. patrols taking off from the airbase on Curaçao.

Key Point: Venezuela’s Presence at Different Levels
Another important issue regarding the future of the islands and their impact on regional factors entails relations between Curaçao and Venezuela. Venezuela has claimed ownership of the Netherlands Antilles, with President Hugo Chavez making provocative remarks in recent years over the political status of the islands. According to a 2006 IPS report, then-Dutch Defense Minister Henk Kamp labeled Chavez as a “fanatic populist who has his sights set on Aruba, Bonaire and Curaçao.” Chavez in turn described Kamp as Washington’s “pawn.” The Venezuelan leader added that there is a “natural relationship, perhaps more direct than with the kingdom [of the Netherlands] itself” between Venezuela and the Netherlands Antilles. This relationship has been interpreted by many as an explicit denigration of the island’s sovereignty as long as the status quo is allowed to exist. Chavez has also blamed Washington for spreading rumors that Caracas has military plans for the Antilles. In an effort to increase regional security, Venezuela held naval exercises with Holland in September 2008. Later that year, Venezuela and Russia held naval exercises, which included the Russian nuclear-powered missile cruiser Peter the Great, traversing the Caribbean.

Talking to COHA, Dr. van der Veur asserted that “Chavez makes these comments now and then. I believe they are made only for internal consumption,” particularly during periods of tension between Chavez and then-U.S. President Bush. The general belief is that, while the U.S. continues to be a military superpower with a military presence in Curaçao and Aruba, any Venezuelan security threat posed by Caracas remains unlikely. Even upon autonomy, Holland would continue to be in charge of the defense of the islands. Van der Veur concludes that none of the islands (Aruba, Bonaire or Curaçao) possess significant natural resources (there may be underwater oil deposits, but exploration is considered too expensive) to make a military invasion cost-effective. Perhaps more importantly, should Caracas ply its claims to some of the Antillean islands more aggressively, it would most certainly alienate other Caribbean island nations that it’s attempting to woo. It would also strain cordialities between Venezuela and Holland, both of which hope to maintain existing strategic trade relations.

Venezuela’s Already Established Presence
Curaçao is situated less than 100 miles from Venezuelan territory and the South American power already has a big presence on the island, particularly through the Venezuelan state-oil company, Petroleos de Venezuela SA – PDVSA, which leases the island’s Isla refinery. The refinery was sold by Shell to Curaçao for a symbolic $1 and the local government was quick to re-sell it in order to make a profit. PDVSA processes around 220,000 barrels per day of oil in the facility, and it is under pressure to maintain current production-levels in light of the global fiscal crisis. The problem is that ever since the refinery’s construction decades ago, the facility has been an environmental and health hazard for local residents. A July 2008 Reuters dispatch quotes a professor at a nearby school complaining that smoke and stench emissions from the plant have reached such intense levels that classes regularly had to be suspended. Industrial emissions are also suspected to create an influx of health issues ranging from chronic coughing to cancer.

Venezuela is an important presence for the Netherlands Antilles, particularly for Curaçao, because of tourism. After Dutch nationals, Venezuelans make up the second largest source of tourists visiting the island. Therefore, keeping a continuous stream of tourists is critical to Curaçao’s economic sustainability. Island officials project that the number of visitors to the island in 2008 grew by 30 percent to about 390,000 people, a December 2008 AP article reported. Sluis added that many wealthy Venezuelans in recent years have moved to Curaçao in order to distance themselves from the Chavez administration.

Key Point: Washington’s Interests
Washington has maintained a military presence at Curaçao’s Hato airport in order to service multinational counter-drug missions operating in the Caribbean. American officials say the operation contributes around $25 million to the local economy. DEA agents are also based in the airport’s facilities. There’s a smaller U.S. military presence at Aruba’s airport as well. Both bases, as well as the American facility in Manta, Ecuador, are categorized as Forward Operations Locations (FOL).

Under the contract’s terms, the personnel are only authorized to launch flights to gather intelligence about drug smuggling, while the DEA agents are the only ones stationed there who are authorized to make arrests. The American presence has largely been accepted by the local population, though the question remains if these planes are solely used to monitor anti-drug operations, or to spy on Venezuela and engage in other operations such as like aerial fumigation in Colombia.

A recent AP story explains that “Nelson Pierre, a member of the 21-member governing council, believes that the U.S. military should no longer be allowed to use the airport in order to ensure good relations with Chavez, albeit, he acknowledges that only one other council member shares his opinion and the lease is therefore likely to be extended after it expires in 2011.” In a November 2008 Christian Science Monitor article, US Southern Command spokesman Jose Ruiz is quoted as saying that “Curaçao is strategically located to be able to monitor the Caribbean basin […] it’s an effective position with which to conduct monitor flights and to track traffic that we suspect may have contraband.”

As the U.S. will soon be forced to withdraw from the military facilities it now leases from Ecuador at Manta, and Caracas-Washington relations continue to be strained, Washington and SOUTHCOM are looking to alternative locations to continue operations. Maintaining a presence in Curaçao and Aruba would provide Washington with friendly ports and airports (specially as plans for the reconstituted Fourth Fleet are advanced) as well as an operations base to monitor both drug trafficking activity as well as, if necessary, carry on operations involving Venezuela. Recent news that Russia may consider using Cuban and Venezuelan airports as landing pads for their strategic bombers carrying out long-distance patrols only heighten the importance for Washington to be able to have a continuous presence in different quadrants of the Caribbean basin.

In September 2008, the USS Farragut, a guided-missile destroyer, visited Curaçao on a humanitarian mission. “The Americans are keen in making sure their community outreach projects are publicized to maintain a good image,” says Sluis. Nevertheless, she adds that there is little interaction between the American personnel and the people of Curaçao, as the former usually remain on their bases and have strict rules about which areas of the island they can travel.

Key Point: New Allies for Whom?
The outcome of the upcoming referendum aimed at dictating the status of the Netherlands Antilles is bound to affect regional arrangements. Curaçao already has taken steps to join the regional agency, the Caribbean Community (CARICOM).

In 2008 CARICOM and the European Union signed an Economic Partnership Agreement. As a result, Curaçao businessmen have viewed trading with CARICOM countries as considerably more beneficial than in previous years. A May 2008 article in the Caribbean Media Corporation quoted the president of the Antillean Industrial Association (AIA), Donald Henrietta, as saying, “In the past with CARICOM very little has been done, not only from our side but from the side of CARICOM, to include us, but lately we noticed with the development of the EPA and with the intention of the European Union of having a unified Caribbean, that there is opportunity for us to embrace this development using the skills that we have at home.”

In a January 2009 interview with CMC, Curaçao’s Economic Affairs Minister, Eugene Rhuggenaath, avowed, that, “as a country, Curaçao will be more empowered to pursue its own direction and we are constantly choosing to become more involved in the Caribbean community.” The senior official went on to add that “we have already made several agreements with the ministries and institutions, like the Caribbean Development Bank (CDB), to take the steps in pursuing that Associate Member status, in order to become a fully participating member with our neighboring Caribbean states.” It is unclear if Curaçao can legally join CARICOM, if it is still part of a European state. Perhaps it can become an associated member of some level, but full membership would bring up a legal issue.

Key Point: Illegal Financial Flows
In the case of the achievement of political autonomy by one or more of these islands from Holland, a critical task that will have to be addressed by the international community is that these islands are known to be tax havens for international companies. A tax haven country suspects that local authorities will not inquire about the amount, or means, or how their clients derive their income. International companies as well as crime syndicates and criminals exploit these financial launching pads to lay away their wealth, as such financial transactions are treated with impunity. Specifically, the Netherlands Antilles are classified as a tax haven by the Organization for Economic Co-operation and Development (OECD), and as an offshore financial center by the International Monetary Fund.

In general, there is optimism that the tax haven-label will soon be removed from the Netherlands Antilles. Regional specialists agree that the current situation is nothing like it was in the 1980s. According to van der Veur, “the tax laws have already changed.” For instance, in September 2008, the New Zealand government announced that it had signed a tax information treaty with Holland regarding the Netherlands Antilles. This represents that the Netherlands are working to get the Antilles off the black list,” explains van der Veur. The Antilles have entered bilateral tax agreements with different countries to combat subversion of tax haven regulations. The U.S. signed a similar agreement with Holland regarding the Antilles in 2007.

Nevertheless, an April 2009 report by the OECD labels the Netherlands Antilles in the section of “jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented it.” Other areas in the same group include well-known tax havens like Liechtenstein, Panama and the Cayman islands. In an interview with COHA, a former senior IMF official explained that “I would believe the OECD more than I would believe the Netherland Antilles” regarding changes in tax regulations. “If the OECD is continuing to list the Antilles as a jurisdiction that has not yet substantially implemented the internationally agreed tax standard, then that is what it is,” the expert concluded.

A better tomorrow… for everyone
When asked if the pro-autonomy movement is the first step for the eventual independence of Curaçao and Sint Maarten from the Kingdom of Holland, reporter Miriam Sluis explained that “there is such a sentiment but some individuals argue that Curaçao and Sint Maarten could become failed states like Haiti or ruled by a strongman like Suriname’s Desire Bouterse; but this is not a reason to dismiss the idea right off the bat. Independence should be talked about, it may work for us.” When asked the same question by COHA, a source close to the process of state structure in the Antilles (structura estatal) who asked to remain anonymous, explained that “Haiti and Suriname are independent countries, if they fail no one will help them; as autonomous entities Curaçao and Sint Maarten are guaranteed that Holland will help us if we fail.” The source added that “the islands’ income per capita is one of the highest in the Caribbean, while Haiti has the lowest, we really would have to hit rock bottom to become like Haiti.”

Even if full independence appears elusive, both islands are in the process of taking firm steps towards becoming fully responsible for the lives of their citizens, should the May 15 referendum affirm a “yes” vote for ongoing negotiations with Holland. Events outside of the Antilles’ control, namely Washington-Caracas security questions and political tensions and the return of Russia as a player to the Western Hemisphere, have made the political inclinations of these islands important to the future of Caribbean security and diplomacy. Drug trafficking and foreign companies attempting to take advantage of the island’s tax laws will continue to be issues that demand attention. Even with continued protection by the Netherlands, Curaçao and Sint Maarten are going to have to be wary of the sharks in the water.

This analysis was prepared by COHA Research Fellow Alex Sanchez

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