August 27, 2020

The Prime Minister of Her Excellency Mrs. Evelyne Wever-Croes L.G. Smith Boulevard 76 Oranjestad, Aruba

Your Excellency,

We hereby jointly express our concern for the looming tragedy for our island, if an agreement is not reached soon with the Netherlands for the required loans.

Aruba’s position

Aruba needs at least another AFL 682.4 Million for 2020 and at least AFL 579 Million in 2021 to cover its expected deficits. Meanwhile, more funds may be needed for urgent investments and economic recovery. Without loans for AFL 1.26 Billion the Government of Aruba cannot pay its employees or fund its programs in the next year and a half, including SVB and AZV. Commercial activity generates funds for the government’s budget. Without meaningful economic recovery from the COVID crisis, the government will continue to have insufficient income. Substantial economic recovery is not expected until 2023. The local economy is artificially kept afloat with some SME fiscal relief and wage subsidies, in addition to relief offered by banks, insurance companies and pension funds (which shall end).

Borrowing Money

As government has explained several times, the only credible source available for the required loans is the Netherlands; these loans cannot be obtained on the local or international market. Aruba has asked The Netherlands for the needed loans, and the Netherlands is setting conditions for the loans as any lender would.

The purpose of the conditions set by The Netherlands is to:

Establish an improved governing structure on Aruba so the island can be in a better position to deal with a financial crisis than it has been in past decades since achieving Status Aparte. This transition would also help ensure Aruba’s ability to pay the loans back according to the terms. Guarantee the necessary restructuring and reform with proactive supervision and incentives by the Netherlands during the transition.

These conditions require a transition period of approximately 6 years to transform Aruba’s financial, justice, education systems and establish a more robust and resilient economy. A new Kingdom entity will provide technical and financial assistance as well as supervise the efforts to ensure completion of the transition. At the end of a successful transition Aruba will have its autonomy strengthened and can be in a better position than the island was prior to the COVID crisis. During the transition Aruba government has input and the Aruba government will largely be in control of implementation. (Note of comparison: From 1948 to 1951 The Netherlands received USD 1.1 Billion from the U.S. in gifts and loans in exchange for substantial American say in both the spending of the funds and in broader Dutch politics for recovery planning. This was known as the Marshall Plan).

Political resistance

Although Aruba’s considers the new entity a threat to its supervisory role, the effectiveness thereof also subject to questions, Aruba only has two options:

1. Negotiate the best agreement possible and accept the conditions with a temporary transition to a stronger foundation, with Kingdom oversight and assistance.

2. Decline the loan conditions and allow our economy to falter further, losing the ability to pay public servants and fund other programs such as healthcare. This would inevitably also result in Aruba defaulting on its local and international loans. Bankruptcy and unemployment would skyrocket, and more widespread suffering would be experienced by the community before the Kingdom has to take over government (as per the constitution and Statuut Art. 43). Once The Netherlands takes over, there would be no participation by Aruba government nor Parliament. (Note: This scenario has occurred before in the Kingdom: a key element in The Netherlands taking over St. Eustatius in 2018 was the complete removal of all powers of local government and parliament).

Unlike many other countries, Aruba is fortunate to have the opportunity to receive assistance from a financially strong Netherlands during one of the worst global crises in all of history.

In our view, choosing Option 1 and complying with the conditions will put Aruba in a better position to recover and even emerge stronger from this crisis, despite a painful transition period where our political autonomy is temporarily compromised.

As always, we offer our availability for dialogue.

Sincerely,

______AHATA ATIA KvK cc: