Netherlands Antilles and Aruba - Future trends

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.

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