Published On: Fri, Oct 9th, 2020

CHE versus OHO: A Figment of our Imagination?

by Emsley D. Tromp

In a letter dated October 6, 2020, to the Chairperson of Parliament Ms. A. Pauletta, Prime Minister E. Rhuggenaath on the one hand, and in a recent press conference, the leader of the MAN party, Dr. I. Martina, on the other hand practiced the art of the impossible. They led us to believe that an agreement had been reached with the Netherlands regarding the financing of the consequences of the coronavirus pandemic. Subsequently, the Dutch junior minister for Kingdom Affairs R. Knops debunked the position taken by both Messrs. Rhuggenaath and Martina by stating that while the negotiations are hopeful, no agreement has yet been reached. Mr. Knops’ reaction reminded me of the following story.

“There is a legend in a faraway land about a man caught for stealing a few onions. The magistrate gave the man the option to choose one of three punishments: he could pay 100 Rupees as a fine or get 100 lashes on his naked back or eat 100 onions without stopping even for water.

In those days, 100 Rupees was quite a huge amount of money. Being poor, the man alleged that the fine was too high, and 100 lashes would be too painful a punishment. So, he decided to eat 100 onions, which to him seemed the easiest punishment. But after eating just a few onions, his eyes got swollen with tears and his mouth burnt with the pungent onion juice. He cried out that he would choose 100 lashes with a whip. But after about just 10 lashes, he asked the executioner to stop and said that he would somehow manage to get 100 Rupees to pay the fine.”

Both the Prime Minister and Martina attempted to explain that after a period of difficult negotiations, the originally envisaged Caribische Hervormingsentiteit (CHE) gave way to the Orgaan voor Hervorming en Ontwikkeling (OHO). They contend that OHO will do justice to the autonomy of the island and will release the much-needed funds to create the necessary investment climate to generate growth.

To the careful observer, however, it seems that OHO as explained by both Mr. Rhuggenaath and Mr. Martina does not differ much from the explanation of CHE given by Mr. R. Knops. Whether the differences between CHE and OHO are in style or substance remains to be seen as made abundantly clear by Mr. Knops since no agreement has yet been reached.

The questions that come to my mind are: if the differences between CHE and OHO are cosmetic rather than substantive, has the delay in the envisaged adjustment added unnecessarily to the adjustment costs; and in the parlance of the onion story, who is the onion thief, the magistrate, and the executioner?

While at first glance the identity of the onion thief may be self-evident, ten years after the constitutional restructuring I came to realize that the answer to this question may not be that obvious. In 10-10-10, the parliaments of Curaçao and Sint Maarten acceded to the transfer of certain authorities to the Kingdom government as laid down in the Rijkswet Financieel Toezicht (Rft.) At the time, the underlying argument for the “consensus Rijkswet” was that because of the weak governance in the islands, a higher form of supervision was necessary to avoid having the islands of the former Netherlands Antilles create the same financial mess as in 2009. As a consequence of the agreed-upon “consensus Rijkswet”, neither Curaçao nor Sint Maarten has the authority to seek access to the financial market without the prior consent of the CFT.

In addition, the Dutch government is duty bound according to the Rft to lend the two governments money to finance their capital expenditures under the same terms Holland itself borrows, therefore guaranteeing the two governments unfettered access to the financial markets. This obligation under the Rft therefore demands strict adherence to the governance by both the CFT and the Dutch government. Failure to do so may lead to an increase in the debt-to-GDP ratio that is not justified by the economic fundamentals.

The subsequent staggering increase in the debt-to-GDP ratio of both Curaçao and Sint Maarten was possible only with the explicit authorization of the Dutch government after due regard of the consent of the CFT. Therefore, the argument advanced now that the islands could not handle their financial autonomy is more a verdict on the failure of the Dutch-engineered governance structure and the laxity of those entrusted with the compliance thereof than on the policymakers of the islands.

Given our experience with the Dutch-mandated governance structure through the Rijkswet, the lingering issue of accountability seems to remain unsolved. If this issue is not addressed, it will further erode our confidence in the supervisory role of the Kingdom government. Aside from the “waarborgfunctie” of the Kingdom government, the “consensus Rijkswet” provides the Kingdom government with sufficient instruments to act on a timely basis to avoid what now is being termed the inability of the islands to deal with their financial autonomy.

The issue in this context again becomes who will ultimately be accountable if OHO does not achieve its objectives? Will there be sufficient instruments to take timely corrective actions to avoid yet another failure?

It may be too early to pass judgement on the newly envisioned OHO as opposed to CHE. But one thing remains abundantly clear: Both the CFT and the RMR at one time or another have been that onion thief as regards the financial autonomy of the islands. In the case of CHE and subsequently OHO, it seems that Curaçao is playing the role of the onion thief.

The Prime Minister and Mr. Martina, in an effort to appease themselves, fail to realize this truism. And just like the onion thief, the lack of a clearly spelled-out strategy forces us as a nation to go on performing one after another of many acts of blind devotion and soon losing faith in our own capacity to stand the test.

Ultimately, we realize that one has to undertake what one always tried to avoid. The question remains whether this OHO will pull our economy out of this pandemic-driven contraction or push it further into a deeper decline with an uncertain path?

For the case at hand, the jury is still out to determine who the onion thief, the magistrate, and the executioner are.

October 9, 2020
Dr. Emsley D. Tromp