After Social Distancing, let’s talk Economic Rapprochement for the island

Not all catastrophes produce a Renaissance. It is striking how big the problems for the private sector already are. The middle class, the backbone of the economy, is in danger of collapsing under the pressure of political measures related to COVID-19. The forced closure of shops and businesses provide health benefits in the short term, but will promote poverty, hunger and crime on the island.

Just like that, dozens of Front Street vendors have lost their jobs. The day after it was announced that cruise passengers would no longer come ashore, numerous sales assistants were told by their employer that there is no money to pay them. Shortly after, the government announced the closure of stores that sell ‘non-essentials’, triggering a second wave of layoffs.

The destruction by Hurricane Irma in September 2017 marked the end of many an entrepreneur’s dream on the island. The majority of the companies that survived the hurricane barely managed to stay in business the last three years. Financial reserves were invested in the reconstruction and reopening of the business after the hurricane, expected revenues from tourism were not forthcoming. Although more cruise ships called at St. Maarten in 2018, passengers spent significantly less on the island. The financial aid for businesses promised by the governments of the Netherlands and St. Maarten did not materialize.

Like everywhere else in the world, brick-and-mortar stores are under threat from online shopping led by Amazon. Just like retail, the catering industry is also struggling with high rents and the price of electricity. Could the government of St. Maarten have protected the business community from excessive monthly fixed costs in order to guarantee employment? For example, by setting ceilings and, like the German city of Berlin, freezing rents for five years? In St. Maarten no measures have been taken against the rapid increases in rents on the housing market, making it impossible for many workers to find an affordable home. Renters have free rein on the island.

Many entrepreneurs have been struggling with financial problems since the reopening of their business in 2018. A jet ski rental company operator complained last year that he had been unable to pay himself a salary since the hurricane: he paid his employees from the rental income, leaving almost nothing for himself. He received no financial aid after Hurricane Irma. “I would have liked to have had help repair the hurricane-ravaged bay demarcations,” he said. He had to pay for the purchase of new lines, flags and buoys.

Beach activity vendors are now desperate. Many of them have a lease with the permit holder of a stretch of beach or water sports activity, such as the rental of jet skis. Not much has been earned since November, the start of the high season. The 25 percent reduction in the number of visiting cruise ships resulted in a hefty cut in income.

A week ago, US President Donald Trump tweeted: “At my request, effective midnight tonight, Carnival, Royal Caribbean, Norwegian and MSC have all agreed to suspend outbound cruises for thirty days. It is a great and important industry – it will be kept that way!” Great Bay and many other bays have since been deserted.

People who lived on a daily yield until last week are currently in serious trouble. This also applies to all those who have lost their jobs. An Indian man, who has been brought to St. Maarten on a six-month contract, now receives half of his salary. Not enough to pay the rent, he says. As one of many foreign seasonal workers on the island, he has nowhere to go.

COVID-19 sent prices for essentials soaring which is hurting the consumer and therefore the economy. After hurricanes Luis in 1995 and Irma and Maria in 2017 many St. Maarteners have learned to weather their own storms and to move forward. But not all catastrophes produce a Renaissance. How do we fix this? How do we get the economy going again? Instead of Social Distancing, let’s talk Economic Rapprochement now.

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