Commissioner Zagers: “Direct ties with Netherlands was right choice for Saba”

Saba has benefited enormously from the direct relationship with the Netherlands, and there have been many improvements since Saba became a public entity on October 10, 2010. However, there are a number of issues that require urgent attention from The Hague, stated Saba Commissioner Bruce Zagers in a letter that he sent to the Second Chamber and State Secretary Raymond Knops on Friday, October 9.

The full text of the letter is attached at the end of this article.

In his eight-page letter to the Second Chamber’s Permanent Committee for Kingdom Relations and the State of Home Affairs and Kingdom Relations, Zagers, who has been commissioner since 2007, reflected on 10 years after 10-10-10 and drew up a summary of things that have gone good and things that have not gone so good, all of which have a direct effect on a small island like Saba.

“Over the years we have witnessed the commitment from the Netherlands to realize tangible results. This has especially been the case during the tenure of State Secretary Knops, who has embraced being the coordinating focal point. As the smallest of the islands, Saba used to get the smallest financial contributions from the Netherlands Antilles Government. Under the Antillean construction there were basically no opportunities for growth, and at times it was so bad that we were forced to make decisions to either fly out a patient for medical treatment or pay civil servant salaries.”

Achieving results

According to Zagers, the current public entity constructions has worked in many areas: politicians and ministries feel responsible for achieving results, there is direct contact, and working together has resulted in many positive developments. “We have transitioned from an era where government could barely keep the doors of the hospital and the schools open because there was no money or support, to an era where we have one of the better health care systems in the region and a school system where we see positive improvements. Saba’s development after 10-10-10 shows that being a being a special municipality was the right decision for Saba.”

After the 2017 hurricanes, Saba received funding to build back and to make the island more resilient, and none of the projects would have been realized under the realm of the Netherlands Antilles, stated Zagers, who mentioned the construction of a new harbor in the coming years as the island’s single biggest project.

Great efforts have been made to address poverty, with the input of the Ministry of Social Affairs and Labor (SZW) and the Ministry of Home Affairs and Kingdom Relations (BZK). During the COVID-19 crisis, Saba has also seen the benefit of the special relationship with the Netherlands. With Dutch financial support, many jobs have been saved and so far, no businesses have closed their doors. But this may become the case if the situation doesn’t soon normalize.

The quality of the Saba Government has improved with Dutch assistance, as has Saba’s financial management. Many infrastructural projects have been realized, such as a new runway and a refurbished, expanded airport terminal, two new solar parks, a water pipeline, a bottling plant which will soon be completed, investments in waste management, investments in the island infrastructure and a new electric power plant. There are also the investments in agriculture, tourism and nature.

Lack of understanding

The vast improvements don’t mean that everything is perfect. “There continues to be a lack of understanding for the individual problems of the Caribbean Netherlands islands and there seems to be a lack of political willingness to differentiate between Saba, St. Eustatius and Bonaire.” Zagers noted that there was no such thing as a BES entity, and that each island has a separate relationship with the Netherlands. Also, something that works for Saba, might not work for Statia. And a policy or law drafted with the Bonaire situation in mind will most likely not work for Saba. The “one size does not fit all” theory also applies to the division of tasks. “If Saba has proven to be capable of assuming more responsibilities, this should not be complicated because of the other two islands. State Secretary Knops started with a more-for-more philosophy, and there have been some results of that approach, but there is room for more differentiation, more tailor-made agreements.”

The lack of structural funding remains a major issue for the Saba Government, and, for the first time, Saba closed off the fiscal year 2019 with a US $621,000 deficit. While there is an abundance of incidental projects, 80 plus projects last year, these incidental funds are also used to finance structural tasks. Incidental projects often result in structural operating and maintenance costs which don’t reflect in the free allowance. This free allowance has not only remained unchanged since 2012, it also has been structurally too low, especially with the added responsibilities for the Public Entity. “Throughout the years, we have been given numerous reasons why the allowance cannot be increased. Most recently the reason given is that it cannot be increased for Saba without doing something for Bonaire and Statia.”

Own income

Saba lacks the ability to generate more own income, unlike Statia which has the oil terminal, and Bonaire which has tourism. Saba has a medical school, but since the 2017 hurricanes, the number of students has gone down drastically, and since COVID-19, the student body is miniscule. Things are very hard economically for both the Saba people and the entrepreneurs, and the Public Entity is in no position to generate additional funds to offset the lack of structural funding.

The National Government Department for the Caribbean Netherlands (RCN) is considered a layer which is expensive and produces results which are neither tangible nor visible, stated Zagers. “We often speak about efficiency and the way money is being spent, and the RCN offers a bad example for both.” In addition, Saba sees the function of the Kingdom Representative as a layer that creates a middle-man doesn’t fit in an efficient system.

As for the tackling of poverty, Zagers stated that even though significant progress had been made, many of Saba’s vulnerable groups were still living in conditions that are far from desirable. In his letter, the Commissioner gave a number of examples of taxes that are too high and too taxing on the people and the businesses and the import procedures that are too bureaucratic and cumbersome. “It bewilders me that on a five square mile island, with less than 2,000 people, we are forced to comply with such complex international systems for imports.”

Businesses struggling

During the ongoing COVID-19 crisis, businesses, especially in the hospitality sector, are struggling to keep their doors open. The financial support that they have received, mostly goes back to paying employer premiums for their staff, and even though 80% of the employee wages are covered by the support package, 100% of the premiums must still be paid by the employer. Zagers said the situation would get worse when real estate tax was levied on these same properties that are not generating any income. And, while banks have been lenient with mortgage payments, it will only be a matter of time when monthly payments will have to resume. The Tax Department is no longer lenient. “The structure and implementation of the support packages have not necessarily taken the small scale of the businesses on Saba into consideration. Our regular size population has plummeted because almost all medical students left and very few have returned. We have no tourism. The one size fits all model with the package unfairly addresses the Saba reality,” he stated.

Despite the challenges and shortcomings that he pointed out, Zagers remained positive. “There is no denying that the good outweighs the bad. The commitment and the growth that we have experienced during the last 10 years is truly remarkable. Together we have been able to accomplish great things for our people and our island. These accomplishments are only possible because of the positive results of the transition, the good working relationship, trust and the commitment from both parties to strive for higher standards.

However, the ‘not so good’ or the ‘petty’ issues often overshadow the positive developments for many of our people. I hope that now after 10 years collectively we can have an honest reflection on all of the results of the transition and the impact it has on our local government, our people and our island.”

The full text of the letter from Commissioner Zagers to the Members of the Commission for Kingdom Relations and State Secretary Knops:

To: Members of the Commission for Kingdom Relations

       State Secretary Raymond Knops

Subject: A Reflection of 10 years after 10/10/10

Saba, October 9, 2020

Dear Reader,

Since becoming a Commissioner in July 2007, I’ve had the opportunity to be involved in the period before the actual transition, during the transition, and now 10 years after the transition. I can speak on the hardships the island experienced during the era of the Netherlands Antilles. I can relate to the many improvements and the growth that Saba has experienced because of the transition. However, I can also convey the experience of seeing firsthand the good intentions that have resulted in consequences that are not ideal for the island and for our people.

The Good

Over the years we have witnessed the commitment from the Netherlands to realize tangible results on Saba. This has especially been the case during the past few years during the tenure of State Secretary Knops. Our State Secretary has embraced being the coordinating focal point and the positive results can be seen in almost every area. 

Saba, being the smallest of the 6 islands used to get the smallest financial contributions from the Central Government of the Netherlands Antilles. Under the Antillean construction there were basically no opportunities for growth. At times it was so bad that government would be forced to make decisions to either fly out a patient for medical treatment or pay civil servant salaries. No person, government or island should be in that position.

The construction of being a special municipality worked in many areas. Politicians and ministries feel responsible for achieving results in their specific policy domains. We have direct contact with many influential persons. Working together, shoulder to shoulder, has resulted in many positive developments. 

We have transitioned from an era where government could barely keep the doors of the hospital and the schools open because there was no money or support, to an era where we have one of the better health care systems in the region and a school system where we see positive improvements yearly. We have seen funding for a complete renovation of our hospital and there are considerable funds available for structural improvements of the school buildings.

In 2017, when Saba was battered by two major hurricanes, the island received relief needed not only to build back, but to also make the island more resilient. Funding was also received to facilitate the loss of income in the private sector. The island has received funding for several projects, none of which would have been realized under the realm of the Netherlands Antilles. In the coming years, we will see the construction of a new harbor which will be the single biggest project in the illustrious history of our island.   

As for poverty, great efforts have been made to address this problem and it definitely has the attention of the decision makers in the Netherlands. During the last few years, we have witnessed both the ministry of SZW and BZK, working together to alleviate poverty with incidental and structural solutions.

More recently, during the COVID-19 crisis we have also seen the benefit of having this special relationship with the Netherlands. Because of this support, many jobs have thus far been saved and thus far no businesses have closed their doors, albeit this may be the case in the future if the situation doesn’t soon normalize.

With the assistance from the Netherlands, both technically and financially, the quality of Government has been able to improve throughout the years. With guidance from the CFT, financial management on Saba has greatly improved. With structural and incidental funding, initiatives for good governance, training for civil servants, the establishment of a Community Development Department and many other tangible services have become possible.

Even after highlighting these headliner improvements, I still have not mentioned projects such as the new runway, the refurbished and expanded airport terminal, two new solar parks, a water pipeline which has resulted in drastically lowered water prices, a bottling plant which will soon be completed, investments in waste management, investments in the island infrastructure, a new electric power plant, agricultural investments, tourism and nature investments etc etc etc. The list of positive changes is vast!

10 years after the transition it’s safe to say that the growth, the development and the improvements witnessed on Saba are only possible because of the support and the good cooperation with the Netherlands. The examples given here, amongst the many others, will have far reaching positive implications for our island and people which are greatly appreciated. The rapid development of Saba after 10-10-10 proves that being a special municipality was the right decision for Saba.

With all this being said, our present challenge is to shine some light on the areas where attention is still needed. The main question is whether or not we should continue like this where we accept that not everything went as well as it was planned or should we do something about these known challenges?

The not so good

Although I have highlighted some of the examples where we have seen vast improvements, it does not mean that everything is perfect. It was unrealistic to expect perfection from a constitutional construction which was basically built from scratch with no real examples to follow. However, there comes a time when tough decisions should be made. If after 10 years, certain policies do not work the way they were intended to, then we need to re-evaluate these.  There continues to be a lack of understanding of each island’s individual problems and more importantly there seems to be a lack of political willingness to differentiate between the islands of Saba, Statia and Bonaire.

Many of these “not so good” issues can be considered petty. They do however have an impact on not only how our people perceive the results of the transition, but also how they are able to carry out their business and way of life. On a small island like Saba, a petty problem can become an insurmountable issue very quickly.

All politics are local, especially on a 5 square miles island. We are the face of both the local government and the national government. All questions come to us; not to RCN, not to the Hague but to us. Our biggest task the coming period is to address and do something about these ‘not so goods’. Small tweaks in the current system can bring real positive change that is both tangible and visible.

Why different and not the same

Although we share the same constitutional status as Statia and Bonaire, we must not forget that there is no such thing as a “BES” entity. The acronym “BES” was loosely used for the creation of common laws such as the WOLBES, FINBES etc. However, each island has a separate relationship with the Netherlands. It is not a relationship that is confined to a “BES” entity. In addition to this each island is completely different. What works on Saba may not always work on Statia even though the islands are only separated by 18 miles. The same way if a policy or national law has been made with the complexities of the Bonaire situation in mind, more likely than not this will not work for the smaller islands of Saba and Statia.

The Raad van State and the IBO have suggested that one size does not fit all when it concerns implementing policy on the islands. In addition to this, each island has its own individual problems and backlogs. For Saba, this backlog is mainly in structural financing. This “one size does not fit all” theory is also applicable when considering the division of tasks. If one island, in this case Saba, has proven to be capable of assuming more responsibilities, this should not be complicated because of the other two islands. Based on article 212 in the WOLBES, the Minister of BZK should focus on decentralizing tasks to the island governments. Only when island governments show that tasks cannot be executed properly, they should be centralized to the national level. Part of this is to have yearly consultations with the individual governments about the division of tasks. For several years, Saba has complained about the very lengthy and bureaucratic process for work permits. Although we have seen some improvements made with SZW there are still lengthy delays caused by IND. The Saba government is still very eager to eventually fully take over this responsibility.

Our State Secretary Knops started with a ‘more for more’ philosophy and that differentiation between the three islands is important. There have been some results of that approach, but there is room for more; more differentiation, more tailor-made agreements between The Hague and Saba. Ultimately this is something that The Hague should want; solid, robust island governments.

Strong Financial Management but lack of structural means

For several years Saba has been highlighted as the best kid in the class, especially in financial management and because of our practical approach to get things done. These accolades have been voiced in debates, press releases and meetings. Yet, for 2019, Saba closed with a deficit of $621,000. In a matter of 4 years, the Saba administration went from managing a handful of incidental project funds to 80 plus projects in 2019. Not only does this create a humongous administrative burden, but these funds are also mostly used to finance structural tasks. As for the actual one-time incidental projects, these often lead to structural operating and maintenance costs which do not reflect in the free allowance. A prime example of this was the onetime investment which was made in waste management.  

When the free allowance was first established back in 2012, it was set at the bare minimum required to execute the legal tasks of government. Since then our responsibilities have increased, the cost of doing business have increased and salaries have increased. Yet for the most part the free allowance has remained unchanged. The modest adjustments definitely do not reflect what it takes to run an island some 8 years later. In 2015, a second analysis was made to determine a new free allowance. This Ministerial initiated study suggested an increase however to date this has not been granted. Throughout the years, we have been given numerous reasons why the allowance cannot be increased. Most recently the reason given is that it cannot be increased for Saba without doing something for Bonaire and Statia. In the past some of the others reasons reflected the refugee problem and the not so favorable exchange rates between the euro and the US dollar. These reasons do not help to solve a very specific Saba problem.

Saba also lacks the ability to generate more of its own income. We don’t have the oil terminal of Statia nor do we have the infrastructure to be a major player in the tourism market like Bonaire does. Saba does have a medical school but since the hurricanes, we have seen the number of students reduce to less than 50%. Since COVID-19, the student body is now minuscule. We can talk about increasing local levies and implementing local property taxes, but how much will this generate? More importantly we know that this would have major consequences for an already fragile community and business sector. It is no secret that many of our people live day to day and that our private sector struggles to keep their doors open because of the high cost of doing business. Not to mention the negative impact COVID-19 is having on our people and the economy. The Public Entity is in no position to generate additional funds to offset the lack of structural funding which we are currently not receiving from the BES funds.

One island, two levels of government

The inequality the islands experienced during the era of the Netherlands Antilles was the glaring factor that led to the breakup. Now, to a lesser extent, on Saba we are yet again experiencing a similar phenomenon between the quality of the local government and that of the RCN. I am confident that this was never the intention. The local government is forced to manage an island with meager means whilst the RCN can easily negotiate and accept new labor conditions and pay their workers higher salaries in comparison to the local government for equal positions. This creates unnecessary animosity not only between civil servants of the two organizations but also between the Public Entity and their own civil servants as they feel they should be remunerated equally as those working for the RCN.

On Saba we see the governmental level of the RCN as a layer which is expensive and produces results which are neither tangible nor visible. We often speak about efficiency and the way money is being spent and the RCN offers a bad example for both. For example, RCN communications has a bigger staff than the Governor General of the Netherlands Antilles had as a support staff when he governed over five islands. It is also obvious that more opportunities and more investments are made in Bonaire than what is seen on Saba which limits job opportunities for individuals and private companies.   

Saba’s position on the Kingdom Representative is also known. Essentially this is a layer which results in the creation of a “middle man” type of position. Our opinion on this does not reflect the ability of the person, or even the ones who have held this position before. We fail to see how the position fits within what should be an efficient system.

Poverty

 Admittedly, great efforts have been made during the last few years under the guidance of State Secretaries Knops and van Ark to establish positive developments where it relates to poverty alleviation. In addition to the progress that has been made, recent initiatives taken because of the COVID-19 pandemic has brought additional relief for the most vulnerable groups. Hopefully the relief that is now in place for electricity, telecom and water can be made structural. Saba has always lobbied for an integral approach for alleviating the poverty problems and these relief initiatives support such a movement. Although significant progress has been made, we are not there as yet as many of our vulnerable groups are still living in conditions which are far from desirable.

Just as progress is being made with some ministries, recently we have seen where these positive initiatives will be hindered by developments that are being implemented by another ministry, namely finance. I would like to give a few examples which will prove that all ministries are not working towards the same goals:

  • Promoting local food productions is supported by all. However, it is difficult for any entrepreneur to do this on Saba fulltime expecting to make a livable wage.  Many persons do this as a side job or as a hobby. Before the importation of fertilizers, animal feed, fishing supplies etc, were ABB free. Now, if you do not do these activities for a living, ABB is charged. In addition to this, in all cases, the importer has to clear these items with a broker who obviously charges for this service. Before these items could be cleared with customs free of ABB and broker fees.
  • On Saba almost everyone can be considered an importer. Because of limited purchasing options and the often-higher local prices, many people order items from St. Maarten and the USA. Before, purchases below $1500 could be cleared directly with the Customs Officers. Recently, this is no longer possible as all items must be cleared through a broker. Between the high shipping rates and the new broker fees, purchasing cheaper options from abroad is no longer appealing for many.   
  • Directly after the transition, an exemption was made for Saba where only 3 commodity codes were used when clearing imports. Eventually, this was increased to 90 plus because it was said it was unfair to the other islands. This argument could have been used the other way as well because if the simplified 3 codes could work for Saba they could also work on Bonaire and Statia. Now, again the codes and clearing procedure will be further intensified. This will lead to a greater administrative burden. Many of the supermarkets have already alluded that they will have to hire additional people to execute these tasks. Great for employment opportunities however we all know that the customer will be the one who pays for this through significant increased pricing.

Again, the abovementioned examples can be considered petty but on a small island like Saba the impact is greatly felt. It bewilders me that on a five square mile island, with less than 2000 people, we are forced to comply with such complex international systems for imports. Additionally, if it is legally the case that custom officers cannot be accepting cash payments for clearing items, why couldn’t an administrator be hired to fulfill these duties for the imports that are below $1500? We see where some departments are over staffed such as RCN communications, yet in this instance the preferred alternative is to force everyone to use a broker which ultimately adds to an already high cost of living. This is a great business opportunity for the two on-island brokers but what about the rest of the population who are impacted by these additional fees? This is an example which shows that the ministries are not always harmonized with their efforts.

Covid Relief

The support received thus far has been very much helpful and appreciated. As mentioned above, thus far jobs have been saved and no business has closed on Saba due to Covid. However, this does not mean that unemployment and business closures are not close.

Almost every business on Saba, especially those in the hospitality sector are struggling to keep their doors open. The financial support that they have received, mostly goes back to paying employer premiums for their staff. Although 80% of the employee wages are covered by the support package, 100% of the premiums must still be paid by the employer. This situation will only intensify when vastgoedbelasting is levied on these same properties who are not generating any income. Banks have also been lenient with mortgage payments but it will only be a matter of time when monthly payments will have to resume. The tax department had been lenient with their collections but no longer is.

The structure and implementation of these support packages have not necessarily taken the small scale of the businesses on Saba into consideration. We have seen our regular size population plummet because almost all medical students left and very few have returned. We have no tourism. The so called “pie” that our businesses now have to share, is much smaller than Bonaire and to a lesser extent Statia. The one size fits all model with the package unfairly addresses the Saba reality. 

Other Challenges

Throughout the last 10 years, these points have been tabled on every level possible. However, little progress has been made to find solutions for what can be considered simple problems.

  • Earlier I briefly mentioned the situation concerning the issuing of work permits earlier. Great efforts were made by SZW to simplify the application process. However, the bottleneck now remains with IND. We still have cases where teachers cannot reach the island on time to start the school year because of the requirements from IND. We also have many examples in the hospitality sector. Saba has lobbied to take over this task completely but we have also suggested that we move from a system of distrust to trust. This way the local government can assume the responsibility of these necessary workers until the requirements of the IND are met. There has been no progress with either scenario.
  • The medical school and tourism make up the bulk of our economy. Since even before the hurricanes we have seen a downward trend with the number of students coming to the island. Since COVID-19, this has only gotten worse. As for tourism, all growth basically stopped because of the major hurricanes in 2017. The majority of the businesses in the hospitality sector still have not recovered and now face even greater challenges because of this global pandemic. When we lobby for funding for tourism, we are told that this should not be the role of the local government but that of the hospitality sector. This was not a realistic position before 2017 and since then the situation has further deteriorated. Because of the pandemic it will be a while before we start seeing regular visits to the island. Resources for marketing within the local budget are very little. An impulse for marketing is greatly needed as the competition for those who are willing to travel will be far greater as many of the islands in our region will be spending more to attract these same people to their islands. We cannot compete with these islands as their marketing budgets are substantial. For several years government used a PR company in North America but because there is no funding this stopped earlier in the year. We have also endeavored to have such a firm in Europe but this has never materialized because of the same reason.
  • We often hear that we should be more efficient; something that I fully endorse. Before the transition we had three local immigration officers. They handled the immigration controls and were responsible for suppling statistical information on passenger arrivals which was accurate, timely and very useful. Now we have more immigration officers who are probably better qualified, but are not allowed to provide statistics. Because of this CBS is hired to carry out a task that was previously done locally by our immigration officers. I am sure that CBS is not cheap. It also does not provide statistics which are timely, accurate or useful. In addition to this we now have Customs division. They are now dictating when ships can come to Saba as they claim they are working very long hours. Please note that there are no commercial flights, no ferries, no yachts etc visiting the island. This means that cargo ships are having to change their shipping schedules to accommodate the customs officers. Already many of these ships prefer not coming to Saba because of the dangerous and small port. This lack of flexibility only increases freight costs to Saba.   
  • Saba continues to operate with one bank. It takes several months to open a bank account. Interest rates remain very high making it almost impossible for our people to get mortgages to either build or buy a home. Transferring money or making deposits to other accounts can only be possible when the person wishing to do the transaction has an account at the local bank. The bank has one ATM machine which is mostly not working resulting in the government having to subsidize a second ATM machine for $100,000 per year just to keep it on the island. Needless to say, our banking sector needs urgent attention.
  • From the onset, it was known that almost all business owners on Saba were English speaking. Almost 10 years later, many of the forms and the processes at RCN are still in Dutch. Right after the transition it was suggested that English forms would also be offered. 10 years later we continue to see our English-speaking business owners frustrated because nothing has changed.
  • The lack of a postal code continues to impact mail delivery as most mail ends up on Bonaire rather than Saba. Not having a postal code also impacts online transactions as Saba, nor the “BES” islands are seldom listed as address locations.  

In closing

There is no denying that the good outweighs the bad. The commitment and the growth that we have experienced during the last 10 years is truly remarkable. Together we have been able to accomplish great things for our people and our island. These accomplishments are only possible because of the positive results of the transition, the good working relationship, trust and the commitment from both parties to strive for higher standards.

However, the “not so good” or the “petty” issues often overshadow the positive developments for many of our people. I hope that now after 10 years collectively we can have an honest reflection on all of the results of the transition and the impact it has on our local government, our people and our island. Unfortunately, I am worried that there will always be reasons why something is not possible. We know the arguments: It is in the law and laws are difficult to change; customs don’t have to do ‘broker administrative work’ because they are not legally allowed to collect money; that Asycuda (the import system with all the codes) must be implemented no matter how micro the economy is because it is in the law; that adjusting the free allowance and allowing Saba to attain more responsibilities creates a precedent for other islands; that a COVID-19 package for Saba cannot differ from the other islands etc etc etc. Although I loosely give examples of why things are not possible, I do realize that making these changes can be complex. But doing nothing about these real-life challenges should also not be an option.

I hope that together we can make the seemingly impossible, possible. We must find creative and practical ways to tweak our system to make it into one where all the good intentions can be worked out into solutions that offer the desired results. After 10 years, it would only be fitting that a small taskforce be formed so that these “not so goods” can be integrated into the Saba Package with a clear plan that leads to practical solutions. This would be a fundamental step where both parties can proactively work towards achieving even more positive results which will bring the necessary balance to the already mentioned many improvements.

The successes of the transition are both visible and tangible here on Saba. With the mutual commitment to further improve social and economic standards, the future of Saba, her people and the relationship with the Netherlands will continue to deliver positive results.

Regards,

Bruce Zagers

Commissioner

Cc: Representatives at BZK, SZW and Finance, CFT, Acting Kingdom Representative, Saba Island Council

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