Public Spanking by the Dutch, OUCH

Our time was wasted yesterday with big headlines about how successful Aruba was for reaching an agreement that would show CITGO the door, this is what the Dutch Kingdom, had to say about it.

Sorry, Google translate is not an eloquent writer, I tried to improve the text a bit. Get a box of Kleenex and read. (Kleenex for your tears.)

Aruba is hit hard by the corona virus. The country was already in bad shape due to poor financial management. A fact that even rating agency Standard & Poor had noticed. And to top it all, the government of Evelyn Wever-Croes has just offered an enabling ordinance to the state to terminate the CITGO contract which includes forgiveness of debt of USD 175M + a waiver, on the cleanup.

Editorial comment:
The Prime Minister must have thought of that. Her budget for 2020 originally had a surplus of 46 million florins, as a result of even more tax increases for consumers, businesses and tourism. That surplus quickly turned out to be impossible due to delays, because the budget came six months late. Moreover, it was shaky overall, according to the Aruba Financial Supervision Board (CAft).
In any case, because of the corona virus, the budget surplus on paper had to make way for a budget deficit of nearly 1.3 billion florins.

In GOA’s budget, presented and ratified all costs have been inflated to create more room for maneuver. Again no cutbacks in operational costs – that may come later, they said. This meant that years of rising and wasted personnel expenses were left untouched.

Free license
Yet Prime Minister Evelyn Wever-Croes has been given a license to spend money without having an idea where she will get that money from. Millions are being put in financial support for people who have lost their jobs, business and public investment: uncontrolled and unstructured and therefore probably ineffective – like talking to the wind!

The Aruban economy is 80% dependent on tourism: where nearly two million tourists visit the island by plane and ship every year, there were just under a hundred on the island at the end of last week.

The prime minister said triumphantly that if the Netherlands did not cooperate, Aruba would borrow on the international capital market if necessary. But Wever-Croes forgets that hardly anyone is going to lend money to a country that does not have any repayment capacity at all!

On March 24th, the Prime Minister appealed to Article 36 of the Statute to quickly obtain a 400 million donation in the Netherlands. Too bad for her, but even before the email was printed, she received “no” on the request.

Refinery
As if the need is not damaging enough in terms of finances, three ministers have been authorized to conclude a settlement agreement with CITGO, the operator of the San Nicolas refinery. The agreement just signed gives CITGO full permission to leave with protection, as Aruba forfeited all guarantees and released the company from all environmental damage, rent and taxes, just go, leave.

The fact that Wever-Croes leaves this money or actually gives it away is almost incredible, but certainly bitter in these difficult times. The island takes over, as it were, the refinery with all the liabilities and financial risks it entails.

The old machinery must still be monitored and maintained, if you ever want to rent it out, again.

If, for example, the environmental damage or the dismantling cost is higher, the financial disaster will become even greater.

One thing is certain, Aruba will not receive the agreed settlement amount, as long as CITGO is under US sanctions.

Besides, the current board of CITGO, appointed by Guaidó, has other concerns at the moment and Prime Minister Wever-Croes might have other plans.

A new company was set up to run the storage terminal before the end of the year. ODD, because in principle RDA as the legal owner of the refining and storage facilities is fully capable to run that itself.

And not a word was said about the outstanding tax debts and unpaid bills to contractors.

Let’s face it: CITGO has failed to fulfill its obligations BUT financial incompetence is not force majeure. Aruba certainly had a chance of being successful in arbitration. As with the budget, Prime Minister Wever-Croes wants yet another carte blanche to negotiate anything and everything, forfeiting over $ 175 million and assuming all risks.

Add it all together and it becomes painfully clear that the government of Aruba was and is unable to take effective corrective measures, and decide on the moves that should or should not be taken in times of crisis

 

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April 01, 2020
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