THE HAGUE--The Council of State has severe objections to the Kingdom law proposal to establish the Caribbean Entity for Reform and Development COHO. The Council doesn’t consider the manner in which the proposal was drafted “fitting” and advised not to submit it to the parliaments in the Kingdom.
The Council of State in its March 3 advice, which has been leaked to the media, said it subscribed to the approach of the Dutch government whereby liquidity support to the Dutch Caribbean countries is linked to a reform programme to make the economies and government finances of the countries more resilient, to strengthen the public administrations and to improve the circumstances of the people of the islands.
However, the Council does not find the way in which this approach was worked out in the law proposal fitting. “The positioning and the duties package of the COHO and the relation to other actors lead to uncertainties about the division of responsibilities and competencies between the different actors.”
The Council didn’t find it advisable to tackle the lack of implementation power in the countries by making the COHO responsible for the drafting and execution of the plans of approach. “This does not strengthen the implementation power of the countries. It weakens the own responsibility of the countries, and as a result, their commitment.” It was also argued that the current law proposal hampered the phasing out of the regulation.
The Council doubted that with the chosen approach it could be “reasonably expected” that a reform programme would yield successful results in the short and long term. “In light of this, questions arise about the compatibility with the constitutional structure of the kingdom, as laid down in the Charter, in which the autonomy and the own responsibility of the countries are important points of departure.”
According to the Council, the law proposal falls short, and should be reconsidered. In its current form, it should not be submitted to the four parliaments in the kingdom, unless it is revised. “The Council considers the proposal in this form to be problematic.”
Aruba, Curaçao and St. Maarten since April 2020 receive liquidity support from the Netherlands to limit the consequences of the COVID-19 pandemic. Conditions have been attached to the financial support, including the establishing of the COHO, an entity that serves to promote the implementation of reforms, to accomplish sustainable government finances and to strengthen the economies’ resilience.
COHO will have four tasks, according to the law proposal that is now on the table. The first task is to support and supervise the developing and execution of projects, programmes and measures by government entities in Aruba, Curaçao and St. Maarten.
The second task is to initiate and promote projects and programmes in relation to the country packages. The third task is to grant subsidies to citizens and organisations, while the COHO may also participate in government owned companies and other legal entities. Lastly, the COHO has the task to, in case it is directed to do so, implement financial supervision on part of or all expenditures of a country.
If the COHO finds that a country is insufficiently cooperating with the reform measures, it can suspend the financial support, and at the same time advise the Kingdom government to institute supervision. The COHO can also implement financial supervision.
The Minister of Home Affairs and Kingdom Relations will have the authority to instruct the COHO with regard to the drafting of plans of approach for the developing and execution of a project, programme or measure, and to initiate and execute projects. The minister can, independently, also institute financial supervision on the expenditures of the counties.
The Council of Advice noted that the COHO has “far-reaching” competencies that the countries’ governments also have. “This leads to competing responsibilities and competencies. The set-up in this law proposal makes insufficiently clear who is responsible for what. Both the COHO and the country’s government are responsible and competent.”
The Council considered this aspect problematic. “The COHO and the country’s government can be in each other’s way, but a situation can also evolve where the COHO and the country’s government point fingers at each other.”
According to the Council, the set-up will diminish the countries’ sense of ownership, the countries will feel less responsible to implement the country package and refer to the COHO in case of problems. “That chance will become even greater now that the countries have little influence on the composition of the COHO board.”
The Council considered the sense of ownership and commitment to be of crucial importance for the success of the approach. “Only in that manner, a fruitful cooperation can be created and sustainable results can be booked that will also last after the programme’s completion.”
The competencies of the Minister of Home Affairs and Kingdom Relations are barely restricted. “They extend over the entire palette of drafting plans of approach, the drafting, initiating and executing of projects, programmes and measures, as well as the financing of these. That not only places the minister above the COHO, but also above the government of the country. In this manner, the competencies provided to minister infringe on the responsibilities and problem-ownership of the countries.”
The approach chosen by the Dutch government create risks for the effectiveness of the reform, because the countries only partially carry responsibility for the execution of the reforms. The competencies overlap with those of the country governments. “This undermines the effectiveness of the approach.”
The fact that the COHO largely resorts under the direction of the Minister of Home Affairs and Kingdom Relations, which to an extent is above the governments of the countries, are relevant from the point of view of the Charter. In the opinion of the Council of State, the principles of the constitutional structure in the kingdom are still relevant even if it concerns a Kingdom Consensus Law, a political compromise.
“The point of departure of autonomy of the countries and especially the reticence that the kingdom, and the Netherlands as the largest country, should aspire in restricting the own responsibility, is a big factor.”
The Council questioned whether the far-reaching competency of the Minister of Home Affairs and Kingdom Relations were “necessary and proportional in light of the principles of the Charter.” This part of the law proposal requires adaptation, the Council noted.
As for financial supervision, the Council asked the question why the COHO should have the authority to determine whether the countries sufficiently work on solid finances, when there is the Kingdom Law Financial Supervision.
The consequence is that two entities will supervise the compliance with the financial supervision law: the COHO and the Committee for Financial Supervision CFT, or in the case of Aruba, the Aruba Committee for Financial Supervision CAFT. The Council pointed out that giving a same task to two entities can create the risk of uncertainty and deviating findings.
