At present, the Kingdom of the Netherlands consists of three countries: the Netherlands, the Netherlands Antilles (which comprises the islands of Curaçao, Sint Maarten, Bonaire, Sint Eustatius and Saba), and Aruba. This political structure is currently undergoing a major overhaul. Simultaneously, a large number of reforms are being implemented in the areas of, inter alia, public finances, law enforcement and good governance. Below, we will explain the main features of these reforms.

Toward constitutional reform

In referenda held over the past couple of years, the populations of the different island territories expressed their preferences as to their respective island's future status within the Kingdom of the Netherlands. Curaçao and Sint Maarten opted to become more independent, whereas Bonaire, Saba and Sint Eustatius prefer a closer relationship with the Netherlands.

After more than three years of intense negotiations between the Netherlands and the respective island territories, an accord to finalize the islands' new status was reached on December 15, 2008:

  • Curaçao and Sint Maarten will both become a separate country within the Kingdom of the Netherlands (similar to the current position of Aruba), with their own government and legislature. Within the European Union, these territories will maintain the (limited) status of "Overseas Communities and Territories".
  • Bonaire, Saba and Sint Eustatius will gradually transition into Dutch municipalities. This will lead to the gradual introduction of the laws of the Netherlands on these island territories. Within the European Union, these territories will maintain the (limited) status of "Overseas Communities and Territories".
  • Once the reform process has been fully implemented, the federation of the Netherlands Antilles will be dismantled.

The last conditions of the constitutional reform will be discussed and finalized in 2009 and 2010. The reform process is not expected to be fully implemented before 2011.

Other reforms

Besides constitutional reform, the focus of the reform process is on public finances, the economy, law enforcement and good governance. The following are examples of concrete measures that have been agreed upon:

  • The Netherlands will take over the majority (approximately 70%) of the debt and part of the payment arrears of the island territories;
  • A financial regulatory authority is in office as from November 2007 for Bonaire, Saba and Sint Eustatius and as from October 2008 for the Netherlands Antilles, Curaçao and Sint Maarten. The financial regulator assesses the draft budgets of the island territories and supervises the implementation of their respective budgets. Bonaire, Saba and Sint Eustatius are not allowed to contract new loans;
  • Curaçao and Sint Maarten strive to have one central bank and use one new currency as from 2010;
  • All island territories have drafted a Social Economic Initiative (Sociaal Economisch Initiatief), which contains a variety of concrete measures and projects in areas such as health care, infrastructure and education. The Netherlands have made available significant budgets for each of the island territories, ranging from EUR 60 million for Curaçao to EUR 10 million to Saba;
  • In order to address certain urgent problems in the island territories, the Netherlands will provide resources for social and infrastructural projects and health care improvements (the so-called "quick-wins");
  • Each of (i) Curaçao, (ii) Sint-Maarten and (iii) Bonaire, Sint Eustatius and Saba jointly, will have a Court of First Instance. The Joint Court of Justice of the Netherlands Antilles and Aruba will remain responsible for handling appeals. The Supreme Court will remain in the Netherlands.

No agreement has been reached yet on the fiscal regime and further negotiations are taking place in this respect. One aspect that is being looked at is whether the Netherlands tax authorities can take over the collection of taxes in Bonaire, Sint Eustatius and Saba.