Ile de Saint-Martin: business on the Dutch side, decline on the French side

Oyster-Pond: in this postcard bay, yachts are reflected in the turquoise water against magnificent villas set in the heart of lush vegetation. It could be paradise if this Caribbean marina wasn’t the subject of a terrible territorial dispute. It is actually right on the border that divides the island of Saint-Martin in two, a confetti the size of the island of Ré piqué in the north of Guadeloupe: on one side, Saint-Martin, an overseas community belonging to France, and on the other page Sint Maarten, an autonomous territory dependent on the Netherlands. According to legend, it is precisely from this point that the French and Dutch runners set off in 1648, responsible for following the coast, one to the north and the other to the south, where their meeting point was to mark the other side of the border. Doped with red wine or rum, it depends on the versions, the obnoxious tricolor athlete would not have hesitated to take side roads, allowing France to grab more territory. But in their joy at sharing this island, the French and Dutch representatives forgot to agree on the course of the boundary at Oyster-Pond.

Some three hundred and fifty years later, the two administrations are still clashing over this issue, and Sint Maarten authorities have avoided the joint celebrations since France took the risk of controlling a site in the disputed part. It must be said that these few centimeters change everything. To the north, Saint-Martin is a miniature reproduction of the French model and must apply our law and our standards without necessarily having the means: the island has neither prison nor prud’hommes! In the south, Sint Maarten passionately practices the principles of Anglo-Saxon laissez-faire without having to worry in the least about European regulations (its status exempts it from this) and remonstrances from the Netherlands. Between these two systems at the antipodes, a theoretical border, without customs control, because, since the division of the island, it is the principle of free movement of goods and people that prevails. Does this remind you of anything? “Here, it is the EU before its time”, notes, half fig half grape, Daniel Gibbs, deputy of Saint-Martin and president of the society.

> French Saint-Martin – Dutch Sint Maarten, the administrative differences:


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The Dutch side attracts investors and tourists

Suddenly its territory suffered the full competition of its neighbor, and we cannot say that it succeeded. GDP per the population is almost double that of the other part (14,700 against 26,021 euros), unemployment is three times higher (30.5% against 11.5%), and the crime rate can make even the bosses of Marseille’s underworld faint. Every year there are 220 armed robberies per 1,000 inhabitants, compared to 64 in Guadeloupe and 14 in Bouches-du-Rhône. Traveling around the island, the difference in dynamics is evident.

On Dutch territory, 2.4 million tourists arrive every year to happily spend their dollars in duty-free shops, promiscuous bars and casinos, where it is far from necessary to wear proper attire… On the contrary, despite its Creole cuisine and magnificent nature reserves , Saint-Martin attracts … 24 times fewer travelers! On the seafront in Marigot, the capital, visitors do not rush to walk the aisles of the souvenir market or shop in the luxury stores. “It’s annoying because we have a lot of assets and a real authenticity”, laments Stéphanie Caliste Manette, author of “Boosting tourism in Saint-Martin”, scanning the capital’s bay.

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But now the beauty of the landscapes is not enough to be competitive, especially against a neighbor that is not very inclined to control the underground economy and money laundering activities. “It’s clearly more attractive to invest there,” says Paul van Vliet, associate partner at PwC Dutch Caribbean. First, because the Batavian area does not care much about giving social rights to its workers. The minimum wage there is very low, the paid holidays half as generous as on the other side (15 days a year against 30) and the 35 hours that the battalion does not know. The prices are also lower. Fipcom, the local Medef, made the calculations. Based on 176 working hours per month, a minimum wage with contributions amounts to 968 euros on the Dutch side and 2,160 euros for the French! The Polish plumber can walk and dress: In Saint-Martin, the competition is much tougher and lives on the sidewalk opposite. Let’s add that although taxes are less heavy there than in mainland France, Saint-Martin puts much more pressure on its taxpayers. In Sint Maarten, the property tax does not exist and certain large projects can benefit from a complete exemption.

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> Professionals on both sides of the island:


Sources: IEDOM, Chambers of Commerce and Industry of Saint-Martin and Sint Maarten, FIPCOM, Statistics Department of Sint Maarten. – ©S. Frances / Only France.

French standards weigh on companies

As if all that wasn’t enough, the French have to endure standards that are more restrictive than their lucky neighbors. Unthinkable on their part, for example, to let tourists push at the risk of their lives on a beach located at the end of the airport runway to watch the planes skim the ground. The Dutch, on the other hand, content themselves with planting a sign “Danger of serious injury or death”, which does not make anyone back down. Almost everything is like that. “On the same boat, their rental companies can put 120 people and ours a maximum of 28”, annoys Bulent Gulay, chairman of the Métimer association, which brings together professionals from the sea. Hoteliers are required to use fireproof sheets, which cost an arm and a leg, while their Dutch competitors can use basic linen. “So to be profitable we have to fill our premises to 60% compared to 40% for our competitors, witnesses Philippe Thévenet, president of the association of hotel owners in Saint-Martin. The same gloom among restaurants that cannot serve meat from the US (cheaper), or in the construction sector, where standards increase construction costs by 30%. As a result, building permits were three times as many in 2015 among the Dutch (219 versus 73).

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This is how Saint-Martin, with exactly the same population, manages the feat of housing far fewer companies than its Batavian neighbour: Just under 7,000, of which only half are actually active, against 11,000. “And many of them are struggling to survive,” adds Michel Vogel, president of Fipcom. Fair return, the assistantship, him, is doing well: at the last scores, every fifth inhabitant of the French part was a beneficiary of the RSA, and this service alone absorbed 12% of the territory’s operating budget! Aggravatingly, the benefits paid are often not even used on the French side, because many Saint-Martinois, attracted by a favorable exchange rate (among the Dutch, the official currency is the dollar), prefer to make their purchases from across the border. According to the authorities, some recipients of RSA would also work discreetly there to round off their benefits completely illegally. “They often have night jobs in casinos or bars because the French administration can only carry out its checks during the day”, condemns Paul van Vliet.

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Budget in the red for Saint-Martin

The most annoying thing is that many inhabitants of the Dutch side do not hesitate to come to Saint-Martin – and sometimes to settle – to benefit from the generosity of its social model. Like the metropolis, this little piece of France has a good quality health and education system that it would be a shame not to use. As we can see, this Caribbean island is ultimately a good example of the international division of labor. On the one hand, we have companies, dynamism and jobs. On the other hand, the loads, the weight and the benefits. No wonder Saint-Martin, whose governance is very unstable – since 2007 eight presidencies have succeeded each other, three of which have been annulled by the Council of State – is struggling to balance its budget!

Regularly in the red since the mid-1990s, its finances were further burdened by the change of status in 2007. Separated from the department of Guadeloupe and transformed into an “overseas collectivity”, the territory has seen its debt rise from 14% to more than 50% of GDP. It must be said that the receipts find it very difficult to get into the coffers, because fraud and evasion are a national sport here, even more so than on the French mainland. The residents also accuse Paris of not having compensated for the transfer of competences.

> Saint-Martin receives little money from the state compared to other Dom-TOMs:


So what to do? Close the borders? Unbelievable, because most Saint-Martinois have family on both sides. Crop the social model? Not only would it make the devil’s mess worse than in Guyana, but it is not certain that it would be enough to clean up the situation. “For Saint-Martin to be as competitive as its neighbor, the rules of the game would have to converge, which would represent a major sacrifice”, judge Gilles Genre-Grandpierre of Iedom, a subsidiary of Banque de France abroad branches -TOM. So give Saint-Martin the European status of OCT (overseas countries and territories), like Sint Maarten? This would certainly allow him to get out of the Brussels grip, warns Loïc Grard, professor at the University of Bordeaux and author of a report on the issue. According to him, France would rather have an interest in cautiously negotiating derogatory treatment in Brussels for its overseas holdings. “When it’s right, she should be able to get enough adjustments to make things better,” he says. “No need to break the house, we just need more leeway”, affirms Daniel Gibbs, the chairman of the society. Instead of taking out the checkbook every time there’s a flare-up and immediately forgetting about the difficulties in these territories, Paris would do well to think about it.

So what to do? Close the borders? Unbelievable, because most Saint-Martinois have family on both sides. Crop the social model? Not only would it make the devil’s mess worse than in Guyana, but it is not certain that it would be enough to clean up the situation. “For Saint-Martin to be as competitive as its neighbor, the rules of the game would have to converge, which would represent a major sacrifice”, judge Gilles Genre-Grandpierre of Iedom, a subsidiary of Banque de France abroad branches -TOM. So give Saint-Martin the European status of OCT (overseas countries and territories), like Sint Maarten? This would certainly allow him to get out of the Brussels grip, warns Loïc Grard, professor at the University of Bordeaux and author of a report on the issue. According to him, France would rather have an interest in cautiously negotiating derogatory treatment in Brussels for its overseas holdings. “When it’s right, she should be able to get enough adjustments to make things better,” he says. “No need to break the house, we just need more leeway”, affirms Daniel Gibbs, the chairman of the society. Instead of taking out the checkbook every time there’s a flare-up and immediately forgetting about the difficulties in these territories, Paris would do well to think about it.

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