See interview with Prime Minister Mike Eman
Aruba is a small Caribbean island of just 193 sq. km located 30 km north of Venezuela. A former Dutch colony, in January 1986 Aruba gained status aparte, removing itself from the Federation of the Netherlands Antilles. It gained autonomy over its internal affairs, but remained part of the Kingdom of Netherlands. Commercial and economic matters are handled by the national government, while the Netherlands retains political control over Aruba's diplomatic relations and defence.
Aruba has a small and open economy. The island possesses few natural resources and is heavily dependent on imports, including food and manufactures. Its main industries are tourism, offshore financial services and transport (mainly shipping). Until recently, the economy also relied heavily on a major oil refinery but it closed in 2012. Tourism grew rapidly from the early 1990s and, as a consequence, tourism-related industries - particularly construction - boomed, contributing to strong economic growth and to a low unemployment rate. Over 80% of the economy depends directly or indirectly on tourism, making Aruba the second highest tourism-dependent country in the world.
The global financial crisis in 2009 and the shutdowns of Aruba's oil refinery temporarily in 2010 and more permanently in 2012 led to an economic contraction but the economy grew again in 2013. The recovery was backed by a strong growth in the tourism sector, and in 2014 the economy has continued to be supported by a steady upswing in tourism and tourism-related investment. Economic output could be boosted sharply again if efforts to partially restart the oil refinery are successful.
The incumbent prime minister, Michiel Eman of the Arubaanse Volkspartij, isserving a second consecutive four-year term that will run until September 2017. The government holds 13 of the 21 seats in the legislature. Its greatest challenges remain improving the island's volatile economic performance and stimulating employment growth.
Economic policy is simultaneously focused on stimulating tourism growth, with projects to boost investment in this sector, and on economic diversification to achieve sustainable growth and to reduce the risks caused by Aruba's great dependence on tourism. The authorities are pursuing a new growth pillar anchored around the renewable energy sector and the promotion of knowledge- and technology-intensive industries. Taking advantage of Aruba's location and abundant solar and wind resources, the government has a strategy aiming to make Aruba more dependent on renewable energy; to turn it into a gateway between South America, the United States and Europe for commerce and investment, and to establish research laboratories.
The Prime Minister has pledged that the government will seek a transition to 100% renewable energy sources by 2020. In recent years Aruba invested US300m to build a 20-turbine wind farm rated at 30mw that meets 20% of the island's power needs. It replaced its old electric turbine with more efficient models, and is building a solar panel park. Between 2006 and 2013 Aruba reduced its imports of heavy fuel oil from 3,000 barrels per day to 1,700 barrels, saving some US50m a year. The construction of a second wind park due for completion in 2016 will mean renewables will provide half of the island's energy needs.
In April 2014, the government signed a partnership agreement with the international lighting company, Royal Philips, to revamp the island's entire public lighting system by completing an in-depth assessment and providing solutions for public buildings and outdoor lighting systems. As part of the agreement, public buildings will be retrofitted with LED lighting to realize the benefits of energy efficiency. Philips will design a tailored solution for outdoor living that allows Aruba to maximize energy efficiency and improve current lighting levels to international standards. Philips estimates sustainable lighting could result in initial energy savings of 50-80% and lower annual CO2 emissions by 3,000 - 4,000 tons.
To demonstrate its commitment to the development of sustainable tourism, the authorities have entered into an agreement with the KLM airline to demonstrate the viability of aviation biofuel. For six months from May 2014, 20 KLM flights between Amsterdam and Aruba and the neighbouring island of Bonaire will be powered by biofuel. The airline declared that the flights represent an important step towards proving that more sustainable aviation is possible.
