Haiti's 200-Year Economic Earthquake

January 28, 2010

Dan Beeton
Newmatilda.com (Australia), January 26, 2010

En español
See article on original website

Debt, Aid, Foreign Interference and the Most-Impoverished Country in the Western Hemisphere

The recent earthquake in Haiti has brought the island nation a perhaps unprecedented level of attention, interest, generosity and solidarity. The magnitude of the earthquake’s human toll has prompted international shock and an examination of the factors behind why the quake was so much more devastating in Haiti than similar quakes have been in other parts of the world. It is foreign interference – economic, military and covert – that has been the principle reason why Haiti is the most impoverished country in the Western Hemisphere, and in turn why the toll of the Jan. 12 quake has been so great.

Haiti was essentially born into debt, forced to pay its former colonial master, France, a 90 million franc ransom in order to begin to receive international recognition of its sovereignty. The debt was to “compensate” France for the loss of its slaves, the new citizens of the first free republic in the Western Hemisphere and the first Black republic in the world. Beginning payments in 1825, Haiti would not finish paying off this debt until 1947.

With the reign of “President for Life” François Duvalier beginning in 1957, and later his son, Jean Claude, Haiti began a new path of indebtedness. The new debt was also odious in that it was accrued by a brutal dictatorship that used the funds to pay the infamous “Ton Ton Macoute” death squads and to purchase expensive personal luxuries.

But this history only begins to tell the full story of how Haiti came to be the most impoverished country in the Western Hemisphere. The U.S. government played a direct role in the 1910s when it plundered Haiti’s National Treasury on behalf of U.S. banks. From 1915 to 1935, the U.S. military occupied and controlled Haiti, and implemented a new constitution allowing, for the first time since independence, for foreign ownership of Haitian land.

During the Duvalier era, the U.S. inflicted other long-lasting economic harm on Haiti. When a swine flu outbreak occurred in pigs in the Dominican Republic, and a few infected pigs were discovered in Haiti, the U.S. soon insisted on the total eradication of Haiti’s native Creole pig population (some 1.3 million pigs). U.S. companies profited from this when they supplied replacement pigs – fat but “fragile” hogs from Iowa that, unlike their hearty Creole cousins, required shelter and a special diet (the native Creole pigs would eat garbage). The slaughter of pigs was economically devastating for Haitian families, for whom the pigs were a form of investment, requiring relatively little care, but which could later be sold to finance significant purchases – for example, school uniforms and books.

The Creole pig eradication was merely one event that struck Haiti’s agricultural sector in the 80s and 90s. At the urging of the International Monetary Fund (IMF), which for decades acted as the de facto head of an international creditors’ cartel, determining the credit-worthiness of countries seeking loans from the World Bank, Inter-American Development Bank (IDB), and other lenders, Haiti slashed import tariffs on rice. Haiti, self-sufficient in production of rice until the 1980s, soon was flooded with cheap rice imports from the U.S. This triggered a mass internal migration, as peasants, no longer able to sustain their livelihoods through farming, moved to Port-au-Prince to seek employment in apparel factories (where workers were paid as little as $0.14 USD per hour in 1993). (One legacy of this rural-to-urban migration is the shantytown communities on the hillsides around Port-au-Prince, which were so vulnerable to the earthquake.)

Another infamous condition of the IMF was for privatization of state-owned companies, including a flour mill, the cement company, banks, and the state-run telephone company, Teleco. The popular rejection of this plan took the Washington-based lenders by surprise; “privatization had already proved to be contentious in Haiti,” the World Bank noted in 1998, “Clashes over [privatization and downsizing] were very visible.” Opposition to the privatization push became an important battleground, putting presidents Aristide and then Preval between the seemingly irreconcilable demands of labor unions and social movements on the one hand, and the IMF and the World Bank, on the other.

The pressure exerted on the democratically elected Haitian government to adopt Washington Consensus policies was backed by U.S. actions, however, that saw Aristide overthrown twice (in 1991 and 2004). Aristide was forced to accept the IMF’s policy prescriptions in order to be allowed back into office following his exile, in 1994. The battle over the privatizations has continued up to the present, with the announcement of Teleco’s prospective sale to Vietnamese company Viettel coming the same day as the earthquake.

The duration of Aristide’s second administration, beginning in 2001, took place amidst a new battle with Washington in which the U.S. used the multilateral development banks (MDBs) as proxies. The Bush Administration enacted an aid embargo against Haiti, using a flimsy pretext of supposed electoral irregularities in the 2000 election of several Senators as an excuse (despite that observers from the Organization of American States originally stated the elections were clean). The U.S. Treasury Department directed the IDB to withhold disbursement of loans for potable water, health and education, even as the IDB insisted the Aristide government pay interest on the withheld loans anyway. While the Bush Administration economically undermined his government, the Washington-based International Republican Institute (a sort of international arm of the U.S. Republican Party) assisted in destabilizing Aristide through its ties with the Haitian-elite-controlled “Democratic Convergence” and “Group of 184” coalitions, who were in close contact with the gang of coup-plotters, drug runners and thugs that began to mount attacks on towns and police stations in Northern Haiti. When the would-be coup-plotters announced a “High Noon”-style showdown with Aristide was imminent, it seemed that Aristide might flee the country. When Aristide decided he would stay instead, the U.S. military flew him out of the country to the Central African Republic. Both Aristide and eyewitnesses to his departure claim he was kidnapped.

Following Aristide’s ouster, an unconstitutional dictatorship was imposed on the country, headed by former technocrat Gerard Latortue. Unlike with Aristide, the World Bank and other Washington institutions would have little conflict with Latortue. Following the imposition of Latortue’s regime, then-World Bank’s Country Director for the Caribbean, Caroline Anstey, noted that “the interim government is made up of technocrats who have agreed not to run in the next presidential election. As a result, they are much freer to embrace a reform agenda.”

Under current president Rene Preval, Haiti has seen little more economic progress, despite much hope and anticipation following his 2006 election. Preval has been hampered by a strong opposition in the legislature (due in large part to the exclusion of Fanmi Lavalas from elections in 2006 and 2009); although the country has benefited from partnership in PetroCaribe, through which the Venezuelan government sells oil to Haiti on preferential terms.

Haiti has also benefited from the recent 2009 cancellation of three-quarters – $1.2 billion – of its external debt, due in part to a prolonged campaign by the Jubilee movement. Yet considering that Haiti is so reliant on agricultural imports, that it has sold off formerly profitable state-owned businesses, and considering Haiti’s already degraded roads and infrastructure (now made even worse by the earthquake), it is difficult to see what the engines of Haiti’s future economic growth will be and how it will begin to significantly reduce poverty.

For Haiti to rebuild successfully, it must have a functioning, democratically elected government that serves its people, free of foreign interference – something that Haiti has not truly enjoyed since before the Sept. 30, 1991 coup d’etat. Yet the elections planned for Feb. 28 (now almost certainly to be delayed) would arbitrarily exclude Fanmi Lavalas, the most popular political party, and 15 other parties from the ballot. This undemocratic exclusion received little attention from the international media and even less outrage from foreign governments. If the international community truly wants to help Haiti get back on its feet, it must support democracy in Haiti – which means allowing the Haitian people to choose their government and then allowing those governments to implement policies and serve out their full terms – free of aid embargoes, coups and destabilization efforts. Only then can there truly be hope for Haiti’s future.

Support Cepr


If you value CEPR's work, support us by making a financial contribution.

Si valora el trabajo de CEPR, apóyenos haciendo una contribución financiera.

Donate Apóyanos

Keep up with our latest news