Haiti’s history provides a prime example of exploitation and the imposition of odious debt. Haitians’ experience also exposed the flaws of current debt relief schemes. More positively the debt relief received following the earthquake should set a precedent for the international response to disasters in poor countries.
Haiti’s history: Born Into Debt
Haiti is the poorest country in the Americas with a national income per person of just over $1,000. Seventy per cent of the population live on less than $2-a day, and only 65% of adults are literate.
The Caribbean country used to be French colony based on slave labour. The slaves rebelled, winning independence in 1804. France then demanded compensation for the property their plantation owners had lost on the island. The price of their former slaves was included in this demand. In fear of invasion, Haiti agreed to pay back a sum of 90 million gold francs over the following 122 years. In 2004, the President at the time Jean-Bertrand Aristide suggested that France should repay $21 billion in reparations for the money extorted after independence. The Council of Hemispheric Relations thought this a very low figure considering the cost of interest and loss of growth resulting from the indemnity. Soon after making this suggestion, the democratically elected president Aristide was overthrown by a military coup supported by France and the USA.
Haiti was isolated by its slave owning neighbours. It therefore struggled to develop and has experienced political violence throughout its history. More recently, between 1964 and 1986 Haiti was ruled by the corrupt and oppressive Duvalier family. They borrowed vast amounts and in 2000 were believed to be responsible for 40% of the Haiti’s debt. These loans were either stolen by the Duvaliers or funded repression to keep them in power. Although donor countries and institutions were aware of the misappropriation of funds, it was tolerated so long as the Duvaliers stayed in the anti-communist camp.
For years the money used to prop up this corrupt and oppressive dynasty was repaid at the expense of those who have already suffered at the hands of this regime. Not only did these loans fail to benefit the Haitian people, the consequent debt service payments continued to cost the country millions of dollars that could have been better spent on health and education. More recently, a 2002 independent evaluation by the World Bank of its assistance to Haiti from 1986 to 2001 concluded, “the development impact of [World Bank] lending had been negligible”. In 2006 the government was paying around $50 million in debt repayments and interest. This is a typical example of what we call illegitimate debt.
Haitian NGOs and the struggle for debt relief
Before the overthrow of Jean-Claude Duvalier on February 7 1986 few popular organisations could emerge in Haiti. Afterwards people immediately came forward to exercise the right to participate in political and civil life. Organisations were created to tackle long-postponed grievances. Ever since civil society has been very active. Debt has been an important cause for Haitian NGOs, a cause which has gained much support outside their country. Unfortunately the NGOs are seldom given room to be heard in parliament.
Problems with HIPC
Despite being the poorest country in the Americas Haiti was not considered for debt relief when the Heavily Indebted Poor Countries (HIPC) initiative was first launched in 1996. In 1998, Claire Short, then UK Secretary of State for International Development, said that Haiti should be included in HIPC as an "exceptional case". In 2006 the World Bank finally accepted Haiti was poor enough and indebted enough and allowed it to enter HIPC. Haiti finished the HIPC and MDRI programmes in 2009 and subsequently had $1.2 billion of debt wiped off.
However, campaigners argue that whilst HIPC is better than nothing it is not good enough, for Haiti or any other country. Firstly, to enter and complete the scheme a country must accept harmful economic policy conditions imposed by the IMF. Secondly, many debts are not included in HIPC. After getting debt relief Haiti still ‘owed’ $0.9 billion to the rich world. Nowhere in the debt relief process did rich countries accept their role in creating Haiti’s unjust debt.
In January 2010 a devastating Earthquake struck Haiti killing up to 300,000 people. In the aftermath it seemed the state could collapse, survivors were left vulnerable to disease and without homes or livelihoods. Soon after the disaster twenty six Haitian NGOs together called for debt cancellation. This message was taken up around the globe, hundreds of thousands of people signed petitions.
Haiti’s debt had already increased to $1.15 billion following debt relief the previous year, and rose to $1.3 billion as new loans were given in the wake of the disaster. The public outcry led governments and the international financial institutions to drop Haiti’s outstanding debt.
The IMF set up a Post-Catastrophe Debt Relief Fund to facilitate this. It allows for debts of other countries to be cancelled in the wake of extreme disasters. However, it is expected to be used just once or twice a decade. Pakistan clearly needed such debt relief after last year’s floods but since the Haiti earthquake the mechanism has received no extra money or been expanded to be of use to more countries facing a crisis. Recently, more resources have become available because the IMF has around $3 billion after getting a high price for gold it has sold. Jubilee Debt Campaign has joined with allies such as Afrodad, Eurodad and Jubilee USA in calling for the IMF to use its extra money from gold sales to cancel debts for the poorest countries, such as through expanding the Post-Catastrophe Debt Relief Fund.
Even as Haiti’s debt was cancelled new reconstruction funds were being offered in the form of loans rather than grants, storing up problems for the future. Meanwhile Haitian NGOs have condemned their exclusion from donor conferences following the earthquake. The twenty six NGOs behind the campaign for debt cancellation have endorsed a call for the population to mobilise a Haitian People’s Assembly, which will address these challenges and define strategies for the alternative reconstruction of Haiti.
According to the Centre for Economic and Policy Research the United States has interfered in last November’s elections 2010 effectively banning one party, preventing Aristide’s return and influencing the vote counting process. Haiti has been freed from some foreign debt but has not been spared foreign domination.
Read more about the IMF’s Gold Sales here > >
Last updated: March 2011