Haiti, an economy condemned by a 19th century debt

Playing the card of the colonial past to explain the underdevelopment of the present is not well regarded, especially in the old metropolises, but a past that begins in the 19th century and continues until 1947 in the form of disproportionate debt is more difficult to ignore. Haiti has things in common with its surrounding countries: an economic structure based on cheap labor—the export of textiles is the second source of foreign currency, after remittances; and Washington's interference. The United States invaded and occupied the country between 1915 and 1934, and then pampered dictators whose main virtue was staunch anti-communism. Like François Duvalier and his son Jean Claude, who between 1957 and 1986 ruled Haiti with an iron fist.

But it also presents notable differences. The first American country to abolish slavery upon independence from France in 1804 was in turn the most punished for its audacity two decades later, when a French army led by Baron Mackau forced it into a ruinous agreement: 150 million francs as compensation to former colonizers for the expropriation of lands and slaves.

With a size that was equivalent to 10 times the budget of the new country, the compensation forced it to take on a debt with French banks that was transformed until it ended up among the assets of the American National City Bank, predecessor of Citibank. Unlike the debt with which other countries improve their productive structure by building hospitals, schools and roads, the amortizations that Haiti had to satisfy until the middle of the 20th century responded to a much more basic concept: the right to exist as a nation. In research published by The New York Times In 2022, it was estimated what would have to be paid to Haiti to repair the damage: between 21,000 and 115,000 million current dollars. “1.5 and 8 times the size of Haiti's economy in 2020,” the American newspaper estimated.

According to MIT historian Malick Ghachem, this debt also generated a fundamental obstacle to the country's development that has not yet been resolved: the use of the dollar as a reference currency and reserve of value. The country's current central bank, he explains, is the heir to a National Bank of Haiti that was created to ensure payment to French financial interests, first; and Americans later. “The gurda is the official currency, but Haiti has never had a monetary authority with the freedom and capacity to make politics thinking about the needs of the citizens,” says Ghachem, author of the book The Old Regime and the Haitian Revolution.

Since remittances are transformed into money before reaching ordinary Haitians, the dollar is the almost exclusive preserve of Haitian banks, companies and millionaires. As demonstrated by the experience of Argentina, Venezuela and Lebanon, which in other ways have also ended with the dollar as a reference, the consequences for the economy are disastrous: cycles of devaluation/inflation that feed on each other and very low purchasing power of the population. In Haiti, the price of the dollar has multiplied by three in just ten years, with inflation registering levels of 20% in January, according to the estimates of Kesner Pharel, who in Port au Prince directs the consultancy Group Croissance. But how is it Does it give stability and purchasing power to the company? Ghachem recognizes that the solution he proposes is not easy: that the central banks of the Eurozone and the United States contribute to stabilizing it with interventions in the exchange market within a broader policy that would include tariff relief and other incentives for Haitian exports. so that the strengthened currency does not worsen the balance of payments.

“I'm not saying that it will be easy, or even that strengthening the currency is going to be the magic solution to return democracy to Haiti, what I am saying is that if we don't pay attention to that, the rest of the security measures are not going to work.” “, says. “If this crisis is not serious enough to convince the international community of the need for far-reaching measures to end the legacy of slavery and colonization, I don't know what crisis will do it,” adds Ghachem, referring to the political chaos that Haiti is experiencing after the resignation in March of the acting president Ariel Henry, a demand of the armed gangs that have taken over a large part of the country.

According to Jake Johnston, a researcher in Washington at the CEPR think tank, an equally fundamental problem for the economy is the virtual nonexistence of the State for “a very large majority of the population that lives without its services or protection.” Up to 80% of the public services that the State should provide are managed by non-governmental entities outside the country, he says.

The presence in Haiti of NGOs from rich countries has only increased since the 2010 earthquake that claimed between 92,000 and 300,000 lives (the imprecision of the number is another indicator of institutional weakness). A phenomenon that, according to Johnston, has to do with a lack of trust in local organizations and an institutionalized model of development aid that seeks to reward companies and organizations from donor countries. According to Johnston, United Nations interventions such as those from 1993-2001 and those from 2004-2017 end up not working because the soldiers cover up with their presence the need to fix Haitian institutions “and the problems resurface as soon as they leave.” .

Corruption

Johnston, who in January published the book Aid State on the effects of foreign intervention in Haiti, believes that the international community can do several things to improve Haiti's possibilities: stop directing aid towards its own NGOs and companies, strengthen to local institutions, demanding transparency, but also reporting cases of corruption to them when they occur, “instead of covering them up to gain negotiating power over those who commit them”, bringing to light the wealth that the Haitian ruling class hides in the countries rich, and study mechanisms to channel the historic debt of 21 billion dollars into development tools.

According to University of Virginia professor and Haiti specialist Robert Fatton, a basic economic measure to fight poverty, which according to Pharel estimates affects more than 60% of the population, is to reduce dependence on imported food by eliminating Gradually, the abrupt drop in tariffs that Haiti registered in the 1990s (from 50% to 3%), ruining, among other things, the cultivation of its basic food, rice.

A classic obstacle to such a measure is the power exercised by the people who made money from the import business and may be harmed by the gradual imposition of tariffs. Like other prominent groups in the country, they have direct ties to armed gangs. But according to Fatton, that's something that could be changing. “The gangs have begun to have a certain autonomy, and they no longer work so much under their orders,” he says. “Right now the only businessmen who are happy with the situation are those who are dedicated to drugs, money laundering, and handgun trafficking.”

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