Haiti's Political and Economic Earthquake "Made in the USA"

Haiti's Political and Economic Earthquake "Made in the USA"
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(updated below - Update II - Update III)

This morning, as political and financial leaders from around the world convene at the World Economic Forum, one of the central issues under discussion will be a strategy for Haiti's recovery. Bill Clinton and Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), have both advocated a Marshall Plan for Haiti whose goal would be to "restart private activity, rebuilding businesses and encouraging guarantees for the banking sector."

However, this kind of Western involvement in Haitian affairs represents the same approach that has been imposed on the country for more than twenty years. These policies have done nothing but perpetuate Haiti as the most impoverished nation in the Western hemisphere and as a source of cheap labor for American companies. If Haiti is to make a successful recovery the first step must be for Western leaders to acknowledge their role in the political and economic earthquake that residents of the island nation have suffered for decades, long before the ground gave way beneath them.

Since 1990 there have been two US-supported military coups, a series of economic "readjustments" at the behest of the World Bank, and a US corporate trade bill that have all served to return the former slave population to economic serfdom. Up until the earthquake on January 12, two-thirds of Haiti's exports were apparel products contracted by multinational companies such as K-Mart, Wal-Mart and the Walt Disney Company. And while the Magic Kingdom was stocked with goods made in Haitian sweatshops, 80% of the residents lived below the poverty line and earned less than $2 a day.

An Economy of Terror

US business interests have been heavily invested in Haiti ever since Woodrow Wilson invaded and occupied the island in 1915 (FDR didn't recall the troops until 1934). However, the present conditions were formed during the US-supported dictatorships of Papa and Baby "Doc" Duvalier. The Duvalier regimes had a horrific human rights record, including having the children of dissidents murdered in front of their parents, but they followed anti-communist policies and so were acceptable to the United States. Between 1946 and 1972, according to a study published in the Journal of Interamerican Studies and World Affairs, the United States sent $120 million in aid to Papa Doc, whom The New York Times referred to as "a man of principle with a desire to pacify his country." After Baby Doc seized power from his father, the enfant terrible was promptly visited by Nixon's Vice President, Spiro Agnew. According to Harvard physician and UN Deputy Special Envoy to Haiti Paul Farmer, in his 1994 book The Uses of Haiti, this visit put in place:

a new economic program guided by the United States, a program featuring private investments from the United States that would be drawn to Haiti by such incentives as no customs taxes, a minimum wage kept very low, the suppression of labor unions, and the right of American corporations to repatriate their profits.

But then something unexpected happened. After Baby Doc's ouster in the late 80s, widespread grassroots organizing in the slums and villages resulted in an overwhelming rejection of the US-supported candidate, former World Bank official Marc Bazin, and the election of the Haitian priest Jean-Bertrand Aristide in 1990. Aristide advocated a liberation theology similar to Martin Luther King, Jr. or Archbishop Oscar Romero and pledged to reject the US-backed policies of the past. These elections were considered "free and fair" by the US State Department, but the H.W. Bush administration immediately shifted economic aid from the democratically-elected government to "democratic forces" supported by the country's elite.

A Coup Regime

The US has long denied they had any role in the 1991 coup. However, this claim has been challenged by a series of investigative reports. It is known that the brutal leader of the FRAPH (Front for the Advancement and Progress of Haiti), Emmanuel Constant, was contacted by the CIA soon after the election and that the Agency worked closely with Constant during the buildup towards the coup d'etat eight months later. This support continued afterwards, even when FRAPH attacked Aristide supporters and engaged in a widespread campaign of murder, rape, and "facial scalpings" in 1993. Constant was then allowed to emigrate to the US a year later and international extradition requests were denied by both Presidents Bush and Clinton. Many of the other coup leaders were likewise protected by the United States. Others weren't so lucky as thousands of civilians were killed and hundreds of thousands fled overseas or across the border into the Dominican Republic as a result of the coup.

Immediately following Aristide's overthrow, the Organization of American States declared an embargo against the country to pressure the junta to allow Aristide's return. The United States signed on initially, but quickly moved towards "fine-tuning" the embargo to allow "individual companies operating in the assembly sector" to continue shipments (at that time about 80% of Haiti's international trade). Furthermore, an investigation by the General Accounting Office later found that both Bush and Clinton allowed Texaco to continue their oil shipments to the coup regime, effectively undermining the embargo. While the coup government maintained power, per capita income fell by one-third and unemployment sky-rocketed to 75%.

With widespread political instability wreaking havoc in the country, President Clinton brokered a deal to return Aristide to Haiti in 1994, so long as he signed onto a strict "structural readjustment plan" set up by the World Bank. According to the plan, leaked to the Multinational Monitor:

Haiti commits to eliminate the jobs of half of its civil servants, massively privatize public services . . . rewrite its corporate laws, 'limit the scope of state activity' and regulation, and diminish the power of President Aristide's executive branch in favor of the more conservative Parliament.

This was called "restoring democracy."

Programs such as this, and a series of other World Bank and IMF initiatives, "tightened monetary policy" for the next fifteen years and dictated how and where Haiti would be allowed to spend Haitian funds. On the eve of Aristide's reelection in 2000, an IMF Letter of Intent dictated how the new government's social policy would be run. Haiti was not allowed to hire any additional civil servants and had to "abstain from granting wage increases" to government employees. The IMF also mandated "spending on education relative to GDP" and insisted that Haiti would not be allowed to "impose restrictions on payments and transfers for international transactions." In other words, Haiti wasn't allowed to spend any money domestically without IMF approval and they had to open their borders to foreign goods without restriction. The Haitian population was kept alive because of the development loans that were dispensed, but they were unable to break free from their cycle of debt and dependency.

Establishing HOPE

Fast forward to 2004. With armed forces in the streets (many of them former FRAPH militants) President Aristide is loaded onto a US military transport, in what he referred to as a "kidnapping," and airlifted into exile in the Central African Republic. Vice President Dick Cheney then appeared on FOX News and explained that the US had intervened because Aristide had "worn out his welcome." Despite maintaining widespread support by the majority of Haitians, The Washington Post had earlier informed their readers that regime change was looming:

Aristide has pushed with mixed success a populist agenda of higher minimum wages, school construction, literacy programs, higher taxes on the rich and other policies that have angered an opposition movement run largely by a mulatto elite that has traditionally controlled Haiti's economy.

Perhaps the cardinal sin, however, was not selling off state infrastructure to foreign investors. As part of the agreement for his 1994 return to Haiti, Aristide had to promise to open up the electrical grid, phone lines, flour mills and banks to privatization. As The New York Times reported, the US and other international donors refused to grant any promised aid until Haiti followed through on these commitments.

Soon after Aristide was removed the Haitian Hemispheric Opportunity throughPartnership Encouragement Act of 2004 was first introduced before Congress. The HOPE Act, and later HOPE II, allowed duty-free transport of textile goods to be exported to the United States from Haiti as part of a new "special relationship." In this arrangement, raw materials such as yarn and fabrics are imported to Haiti from the United States or Latin America, assembly line workers piece together the products to the specifications of US companies for pennies each, and then they are shipped back to the US and sold at several hundred times their production cost. In exchange for this privilege the United States only asked that Haiti further privatize their economy.

Despite the obvious hope in this arrangement, a 2009 report by the Congressional Research Service found that "assessments of the effectiveness of Hope I, however, were disappointing." Since 2004 Haitian exports to the United States increased by 32% while, during the same period, the Haitian minimum wage declined by 36%. Haiti's current trade imbalance is enormous and the country relies exclusively on foreign sources for basic commodities such as food and oil. Then there's the debt, which is estimated at $1.7 billion (half of which was accumulated by the Duvalier regimes, but which Haitians today must pay for). This debt has served to indenture the country to international financiers and obligates them to accept whatever economic programs are demanded. The CRS report acknowledges, but significantly understates, the severity of the problem when they affirm that:

Haiti has a historically unhealthy dependence on foreign commerce and finance, from the colonial days of the sugar trade to the current assistance provided by developed countries. . . Haiti's trade relationship with the world is dominated by the United States, with which it ran a $494 million deficit in 2008.

Now the same politicians and financial elites that helped create this mess are proposing an even larger program following the same model. The people of Haiti are in dire need of immediate aid and support as they piece together their shattered lives. They require an elimination of this odious debt and an economic program that benefits local organizations and businesses rather than multinationals. With all eyes and hearts currently focused on Haiti it is our responsibility to demand justice for this poor nation. Given the history of Western meddling in Haitian affairs, one fears that the earthquake will be the least of their problems if we don't.

UPDATE: The Associated Press is reporting that only one penny out of every dollar makes it to the Haitian government during the current relief operation.

Each American dollar roughly breaks down like this: 42 cents for disaster assistance, 33 cents for U.S. military aid, nine cents for food, nine cents to transport the food, five cents for paying Haitian survivors for recovery efforts, just less than one cent to the Haitian government, and about half a cent to the Dominican Republic.

UPDATE II: At The Primate Diaries I review a recent study suggesting that farm subsidies could help reverse decades of forest degradation in Haiti. This, of course, would require a rejection of current World Bank policy.

[B]y providing a 25% subsidy for seed and a 75% subsidy for fertilizers both large and small farms would improve their income while at the same time improving the conditions of their environment. These subsidies would also be less expensive than the current practice of punishing infractions.

UPDATE III: The Inter Press Service News Agency has picked up this article for their recent story on transparency in development aid.

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