Haiti: a typical case of odious debt

Warning: IWWs do not necessarily share CADTM's perspective

Sophie perchellet, Third World Debt Cancellation Committee

Today, we are interested in Haiti. However, of all comments, none goes beyond the terrible earthquake. We are hastily reminded that it is one of the poorest countries on the planet but without explaining the causes.. We are led to believe that poverty and come like this, that it is an irremediable fact : "It is the curse that strikes".

It is indisputable that this new natural disaster is causing material and human damage that is as considerable as it is unforeseen. Emergency aid is therefore necessary and everyone agrees on this point. However, Haitians did not wait for the earthquake to have real difficulties accessing food, to medical care, to health facilities, to housing ... If it is a fact, is that poverty and misery, the causes of which are foreseeable, do not find their sources in this earthquake. We must rebuild the country because it has been stripped of its means to build itself first. Haiti is not a free or even sovereign country. Its domestic policy choices are enforced by a government that carries out orders from outside the country. For many decades in the 20th century, either this country has experienced periods of political instability, or it belonged to the creditors who supported a dictatorial regime.

Haiti is traditionally disparaged and often portrayed as a violent country, poor and repressive at best. Few commentaries recall the battle and the symbol of the hard-won independence in 1804 against the French armies of Napoleon. It is true that at the time, it was better to keep silent about this event and this affront in order not to deteriorate the image so worthy of France and to contain the risk of contagion to other colonies. Rather than emphasizing the human approach and the fight for Human Rights, savagery and violence will be the characteristics assimilated to Haitians. Edouardo Galeano speaks to this effect of the "white curse" : "At the border where the Dominican Republic ends and Haiti begins, a large poster gives a warning : The wrong step – The bad passage. On the other side, this is black hell. Blood and hunger, misery, pests |1|. "Philippe Rater prefers to speak of" a particular link, from hatred to affection |2| ».

If it is essential to reconsider the emancipation of the Haitian people, it is because in exchange for this double revolution, both anti-slavery and anti-colonial, the country inherited "the French debt of Independence" corresponding to 150 million gold francs (or the annual budget of France at the time). In 1825, France decides that "The current inhabitants of the French part of Saint-Domingue will pay to the federal fund deposits and consignments from France, in five equal terms, from year to year, the first applicable to 31 December 1825, the sum of one hundred and fifty million francs, intended to compensate the former colonists who will claim compensation. We concede, under these conditions, by this ordinance, to the current inhabitants of the French part of Santo Domingo, the full independence of their government |3|. »
This equates to approximately 21 billion dollars today. From the start, Haiti must pay a high price, the debt will be the neo-colonial instrument to maintain access to the multiple natural resources of this country (like coffee).

While it would have been possible to face the painful responsibilities of the past by 2004, the report of the Régis Debray Commission |4| prefers to rule out the idea of ​​restitution of this sum on the pretext that it is not "legally founded" and that this would open a "Pandora's box". Requests from the Haitian government in place are rejected by France : no reparations that hold or recognition of a debt of independence.

Current announcements by the French government to work for full cancellation of Haiti's debt to Paris Club creditors are welcome and the Committee for the Cancellation of Third World Debt (CADTM) demand since its creation in 1990. This remains insufficient. Haiti’s total external public debt is a typical case of odious debt and should be canceled immediately without conditions..

The doctrine of odious debt, resulting from international law recognizes the need to take into account the nature of the regime that contracted the debts and the use that was made of the funds paid. This implies a direct responsibility of creditors such as private organizations or IFIs. If a dictatorial regime is replaced by a legitimate regime, the latter can prove that the debts were not contracted in the interest of the nation or were for odious ends. In that case, they are void and the new authorities do not have to reimburse them. The creditors have only to turn to the leaders of the dictatorship in their personal capacity. the IMF, the World Bank or any other creditor is required to control that the loans granted are lawfully used, especially if he cannot ignore that he is dealing with an illegitimate regime.
Debt cancellation for developing countries is gaining ground in both South and North |5|. The debt audit is a tool to seize to impose the nullity of an illegitimate debt. In 2007, Rafael Correa, the President of Ecuador uses this concept to cancel a significant part of his multilateral and bilateral debt. During his inauguration speech on 10 August 2009, the President declared that this meant "a gain of more than 300 million dollars annually over the next twenty years, sums that will not be used for creditors' portfolios but for national development |6| ». This can serve as an example for other developing countries and especially Haiti.

The reign of the Duvaliers followed instability in 1957 : it will last until 1986, date on which the son "Baby Doc" is driven from power. The violent dictatorship widely supported by Western countries raged almost 30 years. It is marked by an exponential growth in its debt. Between 1957 and 1986, the external debt has been multiplied by 17,5. At the time of Duvalier's flight, it represented 750 million and 2008, she is coming up, with the interplay of interest and penalties, over 1 884 millions of dollars |7|. This debt, far from serving the impoverished population, was intended to enrich the regime set up : it therefore constitutes an odious debt. A recent investigation has shown that the personal fortune of the Duvalier family is well protected in the accounts of Western banks) represented 900 millions of dollars, or even more than the debt of his country at the time of his exile. A case is pending before the Swiss courts for the return to the Haitian state of the assets and ill-gotten goods of the Duvalier dictatorship. These assets are currently frozen by the Swiss bank UBS which advances intolerable conditions as to the destination of these funds |8|. Jean-Bertrand Aristide, elected in popular enthusiasm then accused of corruption then restored to power as a puppet of the United States, is no slouch when it comes to debt and misappropriation of funds. According to the World Bank, between 1995 and 2001, debt service, namely the principal and the interest reimbursed, has reached the considerable sum of 321 millions of dollars.

This means that all the financial aid currently announced following the earthquake, is already lost in paying down the debt !

According to the latest estimates, more than 80% of Haiti’s external debt is held by International Financial Institutions (IFI) which bring together the International Monetary Fund (IMF) and the World Bank (BM). The government is implementing "structural adjustment plans" redesigned as "Strategic Documents for Poverty Reduction" (PRSP). In exchange for the resumption of loans, some insignificant debt cancellations or reliefs are granted to Haiti but which give a benevolent image of creditors. The Heavily Indebted Poor Countries Initiative (PTTE) in Haiti, to which we have just admitted the country while all now recognize its structural poverty, is a typical case of odious debt laundering. That is, replacing the old loans directly related to the debt of the dictatorship, by new so-called "clean" loans |9|.

In 2006, IFIs and Paris Club agree to expand HIPC initiative to Haiti. The stock of total external public debt was 1,337 millions of dollars. At the completion point of the initiative (in 2009), the debt was 1,884 millions. A debt cancellation in the amount of 1 200 million dollars is decided for - according to their term- "Make the debt sustainable". In the meantime, "Structural adjustment plans" have wreaked havoc, especially in the agricultural sector, the effects of which reached their peak during the food crisis in 2008. Haitian peasant agriculture is dumped by US agricultural products. Macroeconomic policies supported by Washington, l's, the IMF and the World Bank do not care about the need for development and protection of the national market. The only concerns of these policies are to produce for export to the world market. It is therefore disturbing to hear that the IMF "stands ready to play its role with the appropriate support in (his) area of ​​expertise ".

Regardless of the debt issue, it is feared that the aid will take the same form as that which accompanied the post-tsunami in Asia or the post-cyclone Jeanne in Haiti in 2004. That is to say either broken promises or funds intended to enrich foreign or private companies. In Indonesia, aid from the international community has mainly favored the privatization of companies and public infrastructure. The development of tourism is preferred to an agrarian reform which would have prevented the peasants from suffering the dramatic consequences of the food crisis.. Haitians need a reconstruction of their country but also and above all a lasting improvement in their living conditions. The government must change these negative economic orientations for the country. This means that he must break with neoliberal policy to prioritize investments in the agricultural sector and launch a process of land reform that favors the access of small(e)s peasant(born)s to earth, to supervision and agricultural credit. We must also change the direction of trade agreements : the country lost a great opportunity to bring its tariffs to the same level as other countries in the region through CARICOM. The state must also break with its policies that exclude women, first victims of poverty.

Today, the “generous donations” come mostly from the country's creditors. Rather than donate, it would be better if they forgot Haiti's debts to them : totally, unconditionally and immediately. Can we really speak of a donation when we know that most of this money will be used either to repay the external debt to creditors or to implement "national development projects" decided according to the interests of these same creditors?. It's obvious that, without these donations immediately, it would not be possible to have this debt repaid, at least half of which corresponds to an odious debt. The major international conferences of any G8 or G20 extended to the IFIs will not advance Haiti’s development one iota but will rebuild the instruments they use to establish neo-colonial control of the country.. This will be to ensure continuity in repayment, basis of submission, just like with recent debt relief initiatives.

On the contrary, so that Haiti can build itself with dignity, national sovereignty is the fundamental issue. Total and unconditional debt cancellation must therefore be the first step towards a more general approach.. A new development model alternative to IFI policies and economic partnership agreements (EPA signed in December 2009, Accord Hope II …), is necessary and urgent.

Notes

|1| http://www.cadtm.org/Haiti-la-maled…

|2| http://www.google.com/hostednews/af…

|3| http://www.haitijustice.com/jsite/i…

|4| http://www.diplomatie.gouv.fr/fr/IM…

|5| http://www.cadtm.org/L-annulation-d…

|6| http://www.cadtm.org/Discours-d-inv…

|7| http://www.imf.org/external/pubs/ft… (page 43)

|8| http://www.cadtm.org/Le-CADTM-exige…

|9| The CADTM nevertheless considers these new loans to be part of the odious debt since they are used to pay this old debt..