IMF to Haiti: Freeze Public Wages

Since a devastating earthquake rocked Haiti on Tuesday--killing tens of
thousands of people--there's been a lot of well-intentioned chatter and
twitter about how to help
Haiti. Folks have been donating millions of dollars to Wyclef Jean's
Yele Haiti (by texting "YELE" to 501501) or to the Red Cross (by
texting "HAITI" to 90999) or to Paul Farmer's extraordinary Partners in Health,
among other organizations. I hope these donations continue to pour in,
along with more money, food, water, medicine, equipment and doctors and
nurses from nations around the world. The Obama administration has
pledged at least $100 million in aid and has already sent thousands of
soldiers and relief workers. That's a decent start.

But it's also time to stop having a conversation about charity and
start having a conversation about justice--about recovery,
responsibility and fairness. What the world should be pondering instead
is: What is Haiti owed?

Haiti's vulnerability to natural disasters, its food shortages,
poverty, deforestation and lack of infrastructure, are not accidental.
To say that it is the poorest nation in the Western hemisphere is to
miss the point; Haiti was made poor--by France, the United States,
Great Britain, other Western powers and by the IMF and the World Bank.

Now, in its attempts to help Haiti, the IMF is pursuing the same
kinds of policies that made Haiti a geography of precariousness even
before the quake. To great fanfare, the IMF announced a new $100 million loan
to Haiti on Thursday. In one crucial way, the loan is a good thing;
Haiti is in dire straits and needs a massive cash infusion. But the new
loan was made through the IMF's extended credit facility, to which
Haiti already has $165 million in debt. Debt relief activists tell me
that these loans came with conditions, including raising prices for
electricity, refusing pay increases to all public employees except
those making minimum wage and keeping inflation low. They say that the
new loans would impose these same conditions. In other words, in the
face of this latest tragedy, the IMF is still using crisis and debt as
leverage to compel neoliberal reforms.

For Haiti, this is history repeated. As historians have documented,
the impoverishment of Haiti began in the earliest decades of its
independence, when Haiti's slaves and free gens de couleur
rallied to liberate the country from the French in 1804. But by 1825,
Haiti was living under a new kind of bondage--external debt. In order
to keep the French and other Western powers from enforcing an embargo,
it agreed to pay 150 million francs in reparations to French slave
owners (yes, that's right, freed slaves were forced to compensate their
former masters for their liberty). In order to do that, they borrowed
millions from French banks and then from the US and Germany. As Alex von Tunzelmann pointed out, "by 1900, it [Haiti] was spending 80 percent of its national budget on repayments."

It took Haiti 122 years, but in 1947 the nation paid off about 60
percent, or 90 million francs, of this debt (it was able to negotiate a
reduction in 1838). In 2003, then-President Aristide called on France
to pay restitution for this sum--valued in 2003 dollars at over $21
billion. A few months later, he was ousted in a coup d'etat; he claims
he left the country under armed pressure from the US.

Then of course there are the structural adjustment policies imposed
by the IMF and World Bank in the 1990s. In 1995, for example, the IMF
forced Haiti to cut its rice tariff from 35 percent to 3 percent,
leading to a massive increase in rice-dumping, the vast majority of
which came from the United States. As a 2008 Jubilee USA report notes,
although the country had once been a net exporter of rice, "by 2005,
three out of every four plates of rice eaten in Haiti came from the
US." During this period, USAID invested heavily in Haiti, but this
"charity" came not in the form of grants to develop Haiti's
agricultural infrastructure, but in direct food aid, furthering Haiti's
dependence on foreign assistance while also funneling money back to US

A 2008 report from the Center for International Policy
points out that in 2003, Haiti spent $57.4 million to service its debt,
while total foreign assistance for education, health care and other
services was a mere $39.21 million. In other words, under a system of
putative benevolence, Haiti paid back more than it received. As Paul Farmer noted in our pages after hurricanes whipped the country in 2008, Haiti is "a veritable graveyard of development projects."

So what can activists do in addition to donating to a charity? One
long-term objective is to get the IMF to forgive all $265 million of
Haiti's debt (that's the $165 million outstanding, plus the $100
million issued this week). In the short term, Haiti's IMF loans could
be restructured to come from the IMF's rapid credit facility, which
doesn't impose conditions like keeping wages and inflation down.

Indeed, debt relief is essential to Haiti's future. It recently had
about $1.2 billion in debt canceled, but it still owes about $891
million, all of which was lent to the country from 2004 onward. $429
million of that debt is held by the Inter-American Development Bank
(IDB), to whom Haiti is scheduled to make $10 million in payments next
year. Obviously, that's money better spent on saving Haitian lives and
rebuilding the country in the months ahead; the cancellation of the
entire sum would free up precious capital. The US controls about 30
percent of the bank's shares; Latin American and Caribbean countries
hold just over 50 percent. Notably, the IDB's loans come from its fund
for special operations (i.e. the IDB's donor nations and funds from
loans that have been paid back), not from IDB's bonds. Hence, the total
amount could be forgiven without impacting the IDB's triple-A credit

Finally, although the Obama administration temporarily halted
deportations to Haiti, it hasn't granted Haitians temporary protected
status (TPS), which would save them from being deported back to the
scene of a disaster for as long as 18 months, allow them to work in the
US and, crucially, send money back to relatives in Haiti. In the past,
TPS has been given to countries like Honduras and Nicaragua in 1998
after Hurrican Mitch, but it has never been extended to Haitians, even
after the 2008 storms, presumably because immigrations officials fear a
mass exodus from Haiti.

But decency, as well as fairness, should trump those fears now. As
Sunita Patel, an attorney with CCR, told me, "We have granted TPS to El
Salavador, Honduras, Nicaragua, Somalia and Sudan following natural
disasters. To apply different rules here would fly in the face of the
administration's efforts to build good will abroad."

(UPDATE: Obama administration has
granted Temporary Protected Status to Haiti. This is a great relief to
Haitians in the US and a victory for those who pressured the
administration to do so.)

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