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The Black Hole of Debt

by NICK DEARDEN

In recent weeks, Haiti has been gripped by violent protest yet again. And yet again the inhabitants of this impoverished country are suffering the most brutal consequences of the fallout of the global economic crisis. This time it is the rise in global food prices, which has sparked riots in Port au Prince, Haiti’s capital, where UN peacekeepers used rubber bullets and tear gas against protesters attempting to storm the presidential palace. Days later the prime minister was fired.

It is therefore particularly appropriate that on Tuesday this week -the anniversary of the death of Haiti’s dictator, Francois "Papa Doc" Duvalier – hundreds of debt campaigners fasted for Haiti’s debt to be cancelled. Haiti’s fate has been tied up with the issue of international debt more than any other country. Despite the fact that it’s debt is illegitimate by any standards and despite Haiti’s sorry position as the poorest country in the western hemisphere, it still owes $1.3bn. Every year debt repayments flow from Haiti to multilateral banks, just as its resources once enriched the French empire.

Haiti became the world’s first republic to outlaw slavery, after the slave population led a struggle for independence which they won in 1804. However, in 1825, in return for recognition, the new state promised to pay its former French overlords compensation amounting to $21bn in today’s money. It did not finish paying this debt until 1947. Calls for restitution have been consistently rejected by French governments.

Some 40% of Haiti’s current debt was run up by the Duvalier dictators – better known as Papa Doc and Baby Doc – who between 1957 and 1986 stole parts of these loans for themselves, and used the rest to repress the population. When the Americans flew Baby Doc out of Haiti in 1986, he is estimated to have taken $90m with him. The Duvaliers were anti-communist and all too happy to follow the economic policies prescribed by the west, so their misdemeanours were overlooked.

In the 1980s and 90s, like all indebted countries, Haiti had to follow structural adjustment policies designed by the World Bank and International Monetary Fund (IMF) – including cuts in government expenditure on health and education, privatisation and the removal of import controls. Indigenous Haitian industries were wiped out as American imports flooded into the country.

In 1995 the IMF forced Haiti to slash its rice tariff from 35% to 3%. According to Oxfam, this resulted in an increase in imports of more than 150% between 1994 and 2003, the vast majority from the US. Certainly this meant lower prices for Haitian consumers, but it also devastated Haitian rice farmers. Traditional rice-farming areas of Haiti now have some of the highest concentrations of malnutrition and a country that was self-sufficient in rice is now dependent on foreign imports, at the mercy of global market prices.

Today, 80% of Haiti’s population live in poverty as defined by the World Bank (under $2 a day). Average life expectancy is just 52 years. Half of all Haitian adults cannot read or write. Yet Haiti failed to qualify for debt relief under the heavily indebted poor country initiative (HIPC), established in 1996 to make the debts of the most severely indebted poor countries more sustainable – surely the clearest proof of the arbitrary nature of the HIPC scheme.

Haiti was finally allowed to start the HIPC process in October 2006. It has to jump through numerous hoops before its debt is cancelled – significantly, more of the same economic medicine responsible for Haiti’s food dependency. On average it has taken poor countries three years to complete these programmes – by which time the country will have paid hundreds of millions of dollars in debt service. And even then not much more than half of Haiti’s debt will be cancelled. While some Haitians are reportedly eating dirt to quell their hunger, their government is forced to send almost $1m each week in debt service to wealthy banks supposedly established to fight poverty.

Haiti is not alone. Throughout April and May, Jubilee Debt Campaign supporters are fasting for 36 countries left behind by the debt cancellation process. Egypt, the Philippines and Pakistan have also experienced disturbances over sharp price rises made more severe by the fact that they are still sending huge sums of money in debt repayments back to the multilateral banks.

Ten years on from the 70,000-strong protest outside the Birmingham G8, which did so much to put debt on the international agenda, it remains a pernicious tool of injustice, taking a real and deadly toll on the lives of millions of the poorest people in the world. We cannot hope to permanently solve the food crisis or the political turbulence which continues to haunt countries like Haiti until debt is wiped out, unconditionally, once and for all.

NICK DEARDEN is the director of Jubilee Debt Campaign. 18th May marks the 10th anniversary of the Birmingham G8.

 

 

 

 


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