Haiti and the Shock Doctrine

Haiti and the Shock Doctrine
October 1, 2012
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Haiti and the Shock Doctrine

14 August 2012, by Matt Kennard

in opendemocracy.net

(Pour une version française de cet article, réalisée par Luc Saintvil cliquez ici)

Haiti, an already very poor country, was shattered by the earthquake of January 2010 centred onthe capital, Port-au-Prince. In the aftermath, a rigorous economic programme was imposed by rich-world agencies and governments that took no account of Haitians’ true needs. A forensic investigation of how this blueprint has overridden the hopes of a new generation of Haitians, by Matt Kennard.

“In the Western hemisphere, in Haiti and elsewhere, we live under the shadow of your great and prosperous country. Much patience and courage is needed to keep one´s head” – Doctor Maigot to Mrs Smith in Graham Greene’s The Comedians

In the middle of Port-au-Prince, along a dusty road and behind some imposing metal gates, sits the E-Power electricity plant. In a capital city where electricity blackouts are a nightly occurrence, E-Power is the kind of company the international financial institutions (IFIs) running Haiti believe will lead “reform” – by taking power away from the state-run company, and running it for profit. The company was founded in 2004 by a group of Haitian venture capitalists excited by the departure of social-democratic president Jean-Bertrand Aristide [10]. The aim, it said, was to “offer a solution to power generation in Haiti”. Sure enough, two years later, in 2006, the new United States-backed president, René Préval, launched an open bid for a contract to provide electricity to Haiti’s [11] capital city. Seven companies took part: E-Power won.

For many in the Haitian business elite, such economic liberalisation should now be the model for the new Haiti being built after the devastating earthquake [12] of 12 January 2010. “The earthquake created trauma that could have been better exploited”, Pierre-Marie Boisson, board director at E-Power, tells me as we sit in the upmarket offices at the plant. “Because of the political process that took place after that, it took too much time.” He adds: “Earthquakes should be an opportunity because they destroy. Where earhquakes destroy, we have to build. When we have to build we can create jobs, we can create a lot of changes, we can change a country.”

However, Mr Boisson’s cynicism about the slow rate of “exploitation” is not quite accurate. In the aftermath of the earthquake, the opportunity afforded by the destruction wreaked on Haiti was, in fact, pounced [13]on immediately – and to stunning effect.

As the dust was still settling in Port-au-Prince, the IFIs and various US agencies – what became the de facto government in the absence of a Haitian alternative – carved up the society’s different sectors and doled them out amongst themselves. The Inter-American Development Bank [14] (IADB) got education and water; the World Bank bagged energy; the United States Agency for International Development  (Usaid) gratefully accepted the planned new industrial parks. Alexandre Abrantes, the World Bank’s special envoy to Haiti, tells me how it worked: “We basically have agreed that where we have each of us the competitive advantage, we then divide … the sectors among ourselves, and add in some sectors which go together.”

The mass privatisation of state-run assets and the turning of Haiti into a “Caribbean sweatshop” – via an export-led garment-production and cheap-labour model – was something that the US and the IFIs had been pushing forcefully from the mid-1990s through the 2000s. Now its realisation became a distinct possibility. They could enforce it with minimal pushback from a decimated civil society and a denuded government. All the extra-Haitian bodies, particularly the US government, saw the same vision, which made it even easier. “There is a lot of agreement, so I would say one of the unusual and very positive aspects about this project is that it is really done in partnership”, Jean-Louis Warnholz, a state-department official working [15] on Haiti, tells me.

The “partnership” believed that rebuilding the capabilities of the Haitian state should play no role in the reconstruction. The panacea to Haiti’s problems [16] lay in the creation of a flourishing private sector. “What’s really going to change Haiti and make this process different from all the previous ones is [the] development of the private sector, and I think there’s a consensus in that”, Agustín Aguerre, the Haiti manager for the Inter-American Development Bank (IADB), tells me. The bank disbursed $177bn in grant money in 2010, more than any other multilateral source, to push this agenda. “Private sector is the big difference, it’s what will be creating wealth, creating jobs, not the public sector”, Mr Aguerre adds.

Even after the election of Michel Martelly as Haiti’s president in March-April 2011, things remained easy for this private-sector-led “consensus”: the IFIs and US not only had their “shock event [13]”, but also their “shock president”. (Aristide – who was president [17] in 1991, 1993-94, 1994-96, and 2001-04, continues to be the most popular politician in Haiti, but is banned from standing again for the presidency). In the Martelly administration, the US had found their “Chicago boy”, a more-than-willing partner for their economic programme. All the major business groupings and IFIs I spoke to in Port-au-Prince were effusive in their support for the president. Carl-Auguste Boisson, general manager at E-Power, says: “I am pleased by what I heard Martelly saying about the importance of private investment, especially when he was campaigning he was talking about things like providing private provision of public services.”

Kenneth Merten, the former [18] United States ambassador to Haiti, is similarly excited about the new president’s privatisation agenda. “A few privatisations of flour mills, but aside from that you haven’t had much of anything in past decades,” he tells me. “That’s the element that’s been lacking here, you need a government that understand investment and I think Martelly and his folks do.” For the US, a pliable figure like Martelly had been a long time coming. Despite many decades of effort, Haiti had not completely succumbed to the plans that its major patron had for it. And such recalcitrance had been causing increasing consternation in Washington.

The long history

In the 1990s the pace of economic reform in Haiti was not fast enough for Washington government or the powerful IFIs that were together trying to radically alter the face of the country. After the first democratic elections in the country’s 200-year history in 1990, the US was hopeful about breaking up the corrupt state institutions which had been run as the personal fiefdoms of “Papa Doc” and “Baby Doc”, the US-backed Duvalier [19] dictators that had ruled viciously for nearly forty years. Private capital would then be able to penetrate deeper into Haiti, and an economic model conducive to the interests of the rich countries could take firm root.

But it wasn’t going to plan. Instead of the US-orientated “reformer” many in Washington had hoped for, a huge mass movement [20], named Lavalas (“Flood’), propelled the social-democrat priest, Jean-Bertrand Aristide [10], to a landslide victory in 1990. Over the next twenty years, Aristide would be ousted twice (with US support), and the democratic hopes and dreams of its people would be quashed time and again.

With the nuisance of Aristide, and all the attendant turmoil in the country, it remained hard for the US and its allies in the International Monetary Fund and World Bank to transform Haiti according to the neoliberal model in the way they had envisioned. When Aristide was put back in power in 2001 he did so with the tacit agreement that he would allow the US and Bretton Woods [21] institutions to institute their plan. It had been eleven years since the democratic elections, and still economic “reform” was slow. Something had to change.

In this period, René Préval, a former ally of Aristide who served as president from 2006-11, seemed to offer some hope for the Americans. “In the context of the developing world, we would most accurately describe him as a neoliberal, particularly in that he has embraced free markets and foreign investment”, notes one of the US embassy’s diplomatic cables sent from Port-au-Prince in 2007.

But the leader the US was really after in that period looked more like Haitian-American businessman [22] Dumas Simeus. A resident of Texas, he assured the US embassy, according to a diplomatic cable of 2005, that “he would manage Haiti like a business”. The same cable added: “Displaying abundant charm and energy, the 65-year-old said he had decided to run for President not only for Haiti’s benefit, but also as a gesture of thanks to the United States.” He was very clear about he would do this: “The University of Chicago alum pledged to bring the ‘Chicago boys’ to Haiti and establish a road map for change, promising investors would return.”

It was exactly what the US embassy wanted to hear; Simeus was the candidate they had been searching for. The cable concluded by noting that the millionaire Texan is a “potentially viable candidate” who could, unlike Aristide, “govern responsibly and maybe effectively” – that is, in the US interest. The US now deems Martelly similarly “responsible”.

But in many ways, the US exasperation at the apparent reluctance of Haiti’s leaders to sell off their country’s assets, and create an economic playground for foreign capital, remains hard to understand. From the mid-1990s through the 2000s, the “Chicago boys” had to all intents and purposes come to Haiti; the process of opening up Haiti’s economy to the predations of foreign capital was well underway. In 1996, the Haitian government had already, one diplomatic cable published by Wikileaks notes, “established legislation on the modernization of public enterprises, which allows foreign investors to participate in the management and/or ownership of state-owned enterprises.”

Moreover, a law of November 2002 explicitly acknowledged the “crucial role of foreign investment in assuring economic growth and aims to facilitate, liberalize, and stimulate private investment in Haiti.” The law gave foreign investors exactly the same rights and protections as Haitians. A few months earlier in 2002, the Haitian parliament had voted for a new free-trade-zone law which provided “zones” with fiscal and customs incentives for foreign enterprises – for example, a fifteen-year tax exemption. In other words, post-Aristide, the government had “seen the light” and embraced the US and Bretton Woods vision for post-dictatorship Haiti. But like a recidivist addict, these steps were never to be enough to sate the US and the IFIs. They wanted their “Chicago boy”.

A good example of this greed comes from the Wikileaks cables [23], one of which notes that in 1996 a “modernization commission” was set up to decide whether management contracts, long-term leases or capitalisation was the best option for each of the companies to be privatised. The commission would also set how much the Haitian government would retain of the asset, with a cap at 49% – a minority stake, stripping the Haitian people of control over their own industries. This had an immediate effect. In 1998, two US companies, Seaboard and Continental Grain, purchased 70% of the state-owned flour mill.

But despite this “progress”, a diplomatic cable from 2005 lamented: “Some investments, however, still require government authorization”. It added: “Investments in electricity, water and telecommunications require both government concession and approval. Additionally, investments in the public health sector must first receive authorization from the Ministry of Public Health and Population.” It sounded like a normal sovereign country, but a sovereign country is exactly what the the US and IFIs didn’t want Haiti to be. Two years after Aristide had been spirited out of the country, and just before the victory the “neoliberal” Preval in 2006, the US embassy noted witheringly: “Since the privatization of the cement factory, privatization has stalled and appears to have been put on hold.” It went on, plaintively: “None of the major infrastructure-related enterprises (the airport, seaport, telephone company or electric company) have been privatized.”

The document continued: “Although these entities were supposed to have been privatized by 2002, persistent political crises, strong opposition from the former administration, and a general lack of political will have delayed the process indefinitely.” The cable then notes a more plausible reason why this massive privatisation programme had not been enacted quite as smoothly as the US had hoped: “Some opposition to the privatization of state enterprises continues from groups such as employee’s unions who have expressed opposition to workforce reductions that privatization might entail.”

By 2008, then, the US embassy was disconsolate at the slow rate of progress and intransigence from the Haitians. “Despite assurances that privatization is a still a priority for the government …we are increasingly skeptical that privatization, in whatever form, will happen”, one cable noted. “Time is running out.” The US, however, remained steadfast to its goal. “We will continue to advocate strongly on behalf of privatization and/or private management”, one cable noted. It further advocated using the Bretton Woods institutions to bribe the democratic government of Haiti. “[The US embassy] repeats its recommendation … that privatization be a requirement under future agreements with the IFIs … to be negotiated with the new government.”

The shock

Bribery might prove an effective strategy for the poorest [24]country in the western hemisphere, but it would still be messy. There was after all a Haitian parliament, populated with nationalist elements, which could continue to stall or even kill the massive privatisation programme the US favoured. But as the US was honing its strategy for its latest push, on 12 January 2010 a huge earthquake hit Port-au-Prince and surrounding areas, creating one of the worst humanitarian crises in the history of the world. More than 300,000 people were killed, while millions became homeless. The capital city lay in ruins, including the majority of government ministries as well as the presidential palace. What was left of an already strangled civil society and social institutions was destroyed. Haiti was a blank slate.

The US and its allies in the IMF and World Bank did not waste any time in realising that this was the opportunity to push through their radical neoliberal programme from the 1990s with little resistance. The opposition to this privatisation programme – which had ranged from quasi-nationalist politicians to worker-based collectives – had all but disappeared. Without a government in place to agree or disagree with the US and the IFIs, which were soon running the country, Haiti was ready for the “shock doctrine” – the radical economic prescriptions enforced throughout the world and outlined in Naomi Klein’s eponymous book [25].

The first step was to entrench a decision-making system which took all power out of the hands of accountable democratic institutions run by Haitians. The Interim Haiti Recovery Commission [26] (IHRC), which became the country’s most powerful decision-making body in the aftermath of the earthquake, was the perfect example of this move. The IHRC was set up ostensibly to coordinate the response and spend the donor money in the absence of a Haitian government. It had twenty-six members, of which twelve were Haitian, leaving them without a voting majority (just as they were not allowed a majority stake in their industries). To those Haitian members, it was obvious they were window-dressing.

In a December 2010 letter of protest [27] to the IHRC chair, former US president Bill Clinton, they complained of being “completely disconnected from the activities of the IHRC”, as well as having “time neither to read, nor analyze, nor understand – and much less respond intelligently – to projects submitted.” According to one journalist based in Port-au-Prince: “These twelve board members surmised that their only function is to rubber-stamp, as Haitian-approved, decisions already made by the executive committee.”

This was exactly the perception that the US and the IFIs were trying to avoid. When officials from the US and international agencies in Haiti are interviewed they are at pains to explain how they are “working for the Haitians” and the phrase of the day is “Haitian-led”. In truth, there was, and continues to be, minimal Haitian involvement in the reconstruction (outside of the business elite). An article [28] in the Washington Post put it bluntly in January 2011: “There is a dramatic power imbalance between the international community – under U.S. leadership – and Haiti. The former monopolizes economic and political power and calls all the shots.” The financial benefits to the American private sector of this set-up was immediately obvious. An AP investigation found [29] that of every $100 of Haiti reconstruction contracts awarded by the American government, $98.40 returned to American companies. The focus was never on building up indigenous capacity – any work was to be outsourced to foreign companies or NGOs by the IHRC.

After Michel Martelly was sworn in [30] as president in May 2011 it took months for the former pop star and member of the “tonton macoute” militia to form a government, as his candidates for cabinet positions were repeatedly rejected by parliament. By the time his administration was in place in June 2011, eighteen months after the earthquake, the coordinates of the economic reconstruction were already in place. Martelly’s hands were tied by the very IFIs who claimed to be subordinate to the Haitians. Though in Martelly’s case [31] his hands didn’t even need to be tied – he was a willing “shock president”.

The neoliberal model

The three factors that the US and IFIs wanted to build the “new Haiti” around were high-end tourism; export-processing zones; and a resurgent private sector in control of the previously-state owned assets.

The managers of the reconstruction had a couple of countries in mind which they believed could serve as a model. One was the Dominican Republic [32], the country next door to Haiti, which had long been an oasis of calm for private capital in the Caribbean. In Haiti, using the model of its Hispaniola neighbour, the IADB planned to spend $22m on a high-end tourism resort near the 19th-century citadel at Labadee, a port on Haiti’s northern coast. Mr Almedia, Haiti manager for the IADB, told me the bank’s money will “provide the means for the private sector to come and invest”, adding that “in [the Dominican Republic] everything they have is all private. The airport is private, the roads are private, even the internal roads. So we could do the same thing [in Haiti].” (In the initial carve up of Haiti society, the IADB was given road infrastructure.)

The other opportunity that had to be taken advantage of was speeding up the privatisation process. The World Bank used the example of Teleco, formerly the national telecom operator, which in 2009 the bank’s private sector arm had helped partially privatise. Mr Naim, the private-sector Haiti manager for the World Bank, told me Teleco is an example of what the government should do now to the ports and airport. “[They can] really transform these assets that generally the government handles poorly”, he says, adding that “It’s better for the government to focus on social things” and let these assets be privatised.

Teleco itself is now due for complete privatisation under the guidance of the World Bank’s private-sector arm, the IFC. For the poorest country in the western hemisphere, it was hard – possibly even suicidal – to argue with the World Bank tells you. In March 2010, the bank promised $479m in grants; the IFC put $49m worth of direct investment into Haiti’s private sector.

With Teleco on its way to privatisation, the IADB had its own plans for the national water and sanitation authority (Dinepa), which had come under its domain in the initial carve-up. The bank soon handed over the authority’s management duties to the giant Spanish company, Agua de Barcelona, which won a three-year contract to train and assist worker,s for which they received millions of dollars. “Many local companies are taking control of small towns’ water systems”, Mr Aguerre of the IADB tells me excitedly. This essential commodity and basic human right was now being turned into a for-profit venture. “We are seeing good examples of places where no one paid for water services, and little by little they are paying”, adds Mr Aguerre. Experts from Agua de Barcelona became the leaders of discussions concerning the investment needed in Haiti’s water system and the process of opening bids to different contractors for the completion of new pipelines and other systemic improvements.

In education, the IADB’s plans were no different. Thanks to decades of neoliberal policies which prioritised the private sector above the Haitian ministries, even before the earthquake 80% of educational services were delivered outside of the state (primarily by international bodies or the private sector). As a result only half of school-age children in Haiti went to school. For the IADB, this did not prove the folly of their enterprise. Contrariwise, they concluded that it meant they had not gone far enough. “It’s too ambitious to think you can turn it around”, Mr Aguerre says.

The IADB settled on a voucher programme [33] that allows the government to retain some “quality control”, but meant education would be completely privately-run. To ensure full access, the plan would create a publicly-funded but privately-run education system. The small print was that this public subsidy would cost the Haitian government about $700m a year, seven times the $100m it spends now on education. With no new revenue streams evident (in fact, as we shall see, the government’s tax base was being all but destroyed), the obvious implication was that full access was not an aim (or even a hope). When the IADB’s promised $500m over three years runs dry, more than half of Haiti’s children will still be locked out of the school system.

The IADB rationalised this arrangement by arguing that the private sector would pick up the slack – explicitly holding Haiti’s kids ransom to Hollywood film stars. “There are many private actors willing to put money in”, added Mr Aguerre. “Half of Hollywood is interested. Everyone wants their Susan Sarandon School of Arts.” Incidentally, the “shock president” Martelly has been approving of both vouchers and subsidising private schools as methods to rebuild the Haitian education system.

With the complete privatisation of the telecoms, water, education, the final piece in the jigsaw for the IFIs and the US was new “industrial parks” or “integrated economic zones”. These, so the propaganda went, would ensure the economic growth that could put Haiti and its people back on their feet.

The cell approach

The thirty-minute drive to Codevi industrial park from the airport in northern Haiti is the smoothest in the country. In a place famed for its poor infrastructure – particularly the undulating roads – the park and the surrounding area are something of an oasis. Beyond the small bridge and metal gates which divide Codevi from the town outside, there’s everything that the average Haitian doesn’t have: paved roads, a functioning health service, employment, and even a (small) trade union – the only one in the country.

The two million square-foot Codevi park was originally built by a Dominican textile company, Grupo M, on the Dominican side of the border [34], but operations were expanded to Haiti in 2003 (with the help of a large investment by the World Bank). “It was created as a vision of expansion that Grupo M had to look for as the Dominican Republic became more complicated competitiveness-wise”, Joseph Blumberg, vice-president of sales for the company, tells me as he sits in his air-conditioned office inside the park. “Haiti offered us the competitive edge that we needed in this region to maintain ourselves with the US market.” He adds, “It had a labour cost which was the lowest in the region.” The minimum wage in Haiti now is 150 gourdes ($3.70), which is nearly half that in the Dominican Republic.

This competitive advantage – in a lay person’s terms “slave wages” and favourable trading terms with the US – had caught the eye of the IFIs in the aftermath of the earthquake. The aim was to rebuild Haiti as a “Caribbean sweatshop” that could enjoy the full fruits of the Haitian Hemispheric Opportunity through Partnership Encouragement (Hope) Act, which was passed [35] by the US Congress in 2006, granting tariff-free access for Haitian textile exporters to the US market. This had been followed by increasingly favourable terms through Hope II, in 2008, and the Help Act after the 2010 earthquake.

The parks like that at Codevi are known in the IFIs literature as “integration economic zones” (IEZs): places where infrastructure, welfare services and other services are provided behind imposing metal gates for the lucky few. The propaganda justifying them argued that prospective foreign investors put off by the decrepit or non-existent roads, electricity-grid and water system throughout Haiti would here have access to a ready-made mini-city. There was already a huge industrial park [36] of this kind near the airport in Port-au-Prince called Sonapi, which is fully owned by the Haitian government and had nearly forty companies based there. But the new IEZs would be under the sole control of its initial investors – mainly USAID and the IDB.

This raised the question of what would happen outside these so-called “poles” of economic activity. What would the incentive be for the central government to develop infrastructure and social services through the country if they were being built on this micro-scale? And where would the money come from? Alexandre Abrantes, the World Bank’s special envoy [37] to Haiti, admits this is a problem; he tells me that industrial parks “may not be sustainable if you were to do it as a policy everywhere”.

Codevi is essentially an “export-processing zone” where exports pay no tax to the central government and there is no customs duty on imported materials. “You’re in an extra-territorial concept so that your goods come in and out very quickly without much paperwork”, adds Armando Heilbron, a senior private-sector development specialist[38] at the World Bank working on the IEZs in Haiti. Therefore, Haiti’s reconstruction will be centred in isolated small cells – called “poles” by the economic managers – primarily around the northern part of the country, while the rest of the country’s infrastructure and welfare services will fall further into disrepair.

But maybe the biggest problem with the industrial parks is the unscrupulous nature of the companies that populate them. The public-relations tour of Codevi [39], with its stops at the local doctor and training facilities, is a relief after experiencing the destruction that has been wrought in the rest of the country. But that same tour did not include many of the most important episodes in its establishment. Codevi was originally built on farmers’ land against their will – a process which literally destroyed the region’s agricultural infrastructure to create sweatshops. It was a parable for the economic reconstruction that occurred after the earthquake. The diplomatic cables recount that there had been a “long-standing labor dispute between Dominican manufacturer Grupo M and workers in Ouanaminthe”. One says:

“According to Yannick Etienne, a labor representative, the fight has its origins in the closed-door negotiations that established the Free Trade Zone (FTZ). The farmers were left out of the negotiating process until the day of the FTZ ground breaking ceremony in 2002, when they were told their land was being expropriated. Grupo M eventually published a social compensation plan in 2003, however, it came too late for the farmers whose land was already gone, and whose suspicions of the Dominicans were already aroused.”

Grupo M and their patrons [40] at the World Bank do not tire of outlining the countless benefits which accrue to the local population because of Codevi. When I ask to speak to workers, two are dutifully brought out to give monosyllabic and mono-positive comments about their jobs, perhaps wary of the manager who sits next to them. Neither is a member of the union, I soon find out. In fact, Grupo M tells me it has no conception of how many workers are in the union. “Very little”, is all Mr Blumberg tells me. “It’s not part of their priority. They’re happy and when the workforce is happy they don’t mind if anybody is doing anything for them or not.”

However, according to the diplomatic cables released by Wikileaks, the soothing words of Mr Blumberg do not reveal the whole story. “Dominican unions allege [Grupo M] discriminates against labor organizers, fires their members, and has created a fraudulent “scab union” in order to circumvent the legitimate one”, one cable notes. It becomes clear something similar had happened in Haiti. Grupo M did have a stronger union once – before it was busted after trying to exercise its rights. Just months after Codevi opened, the workers began complaining of “exploitation and mistreatment” by management of the Grupo M. Rounds of strikes and violence by union members were followed by a “series of employee terminations by the company throughout that summer.”

Mr Blumberg explains it thus: “When we had the first union, there was a lot of growing pain. They didn’t have the right groups guiding them, there were a lot of radicals, a lot of leftists.” But, he adds: “In the end, everything was straightened out and we’re in peace and we’ve fine with the union.” The union had been co-opted. Workers’ rights would not be a high priority for the economic model that would design the new Haiti. In fact, the plan was predicated on the lack of rights for workers. In an internal IFC document that was presented to the Haitian government, the administration is implored to amend the labour code in order to “lift restrictions on 24/7 multi-labor shifts” while “streamlining” the process by which night-time salary supplements can be done away with.

The plan was also predicated on a lack of tax revenue. Another incentive for the foreign companies conjured was the so-called “economic free zones” (EFZs), which would offer companies tax and duty-free rights if they set up operations in Haiti. In truth these zones [41] were not real in physical space but rather constituted the whole country. In other words, Haiti would now be tax-free for foreign investors – further disabling the Haitian government’s ability to rebuild any public institutions. For example, in 2011, the Haitian government brought in an estimated $1bn a year in revenue, much less than the per-capita rate in sub-Saharan Africa.

The answer to this dillema for the IaDB was the “multiplier effect” whereby companies supplying services to the population would in turn have more income and therefore pay more tax to the government (sometime in the distant future). “It’s on that side that we see the benefits of anchoring in the zones and having these companies come, even if under the current regime they do not pay taxes for a while”, says Mr Almeida, IADB [42] country director for Haiti. The idea essentially is that around the industrial estates other smaller Haitian businesses – like travel agents and grocery stores – will pick up the slack of lost tax revenue.

The problem for the IFIs was that even with slave wages – and lax labour regulation – it was proving hard to attract foreign investment. In the face of such reticence from investors around the world, Haiti should have focused on building indigenous capacity, perhaps through a massive public-works initiative and the construction of state-owned facilities, like Sonapi. Haitians were instead again put at the mercy of international capital and its “race to the bottom”. For the US embassy, the only thing going for Haiti was that its people were made to work for peanuts. “Haiti has the lowest wages in the western hemisphere”, boasted one US embassy cable. To Haitians it was nothing to BOAST about. Camille Chalmers, a local economist, told [43] the Financial Times that the wages paid in the textile sector, Haiti’s biggest industry, were a “veritable scandal”.

Amid manifold reservations from both international investors and labour-rights groups, the IADB and the United States Agency for International Development recently finished the construction of the flagship project in the economic reconstruction [44] of Haiti: the Caracol industrial park (CIP), just forty miles down the well-paved road back toward the northern capital of Cap-Haïtien.

The CIP is inspired by the perceived success of Codevi, with those designing Haiti’s new-look economy trying to attract investment [45] with the benefits that drew Grupo M into the economy: cheap labour and geographical closeness to the US, the world’s largest market, where its exports are duty-free. It is one of five planned. The US has poured millions of dollars into the NIP, but only Sae-A Trading, a South Korean textile company, has been enticed [46] to set up shop in the park (and according to people involved in the deal, Sae-A were promised a rent-holiday of four years).

The fact that the US taxpayer is building industrial parks for the benefit of South Korean companies has also raised eyebrows. The US may be the most active foreign country involved in the reconstruction, but even its companies are still keeping their distance. “We are professional beggars”, Mr Aguerre, the Haiti manager for the IADB in Washington, tells me. Haitian people would be beggars too. For example, the internal IFC documents on proposed IEZs argue that the reconstruction should be “propelled by private-sector-led development” even though the same document admits “the existing Haitian Free Zone, Industrial Park and Investment Code policy and regulatory regimes have not been effective in attracting investments that are needed to create jobs”.

There is another downside, namely that offering generous inducements to foreign companies will adversely impact businesses already in Haiti. Grupo M, for example, is fearful of what the incentives offered for the CIP and other IEZs being planned might mean for them. “[New foreign companies] have to train their workforces, they have to prepare themselves for what is coming”, says Mr Blumberg, vice-president of sales at Grupo M [47]. “We want a level playing field if you will. We understand that [foreign companies] are getting a lot of things via grants and via sponsorships from different sources.”

But if investment is not forthcoming or indigenous industries flee, as many predict, Haiti will suffer stagnation and destitution for another generation. Enthusiasm from donors for aid and other forms of sovereign investment is now dwindling as the international community loses interest and financial crisis continues to bite. The Haiti Reconstruction Fund [48] (HRF), which aggregates funds from countries and NGOs to fill gaps in investment, has raised $352m so far, but that’s the peak. “We’ve reached a plateau”, Mr Leitman, head of the HRF, tells me. “I think the donors have been cautious and reluctant to contribute new money.” In March 2010, at the major pledging conference held in New York City, $4.6bn was promised for the first two years of reconstruction. Only $1.9bn of that ever materialised.

The agriculture alternative

Haiti is a notoriously difficult country to operate in: its institutions are frail, weakened [49] by years of underinvestment, and system is riven with corruption. For the economic managers post-earthquake this was the default reasoning for their reliance on the private sector and “export-led” reconstruction. But there was nothing inevitable about such a programme. There were plenty of reconstruction [50] plans that could, most likely would, have created a fairer and more sustainable future for Haitians. The problem was and remains that these plans go against the strict ideology that imbues the Bretton Woods [51] institutions.

For example, the Haitian government could have rebuilt the country’s crumbling infrastructure with a modern-day equivalent of the Marshall Plan from donors, which would have created public-sector jobs for Haitians to construct roads, ports, and energy infrastructure which has either been non-existent or in disrepair. Everyone, after all, puts infrastructure as among the top problems for making Haiti work. 10,000 jobs could have been created just clearing the rubble. The Red Cross [52] has, for example, created hundreds of jobs for Haitians reusing the rubble to build bricks and other building materials, clearing the city and creating employment. “We’re the only ones doing it”, the co-coordinator of the programme in Port-au-Prince tells me. “At the moment, now, all the rest goes down the dump, and the cost of processing it is about the same as taking it down to the dump.”

Perhaps most importantly, Haiti could have focused on creating a new agrarian economy, a sector which been thriving before President Clinton dumped [53] tonnes of cheap US rice in the country in the 1990s. (About 60% of the Haitian population, or 4 million people, live in rural areas). Promoting community-owned agricultural land would instantly depopulate the overcrowded capital and provide a sustainable way of feeding its people (with any leftover ready for export). It was never even discussed. “Agriculture is still missing”, Mr Naim at the IFC tells me. The IFC is yet to make one loan to an agricultural small or medium-sized enterprise (SME), instead training its focus on agribusiness rather than the smallholders that Haiti needs. Likewise, the World Bank [40] admits to me that not enough priority is being given to agriculture. It has put $55m into a new agricultural programme (in the grand scale of things in Haiti, peanuts). “This is our first true agricultural project”, acknowledges Mr Abrantes.

The US government claims it is not ignoring agriculture. The ambassador to Haiti tells me the US has invested $200m in the sector already; but once again, the focus remains on produce for export as opposed to providing for the Haitian population, large portions of which are starving. The IADB, on the other hand, contends that infrastructure is important but “there are other needs” (like “investing in the private sector” in order to import seeds). The bank has a plan to get a private company to buy the mangoes, centralise them, distribute them and then send them to the exporters.

“We’re changing the dynamics of how we can do agriculture in Haiti”. says Mr Almeida at the IADB. This new dynamic [54] is straight out of the neoliberal guidebook: providing vouchers to small producers so they can buy seeds through imports. With no public or community held land, such ventures have to date not got very far. “It’s not a big number of jobs”, Mr Almedia admits. The internal Haitian market remains completely ignored by all parties, a travesty considering that 90% of eggs and poultry consumed in Haiti come from the Dominican Republic, while 80% of rice is imported. Changing that state of affairs through publicly funded subsistence farming is not an option. “When I say agriculture I say agribusiness”, says Mr Almeida.

An emblematic project of this “new dynamic” was brokered by the IADB: an initiative with Coca-Cola who have created [55] a new soda called “Mango-Tango” which will be supplied with mangoes from newly developed producers. A similar deal with Starbucks coffee seeks to transform individual micro-farmers into cooperatives and then supply coffee to Starbucks and market it as Haitian coffee. Critical analysts call this the “sweatshops and mangoes” development model. “They need roads, they need irrigation in the countryside, but that’s the one thing these guys won’t do”, argues Mark Weisbrot, an analyst [56] at the Center for Economic and Policy Research.

But the Martelly administration’s agriculture policy has so far followed the export-orientated agribusiness model of the Bretton Woods institutions [21] to the book. “What I hear from [the Haitian government] is that they want to go into the export mode, including the agriculture”, says Mr Abrantes. In fact, Martelly had pushed the IFIs to go even further. “We were preparing traditional agriculture projects for Haiti which were basically focused on poverty alleviation, on the small farmers”, adds Mr Abrantes. “When the Martelly administration came in, they looked at the project and said, ‘We would like it to have a different slant’. We would like to have significant components on stimulating agribusiness, which is quite a different thing from what we had anticipated, and so I think the overall view is, even in agriculture, to encourage parts of the agricultural sector to move into export-production.”

Haiti remains a majority agrarian country; it needs an agrarian-based development model that distributes land amongst its homeless people for community-based subsistence cultivation. The economic managers of the country are not interested. The long-held dream of a Caribbean sweatshop is being born instead, and out of one of history’s worst human catastrophes, which this approach will only prolong.


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