Haiti and the Loan that Wasn't

    Haitian girl wearing the Disney princess shirt made
    in her country. Image: BBC News
Inter Press Service has just begun a new series focusing on the development loans to Haiti and the strings attached that have effectively removed the Haitian government from managing their own affairs. I spoke with IPS reporter William Fisher last week and this morning appeared on WZBC in Boston to discuss this story. This is the little known history of Haiti and forms the backdrop to why the earthquake that hit this island nation has been so devastating.

According to Fisher's article:

It is an unusual combination of optimism and realism that is driving development experts to try to shed the blemished history of international aid to Haiti, rid the issue of a generation of devastating politicisation, and think way outside the conventional development paradigm.

The fate of one particularly important project is emblematic of factors that have consistently and severely reduced the effectiveness - even the existence - of viable development projects.

What happened was that, after the first coup d'etat and reinstatement of Aristide in late 1994, his term ended in 1996. There was then five years of René Préval (who is also President today). In 2000 Aristide once again won overwhelmingly in the Haitian elections. $146 million dollars of aid from the Inter-American Development Bank that had already been approved was held because, according to the United States, the election of eight Haitian senators were in dispute. There was no clear evidence of wrongdoing but all were asked to resign that year. Even after this took place the United States refused to release the loans. The reason then was because Haiti was behind in their interest payments on the loans they had yet to receive (which were normally paid out of the principle).

The Robert F. Kennedy Center filed a Freedom of Information Act Request in 2006 to force the US to release documents related to this decision. According to the documents (which can be accessed here) there was clear evidence that the United States blocked the loans because they objected to the election of Aristide.

Between 1996 and 1998 the IDB approved these loans and Haiti paid around $10 million in interest even before the loans were dispersed. By 2001 there was no reason for the IDB to continue blocking these loans. On April 2, 2001 William E. Schuerch, Deputy Assistant Secretary for International Development, Debt and Environment Policy in the US Department of Treasury drafted a memo in which he wrote that:

[F]our of six loans approved by the IDB Executive Board in 1996-98 were ratified by the Haitian Parliament at the end of 2000, and the Bank is preparing to begin disbursing these loans.

These loans were for rural and secondary roads, health, potable water and basic education. However, Treasury officials urged the IDB to block disbursement.

On April 4, 2001 Bruce Juba, Special Counsel, Office of the US Executive Director at the Inter-American Development Bank, wrote to Ivy Kosmides and Stephen Altheim at the Treasury Department, and warned them that there were no institutional reasons to prevent the loans from being disbursed as they requested. However, he suggested a "slowing" tactic that, "whileâ.â.â.ânot a 'bullet proof' way to stop IDB disbursements," would certainly "put a few more large rocks in the road."

These loans were not disbursed and, on November 8, 2001, the Congressional Black Caucus wrote to President Bush that:

[I]t is wrong to impose an inflexible policy which conditions US relations and aid, be it loans or grants, entirely on a country's political process. It is our understanding that the U.S. has allowed individual countries to work out their own political issues internally as long as all relevant parties are included in the process. Mr. President, the people of Haiti are suffering. Our current policy towards Haiti must be reviewed and changed to address the current state of economic devastation. ... It is imperative that the U.S. remove its blockade of essentially all aid to Haiti, particularly the loans currently held up at the Inter-American Development Bank. Your help is critical in bringing about this change.

The US continued to put road blocks on the disbursement of these loans, even while Haiti was paying interest on the loans they hadn't received. In 2002 Haiti stopped payment. A study published in the journal Health and Human Rights stated:

Public statements by US government officials soon explicitly linked non-disbursement with political concerns. In early 2002, concluding that the IDB did not intend to disburse the loans, the Haitian government suspended payments to the IDB. Haiti's loan arrears placed its government on non-accrual status, thereby, according to internal bank policy, rendering it ineligible for loan disbursement. The US government's plan to slow disbursement succeeded in blocking the loans indefinitely.

The bottom line is that these loans were denied to Haiti because the Bush Administration objected to Haiti's internal politics, a decision that violated the IDB's charter. The development loans were being used as a weapon to oppose the government of Jean-Bertrand Aristide. $54 million of the loan was intended for desperately needed water and sanitation projects, meaning that this decision likely resulted in the needless deaths of an untold number of poor Haitians.

Even after the loans were finally approved in 2003 (primarily because of Congressional pressure) the water projects were only moving into their implementation stage by mid-2007. The study in Health and Human Rights found that the cost of water had increased in the previous five years and that three buckets of water per day cost approximately US$2.65 per week, more than 10% of the median household expenditure for basic household necessities (i.e. water, food, medical expenses and charcoal for cooking). 86.7% of respondents stated that there were times they could not afford water. Health has been seriously impacted from this lack of clean water. 88.9% of the population of Port-de-Paix reported that the water quality had declined or stayed the same in the previous five years and 73.7% of the wells were found contaminated with coliform bacteria. As a result, at least 84.4% of households had experienced at least one case of infectious illness.

This is a situation that could have been different. The United States shares significant responsibility for this and owes the people of Haiti for the decisions of past administrations.

Author's Note: For more on Haiti see my piece Haiti's Political and Economic Earthquake "Made in the USA" at the Huffington Post and How Can Haiti Be Sustainable? here at ScienceBlogs


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You say that "the bottom line is that these loans were denied to Haiti because the Bush Administration objected to Haiti's internal politics", but you also say that "Between 1996 and 1998 the IDB approved these loans and Haiti paid around $10 million in interest even before the loans were dispersed. By 2001 there was no reason for the IDB to continue blocking these loans."

This seems to indicate that the loans were blocked by the Clinton administration, and that Bush continued this policy. Is my reading of the situation correct? If it is then you should amend any partisan finger pointing.

Sorry I missed this before. I understand your confusion. The loans were held up pending the 2000 election. The incoming Bush administration was very clear that they were displeased with Aristide's election and wanted to punish Haiti for making the wrong choice (though, naturally, they phrased it somewhat differently). There's plenty of blame to go around, Republican and Democrat alike, however, in this specific case, it was the Bush administration that was blocking a Clinton-era development deal. See my Huffington Post piece for a more complete bipartisan critique.

Most development professionals say that, unlike projects in the past, these initiatives should not be U.S. creations alone, superimposed on Haitian needs, or programmes that favour the elites only. Participants are hopeful they will bear the fruit of sustained cooperation between ordinary Haitians and the international community.

As I spent time in the tent camps, I thought, 'How are Haitians going to survive, let alone rebuild?' The answer became clear to me as I watched how Haitians live their daily lives. Everywhere I went, they were making the most of meager resources -- washing a shirt in a plastic bottle of water, taking scraps of food and stretching them into a meal, scavenging through rubble to find material to rebuild a hut. Their enterprising spirit and drive for survival sprung quickly to life after the earthquake.

The loans were not disbursed and, on Nov. 8, 2001, the Congressional Black Caucus wrote to President Bush stating that "it is wrong to impose an inflexible policy which conditions U.S. relations and aid, be it loans or grants, entirely on a country's political process" and insisting that "it is imperative that the U.S. remove its blockade of essentially all aid to Haiti, particularly the loans currently held up at the Inter-American Development Bank."

The resignation of President Preval is not a panacea

The social and political situation of the first black republic in the world is extremely precarious. In recent weeks in the capital Port-au-Prince and across other cities, protesters have occupied streets to request the departure of Preval. This island nation is now drowning under the eyes of his helpless people. The moment is fateful; all different sectors should exercise caution and moderation; and must recognize that everything has to be built from scratch in Haiti.

In my opinion the resignation of President Preval is not a solution to our multiple endemic problems. His departure, which may be inescapable, could lead directly to a total military occupation. In addition the political history of Haiti indicates clearly that interim governments have never produced any real or tangible result. And as a result our population is still languishing under the horrors of misery and ignorance.
Many sectors of the local mafia, that have already begun to finance some demonstrations against the Preval/ Bellerive government, are prepared to take advantage of any eventual constitutional vacuum. At the next general elections, they will also launch their own candidates with the aim of controlling the state apparatus. If this plan materializes, the country would engage in more uncertainty, murder, and corruption.
I am crossing my fingers so that organizations that are against keeping Mr. Preval in power come to listen to reason and wisdom. Obviously the destabilization of the country is in the interest of anyone. Haiti must cease being a sort of international nuisance especially to its closest neighbors.
Mr. Georges Fortune a trade unionist from CATH told me in 1989 in a studio of Radio Lumiere that under the Duvalier governments he had spent a total of 27 years in exile in Canada, USA and finally Venezuela. While outside the country he had never read or seen something positive about Haiti. After so many years that I have been living in USA, now can I say otherwise? A few positive articles I have read about our country concern only painting or music.
The President Preval on the other hand should behave as the president of all Haitians not only his own group âUniteâ. He should try to reach out all sectors. Some claims are legitimate such as the redesign of the Electoral Council Provisory responsible for organizing the next general elections. This is the only realistic opposition demand that he must meet. Haitians need to know that we are poor and do not have financial and technical resources to face the challenges of reconstruction. We can no longer speak of notions independence and sovereignty in traditional term.
All in all, I wish that the government as well as the opposition would sit down around a table to resolve the issues of elections, which must be credible if we donât want to extend the agony of the disinherited. Democracy cannot implant in this unfortunate country without an open dialogue between all its citizens.
Romeo Estinvil
Can be reached: estinro@hotmail.com

By romeo estinvil (not verified) on 31 May 2010 #permalink