Why Haiti’s Debt Should Be Forgiven

A friend of mine recently asked me why Haiti, among all countries, deserved to have its international debt forgiven, as the Inter-American Development Bank recently did to the tune of $479 million.

Aside from the reason that I personally find most compelling - that Haiti has suffered one of the worst natural disasters in history, we have the means to help them and it is simply the right thing to do - there are, in my view, other compelling reasons why Haiti’s debt should be forgiven. Haiti is in far worse shape than quite a few countries I have seen in Africa, with over half of it’s people living on less than US$1 a day, with only the people of Somalia and Afghanistan suffering from higher rates of hunger, and with 90 percent of its tree cover gone (these are statistics from BEFORE the earthquake). But there are also arguments for debt forgiveness that, in my view, go to explain how, though Haiti’s political class has done a handy job of wrecking the country over the last two hundred years, they have had plenty of help from the international community.

In 1825, only 21 years after on independence, a French fleet appeared in Port-au-Prince harbour and threatened to bomb and destroy the Haitian capital unless the country agreed to pay an indemnity for the “intemperance” of having seized its freedom and having outlawed slavery. Haiti was forced to accept a debt of 150 million francs in exchange for France accepting the nation’s independence, a debt that took decades to repay and economically ravaged the country.

One of the reasons that the death toll in the earthquake was so large was that, in recent decades especially, tens of thousands of people have been migrating from the countryside into Port-au-Prince, where they lived in shockingly substandard housing that made them especially vulnerable to natural disasters such as the one that occurred. But why, we must ask ourselves, did they come into the capital in the first place?

In 1980-83, when tests showed nearly a quarter of Haiti’s pigs were infected with African Swine Fever, the U.S- Canadian funded Program for the Eradication of Porcine Swine Fever and Development of Pig-Raising (PEPADEP) succeeded in destroying the 1.2 million Kreyol pigs (kochon kreyol) that formed one of the backbones of the peasant economy. PEPADEP officials paid for the pigs before they slaughtered them, or, in many cases, promised to pay for them or replace them and never did. Most of the replacement pigs that were delivered soon died, unable to adjust to the rough world the Kreyol swine had grown so accustomed to, and an already difficult peasant economy suffered another blow.

Further undermining Haiti’s ability to feed itself, in typically duplicitous fashion in 1995 then-Haitian President Jean-Bertrand Aristide, implementing an economic adjustment plan mandated by the IMF and further turning the screws on the peasantry that he could never win over, cut tariffs on rice imports to the country from 35 percent to 3 percent. This further undermined the peasant economy despite the fact that Haiti for many years had produced low-cost, inexpensive rice for domestic consumption. After 1995, that is, after implementing the economic policies of the international community, it effectively lost the ability to do so.

In my view, “we” in the international community have helped get Haiti into its current sorry state, and debt relief is one tool at our disposal to help try and get it out. Given our dubious history there, it would be downright immoral not to use it.

Development bank forgives $479 million Haiti debt

Development bank forgives $479 million Haiti debt

By Istra Pacheco, Associated Press Writer

Mon Mar 22 2010, 5:46 pm ET

CANCUN, Mexico – The Inter-American Development Bank said Monday it has agreed to forgive $479 million in debts owed by quake-ravaged Haiti.

Bank President Luis Alberto Moreno said the bank's board of governors voted to forgive the debt and will offer $2 billion in financing to the Caribbean nation over the next 10 years.

"This commitment is good news for all Haitians, and will help heal the wounds caused by the earthquake," Moreno said at the inauguration of the bank's annual meeting in the Caribbean coast resort of Cancun.

The IADB debt was the biggest single chunk of the $1.2 billion Haiti owed as of late January, according to figures of the International Monetary Fund.

The measures are meant to help Haiti recover from the magnitude-7 Jan. 12 earthquake, which killed an estimated 230,000 people. The new funds would be directed toward supporting long-term reconstruction and development efforts.

The 48-member regional development bank is Latin America's largest lender for projects such as roads and power plants.

The administration of President Barack Obama is pushing for the cancellation of other multilateral debt, as well as the $400 million Haiti owes individual countries.

Also Monday, European Union foreign affairs chief Catherine Ashton said in Brussels that the EU foreign ministers agreed to donate euro1 billion ($1.36 billion) in development aid to Haiti in the years ahead.

Ashton said she will pledge that amount on the EU's behalf at a Haiti donors conference in New York next week.

She says what the Caribbean country needs after the devastating earthquake is "long-term development aid."

In addition to discussing debt relief for Haiti, Moreno said the board of governors had voted for a $70 billion increase in the bank's current capital of about $100 billion. Moreno called it the biggest capital increase in the bank's history, and said it would allow the bank to become the biggest multilateral lending agency for the region.

Colombian Economy Minister Oscar Ivan Zuluaga said the capital increase would allow the bank to continue financing economic and development projects.

"With this increase, we have established a basis for the bank into the future," Zuluaga said.

In 2009, the bank made loans worth a record $15.5 billion, and it had warned that, without a capital increase, it would have to cut its lending to about half that.

But Moreno said that after Monday's decision the bank could boost its lending to an average of about $12 billion per year, focusing especially on "the poorest and most vulnerable" economies. Poverty reduction, climate change programs and extending educational coverage would be among the priorities for new projects.