Haiti: Creating a Modern Day Slave State
Port-au-Prince, Haiti
I was standing open-mouthed outside the presidential palace in Port-au-Prince 18 months after the earthquake had devastated the city when a man approached selling his paintings. “What do you think of that?” he said, pointing to the collapsed palace behind us. I told him the truth: I was finding it hard to come to terms with the completeness of the destruction. The man, who later told me his name was Charles Renodin, smiled slightly. “Tell the world how we are living,” he requested. “Let them know.” He paused and added, “I live in the camp there,” pointing across the road, where opposite the crumbling presidential palace a vast expanse of tents – emblazoned with the logos of the US, China, Bill Gates, Carlos Slim, all competing shamelessly for brand recognition – spread out as far as the eye could see. “After the earthquake I lost my mum, my dad, one daughter, so I had to move to this camp. I don’t like it, it’s full of corruption, it’s run by gangs, and the little girls have to sell their bodies to eat,” he told me. “Little girls,” he added for emphasis. “Maybe eight or nine years old, getting raped every day. The police don’t do anything about it, the country has no law.” He told me that the Haitian people refer to the palace behind us, which should be a point of pride, as the “Devil’s House”. “It’s full of so much corruption, they don’t care about the people, they just want to make money, when the money comes they take it for themselves.” He was waiting on a house now so he could leave the camp, but he didn’t think it would happen any time soon: “The government has no plan.” In the camps, it was particularly bad news for women: “Because there is no work, women have to sell their bodies just to eat, the only job they have is to have sex for money. Men have to steal stuff – they have no choice.”
Like most in Haiti, Charles had an ambiguous feeling toward the thousands of non-governmental organizations (NGOs) working in his country. “Some come to help, some come to make money, they like us living like this because they make more money.” It is easy to dismiss such sentiments, but the global “rescue” industry really is big business. There is often a direct and positive correlation between American influence over smaller countries and the crises they experience. “After the earthquake they would give us food, water, but now everything has stopped. If you go inside this camp you don’t see water, people have to walk six miles to get water. That’s why crime is up.” He became more agitated. “Everything is crazy right now, we’re living just like animals. There is no everyday life, nobody has a job.” Haiti has arguably had more US intervention in the last hundred years than any other country in the world – that it ended like this is not wholly accidental. As Doctor Maigot poignantly says to Mrs Smith, an American, in Graham Greene’s The Comedians: “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.”
The following day, I was driving down a long, dusty and typically bumpy road in the middle of Port-au-Prince when I came across some imposing metal gates. Behind them stood the E-Power electricity plant. The site was unlike the rest of the city, which lay in complete ruin, even a year and a half after the earthquake: it had burnished sheet-steel doors and perfectly tarmacked roads. I was on assignment with the Financial Times and being escorted in a 4x4 by the World Bank, which had its own particular kind of tour that seemed to ignore the massive tent cities whizzing past our windows. Here was the optimistic vision, they told me. In a capital city where electricity blackouts were a nightly occurrence, E-Power was the kind of company the international financial institutions (IFIs) running Haiti believed would lead “reform” – by taking power away from the state-run company, and running the business for profit. My World Bank guide was adamant that this was the way out of Haiti’s tragic past and present. I soon found out the company was founded in 2004 by a group of Haitian venture capitalists excited by the departure of social democratic President Jean-Bertrand Aristide. The aim, they said, was to “offer a solution to power generation in Haiti”. Sure enough, some years later, in 2006, the new US-backed President René Préval launched an open bid for a contract to provide electricity to Port-au-Prince. Seven companies took part. E-Power won.
For many in the Haitian business elite, such economic liberalization was to be the model for the new Haiti being built after the devastating 2010 earthquake. “The earthquake created trauma that could have been better exploited,” Pierre-Marie Boisson, board director at E-Power, told me as we sat in the upmarket air-conditioned offices at the plant. “Because of the political process that took place after that, it took too much time.” He added: “Earthquakes should be an opportunity because it destroyed. Where it is destroyed, 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” of the “opportunities” provided by the earthquake was not quite accurate. In the aftermath of the earthquake, the opportunity afforded by the destruction wreaked on Haiti was capitalized on immediately. As the dust was still settling in Port-au-Prince, the World Bank, the IMF and their regional analogues, alongside 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 among themselves. The Inter-American Development Bank (IADB) got education and water, the World Bank bagged energy, while the United States Agency for International Development (USAID) – a body that will be examined later in this book – gratefully accepted the planned new industrial parks. Alexandre Abrantes, the World Bank’s special envoy to Haiti, told 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 privatization of state-run assets and the turning of Haiti into a Caribbean sweatshop – via an export-led garment production and cheap labor model that the US and the IFIs had been pushing from the mid-1990s through the 2000s – were now distinct possibilities. This could be enforced with minimal push back from a decimated civil society and a denuded government. All the extra-Haitian bodies, particularly the US government, shared this vision. “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 on Haiti, told me when I was back in New York. (Mr Warnholz asked not to be named, but Haitians deserve to know the officials who are designing their destruction.) Haiti was to be the next Top Model on the World Bank and IMF catwalk. The “partnership” (in which the Haitian people had no part) believed that rebuilding the capabilities of the Haitian state should play no role in its reconstruction. Instead, the solution to Haiti’s problems 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 IADB, told me. The bank disbursed $177 million 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,” he added. It seemed there was no alternative.
After the election of President Michel Martelly in May 2011, things remained easy for this private-sector-led “consensus”: the IFIs and US not only had their Shock Event, but also their Shock President. Aristide, who was president 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 Martelly, the US government had found its “Chicago Boy”, a more-than-willing partner for their economic program (“Chicago Boys” is a term which refers to the University of Chicago economists who helped dictators impose neoliberal capitalism in its early stages). 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, told me: “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 then US ambassador to Haiti, was similarly excited about the new president’s privatization agenda. “A few privatizations of flourmills, but aside from that you haven’t had much of anything in past decades,” he told 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.
History’s long shadow
In 1990, after the first democratic elections in Haiti’s 200-year history, the US became hopeful of breaking up the corrupt state institutions which had been run as the personal fiefdoms of Papa and Baby Doc, the US-backed Duvalier dictators who had ruled Haiti viciously for nearly 40 years. Private capital would then be able to penetrate deeper into the country, 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, named Lavalas (“the flood”), propelled the social democrat priest Jean-Bertrand Aristide to a landslide victory. Over the next 20 years, the democratically elected Aristide would be ousted twice with US support, while the democratic hopes and dreams of Haiti’s people would be quashed time and again. Aristide had become a nuisance in the eyes of Washington and so when he was put back in power in 2001 it was under the tacit agreement that he would allow the World Bank, the IMF and the US to institute their plan. It had been 11 years since the democratic elections, and still economic “reform” was slow. Something had to change: democracy was fine, but it had to be of use.
In this period, René Préval, a former ally of Aristide who served as president from 2006 to 2011, seemed to offer some hope for the Americans. “In the context of the developing world, we would most accurately describe him as a neo-liberal, particularly in that he has embraced free markets and foreign investment,” notes one of the US embassy’s diplomatic cables, released by WikiLeaks, sent from Port-au-Prince in 2007. But the leader the US was really after in that period looked more like Haitian-American businessman Dumas Siméus. A resident of Texas, he assured the US embassy, according to a diplomatic cable sent in 2005, “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 how 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; Siméus was the candidate they had been searching for. The cable concluded by noting that the millionaire Texan was a “potentially viable candidate” who could, unlike Aristide, “govern responsibly and maybe effectively” – code in this case for “in the US interest”. The US deemed Martelly similarly “responsible”.
But in many ways, 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 under way. The fetish of foreign investment was firmly rooted. In 1996 for example, the Haitian government had already, as one diplomatic cable published by WikiLeaks noted, “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 November 2002 law 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. 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 15-year tax exemption. In other words, post-Aristide, the government had “seen the light” and embraced the US-led vision for the post-dictatorship Haiti.
But these steps, it seems, were not enough. Only a “Chicago Boy” would do. Another WikiLeaks cable noted that in 1996 a “modernization commission” was set up to decide whether management contracts, long-term leases or capitalization was the best option for each of the companies to be privatized. The commission would also decide how much the Haitian government would retain of each asset, with a cap at 49 percent – 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 percent of the state-owned flourmill. Despite this “progress”, a diplomatic cable from 2005 lamented, “Some investments, however, still require government authorization,” adding, “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 reasonable demand from a sovereign country, but a sovereign country is exactly what the US didn’t want Haiti to be. Two years after Aristide had been spirited out of the country by the Bush administration and the local oligarchs, and just before the victory of the “neoliberal” Préval 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 added 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 noted a more plausible reason why this massive privatization program 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.” Those pesky Haitians.
By 2008, then, the US embassy was disconsolate at the slow rate of progress and local intransigence. “Despite assurances that privatization is 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. “We will continue to advocate strongly on behalf of privatization and/or private management,” one cable noted. It further advocated using IFIs such as the World Bank and the IMF to bribe the democratic government of Haiti, one of the staples of the “structural adjustment programs” explored later, although it is rare to see it spelled out in such clear language. “[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 cable to Washington noted.
The shock
Bribery might prove an effective strategy toward the poorest 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 privatization program the US favored. But as the US was honing its strategy for its latest push, on January 12, 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 – this was their opportunity to push through the radical neoliberal program from the 1990s with little resistance. The opposition to this privatization program – 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. Klein’s argument was that these policies were so unpopular among the populations of the target countries that the agents of big capital, such the IMF and World Bank, would wait until there was a crisis “real or perceived”, when people could not organize resistance, to push the reforms through. This is what happened in Haiti.
The first step was to entrench a decision-making system that took all power out of the hands of accountable democratic institutions run by Haitians. The Interim Haiti Recovery Commission (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 donor money in the absence of a Haitian government. It had 26 members, 12 of whom 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 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.”
That was exactly the perception that the US and the IFIs were trying to avoid. When officials from the US and international agencies in Haiti were interviewed they were at pains to explain how they were “working for the Haitians” and the phrase of the day was “Haitian-led”. It was the same all over the world – the US and its agencies were adept at making their domination be seen as demanded by the victim. In truth, there was, and continued to be, minimal Haitian involvement in the reconstruction (outside the business elite). An article in the Washington Post put it bluntly in January 2011: “There is a dramatic power imbalance between the international community – under US 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 were immediately obvious. An Associated Press investigation found 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. It was about making money for rich Americans. After Michel Martelly was sworn in as president in May 2011, it took months for the former pop star and former member of the savage Tonton Macoute militia (formed by the US-backed dictator ‘Papa Doc’ Duvalier) 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, 18 months after the earthquake, the coordinates of the economic reconstruction were already in place. Martelly’s hands were tied by the very IFIs which claimed to be subordinate to the Haitians. Though in Martelly’s case his hands didn’t even need to be tied – he was a willing “shock president”.
There were three elements that the US and IFIs wanted to build the “new Haiti” around: high-end tourism; export-processing zones; and a resurgent private sector in control of the previously state-owned assets. It was the racket’s standard playbook. The architects of the reconstruction actually had other countries in mind that they believed could serve as a model. One was the Dominican Republic, the country next door to Haiti, which had long been an oasis for private capital in the Caribbean. In Haiti, using the model of its Hispaniola neighbor, the IADB planned to spend $22 million on a high-end tourism resort near the 19th-century citadel at Labadee, a port on Haiti’s northern coast. Mr Almeida, Haiti manager for the IADB, told me the bank’s money would “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 Haitian society, the IADB was given road infrastructure.)
The other opportunity that had to be taken advantage of was speeding up the privatization process. The World Bank used the example of Teleco, formerly the national telecom operator, which in 2009 the bank’s private-sector arm, the International Finance Corporation (IFC), had helped partially privatize. (The IFC was, incidentally, the brainchild of Nelson Rockefeller in 1951.) Mr Naim, the private-sector Haiti manager for the World Bank, told me that Teleco was an example of what the government should do to the ports and the airport. “[They can] really transform these assets that generally the government handles poorly,” he said, adding that “It’s better for the government to focus on social things” and let these assets be privatized. Teleco itself is now due for complete privatization under the guidance of the IFC. For the poorest country in the western hemisphere, it is hard – possibly even suicidal – to argue with the World Bank. In March 2010, the bank promised $479 million in grants; the IFC put $49 million-worth of direct investment into Haiti’s private sector.
With Teleco on its way to privatization, 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 Aguas de Barcelona, which won a three-year contract to train and assist workers, and for which they received millions of dollars. “Many local companies are taking control of small towns’ water systems,” Mr Aguerre of the IADB told 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,” he added. Experts from Aguas 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 that prioritized the private sector above the Haitian ministries, even before the earthquake 80 percent of educational services were delivered outside the state (primarily by international bodies or the private sector). As a result, only half of school-aged 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 said. The IADB settled on a voucher program that will allow the government to retain some “quality control”, but means that education will be completely privately run. To ensure full access, the plan creates a publicly funded but privately run education system. The small print is that this public subsidy will cost the Haitian government about $700 million a year, seven times what 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 $500 million over three years runs dry, more than half of Haiti’s children will still be locked out of the school system. The IADB rationalized 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, Martelly has been approving of both vouchers and subsidizing private schools as methods to rebuild the Haitian education system.
With the complete privatization of telecoms, water and education, the final piece in the jigsaw for the IFIs and the US became the 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. But two years after the quake, more than 500,000 Haitians still lived in ad hoc camps around Port-au-Prince and 8 million still lived without electricity. The throngs of jobless who lined the capital’s streets are a reminder of the 70 percent unemployment rate. “We need to be realistic and understand that it’s still five years after Katrina and New Orleans is still being rebuilt, it’s 10 years after September 11th and that site isn’t rebuilt complete, the process takes time,” Kenneth Merten, then US ambassador to Haiti, told me, adding, “One of the things Haitians can really do themselves is to move quickly on making a business-friendly climate.”
It might perhaps be hard for the hundreds of thousands of Haitians living in ad hoc campsites to do that. In Haiti, I went to the La Piste camp, a barren enclosure with rows of one-bedroom “houses” on steeples. The owner of one, a middle-aged woman, spoke to me slowly via an interpreter. She was a single mother with three children with no means of income. She was living off money the Red Cross had given her, alongside selling some trinkets, although customers are few and far between. “It’s much better here than the last camp,” she told me. In the last place she and her children lived, like most others, in a tent, which meant they were subject to the rain and animals who decided to look in. “This is a house, it’s safer,” she said, but added that the fence of the camp should be higher, or be turned into a security fence because of the burglaries. She also said the lack of lighting puts them in danger: it is pitch black at night and easy for people to break in. You realize walking around La Piste that these people are completely at the mercy of nature – be that the elements, or their fellow man or woman. There is no security, there is no rule of law, and there is no place to go with grievances; there is merely the hope that someone is looking out for you. Hope cannot thrive in such an environment. “I would like to have hope,” she told me, her face blank, refusing any emotion at all. “I just don’t know who is going to make anything happen.” It seemed rude to ask how she planned to make a business-friendly climate for foreign investors in Haiti.
Therapy
The 30-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 its 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 2 million square foot Codevi Park was originally built by a Dominican textile company, Grupo M, on the Dominican side of the border, 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, told me as we sat 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 added: “It had a labor cost which was the lowest in the region.” The minimum wage in Haiti now is 150 gourdes ($3.70) per day, which is nearly half that in the Dominican Republic. This “competitive edge” – in a layperson’s terms “slave wages” – combined with favorable 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 for Partnership Encouragement (HOPE) Act, which was passed by the US Congress in 2006, granting tariff-free access for Haitian textile exporters to the US market. This was followed by increasingly favorable terms through HOPE II, in 2008, and the Help Act after the 2010 earthquake.
Parks like that at Codevi are known in the IFIs’ literature as integrated economic zones (IEZs): places where infrastructure, welfare services and other services are provided for the lucky few behind imposing metal gates. The literature justifying their existence argues 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 of this kind near the airport in Port-au-Prince called Sonapi, which is fully owned by the Haitian government and had, at one point, nearly 40 companies based there. But the new IEZs would be under the sole control of its initial investors – mainly USAID and the IADB. This raises the question of what will happen outside these so-called “poles” of economic activity. What would the incentive be for the central government to develop infrastructure and social services throughout the country if they are being built on this micro-scale? And where would the money come from? Alexandre Abrantes, the World Bank’s special envoy to Haiti, admits this is a problem; he told 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” (increasingly common in the “developing” world) 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,” said Armando Heilbron, a senior private-sector development specialist at the World Bank working on the IEZs in Haiti. Therefore, Haiti’s reconstruction will take place in isolated small “poles”, primarily in the northern part of the country, while the rest of the country’s infrastructure and welfare services will fall further into disrepair.
Perhaps the biggest problem with the industrial parks is the unscrupulous nature of the companies that populate them. The public relations tour of Codevi, 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 the tour does not include many of the most important episodes in its establishment. Codevi was originally built on farmers’ land against their will – a process that 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 said: “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 its patrons at the World Bank do not, of course, tire of outlining the countless benefits that accrue to the local population because of Codevi. Every program of exploitation has an ideology bolted on to legitimate it to the world – but also to those benefitting: very few people want to look in the mirror and see a monster staring back. When I asked to speak to workers, two were dutifully brought out to give monosyllabic positive comments about their jobs, perhaps wary of the manager sitting next to them. Neither was a member of the union, I soon found out. In fact, Grupo M claims it has no conception of how many workers are in the union. “Very little,” is all Mr Blumberg would tell 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 is clear that something similar has 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 the management of 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 explained 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 added: “In the end, everything was straightened out and we’re in peace and we’re 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 was implored to amend the labor code in order to “lift restrictions on 24/7 multi-labor shifts” while “streamlining” the process by which night-time salary supplements could be done away with. The plan was also predicated on a lack of tax revenue. Another incentive for the foreign companies was the so-called “economic free zones” (EFZs), which offer companies tax and duty-free rights if they set up operations in Haiti. In reality, these zones do not exist in physical space but rather constitute 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. In 2011, the Haitian government brought in an estimated $1 billion of revenue, much less than the per-capita rate in sub-Saharan Africa.
The answer to this dilemma 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 (at some time 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,” said Mr Almeida, IADB country director for Haiti. The idea essentially is that around the industrial estates other smaller Haitian businesses, such as 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 labor 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 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 labor-rights groups, the IADB and USAID finished the construction of the flagship project in the economic reconstruction of Haiti: the Caracol industrial park (CIP), just 40 miles down the well-paved road back toward the northern capital of Cap-Haïtien. The CIP was inspired by the perceived success of Codevi, with those designing Haiti’s new-look economy trying to attract investment with the benefits that drew Grupo M into the economy: cheap labor 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 poured millions of dollars into the CIP, but only Sae-A Trading, a South Korean textile company, has been enticed to set up shop in the park (and according to people involved in the deal, Sae-A was promised a rent holiday of four years). Sweatshop-based development had, in fact, never provided more than 100,000 jobs even in the 1980s.
The fact that the US taxpayer is building industrial parks for the benefit of South Korean companies 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, told me. The Haitian people would become beggars, too. For example, an internal IFC document on proposed IEZs argues that the reconstruction should be “propelled by private-sector-led development” even though the same document admits that “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”.
“To say that the private sector is rushing into Haiti right now would not be exactly what’s happening,” Pamela Cox, the World Bank’s vice-president for Latin America and the Caribbean, told me when I met her in Washington. So why were these institutions focusing so much on a foreign-investment-led reconstruction, rather than building up domestic and public Haitian capacity? Was the fact that this would not make any westerners rich merely a coincidence?
There are still further complications; 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 it. “[New foreign companies] have to train their workforces, they have to prepare themselves for what is coming,” said Mr Blumberg, vice-president of sales at Grupo M. “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 are stifled, 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 the financial crisis continues to bite. The Haiti Reconstruction Fund (HRF), which aggregates funds from countries and NGOs to fill gaps in investment, has raised $352 million so far, but, “We’ve reached a plateau,” Mr Leitman, head of the HRF, told me. “I think the donors have been cautious and reluctant to contribute new money.” In March 2010, at a major pledging conference held in New York City, $4.6 billion was promised for the first two years of reconstruction. Only $1.9 billion of that ever materialized. “If you look at estimates made about rebuilding Haiti after the earthquake, they were huge, you know $15 billion, even more than that,” Mark Weisbrot, co-director of the Center for Economic and Policy Research (CEPR) in Washington DC, told me. “They haven’t come up with anything like that, even a fraction of that. It’s a small country but it’s still 10 million people and so if you don’t clear the rubble, you don’t have roads, you don’t have housing, you don’t have water, you don’t have sanitation, so what kind of economy are you going to get out of that? That’s the real problem.”
The real fear back home in Washington, however, especially among politicians, is migration and drugs. “They feared Aristide was a Castro want-to-be,” Larry Birns, an analyst in Washington, told me. “US policy has never been concerned with building a viable economy. The policies they followed destroyed Haiti’s economy.” On assuming power, Ronald Reagan proposed the Caribbean Basin Initiative to try, in a familiar story, to bring foreign investment to the region. It was a method of regaining control of the region, which seemed to be going on an independent path. Reagan even invaded Grenada on spurious grounds in 1983 to push that effort. The initiative was a failure, bringing little to no investment, but control was exerted. In that respect it was like John F. Kennedy’s Alliance for Progress in Latin America, which sought to bring the region away from Soviet influence, under the guise of “development” and “investment”. The prevailing sprit now in Washington is that Haiti is messy, and people will openly tell you (off the record) that Haiti is beyond the capacity to be reformed, a “loser situation”. They favor what they call “keeping it on life support” so that the US doesn’t get too many people coming in (Haitian refugees dying on the beaches of Florida caused havoc for Southern politicians in the 1980s). But what the US never seems to understand about Haiti and elsewhere is that you cannot have a society operate like clockwork when you have for years persistently undermined all credible efforts for that society to function in an effective way. Haiti is now actually well below its per capita income of 1960, the only country in the hemisphere to have made no progress in that period. Ironically, the economy grew from 1960 to 1980 under the Duvalier dictatorships because, despite their brutality, they actually had a development strategy. It wasn’t great but it did move the country forward. This is true for a lot of the region where many countries had more growth under dictatorships because they had more control over policy than they did in a more democratic era when, in the subsequent neoliberal phase, the World Bank and the IMF controlled policy, and nobody allowed them to have a development strategy. From 1991 to 1994 and from 2000 to 2004, in fact, there was a deliberate strategy to destroy the economy, and that’s how they got rid of President Aristide both times. “This is more about power. It’s hard for people to believe this, but the US really does care who runs the government,” said Mr Weisbrot. “They’ve overthrown the government twice, the US, Canada, France, and their allies. 1991 was more covert but it did come out that the CIA paid the people who did the coup, and they also financed death squads in the period after.”
Robinson Deese’s story shows the human side of this brutality. “After the earthquake everything turned terrible,” he told me, as we sat in his bedroom. He lost his home and moved with his four children and wife to Golf, one of the biggest camps in Port-au-Prince on the capital’s only golf course. But he was given a lifeline. The Red Cross – one of the most influential and powerful NGOs working in Haiti – offered him a rent subsidy to move his family into permanent accommodation. The charity gave him 4,000 Haitian dollars toward the yearly rent of 6,000 Haitian dollars. (Prices have ballooned since the earthquake because of the squeeze on supply.) Now he lives in one small and sweltering room with six other people, including his wife, children and brother. Formerly a tailor, his working life was destroyed when he lost all his sewing machines in the earthquake. “We have to manage with this because we have no means to rent a bigger place right now, I have to work for other people now,” he said. “I preferred to take the subsidy because I didn’t have a piece of land where I could build a shelter. I decided the best option would be to start a small business for myself while I tried to save money, maybe get a piece of land.” He was also awarded a $500 Livelihood Grant to start a business, which he said was not going well so far. In these conditions, saving is hard for a family like this, as he has to stump up money for tuition for his kids’ schooling as well as for books and uniforms. The Red Cross has helped countless people this way – it is one of three options they offer to some of the 500,000 Haitians still living in tent cities around Port-au-Prince. The other two are building a T-shelter on a greenfield site, or finding someone who will let them do it. But the program is a parable of the short-termism that has overtaken the reconstruction of Haiti. Mr Deese only qualifies for this subsidy for a year. After that, he and his family are back at square one unless he finds a job, which with 80 percent unemployment seems unlikely. “I can’t say I will have enough to cover next year’s rent,” he admitted. “It doesn’t stress me out right now, I know that I can work, I have two hands to work with.”
No room for an alternative
Haiti is a notoriously difficult country to operate in: its institutions are frail, weakened by years of underinvestment, and the 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 program. There were plenty of reconstruction 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 an ideology purveyed by the IMF, the World Bank and the US. 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. Some 10,000 jobs could have been created just clearing the rubble. The Red Cross 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 program in Port-au-Prince told 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 had been thriving before President Clinton dumped tonnes of US rice in the country in the 1990s, destroying Haitian agriculture by completely distorting trading terms, something that will be explored in a moment. About 60 percent of the Haitian population, or 4 million people, live in rural areas. Promoting community-owned agricultural land would have instantly depopulated the overcrowded capital and provided a sustainable way of feeding its people (with any leftovers ready for export). It was never even discussed.
“Agriculture is still missing,” Mr Naim at the IFC told 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 has admitted that not enough priority is being given to agriculture. It has put $55 million into a new agricultural program (in the grand scale of things in Haiti, peanuts). “This is our first true agricultural project,” Mr Abrantes acknowledged. The US government claims it is not ignoring agriculture. The ambassador to Haiti told me the US has invested $200 million 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” (such as “investing in the private sector” in order to import seeds). The bank has a plan to get a private company to buy the mangoes, centralize them, distribute them and then send them to the exporters. “We’re changing the dynamics of how we can do agriculture in Haiti,” said Mr Almeida at the IADB. This new dynamic 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 Almeida admitted.
The internal Haitian market continues to be ignored by all parties, a travesty considering that 90 percent of eggs and poultry consumed in Haiti come from the Dominican Republic, while 80 percent 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,” said Mr Almeida. The alternative, which is unthinkable in the world of these institutions, is that money is provided to subsidize domestic small-scale rice production.
An emblematic project of this “new dynamic” was brokered by the IADB: an initiative with Coca-Cola which has created a new soda called “Mango-Tango” that 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,” said Mark Weisbrot, the analyst at the CEPR. But the Martelly administration’s agriculture policy has so far followed the export-orientated agribusiness model of the Bretton Woods institutions to the letter. “What I hear from [the Haitian government] is that they want to go into the export mode, including the agriculture,” said 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,” added 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 among 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. Out of one of history’s worst human catastrophes we have Mango-Tango. The racket’s victory was Haiti’s defeat, but this was no accident.
