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Break the Chains of Haiti’s Debt

New America Media, Commentary, Hayley Hathaway Posted: Feb 03, 2010

In 1804, Haiti became the world’s first independent black republic. It won a bloody and brutal war of independence against France, but in 1825 the country was threatened again. With warships stationed off the coast, France demanded that Haiti pay for what France had lost in the war, including slaves. Haiti now owed the equivalent of a $21 billion debt. It began paying France for its freedom, sending all available resources to its former colonizer.

More than 200 years later, a different type of crisis has left an estimated 200,000 dead and a fifth of the population homeless. After the devastating earthquake, we have to ask: Will Haiti again be shackled by debt through no fault of its own?

On Jan. 27, the International Monetary Fund voted to approve a $102 million loan to Haiti. Hundreds of millions of dollars are pouring into the country in generous acts of support. The United States and even the World Bank committed to give aid as grants, not loans. However, due to the institution’s charter to not provide grants, the IMF just doubled Haiti’s debt to the institution with this new loan.

In a rare and hopeful move in the days prior to the vote, IMF Managing Director Dominique Strauss-Kahn announced, “The most important thing is that the IMF is now working with all donors to try to delete all the Haitian debt, including our new loan. If we succeed—and I’m sure we will succeed—even this loan will turn out to be finally a grant, because all the debt will have been deleted. And that’s the very important thing for Haiti now.”

Yet in a statement following the IMF’s meeting that day, there was no mention of debt cancellation.

The IMF’s history in the region is marked by economic policies that have impeded the fight against poverty. Its restrictive policies in Haiti included wage freezes and increases in the price of electricity. Now, the IMF is assuring that new money to Haiti will come without conditions and that the new debt will be cancelled. The international community must hold the institution to its word.

It is critical that Haiti use its precious resources for recovery and reconstruction, not debt repayments.

For decades the country has been forced to pay out tens of millions of dollars in debt payments, instead of investing the money in building hospitals, schools, or other infrastructure – resources that could have helped in the aftermath of the earthquake. Haiti continued to service its debt to France until the 1900s, when the United States took over the debt and the country. The brutal Duvalier dictatorships used aid money for lavish parties and military death squads. This corruption was widely reported, yet donor countries and international financial institutions continued to lend money to the regime.

Today, Haiti owes $1 billion to the international community, mostly to the IMF, the Inter-American Development Bank, Venezuela and Taiwan. This debt remains even after Haiti received international debt cancellation last June, which wiped $1.2 billion of Haiti’s debt off the books. Still, because of the inadequacies of the debt cancellation deal and the realities of an impoverished nation’s need, Haiti continues to owe.

For the last 15 years, the global Jubilee movement for debt cancellation has advocated dropping Haiti’s debt as a matter of justice and an effective way to combat poverty. Impoverished countries that have received international debt cancellation spend 75 percent more on social services than countries who have yet to receive it.

Since the earthquake, hundreds of thousands of people around the world have signed petitions calling on their leaders to drop Haiti’s debt. U.S. Congressional efforts to forgive Haiti’s debt include a bill in the Senate introduced by senators Dodd and Lugar, a forthcoming bill in the House of Representatives and a congressional letter urging Sec. of the Treasury Timothy Geithner to use his power to cancel the debt.

Thanks to continued pressure, Haiti’s lenders are discussing debt cancellation. Already Venezuela has announced it will cancel its debt. The IMF’s announcement is an important step forward. Now, we must push for the United States to take leadership and negotiate Haiti’s debt cancellation to the IMF and the other international financial institutions swiftly and unconditionally. Let us work together to make sure that Haiti is freed from the chains of debt once and for all.

To learn more or take action, visit the Jubilee USA Network www.jubileeusa.org/haiti

Hayley Hathaway is the communications coordinator for Jubilee USA Network, a nonprofit policy organization that advocates debt forgiveness for developing countries.

Related Articles:

Understanding Haiti's History Key to Understanding the Quake

A Coming of Age Moment for Haiti’s Neighbors

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