Jubilee Justice for Haiti and Beyond
On the evening of January 12, 2010, I was on a conference call, listening to a colleague share details of a recent fact-finding trip to Haiti. As he sketched the latest reports of Haitians’ day-to-day struggles in the most impoverished country in the Western Hemisphere, someone interrupted in a worried voice, “I just got a call from a colleague – apparently a few minutes ago there was a terrible earthquake in Port-au-Prince.”
We were speechless. I know I was not the only one thinking, praying, “No, this can’t be happening. Not to Haiti. Please, God, give Haiti a break this time.” Yet we all knew: a natural disaster in Haiti, where 80 percent of the population already lived in poverty, would mean catastrophe.
The reports over the next days washed over us – 250,000 Haitians dead, millions homeless, most government buildings completely demolished. We realized the cataclysm was worse than even our deepest fears – almost no emergency vehicles to dig people out from the rubble, dangerously few healthcare workers to treat the wounded.
People around the world responded with generosity, sending whatever they could to the rescue and recovery efforts. As always, natural disasters evoke our sympathy and response. We know natural disasters are unavoidable. But what about Haiti’s completely avoidable, unnatural disaster – the human-made disaster of impoverishment? The unimaginable loss of life and destruction on January 12, 2010, stemmed from a historic lack of investment in infrastructure, education, healthcare, government systems, due in part to the burden of odious and illegitimate debts.
After the earthquake, Haiti needs not just charity – though the aid it receives is critical. Haiti also needs justice – justice that begins with 100 percent cancellation of its debt burdens.
The origins of Haiti’s debt date back to 1804, when the country won independence from France and abolished slavery. France threatened to reinvade and re-establish slavery unless Haiti compensated it for its loss of “property,” including slaves. With French warships positioned off the coast, Haiti gave in to French demands in 1825, and agreed to pay 150 million francs (equivalent to $21 billion today) in return for recognition of Haiti’s sovereignty.
We know natural disasters are unavoidable. but what about Haiti’s completely avoidable, unnatural disaster – the human-made disaster of impoverishment?
Abyss of Debt
This enormous debt – equal to fourteen times Haiti’s export revenues – placed a heavy burden on the new country. It has never recovered. The debt was a primary barrier to Haiti’s development. For almost a century, successive Haitian governments dutifully paid the debt service, passing the bill onto Haiti’s poorest citizens. As late as 1908, 51 percent of coffee revenues went to service the exterior debt, while 47 percent went to service the internal debt, leaving 2 percent available for all other expenses.1 During these formative decades, the state lacked revenue for an educational system, infrastructure, agricultural technology, environmental protection, or healthcare investment. Haiti serviced its odious debt to France for well over 100 years. The world’s first black republic descended into a spiral of debt and underdevelopment that it has never overcome.
The country became further indebted during the cruel reign of the father/son dictatorship of Francois “Papa Doc” and Jean-Claude “Baby Doc” Duvalier from 1957 to 1986. For nearly thirty years they spent foreign assistance on fur coats and brutal death squads like the Tonton Macoutes.2 As just one example, in 1980 the International Monetary Fund made a $22 million loan to Jean Claude Duvalier. Within weeks, $20 million of the total was removed from the government’s account – the IMF discovered $4 million went to the Tonton Macoutes, while the remaining $16 million disappeared into Duvalier’s personal accounts.3 These thefts were widely reported, yet donor countries and international financial institutions continued to make loans to the staunchly anti-communist Duvaliers. Despite calls from global civil society repudiating these odious measures, the Haitian people continued to have to service those debts long after the dictatorship was banished. Until last year, Haiti was forced to pay between $60 million and $80 million per year in debt service, with no consideration made for the dubious debt burden incurred under the Duvaliers.4
Staggering into the Present
This legacy of debt has been staggering. Even before the earthquake, more than 70 percent of the population lived on less than $2 per day.5 Life expectancy remains low at sixty-one years.6 HIV/AIDS rates are the highest in the hemisphere.7 There are only three doctors per 10,000 people in Haiti.8 One in twelve children dies before reaching her fifth birth- day.9 The maternal mortality rate is the highest in the hemisphere at 670 per 100,000 births.10 Only 35 percent of Haitian children are able to finish elementary school.11
In addition to this painful history of poverty and political turmoil, Haiti recently suffered other shocks harming the economy. In 2008, the island nation endured four devastating tropical storms, bringing floods that killed more than 800 people people and caused nearly $1 billion of damage.12 The global spike in prices for fuel and food in 2008, then the global economic crisis in 2009, hit Haiti hard. Unable to purchase basic staples such as rice, flour, and corn that doubled in price, many Haitians were driven by extreme hunger and resorted to eating mud pies.13 Because of the jump in fuel prices, public transportation became overcrowded. In one instance, fifteen people were killed when an overloaded ferry capsized, and the closest rescue boat lacked the gas to respond.
A Jubilee Movement
In the mid-1990s, as it became clear that the people of Haiti and other poor nations were unfairly burdened by past illegitimate debts, people of faith and conscience were compelled to act. The notion of debt cancellation sounded threatening at the time: it was only fair that everyone should be expected to pay back their loans, right? But a Jubilee vision based on biblical tradition called for a different type of justice – a vision of leveling the playing field every fifty years, of establishing right relationships among nations and people. In the Jubilee Year as described in the Book of Leviticus, those enslaved by debt are freed, lands lost because of debt are returned, and communities torn by inequality are restored. This Jubilee vision was so powerful, and the organized passion of modern faith communities so strong, that Jubilee became a global movement, and world leaders were forced to respond. In 1999 and then in 2005, G8 governments made high-level commitments to reduce or cancel debt for a significant number of poor countries.
These agreements have resulted in debt relief for more than thirty-five nations, totaling more than $100 billion.14 Twenty-nine nations have received 100 percent cancellation of eligible debt stock.15 With a ten-year track record now, debt relief has delivered striking results in the fight against poverty. Total poverty-reducing expenditures in countries that received debt relief increased from $6.4 billion in 2001 to an estimated $28.8 billion in 2009.16 For every dollar received in debt relief, African governments have increased social spending by two dollars.17
Despite being the hemisphere’s poorest country, Haiti was initially excluded from debt relief initiatives because of a technicality related to its debt-to-export ratio.18 After focused advocacy by our movement, Haiti’s eligibility was finally granted, but the delay meant Haiti waited for debt relief longer than other poor countries in the region such as Nicaragua, Honduras, and Bolivia.
Haiti was still forced to comply with numerous and onerous conditions imposed by the World Bank and IMF before receiving debt relief. These conditions included selling off government-owned businesses such as the power, water, and phone services, as well as the airport administration. 19 The privatization of such services meant a major loss of revenue-generating activities for the government, an influx in foreign-owned companies, and accelerated capital flight.
The Jubilee USA Network and our partners advocated strongly for Haiti to receive debt relief quickly without harmful economic conditions. In response to massive mobilization by people of faith, sympathetic members of Congress pushed for rapid cancellation. Finally, on June 30, 2009, the World Bank and IMF, and then large creditor countries, certified that Haiti would receive 100 percent cancellation of the debt it had incurred before 2004. This $1.2 billion in debt cancellation meant that Haiti’s debt service payments were reduced from over $50 million to $20 million annually. The U.S. agreed to pay some of this debt service as well.
The Never-Ending Story?
Unfortunately, this was not the end of Haiti’s debt story. Because Haiti had taken out loans since 2004, Haiti still owed over a billion dollars to external creditors when the earthquake hit on January 12, 2010. Within a week of the earthquake the IMF announced that it would send $100 million in emergency assistance – as a new loan.
This is a familiar, devastating pattern for impoverished countries like Haiti. They suffer shocks that they have no control over – a natural disaster, a drop in world prices for a main export crop, a spike in world prices for food they must import – and the international financial institutions respond with loans, condemning the countries to another cycle of debt and impoverishment.
The global Jubilee movement has never accepted these immoral financial patterns, which intensify global inequalities. Earlier this year, Jubilee USA and our global partners responded: 400,000 people signed a petition calling for the cancellation of Haiti’s remaining debt, and for all assistance to take the form of grants, not loans. In just a few days, Jubilee USA organized a letter to Treasury Secretary Timothy Geithner signed by organizations representing thirty million Americans, and another letter signed by ninety-two members of Congress. We achieved high-level commitments from the Group of 7 Finance Ministers to pay for full debt cancellation for Haiti.
Finance for the most impoverished countries like Haiti must be in the form of grant and not loan support, and should not come with harsh economic conditions.
This was an important victory not only for Haiti but because of the precedent it set: for the first time, a country received debt cancellation from multilateral institutions like the World Bank and IMF after a natural disaster. Still, it was painful to think how little and how late this justice came – all the debts Haiti had been forced to pay for nearly 200 years at the expense of investing in healthcare and education, building earthquake-proof infrastructure, and hiring sufficient emergency personnel, with so much unnecessary suffering as a result. Haiti is not alone. Our work is far from over.
In 2000, world leaders adopted the Millennium Development Goals, benchmarks for reducing extreme poverty by 2015. In a world with so many resources and so much wealth, those of us who seek justice considered even these goals too modest. With five years left to the 2015 target, many countries, especially in sub-Saharan Africa, have fallen off track in attempting to meet these targets. According to the World Bank, 64 million people were pushed into extreme poverty last year because of the financial crisis.
Even as the governments of developed countries mobilized $18 trillion to bail out the banking and financial sectors that created the meltdown, we were told it is not politically feasible now to provide just a tiny fraction of that amount to help the world’s most impoverished people weather this crisis, which they had no hand in creating.
Gaining Momentum
It is time for people of faith and conscience to re- double our efforts. As the Haiti experience showed, when we have a clear, moral argument on our side, we can move even the most established institutions to respond.
We must expand the benefits of debt cancellation to all countries that need it. There are still at least twenty very poor countries – such as Lesotho, Bangladesh, and Kenya – that were excluded from past debt relief deals. Thanks to the work of people of faith around the U.S., there is strong bipartisan support in Congress for the Jubilee Act for Responsible Lending and Expanded Debt Cancellation. The Act nearly became law in the last Congress, with strong support from then-Senator Obama. We are continuing to build support so this Act will become law, but in the meantime, President Obama can lead a global effort to expand debt cancellation to countries that need it to fight poverty.
More importantly, we must work to transform the international economic system to redress historic inequalities and restore right relationships among nations. The global economic crisis showed the world that irresponsible lending and borrowing to benefit the wealthy is not only unfair, it is destined to collapse on itself. Responsible international finance must begin by recognizing that our sisters and brothers in the Global South deserve justice.
Our Jubilee partners in developing countries have long maintained that they “don’t owe, won’t pay.” They argue that they should be considered the world’s true “creditors” because their underdevelopment is the dire result of the plunder of their countries’ natural resources and human capital by rich nations – a historic injustice that continues
When we have a clear, moral argument on our side, we can move even the most established institutions to respond.
today through unjust trading and financial relationships. Therefore we should support developing countries that undertake “debt audits” to investigate the conditions under which past loans were made and whether these debts are illegitimate. For the future, finance for the most impoverished countries like Haiti, struggling to meet the MDGs or to adapt to the urgent threat of climate change, must be in the form of grant and not loan support, and should not come with harsh economic conditions. For countries in a position to begin borrowing, we must establish frameworks that recognize the co- responsibility of lenders and borrowers to ensure financial help that improves livelihoods, protects human rights and the environment, and promotes true, sustainable development.
Transforming the international financial architecture may seem too ambitious. But the Jubilee vision of right relationships that comes from our faith traditions drives us to take on those challenges. Being ambitious for the world’s poorest nations never stopped us before.
Melinda St. Louis, Deputy Director of Jubilee USA, has more than a decade of experience as an advocate in Washington, D.C. and Central America. She holds a Masters of Public Policy in International Policy and Development from Georgetown University. Jubilee USA Network is an alliance of more than 75 denominations, human rights, environmental, labor, and community groups working for the definitive cancellation of crushing debts to fight poverty and injustice in Asia, Africa, and Latin America.
Notes
1 Gaillard, G-K, L’Expérience haïtienne de la dette extérieure (Maison Henri Deschamps, 1990).
2 James Ferguson. Papa Doc, Baby Doc: Haiti and the Duvaliers. (Basil Blackwell, 1987).
3 Ibid.
4 Eurodad. “Haiti gets $1.2 billion debt cancellation after long wait,” July 2, 2009.
5 UNDP Human Development Report 2009, Haiti Country Page.
6 World Bank Data and Statistics, Haiti Country Page, 2008.
7 AIDS Epidemic Update 2009, “Caribbean Fact Sheet.” UNAIDS, 2009.
8 World Health Organization, “Health Workforce, infrastructure, essential medicines” World Health Statistics 2009.
9 World Health Organization, “Mortality and Burden of Disease,” World Health Statistics 2009.
10 UNFPA Dispatch, “Earthquake in Haiti: UNFPA Concerned Over Critical Situation for Women.” Jan. 13, 2010.
11 Mark Schuller, “Haiti’s CCI: The Tail Wagging the Dog?,” Haiti Analysis.com. 2007.
12 Joseph Guyler Delva. “Haiti storm damage estimated at $1 billion,” Reuters, October 28, 2008.
13 Jonathan Katz. “Poor Haitians Resort to Eating Dirt,” Associated Press, Jan. 30, 2008.
14 IDA and IMF, “Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) – Status of Implementation,” Sept. 15, 2009.
15 List of HIPC Countries on World Bank website.
16 IDA and IMF, Sept. 15, 2009.
17 DATA Report 2007, citing IDA and IMF, “Update on the Assessments and Implementation of Action Plans to Strengthen Capacity of HIPCs to Track Poverty Reduction Public Spending,” April 12, 2005.
18 Mark Weisbrot and Luis Sandoval, “Debt Cancellation for Haiti: No Reason for Further Delays.” CEPR, Dec., 2007.
19 International Monetary Fund. “Haiti: Selected Issues,” 2002.