Elections alone will not solve Haiti's problems

News release from GAP (23 June 1995)

Contact Lise McGowan (202) 898-1566

While Haitians go to the polls Sunday to elect new municipal and parliamentary representatives, the quality of their lives will not change if the fundamental economic inequities under which they struggle are not reversed, a leading group monitoring economic trends on the island said today.

Lisa McGowan, an economist with the Washington-based Development GAP, said, Sadly, while the international community understands the urgency of free and fair elections as a step towards real peace and stability in Haiti, it has failed to act upon the equally urgent need to lay the basis for economic democracy.

McGowan pointed out that development assistance grants and loans are going into Haiti but, So far, the resources are not targeted at increasing the productive capacity or market power of the poor. The economic program imposed as a pre-condition for aid is a stuctural adjustment program (SAP) that has been applied and failed around the world. Ingredients of the SAP are privatization, wage restraint, high interest rates, removal of tariffs and reform of the civil service so that it can better facilitate private-sector activities. Investment strategies also favor the export sector.

In Haiti, as in scores of other countries where it has been tried, this model of development has served to further impoverish vulnerable populations, exacerbate income disparities between the rich and the poor, and undermine local production, McGowan said.

And it is being designed and implemented without input from the Haitian people, despite that fact that it impacts on virtually every aspect of their lives.

According to McGowan, This is cause for real concern: political democracy in a country as economically polarized as Haiti will go nowhere fast if it is not accompanied by economic democracy, where citizens are fully involved in shaping the economic policies that determine who gets what and how much of it they get.

The following points highlight the economic plight of Haiti:

• As in the rest of the world, wage restraint is a condition for receiving World Bank and IMF loans. Thus, despite the fact that real wages in Haiti declined 45 percent between 1985-1991, and even more since then, the Bank, the Fund, the Inter- American Development Bank (IDB) and USAID all recommend that wages be kept low as a means of attracting foreign investors. The current minimum wage of 36 gourdes a day is equivalent to about US$2.60, which, because of inflation, buys much less than it did three years ago. A 1991 USAID- sponsored study found that, even if Haiti's minimum wage were to rise to US$.75 an hour, it would still be 50 percent below that of Mexico, 15 percent lower than in Jamaica, and 35 percent lower than in Costa Rica.
• Privatization, euphemistically called democratization of asset ownership by the Haitian government, is also a condition of receiving loans from the IMF, the World Bank and the IDB. Unions and other groups in Haiti have protested the privatization of electrical power and telecommunications, arguing that it makes little sense in a nation so desperate for government revenues to privatize potentially profit-making concerns. Furthermore, the Haitian government is scheduled to borrow $40 million to repair and upgrade the electric company's equipment before the company is sold. This constitutes a direct subsidy from the poor of Haiti (who will repay the loan) to the private sector.
• Despite the fact that 70 percent of Haiti's people make their living in agriculture and small-scale artisanal production, the first priority of development assistance programs is apparently to speed financial, technical and political resources to the assembly industries -- which at their peak provided jobs for less than two percent of Haiti's workforce.
• Insufficient funds have been targeted to the peasant sector. Donors' documents indicate that, out of a total disbursements of some US$272 million between October 1994 to April 1995, only US$7 million was used for agricultural programs. Remaining pledges of some US$50 million over the next three years are targeted primarily at irrigation infrastructure repair and rural road rehabilitation. While important, infrastruture repair will do little for small Haitian farmers who need tools, seed, credit, and agricultural extension to increase their production. Only about US$2 million in rural credit funds has been pledged by donors to date. In 1995, donors will spend more money feeding poor Haitians than they will allocate to food production over the next three years.
• USAID has provided $750,000 to the Presidential Commission on Modernization and Growth. Dominated by Haiti's business elite, the Commission has an official policy advisory role. It and other privileged business groups continue to receive significant U.S. government support that enables members to lobby and gain benefits from the Clinton Administration, Congress and potential investors. No parallel program has yet been established to draw expertise, priorities or advice from the over 90 percent of Haiti's population that make their living from agriculture, artisanal production and other microenterprises.
• At the same time that the export-oriented private sector is receiving massive internal and external support, import tariffs have been drastically reduced, forcing small farmers in Haiti to compete with highly subsidized food exported to Haiti from the United States. This policy, combined with the impact of food programs that provide Haitians with over one million meals a day, threatens to seriously undermine the food-production sector.

McGowan concludes, The international community has moved mountains to support democracy and provide development assistance to Haiti. However, rather than supporting the development of an economic system that addresses the long-term development needs and priorities of Haiti's poor majority, what it appears to be creating is a juggernaut of development assistance that preferentially serves international and elite Haitian interests. Clearly, this is anathema to true democracy. The challenge for the newly elected Haitian officials will be to make the Haitian people, not international donors, the decisionmakers in Haiti's economic future.