Date: Fri, 21 Nov 97 20:13:39 CST
From: Haiti Progres <email@example.com>
Organization: Haiti Progres
Subject: This Week in Haiti 15:34 11/12/97
This Week in Haiti,
(HIB) In a process that appears to be on the edge of legality at best,
the resigned Prime Minister this month signed a contract privatizing
the first of the 33 state enterprises slated for the auction block in
what was clearly a
liquidation sale in the favor of foreign
Although resigned for over four months, and despite the fact that the council which oversaw the deal is operating without some members or any law regulating it, on Oct. 14, Smarth, as practically his last act in office, signed away 70 percent of the state flour mill, the Minoterie d'Haiti, to two multi-billion- dollar transnational corporations.
According to the few details of the deal made public, the
Haitian-American consortium - a novice Haitian finance group,
Unifinance, and two mega-agribusinesses: Continental Grains, which did
US$15 billion in sales last year and is into wheat, rice, chickens,
finances and a host of other activities in over 50 countries, and
Seabord Corporation, which has boats, flour, pork, chicken, etc, and
did almost US$1.5 billion in business last year -got a great
deal. There is no question who is running the
gets the 70 percent in exchange for promising to invest US$9 million
in the mill. (The state retains 30 percent.) Each of the three
partners has US$3 million worth of shares, but already Unifinance has
announced it plans to sell off $2 million worth. The consortium has
promised to open the mill in nine months.
Coincidentally or not, this first privatization of Haiti's state
companies went through only three days before US Secretary of State
Madeleine Albright's visit. The contract signing, replete with
champagne, was festive, and, not surprisingly, although Albright was
not there, the other patrons were, beaming. US Ambassador William
Swing was in ecstasy, saying this was
a good sign for American
investors... it is very important for us that they come and install
themselves in Haiti, while World Bank representative Carol Carr
said it was
an historic step.
We are delighted to see that everyone accepts this success and we
hope that at the end of the month when the bids for the Cimenterie are
opened, we can move forward! Carr extolled, adding that the
process, overseen by the Conseil de modernisation des entreprises
was done in a very professional and transparent
Smarth, even though he was chalking up points with his tutor for having rammed the sale through in the midst of contestation, was more muted.
For five years [the mill] was closed, there were no jobs, he
This government accepted its responsibilities,
and we said we would not leave it like that. We don't have the
capital, so we called capital to come and join with the state to make
the enterprise work. To criticism, he said, bluntly:
economic program for the country cannot be avoided ... To stop would
Five days later, a job well done, he resigned and went home.
The CMEP was created following parliamentary approval of the
the modernization of public enterprises (one of the two
neoliberal laws) in the fall of 1996. It is supposed to be made
up of the Prime Minister or his designate and two others appointed by
the executive, and two more, one from the business sector and another
the labor sector, both to be approved by the executive. Currently
however, it has only the three executive members. It is headed by
Minister of Planning Jean Erick Deryce. A second law which is
supposed to regulate CMEP's actions has never been considered or
approved by parliament. Currently, CMEP has a great deal of latitude
to choose the form of privatization to do, on many of its actions,
capitalization deals like the Minoterie contract, are
not subject to any oversight or approval by parliament or any other
Given that latitude, it is not surprising that, quite contrary to Carr's claim, there has been no transparency at all in the privatization process. In 1995, for example, it was announced that the International Finance Corporation (IFC), the most secretive of the three institutions that make up the World Bank, was doing a study of the first nine enterprises to be privatized. The study was paid for with a US$2 million grant from USAID. Since then, the US government has also openly funded, and probably more quietly been heavily involved in, other activities to move the process forward. However, neither the IFC study nor any other information on the estimated values of state assets has ever been published. Asked about the value of Minoterie this week, a CMEP employee said there were estimates made but refused to share them.
There is certain information that was deliberately not diffused so
the offers would be more interesting, he said.
Despite the obscurity surrounding the deal, it is still possible to
get a vague idea of the value of Minoterie. What literature and
opinions that can be found indicate that the
consortium was handed the mill on a platter. The Ft. Lauderdale
Sun Sentinel said it appeared the companies got
a good deal and
a blessing bestowed by the Washington-based business lobbying group
Caribbean-Latin American Action is another sign that foreign capital
made out well.
More concretely, in the past Minoterie, the nation's only flour mill, has been a big money-maker. It also made a great deal of money by selling by-products for animal feed. The de facto government closed the plant soon after taking power, but certainly not because the plant was losing money. Col. Michel Francois was said to control the flour import business during the three-year coup d'Etat and supposedly regularly collected payments from merchants. (The regime also closed the cement factory and friends of the regime immediately cornered the market.)
According to a December, 1996 study by the Concertation pour Haiti of
Quebec (a group of Canadian organizations), the mill can be up and
running with only US $1.1 million of investment and US $2.3 million
for modernization. Then,
it is indisputable that the enterprise can
be profitable, like it was in the year 1986- 1987 when it made profits
of US $5.8 million, the study says. According to a 1992
Inter-American Development Bank report, it made almost US $4 million
When the Jean-Bertrand Aristide administration took office in February 1991, Minoterie had been operating in the red due to poor management, corruption and overstaffing, but it, as well as other state enterprises, were soon making money from the state.
During the month of February , Minoterie d'Haiti lost
2,761,230 gourdes. Since the new direction took charge in March, 1991,
this operating deficit was brought to 162,635 gourdes the following
month. Thanks to measures taken by the new direction... the results
have lead to a net profit in May of 1,161,315 gourdes [US $165,000 at
the time], brags a June 1991 report from the office of Prime
Minister Rene Preval, who is today Lavalas' staunchest supporter of
The government intends to continue the objective of making all the
state enterprises profitable, the Preval report continues.
state of financial health of these enterprises and their contribution
to the treasury effects the public finances.
When the contract was signed this month, the black-clad rapid response police team, the Compagnie d'Intervention pour le Maintien de l'Ordre (CIMO) immediately took over the factory, and have prevented workers from getting into their union offices. One reason might be because they have openly condemned the contract.
Our position on the deal is that it is a liquidation in the sense
that, in relation to what Minoterie is worth, it is a gift,
explained union member Wilfred Metellus.
From 1969 to 1989, it gave
the Haitian treasury 5 million gourdes every month; it made 100
million gourdes net every year. It has a housing complex [72
homes]. They did not even evaluate the value of the mills. There are
16 mills. Each one cost US $60,000. We just repaired four generators
that give 4.1 megawatts of electricity.... We have a capacity to stock
32 tons of wheat... We have a wharf... If today they gave them the
global price of US $9 million, that's a gift they gave them.
According to the union, Minoterie also has over 40 carreaux (about 52 hectares) of land, a sisal plant in Montrouis, and a factory for producing Akasan (a cornmeal drink) in Les Cayes. Real estate experts put the value of the land alone, located north of the capital near the Arcadins coast which has many beach clubs and a Club Med, at between US $2 million and US $3 million.
Another major critic of the contract is the recently formed Parliamentary Consultation Against Neoliberalism. Earlier this month it had said that President Preval supported an anti- neoliberal document it helped edit. It reacted strongly to the sale, condemning Preval and rejecting it as illegal.
That transaction was made to the detriment of the Haitian people,
to the detriment of the country said Dep. Joseph Jasmin
The transaction took place outside of law that
has not yet been born and that is supposed to organize CMEP... That
law does not exist, so CMEP is acting in illegality. Also, the
moribund government cannot engage the state.
We have a resigned government that has no legal responsibility
before parliament. To whom is responsible? added Dep. Alix Germain
We say that the act is an illegal act.
The parliamentary group said it plans to propose a law that would eliminate the CMEP altogether.
In the meantime, it is worth pondering why two of the biggest agribusinesses in the US wanted to get into Haiti. There is certainly money to be made in this captive market. Flour is an essential part of the Haitian diet, and with control of the agribusinesses in the US, the shipping, and the milling, Haiti's flour supply has become more of a monopoly than it ever was, only this time in the hands of two transnationals.
But that might not be all. Having Minoterie gives the transnationals a foot in a potential market of 7 million consumers for all the other products they produce, ship and market. In addition to rice, chicken, soy beans, shrimp, cotton, beans and other commodities, both of them are growing producers and exporters of pork, the most-consumed meat in the world and a quickly expanding new US food export, according to a 1966 article in the Kansas City Star. In 1995, for the first time in 44 years, the US became a pork exporter. The top ten producers (Continental is 12th) raised 23 million hogs that year.
Rural America is rapidly becoming the center of a global pork
production business, boasted The Star. A Kansas producer Premium
Standard Farms, added:
The export opportunity is tremendous,
The National Pork Producers Lobby in Washington, DC, is clear on the
connection between the neoliberal policies being embraced by
governments like the two Lavalas regimes, and pigs:
The US pork
industry may have been the single largest beneficiary of the trade
agreements [NAFTA, GATT]. (The Kansas City Star, Nov. 6, 1996)
(Incidentally, mega-pork-producers have recently come under harsh
criticism because their
factories with their
lagoons often pollute nearby waters. Continental has already been
fined over US $268,000 for pollution and for ignoring regulations, and
is now facing a lawsuit by Missouri citizens.)
What does all that mean for Haiti, where pork is one of the main meats consumed? Currently, some pork is imported and the rest comes from medium-sized as well as individual producers. (The peasants' kochon kreyol were killed off in the late 1980s' in a USAID-sponsored eradication program after an African Swine Fever outbreak.) Under the new, neoliberal tariff regime, there is nothing to protect local pork from mass-produced competition, and with a wharf, the boats and the space for a distribution center on Rte. 1, the corporations are now in a very good position to break into at least the pork if not other markets as well.
The privatization of Minoterie d'Haiti offers clear examples of who benefits and who loses from privatization: In this case, the people were robbed of a valuable state asset; the supply of a major food item will be in the hands of vertically integrated transnationals whose only motive is profit and who will have an objective monopoly, and, they are also poised to threaten the country's production of other food products by exposing them directly to the competition engendered by voracious and brutal international capitalism.