One week after a devastating 7.0 magnitude earthquake struck the Caribbean island nation of Haiti, foreign aid began to pour into the country. American Red Cross alone has received US$23 million and counting just from text message donations. Since the occurrence of this event, people have demonstrated on a daily basis the power of human kindness with these massive amounts of donations.
Unfortunately, the same cannot be said for one of the world’s most powerful financial institutions, the International Monetary Fund (IMF). Apparently, this disaster that has destroyed an entire country and killed tens (possibly hundreds) of thousands isn’t a tragedy in the eyes of the IMF, but rather, an opportunity.
This past Thursday, the organization announced a US$100 million loan to Haiti, which on the surface seems great for aiding the country with rebuilding infrastructure and feeding its millions of displaced people. Under the surface however, this loan was given through the IMF’s extended credit facility, to which Haiti already owes US$165 million.
These aren’t straightforward loans either. The IMF places strict conditions on countries that they loan to with extended credit, and in this case, crisis-stricken Haiti is no exception. Conditions such as increased costs for much-needed local utilities, like electricity, clearly demonstrate the IMF’s cutthroat methods for using crisis’ as leverage to indebted countries. This is by no means anything new: Haiti is quite used to this treatment from developed nations and multinational corporations.
A brief look in Haiti’s history reveals the dark side of colonialism and American imperialism. In the words of anthropologist Ira Lowenthal, “Haiti was the first free nation of free men to arise within, and in resistance to, the emerging constellation of Western European empire.” In the late 18th century Haitian slaves revolted against their French colonial rulers, who had used violent repression, in order to further profit from their slave labour.
Haiti declared independence in 1804, but with grave consequences. The “slave uprising” had destroyed nearly all of the agricultural wealth of the country, as well as about a third of the population. To make matters worse, by 1825 the French decided to recognize Haiti’s independence with the condition of being paid 150 million francs in reparations. You heard that correctly, guys — Haiti was forced to pay their former slave masters for the liberty they had fought for.
They would have been crippled economically by a trade embargo from France, Britain and the U.S. had they chosen not to pay France their money. Of course, Haiti did not have that kind of money kicking around, and were forced to borrow from U.S., German and French banks to repay their debt.
By 1900, Haiti was spending 80 per cent of their national budget on repayment. Only in 2003 did democratically elected Haitian president Jean-Bertrand Aristide call on France to pay reparations for the harm they had done to his country. He was soon expelled from the country for a second time (the first in 1991) via military coup carried out by the United States. Haiti’s total foreign debt was US$1.8 billion by September 2008.
Prior to last week’s earthquake, Haiti already owned the title of “poorest country in the Western hemisphere.” Indeed, hundreds of years of foreign debt and destruction do not come cheap. Although this would be considered a natural disaster, the human element that weakened the foundations of Haiti’s infrastructure surely acted as a catalyst for the sheer magnitude of this catastrophe.
This brings me back to the original US$100 million loan the IMF is giving. Haiti, in such a time of crisis, clearly has no choice but to accept the offer regardless of the conditions. As the saying goes, “beggars can’t be choosers.” In fact, that should be the new slogan for the IMF, seeing how often they accommodate such ideology.
The only solution to such a problem is to issue grants instead of predatory loans. Haiti does not need any more debt added to its collection — it needs donations and redevelopment aid that will not meddle with its internal politics. Canada has already taken initiative, along with several European nations, to cancel Haiti’s debt and decrease it to a total of US$214 million, and is calling on other nations to do the same.
Unfortunately, no matter how many countries choose to forgive Haiti’s debt, it is unlikely that the IMF will never agree to such charitable actions. Sadly, their purpose of existence isn’t to help — it is to prey on those less fortunate than us for financial gain. Donations and grants are the only way Haiti can ever be rebuilt properly, and the only way the first free country of slaves will ever see a true road to freedom.
Ian Hunter is a first-year global political economy student at the University of Manitoba.