Saturday, January 30, 2010
Haiti is undoubtably the poorest country in the world - deliberate policies of IMF, World Bank, and Multinationals made it so...
Working together and on behalf of the United States, Great Britain, France, and other western countries, a conglomerate of multinational banks has imposed economic, social, and political policies on Haiti deliberately intended to keep the nation poor, according to a Jan. 2010 report by Richard Kim of National Public Radio.
“Haiti's vulnerability to natural disasters, its food shortages, poverty, deforestation and lack of infrastructure, are not accidental. To say that it is the poorest nation in the Western hemisphere is to miss the point; Haiti was made poor … by the IMF and the World Bank,” Kim said.
Historically, Haiti was once a slave colony of France before a revolt in 1804 led to the nation’s independence. However, as a condition of their freedom, the liberated Haitians agreed to pay 150 million francs in reparations to their former slave owners in France to prevent embargos against Haiti. “In order to do that, they borrowed millions from French banks and then from the US and Germany ... (B)y 1900, Haiti was spending 80 percent of its national budget on repayments,” Kim said.
It took Haiti 122 years to pay off the total compounded debt of 90 million francs—valued at more than $21 billion in 2003 dollars—which was not settled until 1947, Kim said.
Building a Global Economy After World War II
Enter the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (the World Bank), and the Inter-American Development Bank (IDB).
The IMF and the World Bank emerged from international negotiations held in Bretton Woods, New Hampshire, following the end of Word War II in 1944.
“The IMF was originally charged with providing a stable monetary system that would promote world trade, while the (World Bank) was founded to aid in the reconstruction of Western Europe,” according to a 2002 World Bank Report from the Solidarity Center.
By comparison, the Inter-American Development Bank, also headquartered in Washington, D.C., was founded in 1959 to support energy, transportation, telecommunications, agriculture, urban development and health care projects. The IDB—the largest multilateral lender in the Americas—has provided $140 billion in loans and grants to governments and private corporations in 26 Latin American and Caribbean nations, according to a report by Food and Water Watch.
“IDB investments are approved by its shareholders, the 21 member nations that provide funds. With 30 percent of the shares, the United States is the bank’s largest single shareholder. Collectively, the borrowing nations hold just over 50 percent of the voting power. The United States owns three times as many shares as the next-largest individual shareholders, Argentina and Brazil. It makes the US the most influential member country and awards the United States executive veto power over IDB decisions,” reported Food and Water Watch.
Although the International Monetary Fund, World Bank, and Inter-American Development Bank may outwardly appear to be three different lending institutions, they are all controlled by the same multinational corporations, according to a 2009 article by Will Petrik of the Council on Hemispheric Affairs.
“(T)he power structure of these financial institutions is quite similar, and their lending policies have traditionally been informed by neoliberal ideology. Inevitably, the social, economic and political contracts these banks imposed on recipient nations also have been quite similar from country to country in the region,” Petrik said.
Haiti first borrowed money from the international development banks during the 1980s, according to a 1993 report from the National Labor Committee titled "Haiti After the Coup: Sweatshops or Real Development?"
Economic After-Shocks of Natural Disaster
Following the massive earthquake that struck the island on Jan. 12, the IMF has approved a $100 million loan to Haiti--to be added to the country’s current $165 million debt to the bank.
However, in order to get the new funds, the Haitian government must raise prices for electricity, refuse pay increases to all public employees except those making minimum wage, and keep inflation low. “In other words, in the face of this latest tragedy, the IMF is still using crisis and debt as leverage to compel neoliberal reforms,” Kim said.
“A 2008 report from the Center for International Policy points out that in 2003, Haiti spent $57.4 million to service its debt, while total foreign assistance for education, health care and other services was a mere $39.21 million,” Kim said.
Haiti currently owes the Inter-American Development Bank about 13 percent of its annual gross domestic product (GDP), reported Dan Beeton of the Global Policy Forum. $429 million of the country’s current debt of $891 million—which accumulated from 2004 onward—is held by IDB. Haiti is scheduled to make $10 million in payments to IDB next year, Kim said.
Recently, the IMF and the World Bank forgave about $1.2 billion of Haiti’s debt. Before the debt cancellation, the Haitian government was paying $1 million a week to service the loans, according to a report released June 23, 2008, by the Robert F. KennedyRobert F. KennedyRobert F. KennedyRobert F. Kennedy Memorial Center, Partners In Health, and the Center of Human Rights and Justice.
“Massive debt has precluded spending on desperately needed infrastructure projects. In 2003, for example, Haiti’s debt service was $57.4 million; the Haitian government’s combined budget for education, health care, environment, and transportation was $39.21 million. Meanwhile, the Haitian people continued to endure crushing poverty, which has been exacerbated by the failure to disburse the IDB loans,” reported Tom Spoth in 2008.
Coerced Globalist Policies
In order to receive loans from the IMF, World Bank, or the Inter-American Development Bank, debtor nations are required to implement a variety of neoliberal social, economic, and political policies—including forced downsizing and privatization of state-owned industries, higher interest rates, and cuts in social spending.
These "strict conditionalities" established by the IMF, known as Structural Adjustment Policies (SAPs), “gave the IMF enormous influence over domestic economic policies in borrowing nations, as it was essentially the 'gatekeeper' for access to foreign credit. The SAPs included implementing fiscal austerity (including public social spending cuts), higher interest rates, the privatization of state owned industries, and rapid liberalization of capital and commercial markets,” Petrik said.
On Sept. 8, 1995, Haitian Prime Minister Smarck Michel announced Haiti’s continued commitment to privatize nine state-owned companies—including Haiti’s flour mill, a cement factory, its air and seaports, telephone exchanges, and electricity. The forced privatization was one of the conditions to receive $170 million in structural adjustment loans from the IMF, World Bank, IDB, and European Union—part of a five-year, $1.2-billion aid program, reported Inter-Press Service in 1995.
“The support of the international financial institutions for economic reform and progress in countries around the world has always been conditioned on measures to ensure that the money is able to be put to good use and is not simply wasted,’’ said Al GoreAl GoreAl GoreAl GoreAl Gore during a visit to Haiti in October 1995 as vice president under Bill ClintonBill ClintonBill ClintonBill ClintonBill Clinton, reported Dan Coughlin of Inter Press Service on Oct. 16, 1995.
Gore’s visit coincided with the arrival of UN Secretary General Boutros Boutros Ghali to discuss the continuation of a UN presence in Haiti scheduled to end February 1996. At the time of Boutros Boutros Ghali’s visit, the UN had a military force of 6,000 on the ground in Haiti, plus a team of observers, Coughlin said.
Acknowledgements: Ken Boyte