The IMF would have had to be stopped and the whole neocolonial agenda, labeled "globalization":
"While the members of the military Junta were sent into exile (1994), the return to constitutional government required compliance to IMF diktats, thereby foreclosing the possibility of a progressive "alternative" to the neoliberal agenda. Moreover, US troops remained in the country until 1999. The Haitian armed forces were disbanded and the US State Department hired a mercenary company DynCorp to provide "technical advice" in restructuring the Haitian National Police (HNP).
"DynCorp has always functioned as a cut-out for Pentagon and CIA covert operations." (See Jeffrey St. Clair and Alexander Cockburn, Counterpunch February 27, 2002,
http://www.corpwatch.org/issues/PID.jsp?articleid=1988 ) Under DynCorp advice in Haiti, former Tonton Macoute and Haitian military officers involved in the 1991 Coup d'Etat were brought into the HNP. (See Ken Silverstein, Privatizing War, The Nation, July 28, 1997,
http://www.mtholyoke.edu/acad/intrel/silver.htm )
In October 1994, Aristide returned from exile and reintegrated the presidency until the end of his mandate in 1996. "Free market" reformers were brought into his Cabinet. A new wave of deadly macro-economic policies was adopted under a so-called Emergency Economic Recovery Plan (EERP) "that sought to achieve rapid macroeconomic stabilization, restore public administration, and attend to the most pressing needs." (See IMF Approves Three-Year ESAF Loan for Haiti, Washington, 1996,
http://www.imf.org/external/np/sec/pr/1996/pr9653.htm ).
The restoration of Constitutional government had been negotiated behind closed doors with Haiti's external creditors. Prior to Aristide's reinstatement as the country's president, the new government was obliged to clear the country's debt arrears with its external creditors. In fact the new loans provided by the World Bank, the Inter-American Development Bank (IDB), and the IMF were used to meet Haiti's obligations with international creditors. Fresh money was used to pay back old debt leading to a spiraling external debt.
Broadly coinciding with the military government, Gross Domestic Product (GDP) declined by 30 percent (1992-1994). With a per capita income of $250 per annum, Haiti is the poorest country in the Western hemisphere and among the poorest in the world. (see World Bank, Haiti: The Challenges of Poverty Reduction, Washington, August 1998,
http://lnweb18.worldbank.org/External/lac/lac.nsf/0/8479e9126e3537f0852567ea000fa239/$FILE/Haiti1.doc ).
The World Bank estimates unemployment to be of the order of 60 percent. (A 2000 US Congressional Report estimates it to be as high as 80 percent. See US House of Representatives, Criminal Justice, Drug Policy and Human Resources Subcommittee, FDHC Transcripts, 12 April 2000).
In the wake of three years of military rule and economic decline, there was no "Economic Emergency Recovery" as envisaged under the IMF loan agreement. In fact quite the opposite: The IMF imposed "stabilization" under the "Recovery" program required further budget cuts in almost non-existent social sector programs. A civil service reform program was launched which consisted in reducing the size of the civil service and the firing of "surplus" State employees. The IMF-World Bank package was in part instrumental in the paralysis of public services, leading to the eventual demise of the entire State system. In a country where health and educational services were virtually nonexistent, the IMF had demanded the lay off of "surplus" teachers and health workers with a view to meeting its target for the budget deficit.
Washington's foreign policy initiatives were coordinated with the application of the IMF's deadly economic medicine. The country had been literally pushed to the brink of economic and social disaster.
The Fate of Haitian Agriculture
More than 75 percent of the Haitian population is engaged in agriculture, producing both food crops for the domestic market as well a number of cash crops for export. Already during the Duvalier era, the peasant economy had been undermined. With the adoption of the IMF-World Bank sponsored trade reforms, the agricultural system, which previously produced food for the local market, had been destabilized. The lifting of trade barriers, opened up the local market to the dumping of US agricultural surpluses including rice, sugar and corn, leading to the destruction of the entire peasant economy. Gonaives, which used to be a Haiti's rice basket region, with extensive paddy fields had been precipitated into bankruptcy:
. "By the end of the 1990s Haiti's local rice production had been reduced by half and rice imports from the US accounted for over half of local rice sales. The local farming population was devastated, and the price of rice rose drastically " ( See Rob Lyon, Haiti-There is no solution under Capitalism! Socialist Appeal, 24 Feb. 2004,
http://cleveland.indymedia.org/news/2004/02/9095.php ).
In matter of few years, Haiti, a small impoverished country in the Caribbean, had become the World's fourth largest importer of American rice after Japan, Mexico and Canada.
The Second Wave of IMF Reforms
The presidential elections were scheduled for November 23, 2000. The Clinton Administration had put put an embargo on development aid to Haiti in 2000. Barely two weeks prior to the elections, the outgoing administration signed a Letter of Intent with the IMF. Perfect timing, the agreement with the IMF virtually forecloses from the outset any departure from the neoliberal agenda, prior to the election of the new president, which since his return from exile in 1994, had been broadly compliant with IMF demands.
The Minister of Finance had sent the amended budget to the Parliament on December 14th. Donor support was conditional upon its rubber stamp approval by the Legislature. While Aristide had promised to increase the minimum wage, embark on school construction and literacy programs, the hands of the new government were tied. All major decisions regarding the State budget, the management of the public sector, public investment, privatization, trade and monetary policy had already been taken. They were part of the agreement reached with the IMF on November 6, 2000.
In 2003, the IMF imposed the application of a so-called "flexible price system in fuel", which immediately triggered an inflationary spiral. The currency was devalued. Petroleum prices increased by about 130 percent in January-February 2003, which served to fuel popular resentment against the Aristide government, which had supported the implementation of the economic reforms.
The hike in fuel prices contributed to a 40 percent increase in consumer prices (CPI) in 2002-2003 (See Haiti—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, Port-au-Prince, Haiti June 10, 2003,
http://www.imf.org/external/np/loi/2003/hti/01/index.htm ). In turn, the IMF had demanded, despite the dramatic increase in the cost of living, a freeze on wages as a means to "controlling inflationary pressures." The IMF had in fact pressured the government to lower public sector salaries (including those paid to teachers and health workers). The IMF had also demanded the phasing out of the statutory minimum wage of approximately 25 cents an hour. "Labour market flexibility", meaning wages paid below the statutory minimum wage would, according to the IMF contribute to attracting foreign investors. The daily minimum wage was $3.00 in 1994, declining to about $1.50- 1.75 (depending on the gourde-dollar exchange rate) in 2004.
In an utterly twisted logic, Haiti's abysmally low wages, which have been part of the IMF-World Bank "cheap labor" policy framework since the 1980s, are viewed as a means to improving the standard of living. In other words, sweatshop conditions in the assembly industries (in a totally unregulated labor market) and forced labor conditions in Haiti's agricultural plantations are viewed by the IMF as a key to achieving economic prosperity, because they "attract foreign investment."
The country was in the straightjacket of a spiraling external debt. In a bitter irony, the IMF-World Bank sponsored austerity measures in the social sectors were imposed in a country which has 1,2 medical doctors for 10,000 inhabitants and where the large majority of the population is illiterate. State social services, which were virtually nonexistent during the Duvalier period, have collapsed.
The result of IMF ministrations was a further collapse in purchasing power, which had also affected middle income groups. Meanwhile, interest rates had skyrocketed. In the Northern and Eastern parts of the country, the hikes in fuel prices have led to a virtual paralysis of transportation and public services including water and electricity.
While a humanitarian catastrophe is looming, the collapse of the economy spearheaded by the IMF, has served to boost the popularity of the Democratic Platform, which has accused Aristide of "economic mismanagement." Needless to say, the leaders of the Democratic Platform including Andy Apaid, who actually owns the sweatshops are the main protagonists of the low wage economy."
http://globalresearch.ca/articles/CHO402D.htmlHello from Germany,
Dirk
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