Debt Relief Brings Hope For Troubled Haiti's Future Donors May Be Shaking Off Their 'Haiti Fatigue' By Michelle Collins Published July 8, 2009

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It's the slogan they can't seem to shake; for decades Haiti has been tagged as the poorest country in the Western Hemisphere, and despite constant international efforts to change that, it is a reality that haunts the country still.

Last week, three international institutions announced they were forgiving $1.2 billion of Haiti's $1.9 billion in debt, a significant and tangible gesture for a country that has been repaying loans at a rate of $1 million per week. Canada, who lists Haiti as its second largest recipient of foreign assistance, wrote off the total of $2.3 million it was owed. Haiti is the 13^th country to meet the debt relief requirements of the Canadian Debt Initiative, which will eventually forgive $1.3 billion in various loans.

It's a positive development for the nation of nine million people that has long been defined by its negatives—incompetent governance, corruption, violence, natural disaster and hunger—and for Haiti-watchers it is a yet another recent sign, though ever so slight, of possible changes to its tragic story.

"Haiti needs all the financial resources it can get," says Tim Donais, an assistant professor at Wilfrid Laurier University who focuses on post-conflict peacebuidling. "I think probably the most significant challenge for building peace and security in Haiti now is an economic challenge, so debt relief is certainly an important part of that broader picture."

Indeed, the past few months have seen a sudden resurgence of interest in stabilizing the country. International institutions and governments are responding at the highest levels to Haiti's daunting needs, promising aid money, envoys, and even synchronization with the government's own national plan for development. They are pledges laced with a profound sense of urgency driven by a slim window of opportunity to act within the next two years—before the co-operative Haitian President René Préval's term is up.

It's an important shift when compared to Haiti's lack of international caché just one year ago, when, after being slammed by four successive and calamitous tropical storms in September 2008, the world all but ignored cries for help. Damages were estimated at close to $1 billion, and after failed attempts to collect that, the UN instead issued a desperate "flash appeal" for just $108 million in emergency victim funds. Less than half that amount came in.

"In the beginning after the storms, the UN, which is of course responsible for Haiti because they have a UN peacekeeping mission there, decided that the same old approach just wasn't going to work," says Robert Perito, senior program officer at the Washington D.C.-based United States Institute of Peace. "The appeals the UN tried in the course of the regular way of doing business, got no response. So the UN consulted internally, and they determined internally that they needed a 'game changer.'"

So change the game they did. Drawing on examples from the aftermath of the 2004 Tsunami in southeast Asia, the UN attracted a slew of influential and high-profile players to Haiti. Paul Collier, internationally respected economist and author of The Bottom Billion, was recruited to write a report for the UN Secretary General on developing an economic strategy for Haiti. The Security Council, various government officials and even musician Wyclef Jean were asked to visit, and in May former U.S. president Bill Clinton was named the first UN Special Envoy to Haiti.

The debt forgiveness, while criticized by some for coming too late and demanding too many or too few changes, is nonetheless widely welcomed. Much of the $1.9 billion in debt accrued by Haiti occurred during the 20 years of dictatorship under François Duvalier, or Papa Doc, and his son, Jean-Claude Duvalier. Most of that money went straight into their personal coffers.

"Haiti is seen for violence and misrule from Papa Doc on down, but also you might say disorganized government," says Albert Berry, a professor emeritus of economics at the University of Toronto's Munk Centre for International Studies. "The people who have been elected have been kind of not your typical bureaucratic-competent-style politicians."

For the international community to forgive that debt—so much of it embezzled by former Haitian leaders—is a powerful message of faith in their government system, and of its potential.

"It is significant to the extent that the international community is paying attention before the crisis really explodes," says Robert Fatton, the Julia A. Cooper professor of government and foreign affairs in the department of politics at the University of Virginia. "The tendency has been that the international community pays attention to Haiti when the crisis has exploded, whereas this time it seems to be that some worry that if nothing is done, then the crisis is going to explode. So it's kind of preventive, I think."

Reform Despite Disasters

For Haiti, the debt forgiveness is, in many ways, a symbol of both its progress and of the overwhelming challenges it faces.

In 2006, under the auspices of the World Bank and the International Monetary Fund, Haiti was enlisted under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. For the past three years—whilst being crippled by natural disasters, rioting through the global food shortage, and an international economic crisis that has sapped its remittances—the Haitian government has been reforming its system to conform with conditions for achieving debt relief.

Key among the reforms implemented was the auditing of government accounts, adopting a law on public procurement and strengthening tax and customs administration—areas that are particularly ripe for corruption in Haiti. Health, education and poverty reduction plans have also been brought about. With the announcement on June 30^th of its debt relief, Haiti became the 26^th country to reach the HIPC completion point.

"I'm quite happy of that decision," Natalie Gissel-Menos, Haiti's chargée d'affaires in Ottawa said in an interview Monday. The government has made great efforts to achieve a better standing, she says, but cautions that Haiti has yet far to go.

"Do not forget that the global economic crisis has also affected Haiti, and therefore not having that pressure to reimburse will certainly help Haiti to consider other things, to consider doing a bit more than it has been doing. We have had a lot of restraint, the needs are huge in Haiti."

With nearly all of its debt wiped clean, experts are now watching closely to see how Haiti allocates its still limited, but less strained, resources. Mr. Collier and many at financial institutions are pushing for an expansion of its textiles industry as a way to boost exports, while others instead suggest investments to its derelict agricultural sector. Decades of disaster and violence have left the social and physical infrastructures in tatters, and in recent years much of its foreign assistance was channeled through NGOs, pushing the government aside.

"The problem comes when you have a government like the present government in Haiti that is trying to do the right thing and it needs the resources, and instead major funders are continuing to work through non-governmental organizations; it leads to a sort of disconnect," says Robert Maguire, Jennings Randolph Senior Fellow, also with the United States Institute of Peace. "And this has been a major focus this year coming out of the donors' meeting in Washington, it seemed to be agreed upon that the government merits support."

Indeed, Ms. Gissel-Menos said the next big gesture from the international community would be to send funds to the government rather than the NGOs.

"Work closer with the governement and trust and invest, and accompany the government a bit more," Ms. Gissel-Menos says of how the international community could help further. "That, Haiti would appreciate. Having more of an investment directly, instead of through NGOs, we could have more results."

As one of the more active international actors in Haiti, Canada likely has a lot of opportunity in such areas. In 2006, the Canadian government announced $520 million spread out over five years through the Canadian International Development Agency. Canadian money supports election monitoring, strengthening public administration, the justice system, and the rule of law. Canada has also up to 100 civilian forces to the UN Stablization Mission in Haiti (MINUSTAH). And, Gov.-Gen. Michaelle Jean, who was born in Haiti, has twice paid official visits to the country.

As President Préval's term runs out, many are rushing to Haiti's side, hoping to finally set Haiti on a straighter path. Next week, Mr. Clinton will visit Haiti in his capacity at UN envoy.

"Haiti, notwithstanding the total devastation wreaked by the four storms last year, has the best chance to escape the darker aspects of its history in the 35 years that I have been going there," Mr. Clinton said recently.

Mr. Clinton has laid out many goals for his tenure, among them is to refocus international attention onto Haiti's economic and environmental problems. It is one that has gained a fair amount of momentum of late, but will likely turn again, as it always has.

"People often refer to the phrase 'Haiti fatigue', that Haiti's going to be the perpetual loser and that it's just like throwing money down the bottomless pit," Mr. Maguire said. "But I think the international community has come to understand Haiti a little differently now, and this is why the debt forgiveness is so important now. It has real and pyschological impacts."

mcollins@embassymag.ca