The cost of living goes up every day and denies the Haitian population a minimal well-being, depriving them even of staple foods. Already, signs of famine have cropped up in certain regions of the country.
Insecurity increases also, with a corollary increase of unemployment to 70 percent of the population. The expenses of the new school year [which must be borne privately] will be a terrible strain for many. It is clear that in place of progress, we are losing more and more ground.
It must be understood that the prohibitive level of prices of items of first necessity is not just last week?s news but expresses a deep political and economic malaise that risks becoming a humanitarian catastrophe if appropriate measures for the short, medium and long term are not taken. Those in power have not yet considered any serious corrective action. Instead, they have one more time extended an outstretched hand to the international community, which has again expressed its solidarity toward our country by organizing emergency food aid.
However, the impact of this aid will be short-term and without the beneficial effect it would have if the government accompanied it with adequate economic measures to increase agricultural production in the medium term. Already in January 2008 I sounded the alarm after a visit in the Nord?Est Department, but the authorities did not find it convenient to respond.
Despite this failure, the Haitian government preens itself for doing a good job in balancing the budget and producing a surplus in the public accounts. However, it must be noted that balancing the budget is a necessary but insufficient condition for investment and economic growth. A balanced budget has no value if it does not engender an increase of investment in the economy that translates into a growth of national production, job creation, and amelioration of the standard of living of the population.
This government seems to ignore the fact that investment is related to risk and profitability. An objective analysis of the political, social and economic situation leads one to conclude that bad governance is aggravating the situation of the country and increasing the risk of investment in Haiti. In fact, the perception of the risk of investment is such that both Haitian and foreign investors refuse to risk their capital in an environment so volatile. This irresponsible management of the public trust could again lead to social troubles which could even endanger the democratic achievements of 2006.
A close observer of the Haitian scene cannot ignore the extreme degree of general dissatisfaction which prevails in all sectors of national life, despite the expressions of satisfaction emanating from the government and international community. Rather than confront the problems and find appropriate solutions, the government prefers to turn its attention to low-priority items or to make excuse after excuse, avoiding the main problems.
At the beginning of last year, who was it that encouraged the electoral commission headed by Max Mathurin not to publish the results of the elections for local officials so as to block the local-council elections necessary for forming a Permanent Electoral Council? In reaction to this blow to democracy, the deputies and senators took the initiative to organize a study group at the Kaliko Beach Hotel on July 28, 2007 to make the central authorities finally publish these results.
At the same time this was going on, the Haitian executive branch suddenly to everyone?s surprise launched a debate on constitutional changes. This was a debate that spilled a lot of ink but has yet to lead to any concrete result.
Then came the illegal summons of the members of the electoral commission to appear before a prosecutor and the whole series of discussions on the venue: Was it the high court of justice or the prosecutor? One more time, no decision came out of these debates.
The executive then launched into a long series of consultations with the different sectors of society to form a new electoral commission which came into being at the end of 2007. By request of many sectors and to address the total deficiency of the new commissioners in electoral matters, the executive again named as administrator Jacques Bernard, who had demonstrated his capabilities during the three electoral rounds of 2006. But the executive then thought it good to change the rules of the game in the middle of the game. It decided to change the bylaws of the electoral commission, although Mr. Bernard?s condition for acceptance had been maintenance of the bylaws given that they had been tested in 2006 and proved their worth. Mr. Bernard resigned, bringing on a long delay in elections to renew a third of the senate and a consequent political crisis as ten senators were forced to leave their posts after May 8, 2008 because elections had not been held. No one can predict how long it will take for an electoral commission totally foreign to electoral matters to organize these elections.
Then, one more time, attention was diverted to the question of double nationality, as if that were the priority of the moment. The national palace used this question to perpetrate a coup d?état against the parliament and constitution by forcing a senator who had been elected for six years to go into exile for his personal security. How can one understand all the promises made to the Haitian Diaspora by the government relative to this question of double nationality?
One cannot help thinking that this government, incapable of governing, prefers instead to busy itself with a succession of petty crises instead of a frontal attack on the urgent problems that ravage our country. It would be unrealistic to believe that the sociopolitical situation will improve given the tendency of a government which has turned its back on these problems for two years. By its own actions?delay of elections for the Permanent Electoral Council and a third of the senate, coup d?état against the senate and democracy, installation of an electoral commission totally controlled by the executive to make a selection at the right moment?it is leading us to a political crisis that comes on top of a major economic crisis.
The economic situation
The economic situation of the country could not be more disastrous than it is today. After two years, the agronomists in power have not taken any serious measures to encourage national production in the different sectors of the economy, least of all in agriculture.
The primary sector (agriculture, livestock, fishing, and mining), of which 90 percent is agriculture and which accounts for 25 percent of the gross national product (GNP), continues its decline because the government has not formulated any agricultural policy to reverse the trend and increase production. There is an urgent need to modernize agriculture in Haiti by the introduction of a system of agricultural extension and irrigation projects especially in the plains of the Nord?Est, the Nord?Ouest, the Plaine des Moustiques and the Plaine de l?Arbre, in the Plantation Dauphin. All these projects can be profitable in the short and medium term with an investment on the order of U.S.$40 million. There is also an urgent need to modernize agriculture in Haiti with the introduction of mechanical equipment, because our productivity and yield per hectare are among the lowest in the world.
How many kilometers of irrigation canals has this government cleaned, enlarged, or created in two years? Has the government in cooperation with the private sector introduced the right seeds in all the agricultural zones during these last two years? How can we become competitive abroad if we are not able to sell to our own internal market?
It is not surprising that traditional items of consumption are being imported at a pace that is more and more alarming. Agricultural imports are running at U.S. $400 million and reaching 30 percent of our overall imports. This outflow of foreign currency is almost as much as we pay for oil, whereas a good agricultural policy would give us the capacity to enlarge our production and reduce our agricultural imports to a negligible level. Saving our foreign currency in this way would let us increase our imports of supplies and equipment needed badly for the development of our country. (We would not need to borrow anew more than $50 million to purchase the same equipment that was already purchased in 1998.*) Moreover, a profitable relaunching of the agricultural sector would create hundreds of thousands of jobs in the rural areas. The simultaneous introduction of public services would cut down the migration to the urban areas and relieve the pressure on the inadequate infrastructure of the cities.
In the short term, however, and in order to relieve the suffering of the population, timely actions must be taken. Beyond the food aid granted by the international community, it is urgent to eliminate all the direct taxes on certain agricultural imports such as rice, corn, flour, and cooking oil, and to substantially reduce the indirect taxes such as port charges on these and other food products. These actions would in no sense be a subsidy, because no financial resource generated elsewhere would be used to lower the price of these commodities. This would only be reduction of a tax that is part of the fiscal policy of the government and would reflect the fact that all commodities are not taxed at the same level. But the government has refused to take these measures under the false pretext that they would violate certain agreements. Contrary to what the government contends, this strategy is within the normal range of timely economic measures that any government answering to the interests of its people would take, as have other governments around the world.
I proposed the following three points in January 2008:
- Reduction of the import tax on rice
- Micro-credit program for the small market women who serve as the conveyor belt between the producers and the markets
- “Boutik Agricol”: to provide agricultural inputs to the peasants
The government systematically refused because it considered the proposal too costly. Today, the Agency for International Development is spending more than $60 million to feed the hungry while Venezuela is also contributing. Why could not the government act earlier?
The secondary sector (manufacturing industries, water, electricity, construction and public works) accounts for only 16 percent of GNP but plays an important role in job creation, above all in subcontracting. The government has not adopted any new initiative to optimize the effects of the HOPE act on the unemployment that ravages our country. The constraints on the development of this industry are sharper today. The shortage of industrial space, the lack of electricity, the excessive cost of the port are only a few examples of the limitations which the government should have begun to resolve the day after the law was voted. While steps have now been taken to prolong the benefits of the HOPE law, the government has not taken any step to put into place infrastructure adequate to welcome the potential new investors.
The construction sector can also constitute an important source of economic activities and a great provider of jobs, the more so since there exists a great demand for housing. The housing shortage has reached alarming proportions and again the government has neglected to formulate a policy of financial incentives for construction. The interest rate is too high and access to mortgages almost nonexistent. Once more, this sector ought to receive a privileged financial treatment to satisfy a fundamental need of the Haitian population.
As far as public works are concerned (road construction, etc.) it is astounding that despite the availability of different sources of financing these projects are slow in starting or move forward too slowly to make their full impact on jobs and the linking up of different regions of the country. One does not get the impression that the government understands the urgency of rapid development of the infrastructure that is so necessary for the growth of other sectors of the national economy.
Can it be that the government is holding out for a second term in office before getting up to speed or even getting started?
The tertiary sector (commerce, hotels, transport, communications and other services) accounts for a little more than 50 percent of the economy and is an important source of jobs, especially in urban areas. Apart from certain efforts made in the tourism sector by the minister of tourism Patrick Delatour, it is unfortunate that this sector can never realize its potential as long as the insecurity continues. There is no other policy that can encourage the rational development of the other components of the tertiary sector. However, this sector could grow quickly if the government would join with the private sector in reducing the obstacles to its development.
The balance of payments has been able to stay in precarious balance because of the $1.6 billion in remittances by the Haitian diaspora. Our merchandise exports did not exceed $500 million, of which the contribution of subcontractors exceeded 80 percent, although our imports are three times as large at $1.6 billion. The trade deficit ($1 billion) and a net services deficit of more than $400 million cannot be long maintained by a small economy as open as ours, hence the need to quickly cut down our imports via agricultural revival.
A quick response by the government to provide the necessary infrastructure to accommodate the potential investors generated by the HOPE law could increase our exports. The combined effect of a decrease in our imports and a growth of exports would reduce the trade deficit to an easily-manageable level in a fairly short time span. Moreover, the savings in foreign currency would allow importation of equipment to speed up economic growth instead of being used for political purposes such as the corruption of democratic institutions with the objective of maintaining an Epicurean style of power, as Daly Valet has well characterized the situation.
Insecurity is above all political; it is manipulated at the highest levels of the state:
- Why did they release the notorious kidnappers?
- Why do we have a disarmament program that rearms and deploys thugs such as the political gangs to spread mourning and destruction?
- What is the endpoint of this campaign of terror by kidnapping and execution of innocent children?
- Why did they let the arsonists infiltrate the hunger riots to destroy the businesses that are already so hard to create?
We must reestablish security in the cities and above all in the rural areas, so that the inhabitants can reinvest in livestock raising.
Altogether, the government of President Préval has failed. At a minimum, he was supposed to create the conditions necessary to facilitate local investment and attract foreign investors since domestic savings are not enough for rapid development of our economy. To believe that a stable macroeconomic environment could resolve the problems of a country that above all needs development is an abandonment of responsibility, as indicated by the recent departure of the governmental team. Moreover, where is the macroeconomic stability in an economy where the level of inflation exceeds 10 percent and the rate of interest hovers between 23 and 34 percent, where private investment is nearly nonexistent and citizens are starving? Small loans, already hard to get, have an interest rate in the 45-percent range, a level absolutely prohibitive for any kind of commercial activity.
There is no doubt that we are once again not on the road toward real progress. With good governance lacking, we reel from setback to setback. To avoid a humanitarian catastrophe and do away with the political, social and economic instability that persistently threatens our country, we must at all cost have a government that is politically better informed, is endowed with a clearer vision of development, and is more concerned with the national well-being.
In waiting for Godot?for we are fully in the theater of the absurd?we dare to hope that after the defeat of Eric Pierre, who did not have a chance to present his plans to remake the state, and after the joke played on Jean-Max Bellerive, the new nominee will be more fortunate and have the support of the chief of state. Moreover, we implore that this omnipotent chief take a step back to give his prime ministerial nominee enough room to perform and deliver what is expected of him.
Gentlemen, have pity, wait until 2010 to begin your campaigns, the people are hungry.
*Reference is to a shipment of equipment bought in 1998 with a $50-million loan that was left in a lot of the Compagnie Nationale d?Equipement and never deployed for lack of minor parts such as batteries.