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Haiti's foreign debt

In this statement, the WCC general secretary Rev. Dr Olav Fykse Tveit calls for the immediate and unconditional cancellation of Haiti's foreign debt.

25 January 2010

The World Council of Churches (WCC) continues to call for the immediate and unconditional cancellation of Haiti’s foreign debt. Debt cancellation for Haiti would be a critical step in a larger plan for recovery, poverty eradication, and sustainable development that must be developed with the full ownership of the people of Haiti and with the support of the international community under the coordination of the United Nations.

The strong earthquake that hit the small Caribbean nation of Haiti last 12 January 2010 has brought enormous loss of life and indescribable devastation. Thousands of families have lost their loved ones, their homes, and their livelihoods. The WCC commends the ACT Alliance, the United Nations and other governmental and nongovernmental relief organizations that have responded to the crisis with compassion and effectiveness.

Haiti is the most impoverished nation in the western hemisphere. Even before the earthquake struck, there was much hunger and suffering. Seven out of ten Haitians were “subsisting” below the poverty line. Half of the population could not read nor write. One out of nine children would die before reaching his or her fifth birthday.

Haiti is also a heavily indebted country. The worldwide community of churches and church-related organizations has been relentlessly campaigning for the annulment of Haiti’s debt for many years. These efforts have borne fruit. In June 2009, major financial institutions wrote off 1.2 billion US dollars in Haiti’s debt. Still, the country continues to owe around 641 million US dollars – nearly a quarter of the national output – to multilateral banks such as the Inter-American Development Bank (IDB) and the International Monetary Fund (IMF) as well as to Taiwan and Venezuela.

Rooted in its colonial past, the bulk of the debt accumulated by Haiti is patently onerous and odious. In 1825, the former slave colony was compelled to pay 150 million francs (equivalent to 20-21 billion US dollars in today’s dollars) to its former colonizer, France, in exchange for its freedom. The payment was financed through a loan from a designated French bank and marked the beginning of the country’s debt bondage.

Moreover, more than half of Haiti’s debt stemmed from loans extended to the brutal father-son dictatorship of Francois (‘Papa Doc’) and Jean-Claude Duvalier. Many of these loans did not benefit the people of Haiti. The Duvaliers appropriated tens of millions from the national treasury in their almost 30-year stay in power from 1957-1986.

Haiti has been paying around 50 million US dollars a year to merely service interest payments on debt. These monies could have financed feeding programmes for children and built numerous hospitals and schools. This year, Haiti is scheduled to fork out 10 million US dollars to the IDB and IMF.

Obliging Haiti to make debt payments at the expense of health care, education and other critical social programmes is illegitimate. Exacting payment during this time of incredible hardship and destruction is morally untenable.

The WCC therefore calls on the international community, under the leadership of the United Nations, to establish a mechanism for the immediate and full cancellation of Haiti’s debt as part of an overall plan to support recovery, poverty eradication and sustainable development in the country.

Debt cancellation is only an initial step. Haiti desperately needs assistance geared towards emergency relief in the short term, and reconstruction and sustainable development in the medium and long term.

Recently, the IMF has offered to extend an interest-free emergency loan to Haiti in the amount of 100 million US dollars and is further mulling a “Marshall Plan” for the country. However, the WCC, together with many civil society organizations and networks, stresses that any financial assistance should come in the shape of grants, not loans that would burden the country with more debt. These grants should be given without imposing detrimental economic policy conditions on the country such as the privatization of public services.

Moreover, a multilateral “Marshall Plan” to rebuild Haiti should be undertaken with the full participation of the Haitian people, employ Haitian talents and industries, and be coordinated by the United Nations.

The WCC welcomes recent pronouncements by the IMF, Taiwan and the Paris Club in support of reviewing Haiti’s remaining loans and making Haiti debt-free. We will hold them to their word.

The WCC is hopeful that the community of nations will rise to the challenge and assist in Haiti’s recovery in a genuine spirit of justice and caring for our Haitian sisters and brothers.

Justice and care: the situation in Haiti demands nothing less.

Rev. Dr Olav Fykse Tveit
General secretary
World Council of Churches