April 15, 2024

Iraic

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Haiti, an Economy Sentenced by a 19th Century Debt

2 min read

Traversing the path of colonial history to justify present underdevelopment is not well-received, especially in former colonial powers, but a past stretching back to the 19th century and extending until 1947 under the shadow of an overwhelming debt is harder to overlook. Haiti shares similarities with other countries in its region: an economy structured around cheap labor, where textile exports represent the second source of income after remittances, and the constant influence of Washington. The United States occupied and controlled the country between 1915 and 1934, then supported dictators whose main virtue was staunch anti-communism, such as François Duvalier and his son Jean Claude, who ruled with an iron fist between 1957 and 1986.

However, there are notable differences. Being the first country to abolish slavery and gain independence from France in 1804, Haiti suffered greatly for its audacity two decades later when a French fleet led by Baron de Mackau imposed a devastating agreement: 150 million francs as compensation to former colonizers for the expropriation of lands and slaves. This sum, ten times the budget of the new country, led to contracting a debt with French banks that eventually ended up in the hands of the American National City Bank, predecessor of Citibank. Unlike other debts intended to improve productive infrastructure, such as hospitals or roads, the obligations Haiti faced until the mid-20th century were merely a matter of national survival.

This monumental debt became a fundamental obstacle to the country’s development, marking the use of the dollar as a reference currency and store of value. Although the gourde is the official currency, Haiti has never had a monetary authority capable of acting in the interest of its citizens. MIT historian Malick Ghachem explains that, because remittances are converted into gourdes before reaching the population, the dollar has become an exclusive privilege of Haitian banks, companies, and elites. As seen in similar cases in Argentina, Venezuela, and Lebanon, dependence on the dollar has resulted in cycles of devaluation and inflation that perpetuate poverty and economic weakness.

To stabilize the currency, Ghachem suggests intervention by the central banks of the Eurozone and the United States in the foreign exchange market, accompanied by measures to boost Haitian exports and alleviate tariffs. However, he warns that this is not an easy solution, but he points out that ignoring this problem will hinder any other effort to ensure stability and development in Haiti.

Published by Iraic.info, a news and information agency.

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