Haiti's debts and the USA's benefit

This morning I received an e-mail from Avaaz.org about a new campaign to drop Haiti’s debt, which has already attracted nearly 300,000 signatures, including mine. I was horrified to read (in the e-mail, the same text is in the “Tell Your Friends” box at the web page) that

even as aid flows in to Haiti’s desperate communities, money is flowing out to pay off the country’s crushing debt — over $1 billion in unfair debt racked up years ago by unscrupulous lenders and governments.

There  was also interesting background which I had not been aware of:

After Haitian slaves rose up and won their independence in 1804, France demanded billions in reparations — launching a spiral of poverty and unjust debt that has lasted two centuries.

I decided to look into this in more depth.

In 1791, following the French Revolution, the slaves of France’s Caribbean colony of Saint-Domingue rebelled against their white masters and seized control of a large part of the territory. Partly in response, in 1794 the French National Convention abolished slavery in all French colonies (it was not abolished in the British Empire until 1833), and eventually an uneasy peace was restored to Saint-Domingue. In 1802 Napoleon Bonaparte, now ruler or France, reimposed slavery in some colonies, but not in Saint-Domingue. However, this move prompted a new rebellion there which the French government was unable to put down. So when in 1804 the colony gained its independence and took the name Haiti, despite what is often claimed this was not technically the result of a slave rebellion.

Saint-Domingue, with an area of 27,750 square kilometres, had been only a tiny part, much less than 1%, of the French possessions in the Americas. Within living memory France had claimed almost half of North America, known as New France. The southern half of this area was called Louisiana. But in 1763 the French were forced to cede all of New France. The northern part, Canada, became British. Louisiana east of the Mississippi also came under British control before passing to the United States in 1783. Spain took the part west of the Mississippi, as well as New Orleans.

Bonaparte (who crowned himself the Emperor Napoleon in 1804) dreamed of a new French empire in the Americas. So in 1800 he imposed a treaty on Spain by which the part of Louisiana which had been under Spanish control since 1763 was returned to France. However, Bonaparte never took effective control of this territory. And by 1803, facing the loss of Saint-Domingue and a renewed war with Great Britain, he gave up his plans for a French empire in the Americas.

So, when in that year the young United States sent negotiators to Paris seeking to buy the city of New Orleans, Napoleon offered to sell not just the city but the whole of his newly regained territory, Louisiana west of the Mississippi, which consisted of more than 2 million km² of mostly good agricultural land. The Americans quickly agreed to this purchase, for a price of 78 million francs or $15 million, that is, “less than three cents per acre ($7.40 per km²)”. According to Wikipedia,

The purchase, which doubled the size of the United States, comprises around 23% of current U.S. territory. …

Napoleon Bonaparte, upon completion of the agreement, stated, “This accession of territory affirms forever the power of the United States …”

Indeed it did, if not “forever” at least up to 2010. This area, sold to the USA at a bargain price for political reasons, has become the breadbasket of the world and a major driving force of US economic strength over the last 200 years.

(Of course all this land, Haiti as well, had earlier been seized with little or no compensation from its Native American inhabitants. But that’s another story.)

Contrast the French response to Haiti. This tiny former colony gained its independence in 1804, but France did not at first recognise this independence. Again according to Wikipedia,

In July 1825, King Charles X of France sent a fleet of fourteen vessels and thousands of troops to reconquer the island. Under pressure, President Boyer [of Haiti] agreed to a treaty by which France formally recognized the independence of the nation in exchange for a payment of 150 million francs (the sum was reduced in 1838 to 90 million francs) – an indemnity for profits lost from the slave trade.

In other words, the Haitians were asked to pay twice as much for the freedom of their tiny mountainous republic than the USA was asked to pay for the Louisiana Purchase, of an area 77 times larger than Haiti. The people of Haiti did manage to pay the 90 million francs, estimated to be worth billions of dollars at today’s prices. But, according to this 2009 article from the Sunday Times (linked to by Avaaz.org), it took them over a century to do so:

In 1947, Haiti finally paid off the original reparations, plus interest. Doing so left it destitute, corrupt, disastrously lacking in investment and politically volatile. Haiti was trapped in a downward spiral, from which it is still impossible to escape. It remains hopelessly in debt to this day.

It is no wonder that in recent years, as I discovered in this article, at least some

Haitians Demand Reparations
for the Ransom Paid for its Independence.

I can’t bear to summarise the picture of Haiti last year given in the Sunday Times article, of extreme poverty exacerbated by overpopulation and a series of rulers who have enriched themselves at the expense of their country.

Then into this ongoing disaster zone came this month’s devastating earthquake. Was this a natural disaster? Well, yes and no. The magnitude 7.0 earthquake was of course a natural event. But that was not the main cause of the loss of life. I have lived through a magnitude 7.0 earthquake in a major city, in Baku in 2000. (Well, they said at the time it was magnitude 7.0, but the latest data gives a figure of 6.8.) In that earthquake “26 people died as a primary result, but only three people in collapsing buildings”. The latest (28th January) confirmed death toll in Haiti is 170,000.

Why the huge difference? Yes, there were probably geological factors which caused the ground acceleration in Haiti to be higher than in Baku. But surely there is far more here. It must be the poverty and overcrowding in Port-au-Prince, and the poor standard of building work in a known earthquake zone, which have greatly exacerbated the damage and casualty rate. In addition poverty and poor infrastructure have hampered relief efforts.

That is not an attempt to answer the question of why God allowed this natural disaster. But it is intended to put the disaster in perspective.

So we can contrast here the continuing poverty of Haiti with the wealth of France which enriched itself from reparations from Haiti, with the wealth of my own UK which continued to enrich itself from slavery in the Caribbean for decades after the French liberated their slaves, and with the wealth of the USA which benefited so much from France letting them buy Louisiana at such a bargain price. These are some of the roots of continuing injustice in the 21st century world.

So I urge all of you to support the Avaaz.org campaign:

Petition to Finance Ministers, IMF, World Bank, IADB, and bilateral creditors:

As Haiti rebuilds from this disaster, please work to secure the immediate cancellation of Haiti’s $1 billion debt and ensure that any emergency earthquake assistance is provided in the form of grants, not debt-incurring loans.

This should be done not just as an emotional response to the earthquake but as a way of putting right the injustices of the past. And it should be a step on the way to cancelling all the debts owed by poor countries to the rich ones who have exploited them in the past and continue to do so.

0 thoughts on “Haiti's debts and the USA's benefit

  1. I just found out some more about Haiti’s current debt, courtesy of Phil Whittall who linked to a letter from UK government minister Stephen Timms (who also happens to be a good Christian, whom I knew slightly as a fellow Christian Union member at Cambridge). Phil apparently wrote to the government about this issue, and in his 18th January reply (presumably he sent the same letter to many people as well as putting it on a government website) Timms wrote (in part):

    We agree that it is important that Haiti’s debt does not get in the way of the reconstruction effort. … [In June 2009] the UK cancelled all debts owed to it by Haiti, as did other major bilateral creditors who are members of the Paris Club. The World Bank and the Inter-American Development Bank also cancelled 100% of eligible debts at this time. In total, creditors are expected to cancel $1.2bn of debt.

    Timms mentions that there is still bilateral debt to Taiwan and Venezuela, but also that there is outstanding debt to the International Monetary Fund:

    Haiti is not expected by the IMF to make any debt repayments before 2012.

    Well, that is certainly better than nothing. But what is the situation? According to this site:

    While 1.2 billion of Haiti’s debt was cancelled in June 2009 …, the country still has $1.051 billion in debt on its books. Why? Because the debt relief agreements from the IMF and other creditors only covered debts acquired up until 2004. So, new loans Haiti has received since then have been adding to its debt. More than half of this total is owed to multilateral banks, including the Inter-American Development Bank and the IMF and the rest is bilateral debt, owed to Venezuela and Taiwan. Over the next 10 years, Haiti is projected to pay more than $100 million to the IMF and IDB – and this is money Haiti simply can’t pay now that this tragic earthquake has hit.

    In other words, even if Venezuela and Taiwan cancel their debts (but perhaps it would be more appropriate for richer countries to take on those debts and cancel them), Haiti will still be in debt of half a billion dollars to various banks. That debt also needs to be cancelled, so that the impoverished country does not continue to be burdened in this way as it seeks to recover from the current disastrous situation.

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