A cyclone of events has hit us globally – high food prices which are the prelude to civil unrest, crop failure and climate change. All continents face these challenges but Africa is the hardest hit. The inability of Africa to sustain its agricultural deliverables has increased malnutrition and poverty. A shift in how we conceptualize and measure food security is needed. The answer, according to Kofi Anan, lies in altering the paradigm of what we grow, effective partnerships, innovative leadership and the presence of active small-scale farmers who are willing to drive development on the continent. Continue reading
Cameroonians could face serious problems producing and accessing enough food to feed themselves unless the government and its citizens take on corrupt agricultural officials. An investigation into the allocation of maize subsidies between 2006 and 2008 revealed that officials in the agriculture ministry of Cameroon’s had created fictitious farmers’ groups, allocating 62 percent of the subsidies to these groups each year and leaving only 38 percent to reach genuine farmers. According to many experts, it is only possible for Africa to survive on its own without international aid if the continent’s leaders and its people showed responsibility and commitment to development. Read more here and here.
Monitoring the budgets of local and national governments is a key instrument in the toolkit of any accountability activist. Active budget monitoring can both prevent and expose corruption and can also lead to improved public services and infrastructure. See this free visual tool for sharing your graphs and data. Read more here.
Corruption in Zambia was under the spotlight as the head of Idasa’s Economic Governance Programme, Richard Calland, recently spoke about corruption in the construction sector. Read full article here.
– By Nancy Dubosse –
A lot has been written about Haiti’s unserviceable debt, given its poverty. I would like to turn the spotlight onto the reasons why debt relief has been given.
When the G7 announced that it would be cancelling outstanding bilateral debt and urging the international financial institutions to do the same, the reason given was pretty flimsy. British Prime Minister Gordon Brown is quoted as saying: “It must be right that a nation buried in rubble must not also be buried in debt”.
It has been buried in endemic poverty, rife with violence and corruption for two centuries! The earthquake wasn’t even the tipping point.
Haiti’s predicament has been replicated the world over: loans given to despots and dictators in exchange for developed countries’ exploitation of resources and/or manipulation of regional politics.
Haiti’s debt should be cancelled, not because it is too poor and to repay it, but because the debt is ILLEGITIMATE.
Haiti’s first “debt” was an indemnity imposed by France (in 1838) as compensation for loss of its most profitable colony and also in exchange for its recognition of Haiti as an independent country. The amount was originally for 150 million francs, which was reduced to 60 million, payable over 30 years in gold. It was paid off. Conservative estimates place it at a current value of Euro22 billion. This debt is ILLEGITIMATE.
During the US occupation (1915-1929), Haiti was forced to take a loan of $40 million in 1922, supposedly to finance development efforts in the country. There are a number of propositions as to why the United States invaded the sovereign country. Two of the most plausible are that 1) the Panama Canal had just opened, the path to what is the Winward Passage, of where Haiti lies at the entry way; and 2) the First World War had been declared the year prior and an unstable country, situated so close to the US, was simply not an option; as the possibility was high that it would become a staging point for the Germans. Whatever the reason, the debt is ILLEGITIMATE.
Everyone has heard mention of Papa Doc and Baby Doc. The Duvalier father and son regime lasted 29 years. Though the presidency of Francois (Papa Doc) Duvalier could have be argued as legitimate, in the sense that elections took place, the one of Jean-Claude (Baby Doc) was clearly dictatorial, with no elections having been held. Of the loans made to Haiti, $238 million was loaned while Baby Doc was in power. The ILLEGITIMACY of the debt is glaring, and responsible financial lending dictates that they should never have been approved. According to Duhaime (2002), partly in recognition of this, in 1994, the bilateral creditors, who allowed these loans, annulled part of the debt totalling USD$156 million; specifically, $68 million by France, $84 million by the United States, and $2 million by Canada.
Between 1973 and 1980 (Baby Doc), Haiti’s external debt increased from $53 million to $366 million. A portion of that was credited from the Inter-American Development Bank (IADB). During its membership in the IADB, Haiti has been the recipient of 67 loans, amounting to $1.3 billion and 330 grants, totalling $92.7 million. A significant portion of that was loaned during the Duvalier era (1957-1986), approximately $250 million.
The period after Baby Doc, 1986 and 1991 was one of political instability, as the country was mainly led by the military. The Inter-American Bank also made several loans to the junta, totalling approximately $115 million.
In 2007, the IADB agreed to extend total debt relief to Haiti, dating from only 1997, provided it completes the HIPC programme. What about the principal and debt service accruing from the ILLEGITIMATE loans?
Why was so much foreign money poured into the Duvalier dictatorship? Two plausible reasons account for this. The first reason was geopolitical. Haiti is just across the Windward Channel from Cuba. After the 1959 Revolution that brought Fidel Castro to power, it was feared that Haiti might be next. When the US wanted to block Cuba’s entry into the Organization of American States in 1962, Haiti cast a decisive vote that President Kennedy needed in order to keep Cuba out, and Duvalier got more aid.
The other reason for the inflow of loans to Haiti was economic. During the 1970s, unstable oil prices caused a financial shock the world over. In addition, President Nixon removed the dollar from the gold standard, causing extreme fluctuations in its value and spurring intense buying and selling of currency itself. Wealthy investors desperately needed another place to spend their liquid assets, so they poured money into international financial institutions such as the World Bank.
Duhaime estimates that the Duvalier family took $900 million in multinational and bilateral loans for their personal uses. Note that the Duvalier regime ended on February 7, 1986. While in 1970, Haiti’s debt was $40 million, by 1987, the first full fiscal year after the Duvaliers left, it was $844 million, 60% of the amount owed in 2004. The debt service alone Haiti owed from 1987 to 2005 was $779.04 million (Schuller, 2006). In 2004-05, debt service amounted to 22% of government expenditures, of which 40% to service loans made to the Duvalier regime (McGuigan, 2006).
The concept of illegitimate debt entails the following:
The Versailles Treaty bans the transfer of the debt of colonies can not be transferred to newly independent countries.
Leaders, who do not represent their populations through some sort of electoral mechanism, can not borrow on their behalf.
Any loans taken out for war, torture, and crimes against humanity are illegitimate, as provided for by the Vienna Convention.
Any loan given for policies that run contrary to the UN Charter of Economic Social and Cultural Rights is illegitimate.
States have the obligation to fulfil human rights and any state using such resources to service debt is in violation of this.
Illegitimate debt is not a new concept nor is the campaign for international arbitration on the issue. Three organisations working on this are The Committee for Annulation for Third World Debt (CADTM), the European Forum and Network for Debt and Development (EURODAD), and the African Forum and Network for Debt and Development (AFRODAD). There are inherent power imbalances between creditor and debtor nations. The establishment of a Fair and Transparent Arbitration (FTA) mechanism under the United Nations, would enable issues to be resolved in a way that preserves the integrity of countries and ensures creditors share the responsibility for the failure of their bad development policy advice and the rise of the debt crises. EURODAD has done a lot of work on responsible lending. The FTA mechanism would deal with cases of illegitimate debts individually as well as the repatriation of stolen wealth.
The fact that Haitian debt service payments and the debt stock itself has been cancelled by a number of parties does not remove the need to identify certain loans as illegitimate; if only to set the standard by which nations interact with each other financially and in keeping with human rights principles.
Here is a bit of irony. In 2005, after Aristide’s resignation, the interim President, Alexandre Boniface, announced that Haiti would forgive France’s debt.
– By Nancy Dubosse –
I appreciate Pat Robertson’s historical analysis on the causes of the earthquake in Haiti. By all accounts, the Haitian Revolution has everything a great story should have. It starts off with the search for and struggle over gold, then sugar, then coffee. There are fascinating military manoeuvres, which occurred in and around the country’s exceptionally mountainous terrain. It has more than enough drama (e.g. the rage demonstrated by Jean Jacques Dessalines, the Commander in Chief, when he ripped out the white part of the French flag to form the Haitian flag). It has memorable speeches. It has vodou ceremonies, sex, and yellow fever. It has revenge, incidents of both black and white genocide; it even has some instances of mercy.
But that is the story up to 1804, and Robertson forgot to point out what has transpired in the country since then. So, in order to remind everyone of what Haitians have experienced, I’ll be writing a series of blog entries on how Haiti arrived at this point (and it wasn’t because of a vodou ceremony).
In case you were wondering why a city with a capacity to accommodate only about 400,000 had a population of an estimated 4,000,000 people, a short story of the rice industry might help in understanding why there was a mass migration to the capital of Port-au-Prince.
Rice is the Haitian staple food. Rice has been grown in Haiti for centuries, and until thirty years ago, Haitian farmers produced about 170,000 tonnes of rice a year, enough to cover 95% of domestic consumption. Rice farmers received no government subsidies, but, as in every other rice-producing country at the time, their local markets were protected by import tariffs.
The number of families engaged in rice production in the early 1990s was 93,000 (cultivation and processing). Other groups included supplemental agricultural workers (22,000), local traders (8,000), and millers (400). But that all disappeared and two culprits are trade liberalization and bad governance.
Under pressure from donors, import tariffs were cut from 35% to 3%. In comparison, the CARICOM, the Caribbean economic community, tariff is around 25%. Haiti eventually became the fourth largest market for US rice in the world. Rice imports increased by more than 150% between 1992 and 2003, with 95% of imports coming from the USA. According to Oxfam, the price of rice in urban areas fell by 25%, which raised the perpetual conflict between urban and rural populations. The lowering of tariffs made rice more affordable in urban areas and caused the decline of rural incomes, as rice farmers were now unable to compete. This is one of the reasons that they migrated to the city.
In 2002, a scandal was unveiled concerning senators and deputies from Fanmi Lavalas, who imported 70,000 metric tons of rice, duty-free, under a cooperative arrangement associated with the Aristide Foundation for Democracy. It has been estimated that the duty exemption translated into a 117 million gourdes loss ($4.68 million) for the Haitian treasury.
Here is where governance plays a key role in assuring the livelihoods of its citizens, ensuring compliance with customs laws, and stemming corruption.
Parliamentarians were each given a card by the Aristide Foundation to claim 400 sacks of rice to be distributed among their constituencies. The rice, which normally sold for $32 per 110lb sack, was not freely distributed but sold by the parliamentarians for 250 gourdes ($10) a sack.
Aside from the scandalous arbitrage, there are systemic issues fueling the decline of the rice industry. It has been reported that it was the de facto Prime Minister Marc Bazin, who granted the U.S.-based Rice Corporation the monopoly for importing rice, which continues to destroy national production. In short, Haiti was forced to abandon government protection of domestic agriculture – and the U.S. then used its government protection schemes to take over the market.
If you were thinking that the US is just a more efficient rice producer, you would be wrong. The global rice regime notwithstanding, the dumping of rice by the US has been tolerated by Haitian authorities. The marginal cost of producing one tonne of milled rice in the US was $415 between 2000-2003. However, with government subsidies it was able to dump rice on international markets at $274 per tonne, a margin of 34%. Now having put the Haitian rice industry out of business and that of other developing countries, global food price began to rise, with a bag of rice in Haiti going for $51 for 110lb bag just before the riots against food prices in April 2008.
Why hadn’t the Haitian government banned US rice imports? Why hadn’t it filed a case at the WTO against the US for dumping? Dumping is defined as a situation of international price discrimination, where the price of a product when sold in the importing country is less than the price of that product in the market of the exporting country. Why hadn’t it created other opportunities in the countryside to sustain rural livelihoods?
SA Finance Minister Pravin Gordhan delivered the South African medium term budget statement on 27th October. Government priorities remain social spending, infrastructural expansion and job creation. See Idasa’s comment in the video and statement below.