Some Thoughts on Haiti’s Suffering and Courage

Most of us have seen the heart-wrenching images of indescribable suffering, some of which has sadly affected people I knew and that are now gone.  One can only pray that God receive them in His glory and give strength to their families and friends.  At the same time you marvel at the courage, resilience and solidarity shown by the Haitian people, and also by many foreigners affected by the disaster that were working in the country.  The support from a lot of people outside and inside Haiti to the victims of the tragedy has been very generous, and we all should be thankful for this display of human kindness.

But there have also been condescending remarks and even ugly emanations of bigotry.  The Haitian people and the government have been criticized reviving odious stereotypes, showing that the ghost of dictators past seem to still have great influence on some external observers.   Pseudo explanations are bandied about, most of which only sow pessimism about what can be achieved in this long-suffering country. Along with generous outpouring of solidarity and help have been less edificatory cases of showing off and search for photo opportunities.   So, for whatever is worth let me offer some thoughts on how I see the situation.

First, Haitians are in the best position to know what has to be done.  They do not necessarily need visions or blueprints written by well-meaning outside experts (the last time that happened, the international community began to talk about an external report and apparently forgot other relevant documents prepared by the Government).  Everybody knows that infrastructure (even before the earthquake) must be rebuilt and expanded (particularly roads, water and sanitation, energy, ports and housing); that more investment is needed in human capital (education, health and cash transfers to the poor); that reforestation and watershed protection are crucial to avoid environmental disasters (a new approach, however, is that perhaps carbon credits may be used to finance the investments); and that the main productive sectors (agriculture, tourism, and light manufacturing) need strong support, adequate incentives, a conducive business climate, and a more decentralized and geographically balanced approach (avoiding the current concentration in Port au Prince).

The main issues in my mind are others: a) resources, b) operational capabilities, and c) the political framework for legitimacy and decision making.

I am not going to focus on the first issue.  The exercise to evaluate the resources needed is in process (the so called Post Disaster Needs Assessment, in which the Haitian government is working with several agencies including the IADB).  Here I will focus on the other two issues.

OPERATIONAL CAPABILITIES

This main point has two components. First, the Haitian public sector is one of the smallest in the world.  Second, related and interacting with that, there is the issue of the large presence of international agencies and NGOs, which in many cases complement and help, but in others substitute and weaken, public institutions (I am NOT talking here about the much needed help from medical and rescue teams in the immediate aftermath of the earthquake).

The Haitian public sector is operationally weak mainly because of its size, and not as some people suggest, without realizing the advances made in the last years, because of corruption.  As percentage of the GDP it is one of the smallest in the world AND Haiti’s total GDP is also small.  For instance, the Index of Economic Freedom calculated by the Heritage Foundation and the Wall Street Journal, has Haiti in the top 10% of the freest countries in the world (out of 184 countries reported) in the “Freedom from Government” component, just because Haitian public sector is minuscule: the value of this sub-index for Haiti is 93 out of the “freest” possible of value of 100 that, one must assume, would be a completely Hobbesian state of nature (the World Economic Forum, also classified Haiti as one of the most competitive countries in the world in one of the components of its Index of Competitiveness based on the country’s very small government, until 2003/2004 when, recognizing the absurdity, dropped the variable of the size of government and replaced it with more sensible indicators).

The earthquake, by hitting the capital city, has further weakened the human and operational capabilities of an already small public sector (it also damaged significantly the human and operational capabilities of the UN and other international agencies located in Port au Prince).  For several days, we have had a clear glimpse of the state of nature that would have certainly merited a 100 score in the Freedom from Government sub Index.

The obvious point is that such small public sector cannot supply the public goods and services needed for the functioning of the economy and the society.  And this leads me to the other aspect mentioned: the proliferation of international agencies and NGOs in Haiti.

I remember that in one of the first meetings with President Préval after his inauguration in 2006 he told us, half jokingly, that with all the activities of the international organizations and bilateral aid (whose representatives, by the way, always want to talk with the President, or the Prime Minister at least) he was going to need several public sectors to work with all of them.  Less jokingly, and, rather, sadly resigned, he also told us that he expected, if things do not work in the future, that his government was going to be blamed for their supposed inefficiency and inability to get things done.  He insisted in the need to have fewer, but bigger, projects, and with greater impact.  A related issue was Haitian sovereignty.  I was at President Préval’s inaugural address and I remember him mentioning this as an important issue, and he reiterated it in several meetings: he wanted international organizations to work within the government’s plan and leave in the hands of his government the political and governance issues.

Another angle to this debate is the perception that a not insignificant part of what is tabulated as external aid is in fact spent in international consultants and operational costs of the international agencies and NGOs, including vehicles, rents for houses and offices, and similar expenditures that, in addition to making the funding that goes directly to the beneficiaries smaller than it seems at first sight, puts additional pressure on prices of a variety of tradable and non-tradable goods and services (with negative impact on the real exchange rate and income distribution; see below).

Certainly, those resources and technical support are needed (especially, as I said, the medical and rescue teams in the immediate aftermath of the earthquake), but the conundrum is how to complement the provision of the needed public goods through non-governmental channels while at the same time not weakening but strengthening public institutions, and respecting the sovereignty of the Haitian state.  In my view, this conundrum has not been solved yet, and the earthquake may exacerbate the problems.

For instance, current suggestions about the creation of an international development agency to take over the reconstruction of Haiti do not help in this regard.  At the very least, the strategic decisions about reconstruction and development going forward must be made by the democratically elected government (Executive and Congress) with participation of the Haitian civil society, even though part of the implementation may be decentralized to some international or private sector organizations, along with the proper governmental agencies. But it must be done within a unified Haitian budget, under the democratic and transparent control of the Constitutional authorities.

POLITICAL ISSUES

It is impossible to deny the fractured and confrontational nature of the political process in Haiti for many decades.  But it is also important to acknowledge the internal AND external reasons for the polarization, and recognize the advances made in the last years.  Without that understanding inadequate proposals will keep on popping up, such as the idea of an independent body managed by the international community.

Let’s first discuss the internal structural issues. A key factor is that Haiti has a very high ratio of population to land, in general, and to agricultural land, in particular. The next Tables show the numbers, comparing Haiti both to developing regions and to individual countries in the neighborhood. Notice particularly the far greater population pressure in Haiti compared to the other part of the Hispaniola Island (where the Dominican Republic, with about the same population, covers almost 2/3 of the total land area; obviously, this population pressure is also an important factor in explaining the deforestation of the Haitian side of the island, along with poverty and the lack of other sources of energy).

Population density (people per sq. km)     

 

       
Haiti     

 

332.4     

 

  Haiti     

 

332.4     

 

South Asia     

 

303.7     

 

  El Salvador     

 

291.4     

 

East Asia & Pacific     

 

117.9     

 

  Dominican Republic     

 

192.5     

 

Low income     

 

47.8     

 

  Guatemala     

 

114.5     

 

Least developed countries     

 

36.9     

 

  Cuba     

 

102.2     

 

Sub-Saharan Africa     

 

31.5     

 

  Costa Rica     

 

83.1     

 

Heavily indebted poor countries     

 

27.3     

 

  Honduras     

 

60.0     

 

Latin America & Caribbean     

 

26.8     

 

  Nicaragua     

 

44.4     

 

      

 

    Bolivia     

 

8.3     

 

From WB/WDI     

 

       

 

Population per Agricultural Land (Population/ha)     

 

 
Haiti     

 

5.7     

 

  Haiti     

 

5.7     

 

Southern Asia +     

 

5.2     

 

  El Salvador     

 

3.9     

 

South-Eastern Asia +     

 

4.8     

 

  Dominican Republic     

 

3.8     

 

Asia +     

 

2.4     

 

  Guatemala     

 

2.9     

 

Eastern Asia +     

 

2.3     

 

  Honduras     

 

2.2     

 

Low Income Food Deficit Countries +     

 

2.1     

 

  Cuba     

 

1.7     

 

Central America +     

 

1.2     

 

  Costa Rica     

 

1.6     

 

Net Food Importing Developing Countries +     

 

1.1     

 

  Nicaragua     

 

1.1     

 

Africa +     

 

0.8     

 

  Bolivia     

 

0.3     

 

South America +     

 

0.6     

 

     
Source: FAOSTAT     

 

       

 

Population pressure over limited natural resources is usually associated with volatile societies and fractured politics.  This population pressure has also interacted in Haiti with two other characteristics of countries with high social unrest: an important percentage of young population and significant income inequality.  According to UN population data in 2005 Haiti had almost 60% of the population under 24 years old. As a comparison, the number for all Central America was 51.5% and for LAC in general 48.5% in the same year.  At the same time, Haiti’s poverty ratios are very high, and they are also accompanied by important income disparities. 

 

      

 

  GINI     

 

Population living below $1.25 a day (%)     

 

Haiti     

 

  59.5     

 

54.9     

 

Dominican Republic     

 

50.0     

 

5.0     

 

LAC     

 

  51.1     

 

11.6     

 

Central America     

 

52.8     

 

11.4     

 

SSA     

 

  45.9     

 

50.8     

 

Developed Countries     

 

32.1     

 

..     

 

Source: HDI database     

 

   

In addition to structural and historical reasons, income inequality in Haiti seems also to be related in part to the fact that the country is a few miles from the US, the wealthiest economy in the World and the way in which part of the Haitian population gets inserted in that economy while other sections of Haiti cannot do it.  For instance, there is a circuit of legitimate private business integrated with the US; there is another circuit linked to remittances of Haitian people living in the US; there is a third circuit of international organizations, bilateral agencies, NGOs, church groups, and similar activities of cooperation and development that pay higher salaries than local ones; and finally, there is another circuit of illicit activities which may include drug trafficking, smuggling of goods and persons, and other criminal dealings. On the other hand, there is a substantial percentage of the population without the language and other skills, and the contacts, to migrate or to get integrated in those other circuits. The combination of all those activities, licit and illicit, generates a large dispersion in incomes, depending on which circuit the different groups of the Haitian population are integrated.

An additional effect of some of those activities is the impact on the appreciation of the real exchange rate, thus hurting tradable sectors, such as agriculture, where many of the poor work, with negative impacts on employment, poverty and income distribution.  For instance, remittances at about 20/30% of the GDP, plus net disbursements of official donors, must have an impact on the real exchange rate (RER).  The potential impact of foreign flows on the appreciation of the RER has been noted by different studies in developing countries, but I think it is exacerbated in the case of Haiti (for instance, remittances during the 2000s in Central America averaged about 10/15%; in the Dominican Republic, about 9%; in SSA, almost 2%; and in developing countries as a whole some 5.5%).

Currently, the lack of a strong fiscal base (after all the country is poor and the formal private sector that can be taxed is also small) means that those external resources are necessary.  But over time, it is necessary to generate a better balance of external resources, greater fiscal effort, and more domestic financing by the banking system in local currency.  Regarding remittances, they are crucial for some groups in Haitian society, but at the same time a better understanding is needed to transform them in instruments of human and productive capital accumulation, while better managing the macroeconomic effects (for instance, there are several mechanisms studied by IADB’s Multilateral Investment Fund to recycle part of them into investments).

In summary, Haiti has a configuration of high population pressure over natural resources, high poverty and income inequality, young (and unemployed) population and an appreciated RER in a combination that other countries (in LAC and in other developing regions) do not have to confront, and that make for a complicated management of the political process.

Moving now to the external factors that have also contributed to a fractured polity, negatively interacting in a not minor way with the internal factors already mentioned, is the fact that Haiti, due to its proximity to the US, has been caught many times in the racial, partisan, and Cold War politics in that country.  Several bruising battles have been fought between different actors in Washington DC with Haiti as a proxy (my experience in DC is that it is probably better that both major Parties dislike you than to become the rope of a tug-of-war between them).

The latest two episodes (one in 1991-1995, which included the boycott by a US Administration to the military government that had ousted Aristide, and another in 2001-2004, marked by antagonism to the second Aristide presidency by a different Administration) were associated with domestic turmoil in Haiti that led to largest drops in income per capita (see Table; from WB/WDI).  GDP per capita in Haiti (measured in local currency) between 1960 and 2008 (the latest available figure) has declined by almost 46% (see Table).  The two episodes mentioned explain almost 60% of that decline, and more than half of it was associated just with the 1991/1995 period; adding the declines recorded during the time of both Duvaliers (26.4%) these events explain 86% of the total drop in income per capita in this last half century.

 

      

 

Decline in GDP pc     

 

2008/1960     

 

-45.8%     

 

explained by:     

 

 
Papa and Baby Doc     

 

26.4%     

 

1991/1995     

 

52.3%     

 

Aristide 2     

 

7.4%     

 

Total 3 episodes     

 

86.1%     

 

The situation has improved significantly since the election of President Préval in 2006. Although the internal structural factors mentioned require a long period of work to be changed, President Préval has nonetheless managed to calm down domestic politics by following a conscious approach of trying to bring peace and reconciliation among the different fractions (and this patient search of consensus has, of course, alienated some external observers that want “results now”).  President Préval avoided the “winner-takes-all” approach to politics that characterized Haitian politics in the past, and there have not been purges or persecution of critics or the opposition. In fact, the President has run almost a coalition government, maintaining in their posts people from past governments.  Crucially, he has also provided explicit political support to the presence of MINUSTAH in a country whose people, having suffered multiple invasions in the past, are understandably apprehensive of military presence in their territory.  President Préval has reached out to the private sector as well, allaying the initial misgivings about his candidacy among business people.  In foreign policy President Préval has also managed to be in good terms with a variety of international actors with very different perspectives among themselves, while trying to obtain the much needed foreign support for his country.

In terms of the external factors, with Haitian democracy strengthening, the country stopped being a proxy for other battles in the US, contributing to the calmer political environment since 2006.

In fact, President Préval has been the only Haitian President democratically elected in general elections that finished his term normally (1996-2001). In 2006, President Préval was elected democratically again and he has said that he will leave office at the end of his current mandate, as required by the Haitian Constitution.  His more inclusive and democratic approach to governance has certainly contributed to the fact that in the last half century his two presidencies are, by far, the periods with the best performance in incomes per capita (see Table).

 

          GDP Growth per capita since 1960     

 

Annual average for each period     

 

Duvalier  Sr. 1960/71     

 

-0.90     

 

Duvalier Jr.  1971/86     

 

0.35     

 

Several Presidents 1986/1990     

 

-1.95     

 

Aristide 1991, 1995, and 2001-2004     

 

-2.40     

 

Military Government 1991/1994     

 

-6.76     

 

Interim Government  2004/6     

 

-1.39     

 

Préval 1996/2000 and 2006/08     

 

0.61     

 

Source: WDI     

 

 

Of course, everybody, starting with President Préval, would have desired a better economic performance.  But other factors have also intervened.  For instance since he started in 2006, Haiti has suffered from price shocks in 2007/8, 4 hurricanes/tropical storms in 2008, and now just starting 2010, this devastating earthquake.  The next Table shows the Terms of Trade (TOT) for Haiti and some comparators for the period since the mid 1990s until 2007, the latest available data (WB/WDI database).

 

 image001_58.gif

Haiti is a net importer of food and energy and its TOT began to deteriorate since mid-2000s (the broken line), and suffered further with the price shocks of 2007/8.  For instance, the world price of rice, Haiti’s main staple food and which is about 80% imported (after the rice production in this country was drastically affected by unfair competition from subsidized exports and other factors), jumped in 2008 about 200% over the average in the first half of the 2000s. In contrast, the average TOT for the countries in Central America and the Caribbean stayed about even, and in Sub-Saharan Africa and LAC as a whole they actually improved.  In the case of the Dominican Republic the TOT had declined to 94.7 by 2007 (compared to 100 in 2000) while for Haiti had dropped to 83.9 (the World Bank data finish in 2007; when 2008 and 2009 are finally computed the deterioration would most likely be deeper).

The damages of the hurricanes/tropical storms of 2008 were estimated at about 15/20% of the GDP in that year, while the current earthquake’s human toll appears enormous. In fact, as a percentage of total population the current earthquake appears to be the worst global catastrophe in half a century, and can be the second worst in terms of GDP lost (see Table, prepared by the Research Department of the IADB).

 

image002_512_72.gif In summary, Haiti, under the Presidency of René Préval, has been putting together a more stable political and governance framework since 2006, which would have had an even greater beneficial impact on the country had not been for the unfortunate sequence of external shocks suffered since 2007.

CONCLUSION

I want to close with a plea while we all begin to work with the Haitian authorities and people in the post-earthquake phase: all of us in the international community need to be humble and recognize our own limitations (internally in each institution, and in the way we at times bungle coordination among ourselves); understand the operational and political restrictions under which the Haitian government operates; remember that the country has a constitutionally elected government who is accountable in front of the people and it must be the one that must take the decisions and face the electorate; respect Haitian sovereignty and dignity; and, that in our very welcomed eagerness to help (but less valid desire to be seen helping) do not transform Haiti in a transient photo (or video) opportunity when what is needed is long term commitment.  


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2 Responses to "Some Thoughts on Haiti’s Suffering and Courage"

  1. E.Diaz Bonilla   February 3, 2010 at 6:43 pm

    There was a footnote in the original (that was not picked up by the uploading of the posting) in which I said that these comments were completely personal and that they do not necessarily reflect the views of the Inter American Development Bank or of the governments I represent at the Board.