Good News for Haiti

Posted on 09. Feb, 2010 by Annalise Udall Romoser in Emergency Response, Haiti, Latin America

A post from LWR’s Annalise Romoser, Acting Director of Public Policy and Advocacy, on advocacy efforts that bring greater hope for Haiti’s future.

A camp for homeless families set up on a golf course in Port-au-Prince, Haiti, which was ravaged by a January 12 earthquake. Photo by Paul Jeffrey/ACT Alliance.

This past weekend, seven of the most powerful nations in the world made an unprecedented decision to help Haiti rebuild, not repay over $1 billon in crippling debt owed to the international community.

At a meeting on January 6, in the small arctic town of Iqaluit, leaders of what are known as the G-7 countries (Japan, Italy, Germany, the United States, United Kingdom, Canada and France) announced they would lift all debt owed them by Haiti and work with multilateral institutions to ensure they also cancel Haiti’s debt. U.S. Treasury Secretary Timothy Geithner played a critical role in helping the G-7 make this wise decision.

The announced debt cancellation frees millions of dollars for Haiti to use on reconstruction and long-term development of critical public services and institutions. The G-7’s decision is one of the most promising moves made toward recovery in Haiti since the January 12 earthquake, and Lutheran World Relief‘s supporters helped make this happen!

A petition addressed to Secretary Geithner was circulated prior to the G-7 meeting calling on him to push for a complete cancellation of Haiti’s onerous debt. Over 400,000 people signed this petition including hundreds of LWR supporters who responded to an LWR action alert. The magnitude of public support for debt relief in Haiti played a major role in the G-7 decision. Melinda St. Louis, Deputy Director of Jubilee USA, a faith-based coalition working for debt relief in Latin America, Asia and Africa, explains, “We are glad that global leaders responded to the sensible and caring call of the grassroots. Thousands upon thousands of people agree that at this critical time all available resources should be used for reconstruction in Haiti and not to repay international financial institutions.”

The G-7 decision means that bi-lateral debt between Haiti and the G-7 nations will be lifted. More significantly, it means G-7 leaders with crucial influence over international financial institutions will work to cancel debt owed to these institutions. This is yet to be achieved, but we are confident the G-7 leaders will make this happen.

In addition to LWR constituent pressure on the U.S. Treasury Secretary, other effective advocacy efforts are taking place to free Haiti from Debt. In January, LWR and 80 other organizations sent a letter to Geithner asking that the U.S. government support the cancellation of Haiti’s debt and work to ensure that any disaster relief assistance be provided as grants, not loans to be re-paid. And members of Congress responded to their constituents’ call by pushing for debt relief. On February 4, for example, 94 Members of the U.S. House of Representatives led by Democrat Maxine Waters and Republican Ileana Ros Lehtinen sent a strong letter to Geithner calling for “the complete cancellation of debts owed by Haiti to multilateral financial institutions…and the provision of assistance to Haiti in the form of grants so that the country does not accumulate additional debt.” Senate initiatives to ensure Haiti’s debt cancellation were also gaining momentum and creating pressure on Geithner when the G-7 announcement was made.

Powerful global leaders made a compassionate and wise decision this weekend. It is clear they did so because they heard the voice of caring Americans, responded to the pressure of committed politicians and heeded the advice of experienced relief and advocacy organizations. Amidst the unimaginable destruction and sorrow experienced by Haitians, it is difficult to know how best to help from afar. But LWR supporters have not been paralyzed by a sense of inadequacy. On the contrary, you have offered critical financial support and volunteer efforts making quilts and kits to bring comfort to the people of Haiti and to help them recover. And through your advocacy actions this past week, you have helped the country break free from crushing debt. Your advocacy means that Haiti will be better poised to care for its people — to build new schools, educate medical doctors, plant more crops, strengthen local economies and develop with an independence and dignity that burdensome debt simply would never allow for. YOU are helping Haiti rebuild and not repay.

More on Haiti’s debt history and cancellation:

Haiti is the most impoverished nation in the Western Hemisphere, with 80% of its citizens living in abject poverty. When the January 12 earthquake hit, Haiti was saddled with a $1.051 billion dollar debt. On average, the Haitian government was spending $58 million a year in debt payment, diverting precious funds away from fighting poverty. Over half of the country’s debt was owed to multi-lateral banks such as the International Monetary Fund (IMF), World Bank and Inter-American Development Bank. The rest consisted of bi-lateral debt owed to other countries such as Venezuela and Taiwan. Prior to January 12, it was projected that over the next decade, Haiti would pay $100 million to the IMF and World Bank alone.

Most disturbing about Haiti’s crippling debt is that 45% of it was incurred under the Duvalier dictatorships — a time when the Haitian people had almost no say in government decisions or control over how national resources were spent. Decades after the dictatorships, it is the Haitian people still paying for the damaging decisions of an undemocratic regime. In addition, Haiti’s original debt has largely been repaid. The $58 million Haiti now pays each year, represents debt service payments —essentially high interest rates that make complete debt repayment illusive.

Soon after the earthquake, Venezuela promised to forgive a considerable portion of Haiti’s debt, and in the last weeks of January advocacy efforts with Congress, the Administration and U.S. Treasury lead to a government announcement that the U.S. would work to cancel Haiti’s bi-lateral and multi-lateral debt.

Debt forgiveness means that Haiti’s own resources and contributions by foreign governments can now be used to re-build, develop and sustain a stronger, more independent Haiti. In the midst of destruction and despair, the decision of G-7 leaders to cancel Haiti’s over $1 billion debt, represents new hope for Haiti’s future.