Haiti's Latest Coup:

Structural Adjustment and the Struggle for Democracy

Multinational Monitor, May 1997

An interview with Camille Chalmers

Camille Chalmers is the executive secretary of the Haitian Platform for Alternative Development (PAPDA), the leading Haitian organization analyzing the impact of structural adjustment. Chief of staff to then-President Jean Bertrand Aristide from 1993 to 1994, Chalmers resigned over disagreement with the development policy mandates of international donors. Chalmers has been a professor of economics at State University in Haiti since 1983. He was arrested and brutally beaten by the Haitian military regime in the early l990s.

Multinational Monitor: What do you mean when you say the U.S.-favored political model is based on the premise that Haitians cannot govern themselves?

Camille Chalmers: The U.S. view is, "If we leave them to their own device, it will be total anarchy." They came to this conclusion because there was a very vibrant Haitian popular movement calling for very radical democracy. One where people would really participate, one which is not based on a few politicians making decisions for the country while everyone else is a spectator.

We have very concrete manifestations of what that meant. After the downfall of Duvalier, in many sectors of the country, the population created popular tribunals. The tribunals would call on Tonton Macoutes and Duvalierists, ask them questions and try to get justice. This is a formula that was very active, very vibrant, but does not fall within the U.S. concept of democracy.

The U.S. vision of democracy is to create a "democracy" without the participation of these people, since they do not know how to govern themselves. The view is to construct a democracy that would remove the people from the political scene.

The coup d'etat played a very significant role in accomplishing that objective, through killing, through destroying popular organizations, through granting residency status in the United States to many leaders of popular organizations. As a way of decapitating the popular movement, there were interviews made with a lot of people during the coup; about 12,000 leaders of popular organizations were taken out of Haiti and given permanent residence status in the United States.

This is an important aspect of the present institutional crisis. The international community has attempted to install institutions molded after those of the United States without examining our people's experience. Today, as proven by the results of the April 6, 1997 elections, there is a growing breach between the dynamics of the popular movement and the new institutions which the international community attempts to install.

MM: Why have you been so critical of the structural adjustment emphasis on supporting the private sector to generate growth?

Chalmers: In Haiti, we are a very polarized country. One percent of the population has 50 percent of the wealth. Ten to 15 families control practically all phases of production and they engage in all parts of the economy. Supporting the private sector means supporting these families.

However, this private sector is not one that invests in the country. It is one that engages in pillage and speculation. They buy coffee in Haiti, sell it somewhere, and put the money in a foreign bank. They do not invest in productive capacities of the country. Their economic activities cannot lead to development.

The structural adjustment model also asserts that the Haitian peasantry has no future in agricultural production, that the peasantry should not engage itself in producing rice or corn, because it can get those things from the United States.

Instead, the peasants are told to work in the assembly industry. U.S. AID documents dated 1990 to 1991 state that the "natural advantages" -natural!-of Haiti are two things: its proximity to the U.S. market, and its cheap labor. We do not believe it makes sense to base a development plan on exploitation of low salaries, however, because while cheap labor can offer temporary advantages, development itself means we have to do what is necessary so that the wages can increase. We have to very actively invest in human capital development. That would lead very rapidly to undermining the comparative advantage of Haiti, its cheap labor.

Even when there is growth in the assembly sector, it has absolutely nothing to do with the productive capacity of the industry or the economy, since the assembly sector is an economic enclave without backward and forward linkages. Take for example 1991: we exported $150 million worth of goods, but of that $150 million, $134 million was spent on goods imported. So the value added by the Haitian economy was very small.

We think that development is possible only to the extent that it uses the historic productive capacities of the country-of its 4 million peasants (800,000 farmer families), 300,000 artisans, 12,000 peasant organizations, 8,000 cooperatives, many tens of thousands of small and micro enterprises and a very dynamic informal sector. This approach calls for courage, for relying on what are truly the most dynamic sectors of the country. Only they could lead to a break with the past, to an eradication of the economic apartheid that we now have in Haiti.

MM: Why have you so strongly opposed the IMF's call for shrinking the state and for privatization?

Chalmers: Reducing the public role of the state is absurd in Haiti. We have 47,800 state employees for 7 million people. Compare that to the Dominican Republic; with the same population, they have 400,000 state employees.

Of the 47,800 employees, 20,000 work in the education or health sectors, as police and at the university.

In the countryside, the state is basically absent. Outside of Port-au-Prince, you see there is no state; there are few hospitals, there are few schools. Traditionally, the state has been a force only present in its terror; it has never lived up to its obligation to provide services to the population. There is an important deficit in providing social services. In Haiti we have the highest rate of illiteracy, infant mortality and maternal mortality in the hemisphere.

In spite of that extreme situation, the IMF has called for reducing the size of the state by 50 per cent. We think it is necessary to redefine the mission of the state so that it accepts the obligation to deliver universal access to basic infrastructure, health care, education, electricity and communications. In terms of privatization, the state controls 33 enterprises. This is small compared to other Latin American countries, where the state typically controls thousands of enterprises.

In a document that was presented in Paris in August 1994, the IMF called for the sale of nine of the most important public enterprises. These enterprises include the telecommunications company, the electric company, the National Bank of Credit, the Popular Bank of Haiti, the port, the flour mill, a Haitian cement company and a food oil-producing enterprise. No arguments were offered for why these enterprises, the most profitable, would be privatized.

At stake is the question of national sovereignty. With privatization, if all of these things are sold to multinational corporations, we'll have the banks, the national cooperative, the telephone company, the electricity company-all strategic sectors- in the hands of multinational corporations.

In general, we think the criteria to privatize or not should be the following: What is the best way to create a network that could provide services to the vast majority of the population? Second, how can services of the best quality be provided? Third, how can we create the kind of management that will prevent waste of the country's resources? Fourth, what is the role of this enterprise or this sector in a strategy of national development?

MM: How do you apply those criteria?

Chalmers: Consider the enterprise that produces cement, for example. In Haiti over the past 30 years, the construction sector has grown rapidly, even when the economy is shrinking. That means cement is a sector which is always likely to operate at a profit. Second, building infrastructure - roads, airports, irrigation systems-will be a central component of any development strategy, and this construction will create a very high level of cement consumption. Third, in Haiti, the primary element in cement exists in abundance in the Central Plateau. Even the World Bank recognizes that with a 30-year reserve of this material in the Central Plateau, Haiti could produce a very high quality cement that could be competitive even on the world market. All this leads us to believe that cement is a very strategic good; and, as such, we need to have public control of it. The price of this material will play a crucial role in the feasibility of infrastructure investments. If this strategic good is controlled by a multinational corporation, obviously the first priority is to maximize profits, not to support a national development plan.

Public or private ownership of the electric company will also influence how national resources are used. All of the World Bank investments to increase electricity production have been in oil burning factories. But there are other ways we could generate electricity in Haiti; we could use resources-like solar, wind and hydro-that would make us less dependent on petroleum and that are also more compatible with our environment. This also links directly with the problem of erosion that we have in Haiti. The more that we are able to use other sources of energy, the less the population will use charcoal for energy.

But this kind of reasoning can only be made by a state that is preoccupied by the overall interests of the country. A multinational company would never be interested in this kind of reasoning. The only thing that would concern a multinational company is making profits.

Generally, as regards performance records of privatized companies, it has been demonstrated in Latin America that service provided to the general population has worsened following privatization. Service has deteriorated the most for those with the least purchasing power; the multinationals who acquire privatized enterprises target their services at those who can afford them.

Privatization has also led to very catastrophic results in places where the state did not have the capacity to implement regulations to prevent the growth of big private monopolies.

MM: Can the state-owned companies be operated viably.

Chalmers: In the case of the telecommunications company, Teleco earns between $40 million and $80 million every year. Teleco's profits financed the government in exile of Aristide during its three years in exile. The profit from the telephone company was deposited in U.S. banks.

Teleco only services 65,000 lines. There is an effective demand for 120,000 additional lines. So it is a company that has enormous expansion capacities, and it could easily expand and modernize using its own income. Profitability could be increased still more if management were improved and corruption curtailed.

Several other enterprises such as the National Bank of Credit, the National Airport Authority, the cement company, and others would undoubtedly be able to grow and expand while remaining in the public sector. One of our many requests from PAPDA is for an extremely detailed study which would allow the Haitian government to make the best possible decisions.

MM: Which multinationals are interested in acquiring the state enterprises.

Chalmers: The process is not transparent, so we do not know everything. During the last four months of 1996, of the 10 enterprises on which bids were placed, foreign corporations bid on nine. Bell Canada, MCI and Telecom France are very interested in the telephone industry. EDF of France and Hydro Quebec are interested in the electricity company.

We know a foreign company has already purchased cellular rights in Haiti. It was estimated by an expert to be worth $18 million-and it was purchased for $500,000.

MM: Does former President Jean-Bertrand Aristide broadly share the PAPDA critique.

Chalmers: Aristide has on many occasions been very critical of the economic policies of structural adjustment. But many people ask why it is that when he was in power, he did not go further than he did. Even at times when former Prime Minister Claudette Werleigh had a strong critique of the structural adjustment package, the general orientation of Aristide's program was not radically different than what is being proposed right now. Many in the population think that his critique is merely expedient-that it is only something for today, and is linked to his aspirations to be president in 2001. He has a new political party, Lavalas Family, which has the goal to recapture the presidency. In any case, the concerns addressed by President Aristide are generally just. I must however stress the fact that PAPDA is an independent organization of civil concern which has no relationship with the political party directed by the former president.

MM: Would Haiti benefit from Aristide returning to the presidency.

Chalmers: It is very difficult to say today. It depends upon the positions and alliances of the Lavalas Family Party until the coming elections. As of now, the Lavalas Political Organization (directed by Gerard Pierre Charles) and the Lavalas Family seem entangled in a power struggle which has estranged the popular movement.

What is important for me is to note that the popular movement has matured a great deal. We went from a period after Duvalier where everyone united against the Tonton Macoutes. We passed through another period where everyone was for Aristide, because of what he represented-a new state, justice, transparency.

But the two periods of the Aristide presidency differed. Before the 1991 coup, the economic policy was based on the priorities of the population. After the return, the program was one totally dictated by the international financial institutions.

I think now the Haitian people are ready to move to a third level, where there will be unanimity for a societal project, for a project that goes beyond an individual. The Haitian population has learned what can happen if they tie their aspirations to an individual. I think the popular movement is ready to construct a project that responds to their social and economic needs.

MM: Why did Aristide change his basic policy orientation?

Chalmers: One of the conditions of the United States to support the restoration of Aristide in Haiti was his acceptance of a program of structural adjustment.

During the second period of his presidency, Aristide had less space to maneuver. I'll give you a concrete example. In August 1991, Aristide and his team of advisers were going to Paris to negotiate with the international financial institutions. Before they went, Aristide called all of his ministers and advisers, and they had a daylong meeting with popular organizations at the national palace. There were 800 representatives of popular organizations at the meeting, and it was televised live. At this meeting, the popular organizations were able to ask questions of the ministers; and the ministers had to respond and explain the economic policies of the government and what they were going to do in Paris. This is something that was not possible after 1991. It was not possible in 1994, because the space was totally occupied by the United States and the international financial institutions.

The coup d'etat marginalized the population with respect to the government, and they have remained marginalized. That is why we say the structural adjustment program in Haiti is a veritable coup d'etat.

MM: Did Aristide make a mistake in accepting the U.S. principles for restoration?

Chalmers: Yes and no. The error was in the application. Aristide was like a prisoner of war in Washington. An accord signed under such conditions could not be valid. Aristide was separated from the population. He could not consult with them. What he should have done, once he returned to Haiti, was to submit these accords to the Haitian people. The error that the Aristide government made was to continue the process of marginalizing the population, and to allow only the politicians to participate.

We must also recognize, however, that for both the Aristide and Preval administrations, the strategic options are limited because of the government's financial dependence on international institutions. In November 1995, when Prime Minister Werleigh courageously attempted to bring about certain changes, the response from the international community was brutal. U.S. AID abruptly withheld the funds already approved for food aid and the international financial institutions followed suit by withholding funds (for support of the balance of payments account) which had been previously approved.

MM: Could Haiti forswear aid, conditionality and go its own way?

Chalmers: For the Haitian people, saying yes to this question is also making a choice to change the traditional way the state has been governed. Haiti depends on foreign donors for 85 percent of its investment budget and 45 percent of operating expenses.

For example, they talk a lot about austerity measures, but there are people in government who are paid $10,000 to $15,000 every month. Usually after these people serve as ministers, they are guaranteed some kind of consultative position with the International Monetary Fund or the World Bank and will be paid very high salaries for the rest of their life. If it turned down aid, Haiti would have to make the political choice not to maintain these sorts of salaries and arrangements.

It is estimated that the operating budget of Haiti is roughly $1 billion. An economist friend of mine (M. Webster Pierre) calculated that a restructured Teleco could earn $1.2 billion a year.

So there are ways to get out of this cycle of dependency, but they involve a serious striking of an alternative development plan. In Haiti, we have been fortunate to have very serious, rigorous thinkers who have come up with the best econometric models to calculate alternative approaches that would break the cycle of dependency.

To realize these alternatives, we need to develop the political alliances at the national and international levels so that we can launch a new development plan-not one within a logic of autarky, but one that addresses the national priorities of the country and that could lead to our participation in the world market.

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