ONE calls on US Treasury Secretary to cancel Haiti's debt

By Ryan Dicovitsky

21 January 2010 [MEDIAGLOBAL]: Even before last week’s devastating earthquake shook the island nation of Haiti to its core, a dangerous cocktail of problems faced the country. Successive hurricanes, bad infrastructure, instable government, and pervasive poverty made Haiti one of the world’s most vulnerable and least developed countries, and the 7.0 magnitude earthquake that struck the country may be the figurative straw that broke the camel’s back.

As Haiti rebuilds, some feel it should keep its money to recover. Source: UN Photo/Marco Dormino.

As the international community struggles to assist Haiti in its recovery effort, international activists have begun discussing ways to begin fix the structural weaknesses of the small island in the Caribbean. This week, the ONE organization, a non-profit entity founded by U2 lead singer Bono to combat extreme poverty and disease, launched a petition to eliminate Haiti’s foreign debt to creditors. If ONE’s petition gains momentum and proves successful, it could be the first step in easing the long recovery effort of the Haitian people.

The petition, which appears on ONE’s website (http://www.one.org/us/) and has already accumulated nearly 124,000 signatures as of 21 January, is directed toward U.S. Treasury Secretary Timothy Geithner. It calls on Geithner to “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.”

Stephen Wilson, the U.S. Communications Coordinator for ONE, explained to MediaGlobal why the organization chose to focus on the U.S. Treasury as a source of action to cancel Haiti’s debt. “It is directed to Secretary Geithner given the strong voting power the US has on the Boards of both the IMF and the Inter-American Development Bank, which together hold much of Haiti’s debt. Secretary Geithner is in a powerful position to help secure cancellation of these debts from these institutions,” he said. In addition, ONE has sent the petition to Finance ministers in Europe and Canada, the IMF, the World Bank, and other representatives at the Inter-American Development Bank.

ONE’s petition proposes that after Haiti’s debt is cancelled, grants be substituted for traditional loans to finance the recovery effort. Wilson did acknowledge that so far, assistance to Haiti has taken the form of grants, which do not add to the amount of money Haiti owes other countries. “As far as we know at this stage, only the IMF has extended a concessional loan, thereby contributing to re-accumulation of debt,” he explained.

The issue of foreign debt is has arisen many times in Haiti’s recent history. From the late 1950’s to the mid 1980’s, the country incurred a tremendous amount of financial debt, totaling in the billions of dollars. As a response to Haiti’s financial restraints, $1.2 billion was cancelled in June of last year. However, Haiti was still left deeply indebted since none of the loans from 2004 onward were excused. Currently, the country owes close to a billion dollars, mostly to the Inter-American Development Bank and the IMF.

In 2008, after four hurricanes battered the island in a row, ONE issued similar calls for cancellation of debt, which contributed to the partial removal of debt last year. Yet, without a complete removal of the final $1 billion, recovery efforts could be severely hampered given the extreme poverty of Haiti.

Other international bodies have a lesser role but could still contribute to the recovery effort with the cancelation of debt. The World Bank has taken up the mantle of providing debt-free assistance, providing $100 million to the recovery effort. It is also being asked to complete that assistance with the removal of $39 million still owed by Haiti to the World Bank. Other individual countries, such as Venezuela and Taiwan, are also being encouraged to remove their financial demands on Haiti.

ONE has also stated that removal of Haiti’s debt is not a short term fix; emergency assistance is still critical to the recovery effort. But in terms of long-term reconstruction and recovery, ONE is claiming that removing Haiti’s debt makes the most sense, arguing that shifting the direction of financial assistance to the country could reverse a long and sad tradition of poverty.

“This revolving door – we provide Haiti with assistance, and Haiti then must pay creditors back on old loans – makes no sense. Haiti should not be burdened with future large debts due to a tragedy beyond its control” said Wilson.