THE CONSTITUTION IS PAPER, BAYONETS ARE STEEL

HOW INEQUALITY AND POWER DRIVE HAITI’S DEVELOPMENT CHALLENGES

Sean Kelly, Priscilla Lekalkuli, Marvin Saccucci, and Natalia Shafi

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Acronyms GB Gilbert Bigio HDI Human Development Index HUHSA Huileries Hatienne IFES International Foundation for Electoral Systems LAPEH Ligue Alternative pour le Progres et l’Emancipation Haitienne MINUSTAH United Nations Stabilization Mission in Haiti MTK Mouvement Tet Kale NGO Non-Governmental Organization ODA Official Development Assistance PEC Provisional Electoral Council PHTK Parti Haitien Tet Kale OHCHR Office of the United Nations High Commissioner for Human Rights USAID United States Agency for International Development

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I. Introduction Haiti is the poorest and least developed country in the Western Hemisphere. The country

suffers from deep-rooted historical inequality which migration and international trade reinforce. Inequality drives ineffective governance by weak institutions that do not adhere to the rule of law and struggle with corruption. Poor governance inhibits the provision of public services which has negative effects on Haiti’s lower class. Receiving the largest amount of official development assistance (ODA) in Latin America and the Caribbean has not improved the situation, but instead created dependence. The majority of ODA is channeled through local grassroots organizations and non-governmental organizations (NGOs) leading to rent-seeking and undermining the Haitian Government. The Haitian government is accountable to the upper class, composed of a few wealthy families that control import and export industries and use their influence to perpetuate their economic interests at the expense of the lower class. Ultimately, Haiti’s underlying inequality hinders the country’s development prospects. II. The Making of Haiti

Haiti’s multi-dimensional experience with poverty is deeply-rooted in the country’s longstanding history of political oppression, corruption, and structural inequality, forming the impetus for contemporary Haiti. More recently, the 7.0 magnitude earthquake of 2010 killed more than 100,000 people and internally displaced at least 1.5 million people leading many to doubt the country’s ability to rebuild an already depleted infrastructure.1

Throughout history, Haiti was renowned as one of the world’s most prized settlements because of its rich, natural resources. Haiti was the second country to gain independence in the Western Hemisphere after the United States, the first country to gain independence from a slave revolt, and the first black-led nation in the world. Nonetheless, the nation’s democratic facade in 1804 was masked by authoritarian rule. The only official language used in government until 1983 was French, although most Haitians spoke Creole. As a result, only a small percentage of the population could read or understand the very law by which they were governed. This ensured that any constitutional laws or institutions that were implemented during the time would make it difficult to vote the country’s leader out of office. Large amounts of power in the hands of a few left insurrections as the only effective route to political change.

Since Haiti’s independence, geopolitical powers such as the United States and France have exerted tremendous influence over Haiti. The United States refused to acknowledge Haiti diplomatically until 1862, as southern slave-owners feared a slave-revolt ripple effect in the United States. According to Paul Farmer, France insisted that Haiti pay an indemnity of 150 million francs (modern equivalent of $21.7 billion - the amount demanded by Haiti in 2003 from France) to compensate for the damages during the revolution and to receive French diplomatic recognition of Haiti.2 In addition, both countries placed trade embargoes on Haiti, further isolating the country from the international system. Haiti’s isolation and debt debilitated the country for the next 200 years. To repay its initial debt to France, the Haitian Government took out huge loans from American, German, and French banks at unreasonably high interest rates. By 1914, 80% of Haiti’s budget went to debt repayment. At its peak, the country had a total external debt of $1.8 billion, which its major creditors mostly forgave after the earthquake.

The United States invaded Haiti in 1915, and occupied the country until 1934. The United States was eager to build new plantations and considered Haiti strategically important for geopolitical and commercial interests. At the time of the invasion, many claimed the intent of the

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United States was to strengthen democracy, but the Haitian parliament was dissolved and the constitution modified to benefit American interests, specifically allowing the foreign ownership of land. Due to excessive foreign aid and influences, the legitimacy of a political leader was established by outside forces rather than Haiti’s own people. This set the stage in 1957 for the father-son duo, Francois Duvalier and Jean-Claude who reigned as dictators until 1986. Their regimes were best known for their use of brutality and terror, driving thousands of Haitians into exile. Most notably, the special operations unit, Tontons Macoutes, ordered the death of twenty to thirty thousand Haitians in order to suppress political opposition. During this era the state of poverty grew worse as the gap between Haiti and other poor, developing nations widened. Foreign aid was injected into the economy through various organizations, but little aid actually reached its intended people. Instead, the Duvalier’s expropriated this aid for personal gain and enrichment of political allies. In 2010, Salim Succar, an attorney advising the Haitian Government, estimated that the Duvalier’s stole anywhere between $300 to $900 million.3 According to Terry Buss and Adam Gardner citing a World Bank project appraisal, “Haiti has dysfunctional budgetary, financial, and procurement systems, making financial aid management impossible.”4 The Duvaliers’ lasting impact on Haiti has engendered inequality, corruption, weak government institutions, and widespread violence.

The United States continues to play a prominent role in Haiti’s development. After the popularly elected Jean Bertrand Aristide was deposed by a coup led by the economic and military elite in 1991, the United States negotiated the agreement that restored Aristide to power in 1994. The negotiations were further supported by the American led multinational force of 28 states that accompanied Aristide’s return. Aristide’s return to power came with a set of terms from the United States, the World Bank, and the International Monetary Fund regarding economic and political decisions. During the next ten years, Haiti experienced a democratic government and its first peaceful transfer of power. The progress was abruptly ended by the American-supported 2004 coup that concluded Aristide’s third stint as president. In the wake of the coup, the United Nations established the United Nations Stabilization Mission in Haiti (MINUSTAH), a peacekeeping mission led by the Brazilian army.

Haiti returned to democratic rule in 2006 with the election of Rene Preval and was on the path to putting in place significant social and economic reforms. In 2008, Haiti’s economy was growing at 2.9%, which was the highest in the Caribbean. In 2010 all the recovery efforts were shattered by three major events, the earthquake, Hurricane Thomas, and the cholera epidemic. The country’s development was seriously impaired. United Nations agencies, NGOs, and bilateral donors all came to rescue Haiti with very little success and have struggled to effectively assist Haiti with humanitarian relief, reconstruction, and development.

Table 1 illustrates the depth of Haiti’s poverty, income inequality, and deficient institutions. The Haitian economy’s GDP of almost $17 billion is only greater than its neighbors the Bahamas, Guyana, and Suriname. In addition, Haiti’s GDP per capita of $1,630, similar to numerous states in Sub-Saharan Africa, makes it the poorest state in all of Latin America and the Caribbean by a wide margin. The low level of income among Haitians is one of the reasons for Haiti’s low score in the Human Development Index (HDI). The World Bank classifies Haiti as a low human development country, the only one in its region. The World Bank’s World Governance Indicators list Haiti with very low scores in government effectiveness, control of corruption, and rule of law. Overall, one of the most unequal distributions of income in the world compounds the depth of Haiti’s poverty and underdevelopment.

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III. Structural Analysis

Most of the challenges to development that Haiti experiences today are linked to its historical experiences. The demographic dynamics and nature of global integration are some of the major structural variables contributing to Haiti's persistent poverty and inequality. Demographic Dynamics

Figure 1 shows that more than 50% of Haiti’s 10.4 million citizens are between 15-64 years of age. With a life expectancy of 63, less than 5% of the population is 65 or older. Even though the percentage of the population below 15 years of age is decreasing, revealing a decrease in Haiti’s fertility rate since 2000, the current age structure is still a pyramid as shown in Figure 2. Like many developing countries with similar pyramid population structures, Haiti experiences a high unemployment, migration and crime rates that are directly associated with the untapped potential of its youth.

With low education attainment among the poor in the rural areas and to a larger extent the whole country, the youth unemployment rate is estimated at 17.4% by the International Labour Organization.5 With increasing 15-64 ages population, such high unemployment coupled with low education levels has adversely affected the poor in Haiti and has led to increased inequality between the upper and lower class. This is demonstrated by the fact that the top 10% of Haitians hold 48.2% of the nation’s wealth,6 as opposed to 51.8% for the bottom 90%.7

Nature of Global Integration

Haiti participates in the global economy through trade and migration. Both trade and migration contribute to the country’s GDP through imports, exports and remittances. However, trade and migration have also increased inequality between the upper and lower classes.

i. Migration High unemployment rates have caused Haitians to migrate both domestically and

internationally. Limited opportunities in the rural areas have caused many poor Haitians to migrate internally to the departments of Ouest and Nord-Est.8 Ouest attracts many Haitians because of the greater number of opportunities in the capital city of Port-au-Prince, while Nord-Est offers better opportunities in commerce along the border between Ouanaminthe and Dajabon.

As of 2006, the World Bank found that economic factors to a large extent have led to emigration abroad to the Bahamas (more than 75,000 Haitians or people of Haitian descent), Dominican Republic (500,000 Haitians or people of Haitian descent), and the United States (2 million Haitians or people of Haitian descent).9Haiti benefits immensely from the remittances of its emigrants. According to the World Bank between 2009 and 2013 Haiti received between $1.3 billion and $1.7 billion annually in remittances,10 or about 20-22% of total GNP, the highest percentage for the region.11 While remittances provide substantial income for many Haitians, it comes at the cost of a less educated workforce. The emigration rate of people with tertiary education was 83% in 2000 for Haitians.12 At the time this was the third highest emigration rate in the region, only behind Jamaica and Guyana.

This emigration rate illustrates Haiti’s brain drain, which has pernicious implications for inequality. The educated and wealthy Haitians have the ability to travel between Haiti and the United States, which leads to immense economic opportunities and higher levels of income. This is in stark contrast to the large percent of urban and rural poor who are unable to acquire the

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education needed to achieve this level of mobility, leading to fewer economic opportunities and a vicious poverty cycle. The brain drain deprives Haiti of business, law, medicine, and other specialized service sectors that could benefit society. The poor especially have extremely limited access to the specialized services in Haiti.

ii. Trade Haiti’s geographical location and climatic conditions have influenced its involvement in

international trade. Haiti’s access to the ocean, close proximity to the United States, Canada, the Dominican Republic and other international markets are some of the geographical factors facilitating its engagement in trade.

The climate favors production of coffee and other agricultural produce, most notably mangoes, which Haiti exports to the United States. Haiti’s small size with limited resources has also facilitated engagement in international trade to obtain many goods it cannot efficiently produce itself. Interestingly, Haiti’s trade as a percentage of GDP ranged between 57% and 74% from 2009 to 2014.13 These figures are middling in the region indicating that while Haiti needs to trade due to its small size and state of development, it cannot offer goods or services as competitively as its neighboring countries.

Haitian chief exports include apparel, coffee, fruits, and perfumery, while chief imports include electrical machinery and agricultural products including rice, wheat, and meat from the United States. Haiti also trades with the Dominican Republic, China, and Netherlands Antilles. Haiti maintains favorable trade policies with low tariffs. Within Latin America and the Caribbean, Haiti has one of the lowest average tariff rates applied to imports. Since 2009, the rate has fluctuated between 3% and 6.5%.14 While the benefits of trade undoubtedly outweigh the losses, the gains from trade are not evenly distributed and there are parts of the Haitian population that are hurt by trade.

Based on figures from the Central Bank of Haiti, agriculture accounts for roughly 21% of Haiti’s GDP. Considering that most of the rural population relies on agriculture, excessive agricultural imports harm poor Haitian farmers. The Haitian Government tried to make agriculture and rural development a national priority in the 1970s and 1980s, but structural adjustments and aid conditionalities promoting trade liberalization undermined such efforts.15 When import tariffs were drastically reduced (e.g., rice from 35% to 3%), small farmers faced stiffer international competition, while the small urban elite benefitted from the lower food prices. In a country with no social safety nets except for remittances received from abroad, trade liberalization generally benefits the upper class at the expense of the lower class. IV. Institutional Map and Stakeholder Analysis

The weak Haitian Government struggles with ineffectiveness, application of the rule of law, and corruption which has led to governance institutions that do not serve the interests of the vast majority of the population. The provision of public services is deficient and the negative effects disproportionately impact the poor. Quite simply a “small economic elite has supported a ‘predatory state’ that has made only negligible investments in human resources and basic infrastructure.”16 Haiti receives the largest amount of ODA in Latin America and the Caribbean. The aid fuels rent-seeking and undermines the government’s capacity. The major stakeholders in Haiti include the foreign providers of ODA, Haiti’s dominant political party the Parti Haitien Tet Kale (PHTK), and a small coterie of elites that control key industries in the economy.

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Formal Institutions While Haiti has made disjointed attempts at political democratization since 1987, the development of governance institutions that adhere to the laws and respect political rights for all citizens have remained a struggle. The World Governance Indicators score Haiti in the seventh percentile for rule of law and control of corruption. The World Bank further acknowledges the problem’s pervasiveness with examples of “embezzlement of public funds by political and private organizations; payments to government-associated individuals for goods that were not provided and services that were not rendered; abuse of discretionary accounts by government officials; and evasion of the licensing fees and import tariffs collected by public enterprises.”17 Overall, there is little trust that the Haitian Government will abide by its own laws, respect property rights, and enforce the criminal code. In addition, civil liberties are not properly respected. The country’s political rights’ rating has worsened from 4 to 5, according to the Freedom House Index.18 The poor ratings in both of these indices are driven by Haiti's inability to hold democratic elections, an inept judicial system, and lack of freedom of expression. The most important, yet troubled institution in Haiti’s recent history has been its electoral system. Article 191 of Haiti’s Constitution of 1987 establishes the Permanent Electoral Council and Article 289 authorizes the Provisional Electoral Council. Since 1987 Haiti has failed to constitute a permanent council, thus a provisional body has overseen every Haitian election. Elections in Haiti are presidential, legislative, and municipal. Following the earthquake, Haiti failed to hold constitutionally mandated legislative elections in 2011 and 2013. The creation of an electoral body was a matter of great political dispute between President Michel Martelly and members of the Parliament from 2012 through 2014. President Michel Martelly attempted to force a solution through the El Rancho Accord which many opposition parties and civil society organizations protested as a way for Martelly to circumvent the legislature, give extra power to his executive branch, and illegitimately oversee elections. Ultimately, the current nine-member Provisional Electoral Council (PEC) was constituted in early 2015. Haitian elections recently took place on August 9, 2015 with the first round of legislative elections and October 25, 2015 with municipal elections, the second round of legislative elections, and first round of the presidential elections. Haiti’s resolute steps towards renewing democratic institutions were marred by violence and protest. Individuals took to the streets, throwing rocks and burning tires, denouncing the elections as undemocratic. The International Foundation for Electoral Systems (IFES) lists the turnout for the August 9 vote at 18%.19 This is the lowest turnout for any Haitian election in the IFES database since 2000 indicating a low level of voter confidence and possible sign of limitations on political freedoms and rights. The United States through USAID has provided roughly $22 million for technical assistance, logistics, voter education, and civil society oversight in support these elections.20 The level of support underscores Haiti’s institutional weakness as it cannot properly organize an election. Political freedom in Haiti is marked by an over powerful judicial system. Haiti's courts are characterized as under resourced, inefficient, backlogged by cases, and devoid of adequate courtrooms. Court hearings are conducted in French, although 90 to 95% of the Haitian population speaks Creole, rendering hearings incomprehensible to those involved. While pretrial detention serves an important role, more than 70% of the prison population has not been charged.21 This public disdain toward the Haitian National Police is exacerbated by the number of police abuses and deaths in detention in recent years. The United Nations High Commissioner for Human Rights (OHCHR) has been in the process of investigating a number of killings,

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arbitrary arrests, and the poor treatment of detainees, in violation of basic human rights. MINUSTAH has prioritized strengthening the Haitian police force. Freedom of expression is guaranteed by Haiti's constitution. While the constitution guarantees freedom of assembly and association, political protest continues to be subject to police harassment and violence. This lack of freedom of expression is exemplified by Daniel Dorsainvil, a notable human rights activist who was murdered in February, along with his wife. Freedom of the press is even less certain, as police are unable to protect journalists from threats and violence. This lack of freedom of expression is exemplified by a literacy rate of merely 48.7%. Not to mention the fact that while the majority of the nation speaks Haitian Creole, no daily newspapers are printed in the native tongue. Internal Political Stakeholders

Since January 2015 President Michel Martelly has effectively ruled the country by decree because of Parliament’s dissolution. The dissolution occurred after the legislature refused to pass a new electoral law proposed by Martelly that would have extended the Parliament’s term through the 2015 legislative elections. The United States, Brazil, Canada, and European Union endorsed Martelly in the aftermath of the dissolution.

The PHTK, Martelly’s political party, is consolidating its influence in the political system. Prior to the first round of legislative elections in August 2015, Parti Verite was considered a potential rival to the PHTK. However, the PHTK has largely marginalized it through decrees and intimidation. Verite intended to run Jacky Lumarque in the October 2015 Presidential election, but the CEP ruled him ineligible on the grounds that he had not filed the proper documentation. Despite a court ruling in Lumarque’s favor, the CEP ignored his candidacy. Adding to Verite’s frustrations were reports of violence and intimidation during the first round of legislative elections in August which the party cited when it announced its election boycott in September 2015. The general picture is one in which the CEP operating out of the President’s Office seems to exert control to the benefit of his party.

Haiti held the first round of its Presidential elections in October 2015. Jovenel Moise of the PHTK received 33% of the vote, while Jude Celestine of Ligue Alternative pour le Progres et l’Emancipation Haitienne (LAPEH) garnered 25% of the votes. The two men are set to contest the run-off at the end of December 2015. Moise, an entrepreneur in banana exports, is a new face in Haitian politics after Martelly designated him as his successor. In contrast, Celestin has a long history in Haitian politics as a member of Unite, the party of former President Rene Preval. Quite controversially, Celestin placed second after the first round in the 2011 Presidential elections, but then was disqualified by the electoral commission after the Organization for American States concluded the voting was marred by fraud. The disqualification allowed Martelly to contest the run-off and defeat Mirlande Manigat. After the first round in the 2015 Presidential elections, international observers accepted the results, while eight political parties in Haiti including Celestin’s LAPEH alleged fraud on the part of the PHTK.

With the final results of the Presidential and legislative elections are unknown, it is likely that Jovenel Moise will win the run-off and become Haiti’s next president. While his PHTK will have the most seats in the Chamber of Deputies, it has little power in the Senate. Moreover, the PHTK has a tenuous plurality of seats in the Chamber of Deputies that Verite could counter if it forms a coalition with other opposition parties such as Fanmi Lavalas and LAPEH. PHTK’s lack

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of control over Parliament will encourage Moise to resort to extraconstitutional means to achieve his agenda, a common practice in Haitian politics that Martelly has already emulated.

Public Institutions Haiti's development crisis is so multifaceted, and the country's needs are so many, that prioritizing reconstruction efforts has proven difficult. The World Governance Indicators place Haiti in the first percentile for government effectiveness. The score means that the Haitian state’s ability to provide impartial public services and remain committed to policies is better than only 1% of countries in the world. Most notably, the state’s inability to provide for basic societal needs in education and health illustrate the Haitian Government’s inadequacies which further perpetuate inequality and poverty. According to the HDI, the average Haitian receives 4.9 years of schooling, and is expected to complete only 7.6 years.22 Compared to other countries, these scores correlate to the 148th and 179th worst scores worldwide. When considering education as a public good, it is interesting to note that almost all schools in Haiti are privately run. Whether run by religious groups, NGOs, or for-profit institutions, about 90% of schools are private.23 Nonetheless, as most private schools ask for tuition fees, tuition can be very expensive, and it is hard for Haitians to send their children to school. Secondary school can cost anywhere between $250 to $350 per year which is difficult to pay when living on less than $2 a day. Astoundingly, almost 80% of teachers have not received any pre-service training. In short, Haitians in poverty have limited access to education thus it is difficult for them to obtain knowledge and skills that might improve their quality of life and economic position. For the urban elite, access to education is not a concern as they have the financial means to afford education through the tertiary level. In response to these woes, the government has launched the Universal, Free, and Compulsory Education program, allowing more than one million children to attend school free of charge. Nonetheless, the program has not been without controversy, as there have been loopholes in its implementation. Regarding the health sector, the average Haitian is expected to live 63.1 years.24 According to the HDI index, this is the 148th ranked life expectancy worldwide. Although the country spends 7.9% of its GDP on health, comparable to the likes of countries such as Luxembourg, Hungary, and Uruguay, females have a health-adjusted life expectancy of only 37.1 years, and males 27.8 years of age, the worst scores worldwide.25 Top causes of death include HIV/AIDS, diarrheal diseases, interpersonal violence, preterm birth complications, and tuberculosis; preventable causes of death with modern medicine. Males have a 30% chance, and females a 26% chance of dying before age 15. Much like education, the negative effects of the poor health have a disproportionate impact on the poor who face health complications that reduce productivity and the capacity to save. These are challenges that the political and economic elite do not face as they have access to quality medical care. In 2012, USAID and the government of Haiti signed a 5-year health partnership framework to advance the government's health care ownership and reduce the country's dependence on foreign aid. The two countries are working together to improve the government of Haiti's leadership and oversight of the health sector, increase access to quality integrated health services, improve health information and supply chain management systems, and rebuild health facilities and physical health infrastructure.26

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Gender Inequality Just as formal institutions play a prominent role in Haiti's development, informal cultural norms are prevalent as well. One common cultural norm is the view of women as second-class citizens. In general, women are in fewer positions of power and have less political and civil liberties than their male counterparts. This is demonstrated by the fact that women hold only 3.5% of the nation's share of seats in parliament. In addition, 80% of child domestic workers are girls. Only 22.5% of females have some level of secondary education and on average attain 3.4 less years of schooling than men. By disregarding women, the country fails to harness the abilities and strengths that they can provide the workforce. With that said, a number of different initiatives have taken place to decrease gender inequality in Haiti. In regards to political representation, Haiti’s Provisional Electoral Council developed the country’s first national gender and elections strategy, with the support of the IFES, to include women in the electoral process. Concerning gender-based violence, which the 2010 earthquake exacerbated, USAID worked with the Ministry of Women’s Affairs to support campaigns against rape, install solar lights, and pass legislation to combat trafficking in persons and promote responsible parenthood. Impact of Official Development Assistance

Figure 3 emphasizes that Haiti consistently receives the largest amount of ODA in Latin America and the Caribbean. Unfortunately, the stream of money is an attractive rent for the political and economic elite to siphon and use to promote their interests at the expense of Haiti’s lower class. Consequently, donors often direct their funding to NGOs as a strategy to mitigate rent seeking, but that choice seriously hinders reform of Haiti’s governance. The government’s institutional weakness and low-level capacity endure at the expense of Haiti’s lower class. The vast majority of people living in poverty depend on NGO social services that the government should provide for its citizens. Ultimately, the delivery of services is not sustainable, but Haiti’s government is not responsive to the needs of the lower class because there is not a critical mass of civil society that can demand change at the expense of the upper class that controls the institutions.

Figure 4 exhibits that in 2009 Haiti’s ODA from all donors was $1.1 billion, but then tripled after the earthquake to $3.1 billion.27 While assistance declined in the years following the earthquake, the amount was still more than $1 billion in 2013. Drawing from the World Bank population figures for Haiti during the same period, the ODA per capita for Haiti hit a high of $307 in 2010 and a low of $110 in 2013. The Haitian economy has developed a dependence on these large transfers of foreign assistance. The World Bank indicates that Haiti’s net ODA as a percentage of gross national income peaked in 2010 at 46% while prior to the earthquake it was 17% in 2009.28 Despite the fluctuations, Haiti has the highest net ODA as percentage of gross national income every year since 2009 for its region.

Based on an analysis of figures from AidData, Figure 5 depicts the five largest benefactors of foreign aid to Haiti: the United States, Canada, European Union, World Bank, and Inter-American Development Bank. With the exception of the European Union, donors’ assistance peaked in 2010 after the earthquake and has since declined. Every year since 2009, the United States has been Haiti’s largest source of foreign aid. The other four bilateral and multilateral donors have traded positions within the top ranking. Ultimately, ODA imparts on foreign entities a substantial degree of influence with respect to how money is spent.

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Given Haiti’s challenges with corruption, bilateral and multilateral donors channel the majority of their assistance through NGOs and local grassroots organizations. Carol Adelman contends that international donors have opted to use NGOs as vehicles for aid because of the Haitian government’s institutional weakness.29 Terry Buss and Adam Gardner reveal that NGOs became dominant after the 1991 coup against Aristide when donors refused to provide money to the military junta that controlled the country before Aristide’s reinstatement in 1994. The influence of NGOs created multiple problems for Haiti including a lack of government investment and ownership in development initiatives, the NGO sector recruiting the most talented members of Haiti’s civil service, lack of coordination between NGOs and government-sponsored initiatives, and a parallel network of NGO social services that undermined the Haitian government’s legitimacy.30

The ODA has become an attractive source of rent-seeking behavior with cases afflicting grassroots Haitian organizations and larger foreign NGOs. The World Bank observed a case in which local gangs in Port-au-Prince’s slum of Cite Soleil appropriated water points and started to charge user fees to community members accessing the water. More recently, USAID provided a contract to Chemonics that funded Mouvement Tet Kale (MTK) for inauguration activities in support of then President-elect Michel Martelly. Tet kale is a Creole term of endearment that means bald head and refers directly to Martelly. At the time, the MTK was a political movement that supported Martelly’s candidacy and mobilized popular support on the street. After Martelly took office, his most ardent supporters founded the PHTK, his political party. There remain linkages between the MTK, PHTK, and ministers in Martelly’s government. Internal Economic Stakeholders

There are a handful of families that dominate Haiti’s economy and control its most important industries in the import and export sectors. The most influential are the Bigio, Gardere, and Mevs families. Their collective business interests cover some of Haiti’s most successful firms and industries. Due to the high income inequality in Haiti and nature of taxation, the families have a disproportionate amount of influence on industry and the economy.

Gilbert Bigio is the billionaire Chairman of the Gilbert Bigio (GB) Group, a company with diversified holdings in 21 companies that span agriculture, construction, consumer goods, energy, logistics, infrastructure, and telecommunications. Michael Hall states that Bigio founded the company in the 1970s during the Duvalier dictatorship and the firm has become Haiti’s largest private taxpayer.31 GB Group’s most consequential holdings include Acierie d’Haiti, Huileries Hatienne (HUHSA), Telecomm Solutions, National, and Port Lafito. Acierie d’Haiti is the “largest distributor of steel products in the Haitian market.”32 HUHSA produces cooking oil, soap, detergent, and margarine for Haiti’s domestic market. Moreover the company is the country’s distributor for international food brands such as Kraft Foods, Nestle, Gerber, Goya, and Hormel. Telecom Solutions is the sole distributor of cell phones and calling cards for Digicel, one of the major cellular service providers in Haiti. National is Haiti’s most recognized petroleum brand and the country’s largest distributor of the commodity since buying Texaco Haiti and Royal Dutch Shell Haiti. Finally, Port Lafito is a newly operational modern seaport that opened in June 2015. The GB Group wants the port to become the centerpiece of a new export processing zone that will host manufacturing.

The Gardere family led by Thierry Gardere owns La Societe du Rhum Barbancourt, a company that distills the rums which are arguably Haiti’s most well-known exports. Hall

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explains that the firm only directly employs approximately 250 people, but hires roughly 10,000 independent contractors to cut the sugarcane used for rum distillation. In 2009 Barbancourt’s revenue was $12 million.33

Gregory Mevs controls the WIN Group, a company that owns the Terminal Varreux, Wineco, and Shodecosa. Terminal Varreux is the largest private port in Haiti. The terminal is next to Wineco facilities that are the largest petroleum storage facilities in Haiti with the capacity for one million barrels of oil. Consequently, the Mevs control the storage of petroleum in Haiti. Shodecosa is an industrial park close to Port-au-Prince’s international airport and seaport that leases industrial space and warehouses. During the post-earthquake relief efforts, Shodecosa stored humanitarian aid for various multilaterals, bilaterals, and NGOs.

The success of these entrepreneurs in the import and export sector is incongruous considering the World Bank’s Ease of Doing Business Index ranks Haiti 182 out of 189 countries.34 The taxation system in Haiti reveals why these firms have been successful over the decades in a poor business climate with a weak government. The World Bank reports that Government of Haiti derives 30% of its revenue from taxes on international trade.35 Effectively, the government is responsive to the demands of the small upper class that owns these firms because tax revenues from their businesses are a significant portion of government revenue. People such as Gilbert Bigio, Thierry Gardere, and Gregory Mevs have access and influence with the government that facilitates their endeavors. While these businesses benefit Haiti’s output, the control exerted by the upper class reinforces inequality that plagues Haitian society. V. Conclusion

The evolution of inequality through the historical and structural context created Haiti’s development challenges. Unfortunately, the solutions prescribed by international actors have been ineffective leading to continued corruption and instability. In order to meet Haiti’s multitude of challenges, the government and ODA require reforms. The government should prioritize job creation which will lead to increased social integration, reduced inequality, and economic growth. A greater focus on increasing access to educational institutions is vital. The rule of law and effectiveness of governance should be strengthened through technical assistance to institutions, reforming the civil service, and fostering a more vibrant civil society. Finally, ODA should become more transparent and accountable to ensure that activities are properly implemented with known outcomes. The complex and resilient social institutions that have emerged from a historic commitment to self-sufficiency and self-reliance must collaborate with these institutions in order for development to succeed.

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Table 1: Primary Indicators of Haiti’s Poverty and Inequality

Indicator Value Region Rank Global Rank

GDP, PPP (constant 2011 international $) $16.9 billion 36 21/24 139/378

GDP per capita (constant 2011 international $) $1,630 37 26/26 171/189 Human Development Index 0.471 38 25/25 168/187 GINI Coefficient 59.2 39 1st 6th Government Effectiveness 1.1% 40 - 1st percentile Rule of Law 7.7% 41 - 7th percentile Control of Corruption 7.7% 42 - 7th percentile

Sources: World Bank World Development Indicators, Human Development Index, and World Bank World Governance Indicators Figure 1: Population Shares of Haiti Since 1960

Source: World Bank World Development Indicators43

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Figure 2: Haiti’s Population Pyramid

Source: http://populationpyramid.net/haiti/201544

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Figure 3: Official Development Assistance in Latin America and the Caribbean

Source: Organization for Economic Cooperation and Development45

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Figure 4: Official Development Assistance to Haiti

Sources: Organization for Economic Cooperation and Development and World Bank World Development Indicators46 47

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$1,500

$2,000

$2,500

$3,000

$3,500

2009 2010 2011 2012 2013

OD

A, C

urre

nt P

rice

s USD

Mill

ions

Year

ODA% of GNI

16

Figure 5: Sources of Haiti’s Official Development Assistance

Source: AidData48 1 “Displacement Tracking Matrix,” International Organization for Migration, 30 June 2015, http://iomhaitidataportal.info/dtm/. 2 Paul Farmer, The Uses of Haiti (Monroe, ME: Common Courage Press, 2006), 67. 3 Deborah Ball, “Give Back Stolen Cash? Not So Easy,” Wall Street Journal (New York, NY), 21 August 2010, http://www.wsj.com/articles/SB10001424052748703954804575380942951459772. 4 Terry Buss and Adam Gardner, “Why Foreign Aid to Haiti Failed,” National Academy of Public Administration, February 2006, 11, http://www.napawash.org/wp-content/uploads/2006/06-04.pdf. 5 “Unemployment, youth total (% of total labor force ages 15-24) (modeled ILO estimate),” World Bank, 30 November 2015, http://data.worldbank.org/indicator/SL.UEM.1524.ZS. 6 “Income share held by the highest 10%,” World Bank, 28 November 2015, http://data.worldbank.org/indicator/SI.DST.10TH.10. 7 “Income share held by the lowest 10%,” World Bank, 28 November 2015, http://data.worldbank.org/indicator/SI.DST.FRST.10. 8 World Bank, Social Resilience and State Fragility in Haiti (Report No. 36069–HT), 27 April 2006, 19-20, http://siteresources.worldbank.org/SOCIALANALYSIS/1104894-1115795935771/20938696/Haiti_CSA.pdf. 9 Ibid, 21. 10 “Personal remittances, received (current US$),” World Bank, 25 November 2015, http://data.worldbank.org/indicator/BX.TRF.PWKR.CD.DT. 11 “Personal remittances, received (% of GDP), World Bank, 25 November 2015, http://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS. 12 “Emigration rate of tertiary educated (% of total tertiary educated population), World Bank, 25 November 2015, http://data.worldbank.org/indicator/SM.EMI.TERT.ZS. 13 “Trade (% of GDP), World Bank, 25 November 2015, http://data.worldbank.org/indicator/NE.TRD.GNFS.ZS. 14 “Tariff rate, applied, simple mean, all products (%),” World Bank, 25 November 2015, http://data.worldbank.org/indicator/TM.TAX.MRCH.SM.AR.ZS.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2009 2010 2011 2012 2013

OD

A, c

urre

nt p

rice

s USD

m

illio

ns

Year

USEUCanadaIADBWB

17

15 Yasmine Shamsie, “Haiti’s Post earthquake Transformation: What of Agriculture and Rural Development?” Latin American Politics and Society 54, no. 2 (2012): 135-136. 16 World Bank, Social Resilience and State Fragility in Haiti (Report No. 36069–HT), 39. 17 Ibid, 40. 18 “Freedom in the World: Haiti,” Freedom House, 21 November 2015, https://freedomhouse.org/report/freedom-world/2014/haiti. 19 “Election Guide: Republic of Haiti,” International Foundation for Electoral Systems, 25 November 2015, http://www.electionguide.org/countries/id/94/. 20 “Fact Sheet: USAID Elections Support, 2012-2017,” United States Agency for International Development, August 2015, https://www.usaid.gov/sites/default/files/documents/1862/Elections%20fact%20sheet%20FINAL%202015.08.07.pdf. 21 Alternative Choice et al, “Prison Conditions and Pre-Trial Detention in Haiti” (paper submitted, 112th Session of the United Nations Human Rights Committee, Geneva, October 8-9, 2014), 1, http://tbinternet.ohchr.org/Treaties/CCPR/Shared%20Documents/HTI/INT_CCPR_CSS_HTI_18247_E.pdf. 22 World Bank, Human Development Report 2014, (New York: UN Development Programme, 2014), 159-163, http://hdr.undp.org/sites/default/files/hdr14-report-en-1.pdf.. 23 “Four Things You Need to Know about Education in Haiti,” World Bank, 12 March 2015, http://www.worldbank.org/en/news/feature/2015/03/12/four-things-you-need-to-know-about-education-in-haiti. 24 World Bank, Human Development Report 2014, 159-163. 25 “World DataBank: World Development Indicators,” World Bank, 28 November 2015, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators. 26 “Haiti: Global Health,” United States Agency for International Development, 26 August 2015, https://www.usaid.gov/haiti/global-health. 27 “Query Wizard for International Development Statistics,” Organization for Economic Cooperation and Development, 24 September 2015, https://stats.oecd.org/qwids/. 28 “Net ODA Received (% of GNI),” World Bank, 15 November 2015, http://data.worldbank.org/indicator/DT.ODA.ODAT.GN.ZS. 29 Carol Adelman, “Haiti: Testing the Limits of Government Aid and Philanthropy,” Brown Journal of World Affairs 18, no. 2 (2011): 92. 30 Terry Buss and Adam Gardner, “Why Foreign Aid to Haiti Failed,” 20-21. 31 Michael Hall, Historical Dictionary of Haiti (London: Scarecrow Press, 2012), 120. 32 “Acierie d’Haiti,” Gilbert Bigio Group, 16 November 2015, http://gbgroup.com/our-businesses/construction/acierie-dhaiti/. 33 Michael Hall, Historical Dictionary of Haiti, 47. 34 “Ease of Doing Business in Haiti,” World Bank, 30 November 2015, http://www.doingbusiness.org/data/exploreeconomies/haiti/. 35 World Bank, Haiti: Public Expenditure Management and Financial Accountability Review (Washington, DC: World Bank, 2008), 7, http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/07/10/000333037_20080710023439/Rendered/PDF/446510PUB0HT0P101Official0Use0Only1.pdf 36 “GDP, PPP (constant 2011 international $),” World Bank, 24 September 2015, http://data.worldbank.org/indicator/ny.gdp.mktp.pp.kd. 37 “GDP per capita, PPP (constant 2011 international $).” World Bank, 24 September 2015, http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD. 38 World Bank, Human Development Report 2014 (New York: UN Development Programme, 2014), 159-163, http://hdr.undp.org/sites/default/files/hdr14-report-en-1.pdf. 39 Daniel Kaufmann and Aart Kraay, “World Governance Indicators: Haiti 1996-2014,” World Bank, 13 October 2015, http://info.worldbank.org/governance/wgi/c100.pdf. 40 Ibid. 41 Ibid.

18

42 World Bank, Human Development Report 2014, 168-171. 43 “Population ages 0-14 (% of total),” World Bank, 9 December 2015, http://data.worldbank.org/indicator/SP.POP.0014.TO.ZS. “Population ages 15-64 (% of total),” World Bank, 9 December 2015, http://data.worldbank.org/indicator/SP.POP.1564.TO.ZS. “Population ages 65 and above (% of total),” World Bank, 9 December 2015, http://data.worldbank.org/indicator/SP.POP.65UP.TO.ZS. 44 “Haiti 2015,” Population Pyramid, 9 December 2015, http://populationpyramid.net/haiti/2015/. 45 “Query Wizard for International Development Statistics,” Organization for Economic Cooperation and Development, 24 September 2015, https://stats.oecd.org/qwids/. 46 Ibid. 47 “Net ODA Received (% of GNI),” World Bank, 15 November 2015, http://data.worldbank.org/indicator/DT.ODA.ODAT.GN.ZS. 48 “Dashboard,” AidData, 21 November 2015, http://aiddata.org/dashboard.