Haiti Relief and Reconstruction Watch

Petrocaribe Protests: What You Need to Know Before October 17

5 days 13 hours ago

More than two months have passed since an innocuous tweet went viral and a social media campaign targeting government corruption in Haiti began. Using the hashtags #PetrocaribeChallenge and #KotKobPetwoKaribea (“where is the Petrocaribe money?”), the campaign has shifted the paradigm in Haiti and forced a reckoning over alleged fraud and mismanagement in the $2 billion Venezuela-financed Petrocaribe program. This anticorruption movement, which has brought together disparate groups ― both formal and informal ― from across the political and economic landscape of the country, now faces a critical moment.

A Country on Edge

Tomorrow, October 17, is expected to be the largest demonstration yet; a prospect that has the entire country on edge. The US Embassy has issued a security warning requiring employees to “shelter in place.” President Jovenel Moïse, who, despite being implicated in the wrongdoing, has pledged to support an investigation, visited police stations across the capital region over the weekend in anticipation of the protest. “In the camp of power, the panic is palpable,” warned Mario Andresol, the former chief of police. Some 1,500 officers will be deployed throughout the capital. Businesses have already begun boarding up windows. Reports of money being distributed to keep people away from the protests have circulated widely, as have mysterious audio and video clips warning of a bloodbath. “As October 17 approaches, the authorities are doing all the ‘bagay’ [things] to defeat the announced insurrection,” Andresol said.

By focusing on the possibility of violence, the government is attempting to intimidate the population into not participating, while laying the groundwork for blaming opposition political actors if things do go south. Last week, Schiller Louidor, an outspoken government critic, was hauled before a court to answer questions after using the term “Petro-dechoukay,” a reference to dechoukaj (literally “the uprooting,” but more easily translated as rioting). However, what likely scares the government more than the possibility of violence is a massive and largely peaceful demonstration; a demonstration that the government is not able to demonize or use to deflect attention from itself and its lack of response to calls for greater accountability.

The reality is that this movement appears to have tapped into a deep reservoir of political frustration, and not just among those who have taken the streets for years in opposition to the ruling party. With inflation in double digits, the local currency continuing to depreciate, and the cost of living rising each week, the country’s economic malaise has reached the middle and even upper classes of society. If those calling for an investigation into the Petrocaribe accounts are to be successful, they will need the support of a broad-based coalition. Nevertheless, there is also a palpable fear among those tepidly supportive of this movement and tomorrow’s protests who are also deeply distrustful of the popular organizations that have been leading the opposition in the streets. There will be a lot riding on tomorrow’s protest for the future of this burgeoning anticorruption campaign, as well as for a government attempting to stave it off.

Why Petrocaribe?

Haiti formally joined the Petrocaribe initiative in 2007. Under the program, Haiti ― as well as more than a dozen other Caribbean and Central American nations ― received discounted oil, paying a portion of the bill up-front and converting the remainder into a long-term concessional loan to be used for government investments and social spending.

In contrast to traditional donor support that generally bypasses the government entirely, Petrocaribe serves as direct support to the government. As the price of oil rose throughout the early 2010s, the Petrocaribe program filled government coffers. From 2012 to 2015, Haiti spent an average of $270 million a year through the initiative, a critical source of financing for a government sorely in need of additional revenue. Haiti has spent some $1.8 billion of Petrocaribe-related funds since joining.

However, Petrocaribe has been plagued by a lack of transparency. While some have warned for years of the dangers posed by such expenditures without proper oversight, it was elevated to the forefront of Haiti’s political consciousness by an unlikely source: Senator Youri Latortue, whom a former US Ambassador once described as the “poster-boy for political corruption in Haiti.” Though few trusted Latortue’s motives to be anything other than craven politics, his efforts in many ways laid the groundwork for today’s anticorruption movement.

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Own Goal: Fuel Price Increase Generates Crisis in Haiti

3 months 1 week ago

It was 2:15 on Friday afternoon, July 6th, when I got the first WhatsApp message. The Haitian government was going to announce that fuel prices would increase the following day by up to 50 percent. It was also somewhere around the 13th minute of the World Cup quarterfinal match between Belgium and Brazil, the national team adopted by most Haitian soccer fans. Eyes across the country were glued to the TV when the official announcement came late in the game’s second half. Minutes later, Brazil had lost the match. And soon after, thousands of Haitians were in the streets, though not because of the game’s disappointing result.

Roadblocks and burning tires went up in smoke throughout the capital, and soon demonstrations had broken out across the country. By Saturday morning the situation had worsened. International airlines canceled flights in and out of Haiti. Parking lots at many private businesses were turned into car cemeteries. Digicel, the leading cell provider in Haiti, said its fiber optic cables were destroyed, blocking international phone calls, internet usage and other services. Helicopters could be seen evacuating individuals from their rooftops. At least three people were killed.

Less than 24 hours after the initial announcement, the government was forced to cancel the price increases. But the aftershocks of that initial decision have continued to reverberate.

The heads of both chambers of parliament (erstwhile allies of the president) as well as the most powerful private business organization have since called for Prime Minister Jack Guy Lafontant, a doctor and political novice, to resign. The Jovenel Moise administration is now facing its most significant test yet. But how the government found itself backed into this corner is about far more than fuel prices, and reveals as much about the failures of the international community as it does those of Haiti.

The price increase was not a surprise. In late 2017, faced with an increasing budget deficit, and a lack of donor funds, the government sought the assistance of the International Monetary Fund (IMF). Before the government could sign a financing deal with the IMF however, it first had to complete a 6-month reform program. If that program was successful, the government could then sign a long-term deal with the IMF, and budget support from other donors would begin to flow again.

On June 20, the IMF issued a statement welcoming “the government's intention to eliminate fuel price subsidies,” a key step in completing the program. The IMF also noted that it “agreed on the importance of implementing key social measures to mitigate the impact of the subsidy reform on the most vulnerable segments of the population.”

According to World Bank research, 90 percent of the benefits from the subsidy go toward the wealthiest segments of the population. But, in a country with 60 percent youth unemployment, a majority of citizens living on less than $2.40 a day, and stubborn double-digit inflation, any increase in the cost of living can be catastrophic. And to make matters worse, kerosene, the fuel that the poor most rely on, was to see the greatest increase.

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Haiti Relief and Reconstruction Watch
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