For much of its history, Haiti has been guided by the forces of poverty and corruption. This has manifested itself most recently in the ongoing fuel crisis that began in 2018.
With large oil reserves, Venezuela led an oil alliance in the Caribbean known as PetroCaribe. This program provided fuel to Caribbean countries at a low cost in exchange for political support. More than that though, Venezuela provided some of those savings through long-term loans that could contribute to developmental projects. Haiti took advantage of this opportunity for over a decade. However, in 2017, Venezuela entered its own economic crisis, and oil production crashed. Because of this, Caribbean countries could no longer reap the benefits of the cheap fuel or the developmental loans.
Also, the Haitian government implemented additional subsidies on fuel. Here is why. With over half the population below the national poverty line, people already struggle with paying for the basics, and an unstable currency, inflation, and price instability only exacerbate the situation. One way the Haitian government has sought to lighten the financial burdens of the population is by implementing subsidies. Implementing subsidies means the government agrees to pay a portion of the cost for a product so that the people have to pay a smaller amount. However, this has consequences, as a decent amount of the national budget must go toward bearing these costs instead of toward infrastructure, education, health, or institutions, which are all vital components for economic stability and growth.
So, the drop in financing from Venezuela as well as the negative impact of the subsidies led the International Monetary Fund to suggest the elimination of fuel subsidies. This would allow the Haitian government to preserve finances that could then contribute to development.
However, the elimination of subsidies was met with violent opposition. On July 6, 2018 when President Jovenel Moïse announced the total elimination of fuel subsidies, which would push the cost of one gallon of gas over $12 USD, violent demonstrations and protests erupted. The people could barely afford the cost of gas with the fuel subsidies, so even if the government did use these funds for economic development programs, it would be at a great cost to the poverty-stricken nation. However, with Haiti’s history of corruption, the people did not trust the government to use the funds they would save for the developmental programs. The result, then, was a week of protesting, demonstrations, and rioting.
The people wanted the government to take action, and they got their wish. The following Saturday, the decision was reversed so that the subsidies would stay in place. However, the International Monetary Fund still believes the subsidies need to be removed, but they have advised the Haitian government to do so much more gradually.
Unfortunately, 2018 did not end without further uproar. The tension in Haiti continued to erode in the end of the year with more protests in October over a corruption scandal involving embezzlement by two top government officials. Their firings came just after a report was issued that revealed many other government officials and two previous prime ministers from previous administrations had misused the long-term loans from PetroCaribe. The embezzlement amounted to over $2 billion. Protests again erupted when the people realized President Moïse, who was elected largely due to his anti-corruption platform, was only speaking out against the corruption without charging the accused. Wanting justice and believing their president was not giving it to them, they began calling for President Moise’s resignation.
In 2018, the motto became “Where is the PetroCaribe money?”, and as the nation turned the corner into 2019, frustration did not cease. Though protests sparked in February and March of 2019, the civil unrest has calmed for the time being. However, no significant improvements have been made to reconcile the people’s demands, meaning lasting peace is no guarantee.
The major problem from a standpoint of Political Economics is that economic stability is impossible without political stability. If President Moïse is overthrown, it could prevent or even worsen the prospects for economic development. Though if he remains, which at the moment it seems will be the case, the people fear corruption and unrest will persist. Economically, the end of cheap fuel has had other consequences, as in compensating for higher fuel prices, there has been a severe reduction in power. Most now struggle to get more than three hours of electricity a day, contributing to various struggles, including an increase in crime after dark. Not to mention, with gas stations largely running empty, it is becoming more difficult to travel, meaning many cannot get to work, get food, or take children to school. As such, the fuel crisis is pushing the already struggling economy closer and closer to recession.
To combat this, the World Bank approved a plan on May 16 to enhance economic development through a $162 million project seeking to improve education, health, and disaster risk management.
Please join us in praying for the leaders of this nation and for our churches, that they may spread the name of Jesus Christ in a hurting country!
Harkness, E. (2019) ‘Economic Development in Haiti’, ECO 442: Economic Development. Taylor University. Unpublished essay.