a1382: THE ECONOMIST INTELLIGENCE UNIT Haiti politics: New primeminister, old problems (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Stanley Lucas <slucas@iri.org>

THE ECONOMIST INTELLIGENCE UNIT Haiti politics: New prime minister, old problems

EIU ViewsWire 18 Mar 2002
COUNTRY BRIEFING

Haiti on March 15th inaugurated a new prime minister, Yvon Neptune, former Senate head and an ally of the president, Jean-Bertrand Aristide. But the opposition has again refused to co-operate with the government, and Mr Neptune's appointment will do nothing to relieve a two-year-old political crisis. Consequently, the climate of instability, marked by corruption, increasing violence and economic weakness, will persist.

Mr Neptune has replaced the previous prime minister (and Mr Aristide's childhood friend), Jean-Marie Cherestal, who stepped down on January 21st amid allegations of official malfeasance and incompetence. Mr Cherestal had also come under attack from the more radical elements within the ruling Fanmi Lavalas (FL) party, which are believed to be responsible for a rise in political violence and human-rights abuses in the country.

Mr Aristide and his FL, which also dominates the parliament, have been at loggerheads with the opposition Convergence Democratique, a coalition of 15 parties, since the disputed legislative elections of March 2000. Convergence charged that irregularities led to several parliamentary seats going to the FL rather than to opposition candidates. It subsequently boycotted the presidential elections held in November of that year, which Mr Aristide won handily, and has called for the president's resignation ever since.

Despite repeated efforts at mediation by the Organisation of American State and the Caribbean Community (Caricom), the two sides have been unable to reach any agreement. Convergence has demanded that a transitional government be set up, a solution that the government will never accept and the international community does not support.

The intractable crisis has contributed to Haiti's desperate economic situation, as it is holding up at least US$500m in promised foreign aid that was suspended after the legislative row erupted. International monitors concurred with the opposition that the parliamentary vote count had been manipulated, and demanded that the government implement a series of political reforms.

Early in February the leaders of the 14-member Caricom said that the Aristide administration had met several of the conditions demanded by potential donors and creditors, including restructuring of the body responsible for monitoring elections. The administration has also agreed to new balloting for the disputed legislative seats. Caricom has therefore asked for release of some of the frozen assistance to ease social conditions in the country of 7.8m people, the poorest in the Western Hemisphere. This has not yet happened.

Meanwhile, the political paralysis continues and violence has increased. The latter peeked last December when an attempted coup against the government led to multiple deaths. (An earlier coup attempt took place in July.) Government supporters also attacked the offices of Convergence, and incidents of kidnappings and other acts by armed gangs -- alleged to have links to the FL party -- are on the rise. These events have further heightened the air of lawlessness in the country.

There is no sign of a resolution to the political deadlock any time soon. Convergence is likely to continue to challenge the president's, and the prime minister's, authority, undermining governability and stability. The effectiveness of the legislature may also be undermined by internal strains and often-weak respect for the institutions of democracy on the part of political figures. Moreover, the likelihood of additional incidents of armed insurrection has increased and with it the risk of political turmoil. This would make chances still more remote that countries such as the US would back the Aristide government or support a release of foreign aid.

The economy, too, has continued to stagnate and social conditions to worsen. Two-thirds of Haiti's inhabitants live in dire poverty, half of all adults are illiterate, and less than one-quarter rural children attend primary school. Infant and maternal mortality rates are among the worst in the world, and the prevalence of HIV-AIDS infection is extremely high. The government has failed to pass a budget in six years. Instead, observers believe it is financing itself with pay-offs from drug-dealers who use the country to trans-ship an estimated 10-15% of the cocaine that enters the US. There is little new private investment coming into the country.

Even if the political crisis abates, economic progress will be slow. Total government revenue is below 10% of Haiti's GDP, and with limited official development assistance and no access to international private capital markets, no possibility exists for fiscal stimulus. Nor does the government have the resources to fulfil its election promises to bring relief through nationwide programmes to people living in extreme poverty.

Price and exchange-rate stability will continue to be defended by the monetary authorities, guided by the IMF. But if donors remain unwilling to disburse aid until late 2002, GDP will contract by an estimated 1.5% in the 2001-02 fiscal year, before growing by 3% in 2002-03, according to the Economist Intelligence Unit. As for the external accounts, remittances and grants will continue to cover most of the deficits on trade, services and income flows. But the overall current-account deficit, which is expected to reach US$585.8m this year and US$629.8m in 2003, will have to be financed with official lending.

Haiti's political, social and economic prospects remain bleak even under the best of circumstances. The new prime minister has told the parliament that "my government intends to work with the opposition, other key sectors and the international community to help the country find a solution to the political crisis. My government will be very open to rebuild unity among the Haitian people." Even if he succeeds, it will take much more, including a stronger commitment from the Aristide government to democratic principles, as well as larger donations from the international community, to help Haiti pull itself out of its current morass.