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#1097: Privatization projects stall in Haiti (fwd)


Published Tuesday, November 23, 1999, in the Miami Herald 
 Privatization projects stall in Haiti___ BY DON BOHNING 

 PORT-AU-PRINCE -- An ongoing effort, backed by international financial
 agencies, to privatize Haiti's major state-owned enterprises has
apparently stalled amid the country's political turmoil and upcoming
elections. A timetable submitted to the World Bank in May by Prime
Minister Jacques Edouard Alexis called for bids to be requested in
mid-June for the telephone company, in early August for the airport and
in September for the seaport. The winners were to have been selected for
all three by mid-November. But bids have not even been requested,
according to foreign officials, although all preparatory work, including
technical analyses by contracted outside firms, has long been completed.
 In a letter to Alexis dated Aug. 31, a copy of which was obtained by
The Herald, Orsalia Kalantzopoulos, director of the World Bank's
Caribbean Country Management Unit, essentially asked: What's going on?
 She noted that Alexis, in a May 21, 1999, letter, ``had clearly
indicated the different stages to follow in order to bring the program
of modernization of the public enterprises to completion that the
government has been pursuing since 1995 with the support of the World
Bank and other investors. ``In this correspondence you proposed a
calendar of how to put these in effect with detailed information and
different actions to follow with the dates of the different stages,''
Kalantzopoulos pointed out. ``The calendar runs to the end of March
2000. We would like you to inform us of the actual state of this
calendar and the measures that your government is taking to complete the
indicated steps in order to put in effect this program which is very
 important economically for your country,'' added the letter.
 The question was again discussed with Haitian representatives in
October during the annual World Bank/International Monetary Fund meeting
in Washington, according to Bank officials. As of last week, however,
they said Haiti had not yet responded to the letter. The suspicion among
foreign diplomats is that the failure to carry out the privatization --
or modernization as it is known in Haiti -- of the three enterprises is
 related to parliamentary and local elections scheduled for March 19.
 While not directly involved in the process, Haiti Foreign Minister
Fritz Longchamp acknowledged as much in a Nov. 11 interview. He said he
did not know the details but that there had been a meeting on the
 issue earlier that week and ``the government does understand what's
going on.. . . ``The very initiative of privatization was taken way back
in 1996 by this president [Rene Preval] because he has always said he
believes it is in the best interest of Haiti, and especially the
consumers, to have those enterprises in the hands of the private sector
as opposed to the government,'' Longchamp said. ``But there again we
have the reality of our political situation, and the very fact
 that we don't have a parliament, that we don't have a political
consensus on this issue, has hampered the ability of the government to
carry it out.'' Privatization has been an ongoing source of political
and social controversy, opposed by the trade unions and influential
former President Jean-Bertrand Aristide. Preval, who took office in
1996, recommitted Haiti to the privatization efforts as part of the
country's economic reform program, but his government is apparently
 unwilling to confront either Aristide or the unions on the issue before
the March elections. With a combined payroll of more than 7,500, the
seaport and the telephone company have long been traditional sources of
political patronage. The concern among foreign officials is that if the
bids are not called for and contracts let within the next few months,
new technical analyses will be required and there may be no
international funding to finance them. And without the improved
efficiency that privatization would provide in the major state
enterprises, officials say, it will be increasingly difficult for Haiti
to attract any significant foreign investment.