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Generational Dynamics Web Log for 12-Jul-2018
12-Jul-18 World View -- Haiti blames IMF for fuel price increases triggering riots

Web Log - July, 2018

12-Jul-18 World View -- Haiti blames IMF for fuel price increases triggering riots

Haiti people riot after announcement of fuel price rises during World Cup match

by John J. Xenakis

This morning's key headlines from

Haiti people riot after announcement of fuel price rises during World Cup match

People dump trash and raw sewage into canals that run through Port-au-Prince, Haiti. When it rains, the canals overflow and flood poor neighborhoods. (NPR)
People dump trash and raw sewage into canals that run through Port-au-Prince, Haiti. When it rains, the canals overflow and flood poor neighborhoods. (NPR)

On Friday, as Haitians were watching the World Cup game between Brazil and Belgium, Haiti's government announced the end of large subsidies on fuel prices, resulting in dramatic price increases -- 38% for gasoline, 47% for diesel fuel, and 51% for kerosene. The increases were blamed on the International Monetary Fund (IMF).

The price increases for fuel appeared to affect everyone. The gasoline prices affected those in the middle or upper classes who own automobiles, the diesel prices affected businesspeople who use diesel fuel for trucks and heavy equipment, and the kerosene price increases hit poor people especially hard, as they burn kerosene to light up their homes, lacking electricity.

Haiti was the poorest country in the world, even before the major earthquake the country suffered in 2010. There was a huge outpouring of international aid after the earthquake, including a large fund organized by former president Bill Clinton, but none of the people seem to have benefited, and almost all the money was apparently lost in corruption.

The government had apparently hoped that by announcing the price increases during Friday's World Cup game, nobody would notice. That turned out to be a major miscalculation. Most Haitians fervently supported Brazil over Belgium in Friday's World Cup game, and were shocked when the game ended in a loss for Brazil. The rioting began five minutes after the game ended. Burning tires blocked major routes in Haiti's capital city Port-au-Prince, and sporadic gunfire could be heard around the city. Store and car windows in the affluent sections of Port-au-Prince were reportedly smashed. Affluent hotels were also targeted. Three people were killed on Friday.

As the rioting became increasingly violent, Haiti's president Jovenel Moïse, accompanied by his wife Martine, appeared in a televised address to the nation on Saturday evening:

"You sent me the message and I got it. I corrected what needed to be corrected.... I asked the Government to reconsider the decision to withdraw subsidies on the prices of petroleum products. The Prime Minister did it. The price of fuel remains what it was before, throughout the national territory. There is no longer an increase in gas prices. ... Now I ask you to stay calm and go home. ... I know that it is to me that you gave the power, but I cannot run alone. I have to have a lot of people around me before making a decision."

The protests didn't end. On Monday, workers went on strike and shut the capital down. Many analysts have stated that the continuing riots are being caused by massive government corruption. According to one NGO analyst:

"Having had over ten deployments to Haiti following the earthquake in 2010, including during their elections, I do not think that the increase in fuel prices is the root cause of this crisis.

They know that sacrifices have to be made to improve their economy, and they have made them in the past. However, after suffering for so long, the Haitian people hate being tricked

Their political candidates promised to address mismanagement and corruption if they were elected. The people expected improvements in government efficiency, and arrests of those accused of corruption, before being targeted for austerity.

However, to have austerity forced on them, without the promised efficiency and arrests, appeared to be too much for the people to bear from a government that promised to be different."

The United States has warned Americans living in Haiti to shelter in place in their homes, to avoid the violence. A marine security detachment of 13 marines has arrived in Haiti to provide security at the US embassy there.

Both the United States and Canada have policies to deport Haitians who fled from the violence following the 2010 earthquake. Activists in Canada is demanding that because of the current violence, deportations back to Haiti should immediately end, and Haiti should be put back on the government list of countries to which migrants may not be returned. AFP (7-July) and Barbados Today and and Canadian Broadcasting

International Monetary Fund blamed for austerity triggering riots

The fuel price increases announced on Friday were caused by a termination of subsidies as demanded by the International Monetary Fund (IMF) in return for $96 million in loans and grants from the IMF and the World Bank.

When the price increases were announced, Prime Minister Guy Lafontant said, “I ask for your patience because our administration has a vision, a clear program." He defended the price increases because the subsidies make Haiti's fuel prices the lowest in Latin America among the non-petroleum producing nations. Furthermore he claimed that many people regularly crossed the border from neighboring Dominican Republic, where oil prices are 43% higher, to take advantage of the subsidized prices in Haiti, which meant that the subsidies were supporting both Haiti and the Dominican Republic.

The austerity demands were in an agreement that Haiti signed with the IMF in February. The agreement defines a "Staff-Monitored Program" (SMP), where IMF closely monitors government activities in Haiti in return from the loans and grants. The agreement requires that it is necessary "to eliminate excessive subsidies, including on retail fuel." According to the agreement:

"“Under the SMP, fiscal policy will focus on mobilizing revenues and rationalizing current expenditure, to make room for critical public investment in infrastructure, health, education and social services. This will include measures to improve tax collection and efficiency, and to eliminate excessive subsidies, including on retail fuel. Other reforms will focus on stemming the losses of the public electricity company (EDH), which in recent years have amounted to a sizeable portion of the public deficit, by improving the efficiency of billing, and by reforming contracting practices. Fiscal reforms also aim to increase the transparency of public accounts. These reforms are to be accompanied by a substantial package of mitigating measures to protect the most vulnerable members of society. ...

IMF staff will work closely with the authorities to monitor progress in the implementation of their economic program.."

By Wednesday, relative calm had been restored in Haiti. The president and prime minister are under pressure to resign, and it's not known how the IMF will react, now that the subsidies have been restored. Atlanta Black Star and IMF (27-Feb-2018) and Miami Herald

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(Comments: For reader comments, questions and discussion, see the 12-Jul-18 World View -- Haiti blames IMF for fuel price increases triggering riots thread of the Generational Dynamics forum. Comments may be posted anonymously.) (12-Jul-2018) Permanent Link
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