Did Reparations to France Hamper Haitian Economic Growth?

The year 1804 saw the birth of Haiti, it being the first successful revolt by slaves, resulting in its liberation from France. Nevertheless, in 1825 this same island republic had no other option but to offer massive reparations to France for things like property loss which included human beings. Due to this, many observers continue to argue that repayment demands remain the key reason why Haiti cannot progress economically.

While there is no doubt that the Paris Debt had taken its toll on this nation from its onset, some scholars claim that it was not what hindered economic progress. This paper examines the role of reparations with other significant contributors including political instability, corruption and foreign manipulation in Haiti’s underdevelopment process.

The Reparations to France: A Minor Economic Factor?

It is common knowledge that Haiti’s undertaking of paying back France through what came to be known as Indemnity greatly strained its financial muscles. In 1825, Haitian President Jean-Pierre Boyer promised to pay France 150 million francs (later reduced to only 90 million) in order for France to recognize their independence and shun attacking them militarily. In order to finance these payments, loans were obtained from French banks leading to an obligation that could only be paid by subsequent generations. By some estimates the entire sum together with interests could be equivalent today of about $560 million.

Nonetheless, even though there existed a widely accepted narrative which said that reparation made Haiti’s economy dysfunctional, these funds represented less than 5% of Haiti’s GDP in gross terms. Way back, Haiti has been given more than $20 billion in reconstruction aid which is significantly greater than what was paid as reparations in terms of the economy. As a result, while certain resources might have been lost owing to reparation; other factors have contributed more towards its long run underdevelopment.

Historical evidence shows that this was an isolated incident while modern Haiti has endured persistent hardship over many generations. The ongoing economic hardship in Haiti cannot solely be blamed on reparations, but a number of other aspects (Bouie & Hill, 2007).

This economic trajectory should also consider political instability, corruption and governance failures. Consider the following when evaluating the economic history of this nation.

Political Instability and Corruption: The Prime Causes of Underdevelopment

Throughout its history Haiti has suffered from widespread political instability and corruption. These two factors have been more detrimental to Haiti’s economic growth than repayment made to France. Haiti has gone through various periods of military rule, coups and political violence for the last two hundred years. In this context, national leaders have frequently used public funds not for economic development purposes but for their selfish interests considering that Haiti is one of the countries with weak governance structures.

Corruption has crippled the economy of Haiti since time immemorial. Political leaders in Haiti have throughout their reign embezzled foreign aid and public funds that were meant for social amenities like education and health facilities. A progressive private sector has been strangled by such endemic corruption leading to the discouragement of foreign direct investment as there are no rules governing these markets. During the years that the Duvalier ruled (1957–1986), François "Papa Doc" Duvalier himself also his son Jean-Claude “Baby Doc” siphoned off state treasury money into their bank accounts and misappropriated international assistance for themselves instead of using it judiciously for the country. In fact, other leaders have since emulated this pattern of governance that is kleptocratic thereby making it impossible for Haiti to develop a functioning economy as each time there is a chance of bringing this nation on its feet through proper economic planning it gets stolen away.

Moreover, due to political instability there has been less security thus discouraging both tourism and business investments in Haiti. Throughout the 19th and 20th centuries, Haiti has undergone numerous revolutions, coups and insurrections. Maintaining stable economic policies or long-term development plans has become difficult as these violent disruptions have interrupted the same. With every change in regime being accompanied by chaos characterized by disorderliness within the economic circle & reversal of policies because there always exists an absence of continuity as far as politics are concerned.

Besides, Haiti is a centre for drug trafficking routes. With non-existing structures and ineffective law enforcers Haiti turned into drug cartels’ paradise in the eighties and nineties. As a result, drug trafficking has led to repeated acts of violence and further entrenched corruption, with politicians and top officials becoming involved in vice incidents. Eventually, these factors combine to create an environment hostile for legitimate business thereby keeping part of the country’s population poor (Levenson, 200).

Is U.S occupation a period of stability and growth or destruction?

One of the only few signs of smooth transitions and economic growth ever seen in Haiti was following the American presence in the years 1915 through 1934. When Haitian President Vilbrun Guillaume Sam was assassinated, the United States stepped in to restore order as well as safeguarding interests of the Americans. . . . . They built roads, bridges, public buildings and raised crops like coffee and sugar cane to encourage export trade etc. as they experienced economic prosperity under American rule. This action can probably be seen as the greatest achievement since it brought violence on the country’s political scene to a halt and restored some normalcy.

However, this period proved an economic benefit to the country since several public infrastructures were constructed like roads, bridges among others which resulted in industrial growth. In addition, Americans promoted coffee and sugar production thereby increasing revenue generation through exports upwards. Most importantly still is the fact that during this time there were no more rampant political killings that characterized the rest of the era.

At the same time, there were some negative consequences as well. The invading power was widely unpopular among the elites and a majority of the populace in general, because it mainly supported a narrow political stratum while ignoring the wider population. After the American withdrawal, however, many of its reforms quickly collapsed. And the stability enjoyed during the occupation was merely temporary. Indeed, almost immediately after the Americans left, the country reverted back to dictatorship and political strife.

This explains why Haiti can create wealth provided it attains stability politically, as shown by the American occupation (Higgens, 184, 189). Nevertheless, unless deliberate effort is put into place to develop robust institutions and fight against corruption, these processes are only brief.

In conclusion, while paying France reparations constituted a major challenge for Haiti, it did not really bring about underdevelopment in that country. The more important determinants are political turmoil and graft, which have made it impossible for this nation to establish any strong, stable economic base. Personal gain had always been more important than anything else when it came to running the nation over these last two hundred years such that business corporations find no conducive environment here because there has been no priority on personal gains at the expense of national developments.

Politics are the reasons behind why Haiti has remained poor over the years, not just the compensation for slavery. We have tried to come out of this cocoon by having periods when we had stability in politics like during the US occupation but they have been rare as every now and then we slip into violence and dictatorship again.

Ultimately, the root cause of Haiti’s economic challenges lies in poor governance systems rather than external factors such as paying reparation. Cottard argues that it is mismanagement at a political level rather than the weight of reparation payments that accounts for Haiti’s economic stagnation, although the latter too is a part of the issue.