Haiti's Historic Debt Load

Haitian General Toussaint L'Ouverture who led the Haitians to freedom from direct French rule.

When the slaves of Haiti won their independence from their French masters through war in 1804, Napoleon and his French government demanded that the ex-slaves pay reparations in the amount of 150 million francs in gold. That was an enormous sum, and even though it was reduced in 1830 to a mere 60 million francs, it still had the effect of bankrupting the fledgling nation and preventing economic development. Haiti finally paid off this debt plus interest in 1947, but in many important ways, it continues to pay a heavy price for this outrageous burden.

How much was 150 million francs in 1804 in comparison to a contemporary currency? Well, a back of the envelope calculation would be $1.1 trillion in today’s dollars. While that’s only about 13 percent of America’s GDP, that’s nearly one hundred and fifty-seven times Haiti’s 2008 GDP of $6.95 billion.

Given this awesome reparation burden, it’s no surprise that Haiti is the poorest nation in the Western hemisphere, and this doesn’t begin to consider the political, environmental, social, or even financing costs associated with this historic debt burden.

A 2009 Times of London article sums up this legacy well:

France gained the western third of the island of Hispaniola — the territory that is now Haiti — in 1697. It planted sugar and coffee, supported by an unprecedented increase in the importation of African slaves. Economically, the result was a success, but life as a slave was intolerable. Living conditions were squalid, disease was rife, and beatings and abuses were universal. The slaves’ life expectancy was 21 years. After a dramatic slave uprising that shook the western world, and 12 years of war, Haiti finally defeated Napoleon’s forces in 1804 and declared independence. But France demanded reparations: 150m francs, in gold.

For Haiti, this debt did not signify the beginning of freedom, but the end of hope. Even after it was reduced to 60m francs in the 1830s, it was still far more than the war-ravaged country could afford. Haiti was the only country in which the ex-slaves themselves were expected to pay a foreign government for their liberty. By 1900, it was spending 80% of its national budget on repayments. In order to manage the original reparations, further loans were taken out — mostly from the United States, Germany and France. Instead of developing its potential, this deformed state produced a parade of nefarious leaders, most of whom gave up the insurmountable task of trying to fix the country and looted it instead. In 1947, Haiti finally paid off the original reparations, plus interest. Doing so left it destitute, corrupt, disastrously lacking in investment and politically volatile. Haiti was trapped in a downward spiral, from which it is still impossible to escape. It remains hopelessly in debt to this day.

Annie Lowrey of Foreign Policy renews the call to cancel Haiti’s current debt, which is largely the consequence of this historic legacy.

Haiti, as a nation, has suffered violence, unrest, juntas, and natural disasters. One thing it need not suffer anymore, given the earthquake? Its debt obligations.

This September, Haiti qualified for the cancellation of $1.2 billion of its $1.9 billion in external debt. To ensure the recovery of the nation and the livelihoods of its 9 million citizens, the IDB and any other lenders should fully cancel any remaining debt obligations.