Aid Windfall Propels Sweeping Change in Haiti

THE people of Haiti have their best chance in more than a century to create a new country. But to accomplish this, they must overcome huge obstacles.

``It's the people of Haiti ... who will change the country's situation,'' says Dumy Simeon, an unemployed accountant in Haiti's capital.

Among the greatest challenges for Haiti:

* Revamping a tattered economy. Haitians are the poorest people in the Western Hemisphere. In 1990, average income was $440 a year - a figure that has fallen sharply since 1991 with the country under an international embargo.

* Developing the rural economy. More than two-thirds of Haitians live in the countryside, scratching a living from farms that are too small and eroded to feed the nation.

* Rebuilding institutions, especially the public school system. Haiti has a public sector so shriveled that most institutions do not work anymore: the police, the judiciary, the state-owned telephone company, and the schools.

These problems may seem too overwhelming to solve. But Haiti has two factors in its favor. Its first democratically elected President Jean-Bertrand Aristide has returned to tremendous popular support. And Haiti will receive international aid for road-building, jobs programs, and humanitarian assistance. This week, the Monitor examines this poor Caribbean nation's effort to launch a new beginning in three articles.

Haiti has spent 200 years going backward, economically. As a French colony, it thrived by exporting sugar to Europe. In the 1790s, its trade with France was more than double Britain's trade with all its colonial holdings combined. But uninspired and corrupt leaders, combined with decades of diplomatic and economic isolation, turned that powerhouse into a basket case.

Despite the country's deep-rooted problems, economists are upbeat about President Aristide's potential to reverse the decline.

``This is a historic change that has tremendous possibilities,'' says Bob Maguire, coordinator of the Hopkins-Georgetown Haiti Project, an interuniversity project funded by the Ford Foundation.

Short-term `cluster bomb'

Aristide's plan has two components. The first is massive short-term aid. United States Agency for International Development (USAID) and the World Bank are spearheading an effort to raise $555 million from the world community for aid to Haiti in the next year. Nearly half of that should be available within the next three to four months. The aid involves everything from programs to provide 50,000 short-term jobs to subsidies for fuel imports.

The main complaint from economists is that the aid package may be too massive, hurting the private sector more than it helps the nation.

``There's going to be a lot of pressure to cluster-bomb Haiti with dollars,'' Professor Maguire says. ``It's going to be a tough call for Haiti to absorb this money.''

The second part of Aristide's plan is long-term reconstruction. Though similar to Aristide's moves to aid the poor and streamline public institutions in his first seven months in office, the current program is more ambitious on two counts, economists say.

The first is its reach. ``There's a greater effort to reach out to broader sectors of society'' in the new program, says Mark Schneider, assistant administrator for Latin America and the Caribbean at USAID.

For example, the plan envisions some kind of transitional help to Haitian soldiers who soon will lose their jobs. At the same time, Aristide and his advisers are said to be contemplating some method of reimbursing the victims of human rights violations during the military's three-year rule.

The second difference is privatization of state-owned institutions, such as the telephone and water companies. Before the coup, Aristide presented a plan to economists and aid organizations in Paris in August, which included privatizing these institutions, widely acknowledged to be corrupt and inefficient. But that will be a tricky maneuver.

``That's only going to make the wealthy sectors of society wealthier,'' says Alex Dupuy, a sociology professor at Wesleyan University in Middletown, Conn. ``When they divest this public sector, I don't think the peasants will be buying them [the newly issued shares].'' Several economists see US and World Bank influence behind the privatization plan.

But Paul Latortue, an economist at the University of Puerto Rico and a part-time Aristide adviser, disagrees. ``The state structure has to be built almost from scratch,'' he says. ``There's the gamble it can be done more quickly, at lower cost,'' in the private sector. It is a risky plan because the methods for giving Haiti's poorest shares of these privatized companies are still experimental, he adds, but it's a gamble worth taking.

Opening up Haiti's trade

At the Paris conference, Aristide proposed cutting import tariffs - a free-trade move strongly supported by the US, the World Bank, and others. Such a program would make imports of products into Haiti cheaper but offer Haitian manufacturers and farmers less protection to compete against foreign competitors. The president is downplaying a proposal - controversial with the business class - from his original seven-month term that would have doubled the minimum wage in Haiti.

If the plan is successful, it should make the state work more for its citizens and dilute the monopoly power of Haiti's wealthiest families, economists say.

``I am not at all pessimistic despite the overwhelming job'' ahead, Mr. Latortue says. ``I think the Haitians are willing to do it.''

* Part 2 of this series, on Haiti's agriculture, will appear tomorrow.

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