Thursday, July 19, 2018

Protests over fuel prices in Haiti derail the government’s reforms - A gamble gone wrong

Protests over fuel prices in Haiti derail the government's reforms - A gamble gone wrong

Protests over fuel prices in Haiti derail the government's reforms

Jovenel Moïse faces the same obstacles that have bedevilled his predecessors

Jovenel Moïse faces the same obstacles that have bedevilled his predecessors

OF ALL the bets placed on the football World Cup, the biggest gamble took place in the Caribbean. Lacking a competitive side, many football-mad Haitians have adopted Brazil as their team—some because they share African roots with Pelé, Brazil's greatest player ever, others because Brazil has given Haiti financial and military aid. With the public glued to their screens watching the seleção on July 6th, the Haitian government discreetly raised fuel prices by around 40%.

A Brazilian victory might have left Haitians too ecstatic to protest. Instead, Brazil fell to Belgium. Soon after, Port-au-Prince burst into flames. Protesters burned cars, looted shops and closed much of the country with roadblocks. Jack Guy Lafontant, the prime minister, quickly reversed the policy, but could not save his job; he resigned ahead of a no-confidence vote on July 14th. Early estimates put the damage at some 2% of GDP. Three people have died.

Latin American nations far sturdier than Haiti have been brought to a standstill by protests over fuel prices. But in the poorest and most unequal country in the Americas, the unrest is particularly acute. Haiti is still rebuilding itself after an earthquake in 2010 that killed perhaps 200,000 people. And as the flow of aid from foreign donors has ebbed, so too have funds from Venezuela, which sent Haiti $300m a year until it plunged into an economic crisis.

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Jovenel Moïse, the president, took office last year shortly after another disaster, Hurricane Matthew. Mr Moïse grew up in Haiti's poorest region, and ran a banana plantation until 2015. The presidency is his first elected office. Upon coming to power, he combined unrealistic promises, such as providing uninterrupted electricity to every household, with "shovel-ready" initiatives like building roads and canals in the countryside. But the endemic weakness of the state may prevent him from achieving his goals great and small.

The wealth of Haitians

One of Mr Moïse's first moves was to strike a deal with the IMF, which required Haiti to wean itself off the fuel subsidies that consume over a tenth of public spending. In 2011 the government stopped pegging domestic prices to global oil markets, leaving it to foot the bill for any rising costs; crude has appreciated by 50% during the past year. Some 85% of the subsidies go to the richest 10% of Haitians, who tend to own cars. Wilson Laleau, the president's chief of staff, says that 6,000 barrels a day are smuggled to the neighbouring Dominican Republic. Ditching subsidies would free $350m a year badly needed elsewhere: Haiti spends just 5% of GDP on health, education and social protection. Honduras and Nicaragua, the two poorest countries in mainland Latin America, spend 15% and 10% respectively.

Helping the poor by abolishing a practice that benefits the rich should be an easy sell. But by its own admission, the government botched its pitch. It announced the price increase but did not mention its countervailing policies, such as compensation for the poor and working class, and spending the savings on social services.

Even a better-handled rollout might not have prevented lawlessness, given the weakness of Haiti's security forces. UN peacekeepers, who had patrolled the country since 2004, withdrew last October. The foreign troops were not popular. Some forced children into sex in exchange for food and medicine; others brought cholera, causing an epidemic that killed 10,000 people. Nonetheless, they kept the peace and buoyed the economy by filling cafés and restaurants. In their absence, it fell to the underpaid police force to impose order (Haiti's army was abolished in 1995). Its inability to control the riot raises doubts about how it will handle future unrest.

Some government officials wonder whether anyone organised the protests—possibly fuel smugglers, political rivals or powerful families that benefit from the subsidies. Many of the roadblocks and stacks of burning tyres were in place within minutes of the end of the football match. Even if the uprising was spontaneous, however, it makes clear that the president will struggle to implement his agenda.

Mr Moïse's "Shaved-Head Party"—so called because both he and his predecessor sport the party's look—was founded only in 2012, and has built little political infrastructure. Before trying to restore the subsidy cuts, savings from which are already counted in the budget, Mr Moïse will need to win approval for a new prime minister—Haiti's 21st since 1988.

And the government is too poor for the president to buy popular support. Just 70,000 tax returns are filed each year in a country of 11m people. Foreign donors often prefer to supply their aid through NGOs, rather than see a portion lost to corruption. This prevents the state from strengthening its capacities.

Without money or patronage, Mr Moïse must rely on personal popularity. Although he won the election of 2016 easily, turnout was around 20%. He has sought to drum up support by holding rallies around the country under the "Caravan for Change" banner, promoting the government's good works. Unfortunately, the fuel-price fiasco has set back these efforts.

Near the presidential palace, three men chat on a park bench. Patrice Ciresmond, a 48-year-old who cannot find work, sat in the same spot to watch the ill-fated World Cup game on a government-provided screen. "They were waiting for when we were about to be happy because of Brazil, and then they put the knife in our belly," he says, as his friends nod along. "They don't want us to laugh even just once."

This article appeared in the The Americas section of the print edition under the headline "A gamble gone wrong"

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