Political Risk Analysis: Haiti

Brady LorekDr. James Thoma

February, 27, 2012SB 450Q

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INTRODUCTION 3,4Devastating 2010 4

COUNTRY’S SPORT STRUCTURE 5,6Popular Sports 6University of Mount Union & Haiti 6,7Indigenous Sports & Games 7

POLITICAL RISK ANALYSIS 8Regime Change and Political Turmoil 8,9Government Restrictions 9

Tariffs 9,10Currency Transfer 11Import Licensing 11,12Media/Social Media 12

Economic Policies 12,13

CONCLUSION 13

REFERENCES 14

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INTRODUCTION

The Republic of Haiti is a Caribbean-based country, located on the island of Hispaniola

that it cohabits with the Dominican Republic. Haiti has a population of 9,089,085 with its three

largest cities being Port au Prince (capital), Carrefour, and Delmas (807,301/ 541,511/ 425,501

respectively). It has a very tropical climate, but

semiarid in the mountain regions (“Country

watch,” 2012).

French is one of the two official

languages of Haiti, but is only spoken by 10

percent of the people. The main language

spoken by all Haitians is Creole. Creole is

French-based but is considered a “new world hybrid” language. English is increasing throughout

the education systems because most schools are hosted by American NGO’s and missionaries.

Ethnically, 95 percent of the Haitians are of African descent. The rest of the population is

a mix of African-European ancestry and Europeans. This group often makes up the elite class. In

recent years, a small group of Arab migrants have colonized in Haiti (“Country watch,” 2012).

In Haiti the largest religion practiced is Roman Catholic (80 percent). However, a very

monumental part of their culture revolves around voodoo—African spiritual rituals. There is no

conflict in maintaining voodoo practices and adhering to their Christian faith; similar to many

Latin Americans practicing Catholicism and Santeria.

Haiti is the poorest country in the Western Hemisphere with a poverty rate well over 80

percent, and one of the lowest on the United Nations’ Human Development Index (145out of

169). The currency in Haiti is gourdes. One U.S. dollar is the equivalent of 40 Haitian gourdes.

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Haiti’s population lives on an average of $2 USD a day. While Haiti is one of the world’s most

densely populated countries, approximately 15 percent of the Haitians are under five years old.

25 percent are between ages six and 14. 56 percent of the population is between the ages of 15

and 64 years old (working class) and those over 65 years old form four percent of the population

(“Country watch,” 2012).

DEVASTATING 2010

Attention was drawn to Haiti on January 12, 2010 when a 7.0 magnitude earthquake

struck and devastated Port-au-Prince. The estimated death count was well above 300,000 leaving

the community in ruins and more than 1.5 million homeless. With an already instable economy,

the earthquake left the community in ruins and forced the country to turn to international relief

organizations for aid.

The destruction left morale severely low, but the reintroduction of sports has brought a

glimmer of hope to the eyes of millions. Foreign relief sport programs have brought laughter

back to the country through recreational sports for the kids. This analysis will explore the

rebuilding of Haiti, as well as the rehabilitation of the sports industry.

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COUNTRY’S SPORT STRUCTURE

The earthquake in January of 2010 left the country of Haiti in ruins.

50 percent of the population is composed of children and youth, who were left vulnerable with

the tragedy of the earth quake. The majority of these kids have been left to fend for themselves

or have been placed in group homes and orphanages. This alone has left a monumental impact

on the sports industry.

In the United States, sport recreation programs are started at a young age. These can be

run though the community recreation departments or club/private teams. Individuals can begin

competing for their school teams as early as middle school (7th grade norm) and throughout high

school. They may then go on to compete at the collegiate and professional levels. For Haiti this

is not the case.

Since the natural disaster, the primary focus is placed on educating the youth in Haiti.

The education levels are low with a literacy rate of 53%. Most Haitian schools are privately

owned and operated rather than state-funded, and are often facilitated by foreign religious

organizations and NGOs. The community understands that in order to grow from the rubble, the

youth needs to stay in school. That is a primary reason why there is no sport structure in Haiti; all

the family earnings go to food and education. Another reason for the lack of sport structure is

the amount of destruction. Streets are mounded high with debris and rubble, leaving no room or

facilities available for recreation (Garcon, 2012).

Outside relief groups such as AIS (Ambassadors in Sports) have made it a priority to

revive the sport community. Richard Mears, Director of AIS in Haiti has created a soccer league

of 75 teams, 18 kids each to provide an escape from the daily despair and to also develop their

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relationship with Christ. AIS volunteers pick up the kids to bring them to a centralized field,

provide soccer uniforms, and feed them after games, practices, and bible studies. An emphasis is

not placed on competition but recreation. Bringing sports to countries that have suffered major

tragedies has helped boost the sense of community and morale (Mears, 2012).

POPULAR SPORTS

The most popular sport in Haiti is football (soccer). Not only does it draw a sizable crowd

to the stadium in Port au Prince it is also

dominant on the rubble-filled roads of

poor towns and neighborhoods (Garcon,

2012). In 1974, Haiti became the first

Caribbean nation to qualify for the

World Cup finals, and some Haitian

football players, such as Joe Gaetjens

have played for teams in the United

States and Europe. Their most recent achievement was winning the 2007 Caribbean Nations Cup

(“Haiti,” 2012).

Other popular sports include basketball, American football, swimming, track & field, and

boxing. For those in the Haitian elite class tennis and cycling are popular as well (Garcon, 2012).

UNIVERSITY OF MOUNT UNION & HAITI

Soon after the tragedy of the earthquake in Haiti, Professional American football player

and University of Mount Union Alum, Pierre Garcon created “Helping Hands” Organization to

generate funds to support his family back home in Haiti. The University of Mount Union and

radio station Q92 collaborated to produce over $18,000 to provide schools, food programs,

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orphanages, medical clinics, agricultural development, churches and a Bible college for the

people of Haiti (Garcon, 2012).

This relief effort not only showed the humanity of the university and giving nature of

Pierre Garcon, but built a following of new American football fans throughout Haiti.

INDIGENOUS SPORTS AND GAMES

Sports and gambling tend to go hand in hand in

Haiti. Card games (such as Cassino) and dominoes are

popular pastimes, but the most entertainment is derived

from cockfighting (Garcon, 2012). This usually takes

place every Sunday in almost every village throughout

the country. For a poor community, considerable amounts of money can be generated at these

gatherings and the successful trainers become powerful figureheads to the community. Another

popular form of gambling is Borlette. The Borlette part bank part lottery system is very popular

and can be found at many street corners and kiosks. Individuals can pay as little as $.12 (USD)

and receive pay outs to be 50 times their wager. This system is a fascinating one because not

only does it allow for a chance to win rewards; it also helps with money management and

savings. This system is utilized by virtually everyone and has managed to help the economy

(“Haiti,” 2012).

One sport played by children in Haiti is Blagaball. Blagaball holds similar rules to

baseball but instead of playing with a ball it is played with an orange. However, because they do

not play on regulated diamonds with homerun fences, homeruns are achieved when a player

shatters the orange (Garcon, 2012).

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POLITICAL RISK ANALYSIS

REGIME CHANGE & POLITICAL TURMOIL

Haiti has seen constant regime changes since its beginning. Haiti was

originally occupied by the Native American Taino tribe when it was discovered by Christopher

Columbus in 1492. These native inhabitants were virtually conquered by the Spanish settlers

within twenty –five years. In the 17th century, the French made their presence known and were

given the western portion of the island, Haiti, in 1697. In 1804, due to revolts, Haiti became the

first black republic to declare independence (“The world factbook,” 2012).

Haiti experiences 22 changes of government from 1843 to 1915 followed by 19 years of

military occupation by the United States. Within this time period U.S. intervention capped a

period of commotion in Haiti. Series of assassinations and overthrows, rioting, and mob-rule

contributed to this political and economic disorder. There was a great need for external control

for more stable conditions. The United States upgraded public administrations and improved the

government infrastructure. The United States allowed for the first elections in 1930 and then

winning government negotiated for a full withdrawal by the U.S. military by 1934 (The world

factbook,” 2012).

The 1940’s and 50’s brought about more unsuccessful and unstable regimes. In 1957, any

hopes for democracy was abandoned when Dr. Francois “Papa Doc” Duvalier was elected

president. He nominated himself president-for-life, formed a paramilitary movement that

sustained his absolute power. Duvalier punished all those he saw as threats to his power. In 1971

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this authoritarian regime continued under the leadership of his son Jean-Claude “Baby Doc”

Duvalier. After an uprising the Duvalier were exiled to France “The world factbook,” 2012).

After many uprisings, a democratic election was set, electing Jean-Bertrand Aristide in

1991. His administration only lasted until September when he was ousted by another military

coup. In the days following, over 1,000 Haitians were slaughtered, and 3,000 were killed in the

following three years.

Years of turmoil continued with government takeovers and military interventions. The

2000’s saw a massive shift in illegal drug trafficking, murders, and bombings. After an armed

rebellion led to the forced resignation and exile of Jean-Bertrand Aristide in February 2004, an

interim government took office to organize new elections under the United Nations Stabilization

Mission in Haiti (MINUSTAH). Haiti finally held a democratic election for a president and

parliament in May of 2006. Currently, Michal Martelly is the President of Haiti (“The world

factbook,” 2012).

Throughout history there have been constant attempts at government over throws.

Whenever there was too much power being dominated by an individual, destruction was hot on

its heels. This unstable government created an unstable economy, and no roots for growth. Haiti

was in a rapid downward spiral and sadly, it was not until the earthquake of 2010 that the fights

for power ceased. Individuals understood a need for unity to survive and overcome. While the

earthquake crippled, it also provided a wake-up call to those in higher power to unite locally and

internationally to save its people (“The world factbook,” 2012).

GOVERNMENT RESTRICTIONS

A. TARIFFS

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As a member of the Caribbean Community and Common Market (CARICOM), Haiti

applies the group’s Common External tariff (CET). By eliminating its export duties, simplifying

and lowering its applied tariff rates, and abolishing the majority of its restrictions, Haiti has

greatly liberalized its trade regime since 1986. Haiti’s Most Favored Nation (MFN) tariff has

remained constant at 2.8 percent which stands lower than that of Latin America

and Caribbean (LAC). It holds a low 15 percent, excluding alcohol and

tobacco, and its 67.2 percent share of tariff lines with zero MFN is the highest in the region.

Haiti is very protective of its agricultural products (5.7 percent) than its non-agricultural ones

(2.4 percent). Based on the extent of its trade services, Haiti ranked 80th out of 148 countries

according to the GATS Commitment Index.

In response to the food crisis, CARICOM agreed in 2008 to a two-year suspension for the

CET so that other governments could drop duties to counteract rising food prices. Haitian

government introduced subsidies on imported rice, reducing the price of a 50 kilogram bag by 15

percent.

The average of world tariff exports is 9.8 percent. Haiti’s exports have greater access to

international markets than those of competitors. Haiti’s weighted tariff is 0.7 percent. This is

lower than the regional (3.2) and income group (3.9) averages. However, the Haitian gourde

depreciated by 6.1 percent compared to 1 USD making exports cheaper in foreign currency terms

(“Political risk Analysis,” 2012).

In 2007, Haiti joined an Economic Partnership Agreement (EPA) with the EU and part of

the CARIFORUM EPA group. This means it receives benefits/preferences under the Africa,

Caribbean, and Pacific (ACP)-EU Cotonou Agreement. Haiti’s textiles benefited greatly from

this.

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In 2009, Haiti was in the bottom 20 percent of international business environments (151

out of 183- Ease of doing business). Haiti’s Logistics Performance Index (LPI) was below the

regional and income group averages stating a less conducive climate for trade. In 2010 there was

a large decrease in exports from a fall in demand by the United States (Haiti’s main trading port).

B. CURRENCY TRANSFER

As mentioned previously the gourde is the currency used in Haiti. The

Bank of the Republic of Haiti is the centralized bank of Haiti. Coins in

circulation are 50 centimes, 1 gourde, and 5 gourdes. Bank notes include 10, 20, 25, 50, 100,

250, 1000 gourdes (“Country watch,” 2012).

C. IMPORT LICENSING

The United States is the main commercial partner of Haiti. It accounts for about 60% of

the imports and exports. Primarily Haiti exports coffee, mangoes, sisal and essential oils. It

currently imports petroleum products, foods, beverages, and fats.

In order to start a cargo business in Haiti and start shipping goods to and from Haiti,

foreigners need four basic documents: Residence Visa; Work Permit issued by the Ministry of

Social Works following submission of applicant’s passport, residence visa, job offer and a

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receipt from the Tax Office; license from the Tax Office; Registration Certificate from the

Ministry of Commerce and Industry.

Local producers and importers must obtain a professional identity card that is issued by

the Ministry of Trade and Industry (MCI) for an annual fee of 5 gourdes. Before the professional

identity card is issued, importers and local producers must first obtain a tax registration card and

an occupation tax certificate. The tax registration card is issued by the

Direction Générale des Impôts for an annual fee of 300 gourdes for natural

persons and 600 for legal persons. The occupation tax consists of a fixed levy that depends on

the sector of economic activity and the group to which the commune activity carried out belongs.

There is also a variable levy.

D. MEDIA/SOCIA MEDIA

In Haiti, the forms of media consist of print publications, radio, television, and internet.

There are more than 300 radio stations that broadcast throughout the country. Talk show

programs are one of the few ways that Haitians can speak openly about politics and the

government. In 1997, a law was passed declaring the airwaves property of the government.

However, there are over 133 unlicensed radio stations open freely. There are also, more than 50

community based radio stations.

Within the past couple of years television has made an a great recovery. In the

metropolitan area there are no fewer than 25stations broad casted. Tele Haiti, the oldest TV

station offers many foreign channels.

Haiti’s media is under strict control of the government. The Ministry of Information and

Coordination issue renewable cards to the press that has legal registration. Foreign journalists

much request a card from the Ministry to report in Haiti.

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ECONOMIC POLICIES

On January 12, 2012, Haiti was struck by a 7.0 magnitude earthquake that caused

monumental damage and casualties. The core of this earthquake struck Port au Prince, where

one-third of the country’s population and most of the state and economic infrastructure are

located. Six months later the country suffered and outbreak of cholera. The international

community responded with millions in donations, and volunteers and relief groups. However,

this was a major setback to Haiti and reaching their economic stability goals.

The Inter-American Development Bank quoted the total cost of the disaster to be

between $8 billion and $14 billion. Haiti received $1 billion through the Highly-Indebted Poor

Country (HIPC) initiative and $400 million from donor countries. As of 2011, only 43 percent of

the $4.59 billion promised to Haiti had been received (“Country watch,” 2012).

From 2007-2008, inflation rose from 9 percent to 14. 4 percent due to rising world food

and fuel prices but dropped to about 3.5 percent in 2009 because of the falling commodity prices.

By 2010, the prices climbed to 5.7 percent; taking a fiscal balance from a surplus of 0.4 percent

of GDP to a deficit of 4.4 of GDP (“Political risk analysis,” 2012).

CONCLUSION

Looking at decades of political turmoil and unstable regime, the country is not in a

position to host any major events for the safety of all involved. This is also taking into

consideration that they are financially unable to finance an event of this magnitude. Haiti is

still rebuilding from the earthquakes and cannot even clear the rubble from some streets to

allow for two way traffic. There are also very few sport facilities and any hotels/ motels to

accommodate for so many guests. There would need to be a very large amount of money

poured into planning of a major sporting event that Haiti would be much further in debt

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than it already is. Simply, they do not have the means to accommodate the tourists.

Furthermore, the weather and disease does not allow for the hosting of any Games.

Flooding is very frequent in Haiti and causes annual damage. Also, there had been a huge

cholera outbreak recently, leaving all travelers at risk and susceptible to conjuring this

disease and returning to their country with it and spreading it.

References

Garcon, P. (2012, February 26). Email interview.

Mears, R. (2012, February 9). Ambassadors in sports [Video file]. Retrieved from http://www.youtube.com/watch?v=4yDLWHcP6S0

Country watch. (2012). Retrieved from http://www.countrywatch.com/cw_country.aspx?vcountry=73

Haiti. (2012). In Encyclopædia Britannica. Retrieved from http://www.britannica.com/EBchecked/topic/251961/Haiti

Haiti trade brief. (2011). Retrieved fromhttp://info.worldbank.org/etools/wti/docs/Haiti_brief.pdf

Political risk analysis: Haiti. (2012). Retrieved from http://www.pri-center.com/country/country_specific.cfm?countrynum=87

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Garcon, P. (2012, February 26). Email interview.

Mears, R. (2012, February 9). Ambassadors in sports [Video file]. Retrieved from http://www.youtube.com/watch?v=4yDLWHcP6S0

Country watch. (2012). Retrieved from http://www.countrywatch.com/cw_country.aspx?vcountry=73

Haiti. (2012). In Encyclopædia Britannica. Retrieved from http://www.britannica.com/EBchecked/topic/251961/Haiti

Haiti trade brief. (2011). Retrieved fromhttp://info.worldbank.org/etools/wti/docs/Haiti_brief.pdf

Political risk analysis: Haiti. (2012). Retrieved from http://www.pri-center.com/country/country_specific.cfm?countrynum=87