Political Risk Analysis: Haiti Brady Lorek Dr. James Thoma February, 27, 2012 SB 450Q
2|Page Table of ContentsINTRODUCTION 3,4 Devastating 2010 4COUNTRY’S SPORT STRUCTURE 5,6 Popular Sports 6 University of Mount Union & Haiti 6,7 Indigenous Sports & Games 7POLITICAL RISK ANALYSIS 8 Regime Change and Political Turmoil 8,9 Government Restrictions 9 Tariffs 9,10 Currency Transfer 11 Import Licensing 11,12 Media/Social Media 12 Economic Policies 12,13CONCLUSION 13REFERENCES 14
3|Page INTRODUCTION The Republic of Haiti is a Caribbean-based country, located on the island ofHispaniolathat it cohabits with the Dominican Republic. Haiti has a population of 9,089,085 withits three largest cities being Port au Prince (capital), Carrefour, and Delmas (807,301/ 541,511/425,501 respectively). It has a very tropicalclimate, but semiarid in the mountain regions(―Country watch,‖ 2012). French is one of the two officiallanguages of Haiti, but is only spoken by 10percent of the people. The main languagespoken by all Haitians is Creole. Creole isFrench-based but is considered a ―new world hybrid‖ language. English is increasing throughoutthe 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 isa mix of African-European ancestry and Europeans. This group often makes up the elite class. Inrecent 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 verymonumental part of their culture revolves around voodoo—African spiritual rituals. There is noconflict in maintaining voodoo practices and adhering to their Christian faith; similar to manyLatin Americans practicing Catholicism and Santeria. Haiti is the poorest country in the Western Hemisphere with a poverty rate well over 80percent, and one of the lowest on the United Nations’ Human Development Index (145out of169). The currency in Haiti is gourdes. One U.S. dollar is the equivalent of 40 Haitian gourdes.
4|PageHaiti’s population lives on an average of $2 USD a day. While Haiti is one of the world’s mostdensely populated countries,approximately 15 percent of the Haitians are under five years old. 25percent are between ages six and 14. 56 percent of the population is between the ages of 15 and64 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 earthquakestruck and devastated Port-au-Prince. The estimated death count was well above 300,000 leavingthe 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 relieforganizations for aid. The destruction left morale severely low, but the reintroduction of sports has brought aglimmer of hope to the eyes of millions. Foreign relief sport programs have brought laughterback to the country through recreational sports for the kids. This analysis will explore therebuilding of Haiti, as well as the rehabilitation of the sports industry.
5|Page COUNTRY’S SPORT STRUCTURE The earthquake in January of 2010 left the country of Haiti in ruins. 50 percent of thepopulation is composed of children and youth, who were left vulnerable with the tragedy of theearth quake. The majority of these kids have been left to fend for themselves or have been placedin 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 berun though the community recreation departments or club/private teams. Individuals can begincompeting for their school teams as early as middle school (7th grade norm) and throughout highschool. They may then go on to compete at the collegiate and professional levels. For Haiti thisis 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 privatelyowned and operated rather than state-funded, and are often facilitated by foreign religiousorganizations and NGOs. The community understands that in order to grow from the rubble, theyouth needs to stay in school. That is a primary reason why there is no sport structure in Haiti; allthe family earnings go to food and education. Another reason for the lack of sport structure isthe amount of destruction. Streets are mounded high with debris and rubble, leaving no room orfacilities available for recreation (Garcon, 2012). Outside relief groups such as AIS (Ambassadors in Sports) have made it a priority torevive the sport community. Richard Mears, Director of AIS in Haiti has created a soccer leagueof 75 teams, 18 kids each to provide an escape from the daily despair and to also develop theirrelationship 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
6|Pagenot placed on competition but recreation. Bringing sports to countries that have suffered majortragedies 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 crowdto the stadium in Port au Prince it is alsodominant on the rubble-filled roads ofpoor towns and neighborhoods (Garcon,2012). In 1974, Haiti became the firstCaribbean nation to qualify for theWorld Cup finals, and some Haitianfootball players, such as Joe Gaetjenshave played for teams in the UnitedStates 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, andboxing. For those in the Haitian elite class tennis and cycling are popular as well (Garcon, 2012).UNIVERSITY OF MOUNT UNION & HAITI Soon after the tragedyof the earthquake in Haiti, Professional American football playerand University of Mount Union Alum, Pierre Garcon created ―Helping Hands‖ Organization togeneratefunds to support his family back home in Haiti. The University of Mount Union andradio station Q92 collaborated to produce over $18,000 to provide schools, food programs,orphanages, medical clinics, agricultural development, churches and a Bible college for thepeople of Haiti (Garcon, 2012).
7|Page This relief effort not only showed the humanity of the university and giving nature ofPierre 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 inHaiti. Card games (such as Cassino) and dominoes arepopular pastimes, but the most entertainment is derivedfrom cockfighting (Garcon, 2012). This usually takesplace every Sunday in almost every village throughoutthe country. For a poor community, considerable amounts of money can be generated at thesegatherings and the successful trainers become powerful figureheads to the community. Anotherpopular form of gambling is Borlette. The Borlette part bank part lottery system is very popularand 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 notonly does it allow for a chance to win rewards; it also helps with money management andsavings. 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 tobaseball but instead of playing with a ball it is played with an orange. However, because they donot play on regulated diamonds with homerun fences, homeruns are achieved when a playershatters the orange (Garcon, 2012).
8|Page POLITICAL RISK ANALYSISREGIME CHANGE& POLITICAL TURMOIL Haiti has seen constant regime changes since its beginning. Haiti was originally occupiedby 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 –fiveyears. In the 17th century, the French made their presence known and were given the westernportion of theisland, Haiti, in 1697. In 1804, due to revolts, Haiti became the first black republicto declare independence (―The world factbook,‖ 2012). Haiti experiences 22 changes of government from 1843 to 1915 followed by 19 years ofmilitary occupation by the United States. Within this time period U.S. intervention capped aperiod of commotion in Haiti. Series of assassinations and overthrows, rioting, and mob-rulecontributed to this political and economic disorder. There was a great need for external controlfor more stable conditions. The United States upgraded public administrations and improved thegovernment infrastructure. The United States allowed for the first elections in 1930 and thenwinning government negotiated for a full withdrawal by the U.S. military by 1934 (The worldfactbook,‖ 2012). The 1940’s and 50’s brought about more unsuccessful and unstable regimes. In 1957, anyhopes for democracy was abandoned when Dr. Francois ―Papa Doc‖ Duvalier was electedpresident. He nominated himself president-for-life, formed a paramilitary movement thatsustained his absolute power. Duvalier punished all those he saw as threats to his power. In 1971this 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
9|Page1991. His administration only lasted until September when he was ousted by another militarycoup. In the days following, over 1,000 Haitians were slaughtered, and 3,000 were killed in thefollowing three years. Years of turmoil continued with government takeovers and military interventions. The2000’s saw a massive shift in illegal drug trafficking, murders, and bombings. After an armedrebellion led to the forced resignation and exile of Jean-Bertrand Aristide in February 2004, aninterim government took office to organize new elections under the United Nations StabilizationMission in Haiti (MINUSTAH). Haiti finally held a democratic election for a president andparliament in May of 2006. Currently, Michal Martelly is the President of Haiti (―The worldfactbook,‖ 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 onits heels. This unstable government created an unstable economy, and no roots for growth. Haitiwas in a rapid downward spiral and sadly, it was not until the earthquake of 2010 that the fightsfor power ceased. Individuals understood a need for unity to survive and overcome. While theearthquake crippled, it also provided a wake-up call to those in higher power to unite locally andinternationally to save its people (―The world factbook,‖ 2012).GOVERNMENT RESTRICTIONS A. TARIFFS As a member of the Caribbean Community and Common Market (CARICOM), Haitiapplies the group’s Common External tariff (CET). By eliminating its export duties, simplifyingand lowering its applied tariff rates, and abolishing the majority of its restrictions, Haiti hasgreatly liberalized its trade regime since 1986. Haiti’s Most Favored Nation (MFN) tariff has
10 | P a g eremained 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 oftariff lines with zero MFN is the highest in the region. Haiti is very protective of its agriculturalproducts (5.7 percent) than its non-agricultural ones (2.4 percent). Based on the extent of its tradeservices, 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 theCET so that other governments could drop duties to counteract rising food prices. Haitiangovernment introduced subsidies on imported rice, reducing the price of a 50 kilogram bag by 15percent. The average of world tariff exports is 9.8 percent. Haiti’s exports have greater access tointernational markets than those of competitors. Haiti’s weighted tariff is 0.7 percent. This islower than the regional (3.2) and income group (3.9) averages. However, the Haitian gourdedepreciated 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 ofthe CARIFORUM EPA group. This means it receives benefits/preferences under the Africa,Caribbean, and Pacific (ACP)-EU Cotonou Agreement. Haiti’s textiles benefited greatly fromthis. In 2009, Haiti was in the bottom 20 percent of international business environments (151out of 183- Ease of doing business). Haiti’s Logistics Performance Index (LPI) was below theregional and income group averages stating a less conducive climate for trade. In 2010 there wasa large decrease in exports from a fall in demand by the United States (Haiti’s main trading port). B. CURRENCY TRANSFER
11 | P a g e As mentioned previously the gourde is the currency used in Haiti. The Bank of theRepublic 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% ofthe imports and exports. Primarily Haiti exports coffee, mangoes, sisal and essential oils. Itcurrently 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 ofSocial Works following submission of applicant’s passport, residence visa, job offer and areceipt from the Tax Office; license from the Tax Office; Registration Certificate from theMinistry of Commerce and Industry. Local producers and importers must obtain a professional identity card that is issued bythe Ministry of Trade and Industry (MCI) for an annual fee of 5 gourdes. Before the professionalidentity card is issued, importers and local producers must first obtain a tax registration card andan occupation tax certificate. The tax registration card is issued by the
12 | P a g eDirection Générale des Impôts for an annual fee of 300 gourdes for natural persons and 600 forlegal persons. The occupation tax consists of a fixed levy that depends on the sector of economicactivity and the group to which the commune activity carried out belongs. There is also avariable 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 showprograms are one of the few ways that Haitians can speak openly about politics and thegovernment. 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 50community based radio stations. Within the past couple of years television has made an a great recovery. In themetropolitan area there are no fewer than 25stations broad casted. Tele Haiti, the oldest TVstation offers many foreign channels. Haiti’s media is under strict control of the government. The Ministry of Information andCoordination issue renewable cards to the press that has legal registration. Foreign journalistsmuch request a card from the Ministry to report in Haiti.ECONOMIC POLICIES On January 12, 2012, Haiti was struck by a 7.0 magnitude earthquake that causedmonumental damage and casualties. The core of this earthquake struck Port au Prince, whereone-third of the country’s population and most of the state and economic infrastructure arelocated. Six months later the country suffered and outbreak of cholera. The internationalcommunity responded with millions in donations, and volunteers and relief groups. However,
13 | P a g ethis was a major setback to Haiti and reaching their economic stability goals. The Inter-AmericanDevelopment 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 $400million from donor countries. As of 2011, only 43 percent of the $4.59 billion promised to Haitihad been received (―Country watch,‖ 2012). From 2007-2008, inflation rose from 9 percent to 14. 4 percent due to rising world foodand 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 percentof 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 aposition to host any major events for the safety of all involved. This is also taking intoconsideration that they are financially unable to finance an event of this magnitude. Haiti isstill rebuilding from the earthquakes and cannot even clear the rubble from some streets toallow for two way traffic. There are also very few sport facilities and any hotels/ motels toaccommodate for so many guests. There would need to be a very large amount of moneypoured into planning of a major sporting event that Haiti would be much further in debtthan 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 hugecholera outbreak recently, leaving all travelers at risk and susceptible to conjuring thisdisease and returning to their country with it and spreading it.
14 | P a g e ReferencesGarcon, P. (2012, February 26). Email interview.Mears, R. (2012, February 9). Ambassadors in sports [Video file]. Retrieved from http://www.youtube.com/watch?v=4yDLWHcP6S0Country watch. (2012). Retrieved from http://www.countrywatch.com/cw_country.aspx?vcountry=73Haiti. (2012). In Encyclopædia Britannica. Retrieved from http://www.britannica.com/EBchecked/topic/251961/HaitiHaiti trade brief. (2011). Retrieved from http://info.worldbank.org/etools/wti/docs/Haiti_brief.pdfPolitical risk analysis: Haiti. (2012). Retrieved from http://www.pri-center.com/country/country_specific.cfm?countrynum=87The world factbook. (2012). Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html