Assassination of Haitian Leader Highlights Nation’s Monopoly-Dominated Economy

The killing of President Jovenal Moïse took place against a backdrop of elite power, anticompetitive policies, and the U.S. doing little to create open markets.

The assassination of Haitian President Jovenel Moïse in his home near the capital city of Port-au Prince earlier this month rocked the already beleaguered Caribbean nation, which is the poorest in the Western Hemisphere and has a history of political violence

According to Haitian authorities,  mercenaries stormed the president’s gated compound and shot and killed the 53-year-old former businessman, seriously injuring his wife, Martine. Moïse, a member of the center-right PHTK party, was a polarizing politician, accused in a 600-page report prepared by a panel of judges that he embezzled foreign aid from Venezuela. Moïse came to power as the chosen successor of President Michel Martelly, a popular musician who goes by the stage name Sweet Micky. He won office in the heavily disputed 2016 election amid claims of voting irregularities, intimidation, and violence.

Now more violence threatens to engulf the Caribbean nation of 11 million people, with leaders of the nation’s powerful criminal gangs calling for civil war. Adding to the chaos, Moïse has no clear or elected successor because the current Prime Minister’s term was set to expire this week, and its supreme court president died of Covid-19 days before the assassination.

The power vacuum and dangerous instability in the Francophone nation result from many factors, but the American media ignore big ones, including state capture by elites, a grim monopolism that characterizes the country’s economy, and neoliberal policies imposed by the United States and international institutions. These factors have played a significant role in creating a country characterized by a 14 percent unemployment rate and 60 percent of the population in poverty. Regardless of how the assassination unfolds, if Washington is serious about helping to stabilize Haiti’s government and lift its citizens out of misery, it should use its aid and influence to promote economic democracy through competition and anti-monopoly enforcement.

In Haiti, the wealthiest one percent controls almost half of the country’s wealth. Just over 600 families control 345 corporations. Groups of elite families have monopolistic control of broad swaths of industries through conglomerate structures. Three major banks—Unibank, Sogebank, and BNC—control 83 percent of Haiti’s banking assets and 75 percent of its loan portfolio. An astounding 70 percent of the loans are in the hands of a mere 10 percent of borrowers. In telecom, Digicel has an 85 percent market share in subscribers and acquired the second-largest provider Voilà in 2011. Even in the food industry, supermarkets and prepackaged foods are monopolized by few businesses. This has contributed to food prices 30 to 77 percent higher than other countries in Latin America. Some 38 percent of the import value in areas such as petroleum, food, and consumer goods, are imported into highly concentrated markets.

Furthermore, these companies engage in collusion and non-competitive policies by offering different products that don’t overlap, according to a 2018 report by the Famine Early Warning System, a leading provider of famine information created by the U.S. Agency for International Development in 1985.

The lack of competition in many industries means inputs in upstream and downstream markets for products are not priced competitively. It also hinders efficiency and productivity in the value chain. In Haiti, monopoly is a major deterrent to development because it creates barriers to entry and sustains anticompetitive practices. Many of these companies benefit from low import duties, import monopolies, tax write-offs, and the awarding of government contracts and state loans.

These monopolies mar Haiti’s history but have been particularly strong during the past few decades. Following Haitian independence from France in 1804, two groups competed for power: the military who amassed political power and were of African ancestry and the merchants who controlled commerce and were of mixed French and African ancestry. Haitian society has traditionally been a symbiotic relationship between these two powerful groups.

The merchant elite gained political power only to have it stripped away by the Haitian army after American troops left the country in 1934 after a 19-year occupation. Dictator Francois Duvalier (“Papa Doc”) made powerful enemies in Haiti’s business community, attacking the elite’s economic control and promoting black nationalism during his rule from 1957 to 1971. Duvalier, at the time, only allowed monopolies if businesses owners’ interests were aligned with those of his government. The dictator created monopolies in mineral and petroleum exploration, television, fertilizer, casinos, hotels, sugar, and agriculture. An anti-communist, Duvalier had the military backing of the U.S. by serving as an ally against Fidel Castro’s Cuba. Following his death in 1971, his son and successor Jean Claude (“Baby Doc”) reestablished relations with Haiti’s old elites and gave them control of the economy in the 1970s and 1980s. By 1985, 19 families in the country had exclusive rights for importing essential products.

In the 1980s and 1990s, neoliberal policies advocated by international institutions and the U.S. promoted economic and trade liberalization in Haiti, resulting in removing tariffs for over a hundred products. This free-but-not-fair trade led to the importation of subsidized American rice through President Ronald Reagan’s Caribbean Basin Initiative. Many self-sufficient farmers became unable to compete with cheap U.S. imports and migrated to the cities. The influx helped create notorious shantytowns and slums that exist today. During the 1990s, rice imports continued with U.S. corporation Erly Industries, whose chairman had ties to the Reagan administration, establishing monopolistic control of the rice industry.

This policy of importing rice continued under the Clinton Administration, although the former Democratic president apologized in 2010, stating he had made a “devil’s bargain” that contributed to continued Haitian poverty. “So, we genuinely thought we were helping Haiti when we restored President [Jean-Bertrand] Aristide,” Clinton told Haiti Liberté,“We made a commitment to help rebuild the infrastructure through the Army Corps of Engineers there, and do a lot of other things. And we made this devil’s bargain on rice. And it wasn’t the right thing to do. We should have continued to work to help them be self-sufficient in agriculture.” Haiti still imports 80 percent of its rice from the U.S.

The influx of rice and decreased livelihood of farmers in Haiti helped Aristide, a socialist, win the 1990 election with backing from rural voters galvanized by his pro-poor platform and vow to tackle monopolists. These same monopolists would later help finance a coup against the Aristide to protect their business interests. The Clinton Administration and U.S. Armed Forces helped restore him to power.

Many of these elites in Haiti were singled out by U.S. Congressional Task Force on Haiti during the 1990s. The panel detailed how many of these monopolists lobbied in Washington to develop policy on Haiti. Additionally, some groups such as the International Republican Institute (IRI) are connected with this group of elites and have influenced policy in Haiti for decades.

Many of these same oligarchs that gained control of the economy over these past few decades are still in control of monopolies in Haiti to this day. These elites would later finance the political party PHTK and the campaign of President Moïse and his predecessor Michel Martelly.

After Moïse was elected, one of his key goals was to reform the Haitian energy sector promising 24-hour electricity in a country plagued by rolling blackouts and fuel shortages. Roughly 80 percent of the electricity in Haiti is produced through imported diesel fuel. Many businesses and households use diesel generators for reliable electricity because the national electrical grid is too small. An oligopoly of just three independent power companies–Sogener, E-Power, and Haytrac—dominates energy imports. These companies then sell the fuel back to the Haitian state-run electricity provider Electricite d’Haiti. In 2019, the Moïse government suspended contracts with these companies, took control of Sogener, and arrested its executives on charges of overbilling the state. The slain president may have made the situation worse, as the electricity production in Port au Prince dropped from 130 megawatts to less than 50 megawatts.

By attempting to reform the energy sector and go after other monopolies, Moïse was biting the hand that fed him. He was making enemies of former allies. Over the past few years, Moïse began to rail against elites in Haiti, arguing that they had controlled the nation. “The Haitian state is being held hostage, and the only way we can talk about development is to free the captured state,” he stated in a speech in 2019.

Although Moïse’s attempts at reform failed, U.S. foreign policy could help. Washington has coddled monopolists abroad for too long through its trade policies, invitation to engage in lobbying, and lack of promoting anti-monopoly and competition policy. The U.S. has been providing Haiti aid and advising their governments for decades, yet the country has no laws or regulations on competition. If Washington wants to avoid further political instability in Haiti and other countries, it should send ideas as well as aid. Promoting economic democracy through an anti-monopoly policy and conditioning at least some economic aid on anti-monopoly reform would be an essential first step.

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Garphil Julien

Garphil Julien is a Research Associate at the Open Markets Institute.