IMF Cancels $268 Million in Haiti’s Debt, Approves New Loan

Bloomberg / Business Week

The International Monetary Fund agreed to cancel Haiti’s $268 million outstanding debt to the institution and approved a loan to boost central bank reserves as the country rebuilds its economy after a January earthquake.

The decisions came four months after donors pledged $5.26 billion to Haiti’s reconstruction. The $60 million, three-year loan, which bears no interest until the end of 2011, will help the central bank manage potential currency volatility as donor funds flow in, the Washington-based IMF said in an e-mailed release.

“Donors must start delivering on their promises to Haiti quickly so reconstruction can be accelerated, living standards quickly improved, and social tensions soothed,” IMF Managing Director Dominique Strauss-Kahn said in the statement.

The IMF said it will also provide technical assistance to the poorest country in the Western Hemisphere to strengthen government institutions, including the tax system and the budget.

The authorities for instance agreed to give regular updates on the finance ministry’s website on what the aid money is used for under the IMF program, IMF mission chief Corinne Delechat said on a conference call today.

The interest rate on the loan will be zero through 2011 and as much as 0.5 percent after that, according to the IMF. Haiti’s economic growth will be 9 percent in fiscal 2011-2012, mostly due to the flow of international aid, the fund said.

The temblor killed about 300,000 people, according to a United Nations report this month.

The debt relief was financed by a trust fund established by the IMF last month to help very poor countries hit by catastrophic disasters.

“While it is welcome that the fund is providing Haiti with debt relief, it is deeply concerning that at the same time the fund is risking a build-up of Haiti’s future debt problems with a loan,” Oxfam International Policy Adviser Pamela Gomez said in a statement. “This assistance should be a grant, not another loan,” she said.

Setting Sail on a Haitian Pleasure Cruise

Newsweek

The moral and economic dilemmas of Royal Caribbean's Labadee Port.

In the weeks since the Jan. 12 earthquake that leveled Port-au-Prince, cruise ships full of mostly American tourists have continued to dock in Labadee, a private resort 60 miles north of Haiti's devastated capital city. "It was a bit surreal knowing that the center of the world's focus was only 100 miles away," says passenger Becky O'Connor, who visited the island on a recent cruise. On the television in her stateroom, Fox News broadcast the first airdrops over Port-au-Prince amid a background of apocalypse. Off the side of her balcony, she could see aid supplies—water, powdered milk, dried beans—being unloaded onto the pier and piled into trucks. But surrounding her and the other 3,000 or so passengers who had booked mid-January cruises on Royal Caribbean International (the only cruise line with a port in Haiti) were all the amenities one would expect of a luxury vacation. On board: 17 decks' worth of buffets, swimming pools, casinos, miniature golf, and a 1,200-seat theater. Ashore: a Dis-neyesque pseudotown with pristine beaches, lovely cabanas, and quaint cafés and shops.

At first, passengers were uneasy about the visit—mulling over safety concerns and discussing among themselves the ethical quandary of so much wealth and luxury amid such devastation. But by midday, most had overcome their reservations and were venturing ashore. "The idea to relax so close to the death and destruction was definitely awkward," says Daniel Melleby, another passenger. "But it became clear pretty quickly that the people there were very happy and relieved to see us."

While many have criticized the cruise line's decision to proceed with planned trips to the Haiti port just days after the quake, many more have argued that canceling scheduled stops would only hurt the already struggling Haitian economy. The passengers themselves have held both views. Some note surges of pride as they watched pallets of supplies being unloaded from the cruise ship, others say they spent more on local wares than they normally would have, and most describe the stop as more somber than others along the same route. "I believe it was the right decision to support Haiti financially," says one passenger, who gave her name only as Linda. "But I could not bring myself  to enjoy anything on Labadee." The ambivalence underscores what some say is a persistent, if not always obvious, uneasiness between wealthy vacationers and the struggling countries they like to frequent.

Labadee—a former slave plantation on the northern coast of Haiti, named for the Frenchman who settled it in 1600—is the only Haitian port open to cruise ships. In 1986 Royal Caribbean International leased the spot from the Haitian government and transformed it into a pri-vate resort, one of several stops along its Caribbean route. Last year, at the urging of President Bill Clinton, who traveled to Labadee to promote tourism in the region, the company spent $55 million upgrading the port to accommodate its newest fleet member, Oasis of the Seas, the world's largest passenger ship. The company made Labadee the ship's maiden destination.

After the earthquake, the Haitian government urged Royal Caribbean to proceed with its scheduled stops on the island. The company complied, and on Jan. 15 delivered nearly 40 pallets of food and water, along with roughly 3,000 tourists, who spent at least some of their money stimulating the local economy. More ships followed on the 18, 19, and 22; so far, the cruise line has brought nearly 400 pallets of ur-gently needed goods ashore. In addition, the company promised to donate all money made at the Labadee resort to the relief effort, at least until Feb. 1. Combined with passenger donations, they expect to reach $2 million in contributions. Royal Caribbean has also augmented an existing crew-welfare fund to provide up to $2,500 in grant money to any Haitian employee seeking to rebuild homes or find loved ones. Compassion leave has been extended from two weeks to indefinitely. But while no one disputes the value of sending food, water, and cash donations in the wake of a disaster, larger questions—about whether the company and its policies are the best option for Haiti—persist.

To be sure, Royal Caribbean is among Haiti's largest foreign investors. According to the company, it employs 200 locals at Labadee and allows another 300 to sell their wares on the premises. They also pay the Haitian government a "head tax" of $6 per tourist. With roughly 365,000 tourists visiting the site each year, that adds up to slightly more than $2 million in revenue for the beleaguered country, whose 2008 GDP was estimated at $6.9 billion. But critics say that a nonprivatized port could yield far more in publicity and profits for the local community. The tiny peninsula is currently sequestered from the surrounding area by a 10-foot-high fence and a private armed security force; passengers are not allowed to leave the property. And because the company owns all the restaurants and concession stations, most payments for food and beverages are made not in cash, but via room keys or cruise cards, which means no tips for employees.

Royal Caribbean is not the only company to turn a chunk of foreign land into a private tourist spot. Disney, Princess, and Norwegian Cruise Lines have each claimed various segments of beach in the Bahamas. Once bought or leased, experts say these tracts of land are typically recast as private beaches and staffed by private work-forces. "Unlike other port calls, on a private island [or in a private port like Labadee] the revenues and profits remain largely with the cruise line," says Ross Klein, a sociologist who has written three books about the cruise industry. "While it's quite profitable to the cruise line, the benefit to the local economy is relatively small and very limited."

The cruise industry in general has been subject to a rash of criticism over the years, for unfair labor practices, dismal environmental records, and shoddy safety practices. But Royal Caribbean Cruises has come under special criticism for its policies in Haiti. Labadee, with its high fences and armed guards, is far more closed off to the surrounding community than other resorts like it. And, as The Christian Science Monitor reported, advertisements for the port tend to avoid any mention of Haiti, describing it as a private island rather than as a peninsula contiguous with the rest of the country.

Given the scale of the current disaster, some passengers feel the company's contributions to the relief effort did not go far enough: "These ships hold thousands of customers and crew. They often have five different buffets at a time and huge amounts of food are wasted," writes one woman—who visited the port with her family last year—on an Internet listserv. "If Royal shut down just one eating option per boat and donated all the food, they could feed hundreds."

Still, most passengers and cruise enthusiasts seem to support Royal Caribbean's decisions: a company representative said that 85 percent of guests who docked at Labadee ultimately went ashore. And in a survey of some 4,700 people done by the Web site Cruise Critic, two thirds of respondents agreed with the company's decision to proceed with scheduled cruises. After all, as many have pointed out, Haiti was no oasis before the earthquake hit.

Haiti Cruise Stops: 'Without This, We Don't Eat'

AP

With the Celebrity Solstice cruise ship anchored just offshore this beautiful expanse of white sand Friday, vacationers stretched out on beach chairs in the sun, sipped cold beer and pina coladas with pineapple slices on the rim and listened to Haitian folk music.

The beach resort of Labadee is just 60 miles (100 kilometers) from Port-au-Prince, but it's a world away from the devastation of the Haitian capital, where some 200,000 people are believed dead in an earthquake.

The cruise ships that stop here have become the center of a controversy: Should vacationers relax and have fun with so much suffering elsewhere on the island? Or would it be worse to halt the port calls and deprive locals of what they earn from tourism?

Royal Caribbean is also donating $1 million, delivering food and water on every call and pledging net revenue from Labadee to the relief effort

Jameson Charitable, 20, stood near the pier with a sign offering tours. "Without this," he said, motioning toward the boat, "we don't eat." He said he makes $15 every time a Princess Cruises ship comes in.

About 200 people work here, and a few hundred more vendors and service providers are allowed in whenever ships arrive. The resort enclave, which has a beach, a zipline in the mountains and other activities, is leased by the Haitian government to Royal Caribbean International, which also owns the Celebrity cruise line.

Royal Caribbean allowed a team of journalists from The Associated Press to visit Labadee on Friday, but the cruise company's spokeswoman, Tracy Quan, would not allow them to interview or photograph cruise passengers.

Carol Myers, 53, a nurse from New Jersey, was not on the cruise ship but was enjoying the beach. She had spent an intense week tending to earthquake victims in a hospital in the nearby town of Milo, and was decompressing for a few hours before her scheduled return to the U.S. on Saturday.

"I almost feel guilty for being here after what happened," Myers said, sitting in a beach chair in blue scrubs. "But the people need a job, the people need to eat."

Royal Caribbean President and CEO Adam Goldstein said the decision to continue with scheduled stops in Labadee was an easy one. The site sustained no damage, and he said the Haitian government welcomed the ship. The country reaps a fixed cost per passenger, plus annual fees and the cash tourists spend on local goods at a marketplace where artisans and artists sell trinkets and crafts.

Royal Caribbean is also donating $1 million, delivering food and water on every call and pledging net revenue from Labadee to the relief effort. Maryse Kedar, president of Royal Caribbean's Haitian subsidiary, SOLANO, said the cruise visits are "the only substantial commerce taking place in northern Haiti."

But the cruise line found itself on the defensive after criticism spread online. Melissa Bacchus, a Brooklyn, N.Y., teacher, was among several veteran cruisers to dominate message boards on sites like Cruisecritic.com with the debate.

"I do think morally it is wrong for Carnival Cruises to go (to Labadee), where less than 60 miles away people are suffering," Bacchus said in an interview. "And because we have the resources, we have the wealth, we can frolic using the beauty of their island?"

Bacchus suggested Royal Caribbean pay Haiti its regular port fees, but not actually stop there. She said they could also give local artisans money to go back home and assist in the relief effort.

Haiti Tourism Minister Patrick Delatour said Royal Caribbean continuing the trips was "courageous" and important to his nation's recovery. "We applaud this decision and feel the criticism they are receiving in the media is not only unfair but conveys a complete lack of understanding of the overall condition in Haiti following this horrific disaster," he said.

Still, public relations experts quoted by AdAge.com said Royal Caribbean Cruises had made a mistake by mixing leisure business with humanitarian efforts. "The brand will take a hit," Paul Gallagher, managing director of WPP's Burson Marsteller's issues and advocacy practice, was quoted as saying.

Haiti shares the island of Hispaniola with the Dominican Republic. The Dominican Republic suffered no damage from the earthquake, but the government is clearly worried that vacationers may cancel trips on Celebrity Cruises here because of the disaster on the other side of the border.

The Dominican Ministry of Tourism has issued repeated statements that it was unaffected by the quake, including pointing out that Port-au-Prince is hundreds of miles (kilometers) and several mountain ranges away.

That message was lost on travelers like Debbie Ulin, a 39-year-old mother of two in Hillsdale, N.J., whose family and two others canceled a group trip planned to the Dominican beach resort of Punta Cana for February.

"With everything happening as it did, we sort of all came to the realization that it's probably not the best time to be traveling to the Dominican right now," Ulin said. "As selfish as I feel when I say that, it's not so important, my vacation. We didn't feel like it would be the safe place to go with the families this soon after the devastation has occurred."

Arthur Applbaum, a Harvard University professor of ethics and public policy, said that while it shows "moral sensitivity to be disturbed by the thought that one is vacationing on the beach when others are suffering nearby ... it also shows insufficient moral reflection to think that proximity makes a moral difference.

"The people of Haiti are suffering whether you take your beach vacation in the Dominican Republic or in Hawaii," he said, "and it is a failure of the moral imagination not to be equally troubled in Waikiki."