ARTICLE - HAITI OPEN FOR BUSINESS - PT. 3

MARTELLY GOVERNMENT BETTING ON SWEATSHOPS: "HAITI: OPEN FOR BUSINESS"
(Haiti Liberte) - By Haiti Grassroots Watch (The third of three articles)

The case of Caracol

Robert Etienne looks out with dismay at the fence cutting through his field in Fleury, near Caracol, in Haiti’s Northeast department. Earlier this year, he had a healthy crop of beans coming up through the rich, black soil.

“The first week of January, tractors moved across all this area and broke down everyone’s fences,” the septuagenarian told Haiti Grassroots Watch (HGW) during a June, 2011 visit. “Thieves and animals followed, and our crops were gone.”

Etienne brought up his four children right here, by raising animals and farming a small family-owned plot and a larger plot he leased from the state. Along with hundreds of other farmers in this community, he woke up one day last January to discover his fields had been destroyed.

Unbeknownst to Etienne and other farmers, that same week the Haitian government (GOH) signed an agreement with U.S. Secretary of State Hillary Clinton, representatives of the Inter-American Development Bank (IDB), and the Korean textile giant Sae-A Trading. With those signatures, Etienne’s land and about 300 other plots were converted into an industrial zone.

“This will be the match that strikes a fire, and gets things going,” Hillary’s husband, former U.S. President Bill Clinton, told the Wall Street Journal. Clinton, who at the time headed the Interim Haiti Recovery Commission (IHRC), has long-championed plans to bring more industry to Haiti.

But farmers like Etienne, along with labor leaders, environmentalists and economists, are all wondering – just what “fire” has been lit and when “things get going,” what “things,” and where will they “go?”

Also, why was Caracol chosen?

All parties agree that the site – which is part of the Trou du Nord River watershed – is one of the most fertile spots in the Northeast Department. The new industrial park will also be located only about five kilometers from a large bay which is home to one of the country’s last mangrove forests and extensive coral reefs.

In order to find out why Caracol was chosen, and to get a better picture of the potential “winners” and “losers” in the project, HGW visited the Northeast, reviewed a half-dozen studies, and interviewed numerous experts and potential beneficiaries.

PIRN - A public-private partnership

The Industrial Park of the North Region (Parc Industriel de la Région Nord - PIRN) is the showcase reconstruction project for the new government, the CIRH and the “international community” in Haiti – U.S., France, Canada, the European Union and the IDB. The 243-hectare industrial park is slated to open in March 2012. Planners say some 20,000 people will be hired for “Phase 1,” and that up to 100,000 new direct or indirect jobs, the overwhelming majority of them sweatshop wage-level assembly jobs, will be created over the next few years.

In the planning stages before the earthquake, and with an initial price ticket of over US$200 million, the PIRN is the result of a “public-private partnership.” But the Government of Haiti (GOH) is not the only “public” partner.

The “public” to the north – U.S. citizens – is the project’s biggest investor, providing some US$124 million in U.S. tax dollars. That financing will be used (according to project documents) to improve nearby port infrastructure, build a electricity plant to supply power to the PIRN, and build at least 5,000 units of housing.

As Bill Clinton implied, foreign investment is a key part of the economic plan he and the Haitian government are pushing. Washington is doing everything it can to help assure Haiti is “open for business.” Thus, at a briefing on Jan. 7, 2011, U.S. AID Director Cheryl Mills was proud to report that her team had “been working through with foreign investors on how we could go about attracting them to an industrial park.”

In addition to U.S. tax dollars, the PIRN is also being funded by the IDB to the tune of US$50 million. The IDB money will be used to build “factory shells and inside-the-fence infrastructure,” according to U.S. State Department documents.

The use of taxpayer dollars to subsidize private business is nothing new. “Public Private Partnerships” (PPP) are common the world over. The taxpayers take risks to make a location or a sector attractive for private capital. And while the overall logic and justice of PPPs in general could certainly be debated, the specifics of this PPP really stand out. It goes further than most. It uses tax dollars – mostly from the U.S. – to benefit textile and clothing companies that are not necessarily American, and every job created there will likely result in lay-offs of workers in U.S..

Ultimately, in the case of the PIRN at least, U.S. taxpayers are making it easier and cheaper for foreign and local clothing and textile companies to set up (sweat-)shops in Haiti, lay off better paid workers in the U.S. and other countries, and increase their profits. If Levis and the GAP can get their clothes stitched in a place that pays $5 a day rather than $9 an hour (approximately the lowest wage paid in US-based clothing factories), with new infrastructure, electricity, UN “peacekeepers” to provide security, and tax-free revenues and other benefits, why not?

Ironically, the main private partner in the PIRN is not Haitian or American. The partner is South Korean textile giant Sae-A Trading, which promises to spend $78 million to build a 50,000 hectare factory complex that eventually employs 20,000 workers (in the first phase) and which will eventually include a textile mill that will do knitting and dyeing.

Sae-A Trading is one of the worlds larger apparel makers, supplying GAP, Wal-Mart, Target, and other major U.S. retailers. The company has been building factories and textile mills around the world at record pace recently: Nicaragua, Indonesia, and now Haiti. One of the largest clothing manufacturers in the world, a 2009 article reported that its exports – all to the U.S. – were valued at about $885 million.

“Our 20 factories worldwide produce 1.4 million pieces of clothing a day and the annual production rate is 360 million pieces,” founder Kim Woong-ki told the Korea JoongAng Daily. “That number is nearly equal to the U.S. population.”

But Sae-A Trading is not investing in Haiti to “create jobs,” as the fans of assembly industry-based “sustainable development” – like Haitian President Michel Martelly – claim. The company is moving in to make more money. Sae-A will be in perfect position to take advantage of the Haiti Economic Lift Program (HELP) Act – that allows textiles to enter the U.S. from Haiti tariff-free, and then of the recently approved US-Korea Free Trade Agreement (KORUS FTA). Sae-A Trading is setting up shop just in time.

Approved by Congress in October, KORUS FTA – which could go into effect as early as Jan. 1 – will immediately reduce tariffs on most Korean goods to zero, with more reductions coming in five and ten years. A 2007 study by the U.S. International Trade Commission estimated the agreement “would likely result in a significant increase in bilateral U.S.-Korea trade in textiles and apparel, particularly U.S. imports from Korea.”

And therefore, most likely, a further decrease in employment in the U.S. textile and apparel sector.

How was Caracol chosen?

Even before the earthquake, the GOH and its supporters targeted the north of Haiti for an industrial park because of its proximity to the U.S. and to the Dominican Republic. According to various government and consultant documents, a good site needs access to a large unemployed population, an abundant water supply, electricity, and major highways.

The U.S.-based Koios Associates consulting firm, hired to help choose a site, also noted that the north region was a great place because “the area has large stretches of relatively empty land.”

Of course, “relatively empty” is a relative term, as will be shown below.

The Koios study – dated Sep. 20, 2010 – recommended 18 possible sites, with the Caracol site ranked #2 of 18.

“The river to the east of the site has substantial perennial flow and is likely to be suitable for factories using substantial water and requiring discharge of treated water. The land is devoid of habitation and intensive cultivation,” the report stated.

Except, it wasn’t quite “devoid.” The Caracol site was home to 300 farming plots.

But the site was chosen anyway. According to a subsequent Koios study – dated May, 2011, and entitled “Study of the Environmental and Social Impacts – Industrial Park of the North Region of Haiti” – the Caracol site was selected by the GOH because of:

• the Trou du Nord River - “it is capable of absorbing a large volume of treated water,”

• an abundant subterranean water supply,

• most of the land belongs to the State, meaning that it would be easier to kick off the farmers.

“Good agricultural lands”

In their second study, Koios admitted that the site was actually home to “good agricultural lands.” But it was too late by then. Farmers had been evicted and a fence put up.

Asked after the fact by the Ministry of Environment (MOE), Caracol Mayor Colas Landry said he disagreed with the choice of the spot.

“If I were consulted by the project promoters, I would never propose that site,” he told the MOE in an internal report leaked to HGW. “I would orient them to Madras,” a less-used area nearby.

(According to Haiti’s Free Trade Zone Office, Free Trade and Industrial Zones should not be set up on farming land. In an interview with HGW, the Office’s Luc Especca insisted on the point, saying “We all remember what happened with CODEVI.” The CODEVI Free Trade Zone, built on the fertile Maribahoux Plain, caused considerable upheaval and protests in Haiti and internationally.)

What about the environment?

Shockingly, the second Koios study also admitted that “the study process and the section of sites was not accompanied by extensive environmental, hydrologic or topographic research.” [our emphasis]

Indeed, a comprehensive internal MOE report obtained by HGW confirmed that, noting that “at [no] moment was the MOE associated in any thought in the identification of the Caracol site.”

The report – subtitled “To what extent and under what prerequisite a win-win situation could be envisaged from an environmental point of view” – also noted that the PIRN could have “potentially great adverse impact on the environment.”

Apparently, the Koios team agreed.

When the firm took a closer look at the site in its second study this past spring, it suggested the GOH change the “risk rating” for the project from B, or “medium,” to A which – according to the MOE document – means “significant adverse environmental impacts.”

In addition, Koios noted that a more detailed environmental and social impact would be necessary. The consultants suggested that while the more thorough study is conducted, the GOH should “impose certain limits to the industrial activities authorized in the park during the first 12 to 24 months of operations.”

Koios also noted that the region is also home to the significant indigenous archeological sites, and some of earliest European settlements in the hemisphere. The firm went so far as to make two other, even more radical, suggestions: 1 - Move the project to another site in the north or even a completely different region of Haiti, or 2 - Cancel the project, although, the consultants remarked, “[i]ts cancellation could call into question the reputation of the parties concerned and could harm the reputation of Haiti as a country that welcomes investment.”

Not surprisingly, the PIRN was neither moved nor cancelled.

And, two months after the Koios report came out, perhaps seeking to downplay the environmental aspect, the Ministry of Economy and Finance (MEF) bought several one-page ads in Le Nouvelliste where it reported that “environment issues have been considered with a great deal of attention” and claimed that more studies were underway. A month later, the IDB’s Eduardo Almeida said everything was ready to move forward since “[e]nvironmental impact studies… have already been completed in the region.”

Indeed, the project is moving forward. On Nov. 28, the major actors flew to Caracol to inaugurate the site. Clinton, Martelly, Sae-A Trading, the BID – they were all there.

“Haiti is open for business,” Martelly said as he stood in front of a giant architect’s schematic drawing of the factory zone. “This is the kind of change we need.”

But what about the risks identified by Koios and the Ministry of the Environment? Are more studies taking place or not? Will limits be imposed on the PIRN’s tenants during the first 12 to 24 months? How did the MEF – the main ministry shepherding the PIRN and the one that commissioned the Koios study – react to the Koios recommendations and the MOE report?

Industrial Park in Caracol: A win-win situation?

Why did the Haitian Ministry of the Environment warn of “potentially great adverse impact” from the PIRN being built in Caracol with over $200 million in public and private financing?

Why did the consultants’ study call the nearby Caracol Bay “unique, productive and precious” and say that even if all regulations are followed, the PIRN “could endanger this ecosystem?”

Why did the same consultants – who originally suggested the Caracol site, but who later admitted they did not take environmental considerations into account – tell the GOH to consider moving or even cancelling the project?

These are all relevant and urgent questions.

But even though two extensive environmental and social impact studies – listing numerous risks – are public and posted online, and even though there are also several other studies on the Caracol Bay marine habitat available, no Haitian or foreign media outlet (except Haiti en Marche) has looked further than the press releases from the project’s champions and investors: the U.S. State Department, the IDB, the GOH and Sae-A Trading.

Instead, the Wall Street Journal, Miami Herald, Associated Press, Le Nouvelliste, Haiti Press Network, and others are largely cheerleaders for the PIRN and the mostly sweatshop wage jobs it will provide.

It comes as no surprise that there are numerous environmental and social risks associated with any industrial park – “free trade” or not. But these risks are exponentially greater in poor countries due to poor zoning, lack of legislation and/or government control, large unemployed populations, etc. This does not mean a project should not be undertaken, but studies should be done and the benefits vs. risks put before the public.

As noted above, studies were done, including one released May 13, 2011, by Koios Associates, hired by the MEF in 2010 and a second one, released on Aug. 5, 2011, and commissioned by one of the project’s major investors, the IDB.

Both studies have potential conflicts of interest: Koios chose the site in the first place, and the IDB is donating or loaning over $50 million for the PIRN. But it appears the potential conflicts of interest, and the numerous risks outlined in the documents, were not of significant concern to the power-brokers. Construction has started and a $15 million power plant contract was awarded in September.

HGW lacks the space and the human resources to list all the sources and fully list all the risks, but here are some of the major ones:

Risk 1 - The Caracol Bay environment

Among the most obvious risks are the dangers to Haiti’s fragile environment, specifically the Caracol Bay.

The original, MEF-commissioned study recommending sites for the PIRN was done by the Koios group, whose 110-page study identified the Caracol site as #2 out of 18 possible sites in the north. However, Koios’ own follow-up Environmental and Social Impact Study, in May, 2011, admitted – shockingly – that the environment had not been taken into consideration the first time around.

Also, equally astoundingly, in their impact study, the Koios team claimed that “It wasn’t possible to anticipate the presence of the complex and precious ecosystem of the Caracol Bay before we conducted this environmental evaluation.”

The claim is nothing short of outrageous. The bay – home to mangrove forests and the country’s longest uninterrupted coral reef – has been the subject of international study for some years and is part of several plans to make the region into a park, according to publicly available documents.

1) A 2009 study for the Organization of American States and the Inter-American Biodiversity Information Network (IABIN) put the “value of ecosystem services” of the mangroves and coral reefs in the bay at US$ 109,733,000 per year.

2) In 2010, the UN Development Program and the Haitian MOE initiated plans to set up a “National System of Protected Areas (SNAP).” Over US$2.7 million has been invested in the program already, according to the MOE. One of the first areas on the list is the Caracol Bay.

3) The bay also lies in the Caribbean Biological Corridor (CBC), an area designated by Dominican Republic, Haiti and Cuba back in 2009, and is part of that US$7.4 million project.

Even if Koios somehow “missed” the literature on the bay, the Interim Haiti Recovery Commission (IHRC), co-headed at the time by Bill Clinton, cannot claim ignorance. In October, 2010, the IHRC approved $1 million of the CBC’s $7.4 million in funding. That was two months before the Commission approved the PIRN.

Risk 2 - Water

Another risk involves water usage and water pollution. The PIRN is located in the middle of the Trou du Nord River watershed, identified as a “priority watershed” in a recent study from the US Agency for International Development.

Water for the PIRN and surrounding settlements will likely be drawn from the river and the water table. One study however, by a Washington-based firm commissioned by the IDB, recommends that water is taken from the water table only because the Trou du Nord River empties into the fragile Caracol Bay. Writing in August, 2011, the Environ International Corporation said: “We strongly recommend using underground waters to meet the needs of the site.”

But other studies noted that if too much water is taken from the water table, it could be polluted by salinity due to an intrusion of saltwater from the Atlantic Ocean. Over-exploitation of the water table could also harm agriculture in the region at large, and make it difficult to develop other water-needy businesses, such as tourism. The Environment group disagreed, saying there was ample water.

A study by the Louis Berger Group, commissioned by the MEF and quoted in the Koios study, recommended that water come from both below ground and from the river. The study said the PIRN and surrounding population (current and new) should not use more than 11,000 cubic meters per day. According to the same study, the park will likely need at least 5,800 cubic meters of water per day during Phase 1 (2012-2014) and at least 9,800 cubic meters during Phase 2.

(An internal study from the Ministry of Environment – leaked to HGW – called these estimates “conservative” and “minimalist,” saying they don’t take into account continuing deforestation and projected exponential population growth. More on that study below.)

The other great water-related risk is, of course, pollution or other negative impact from the use of water from the river and water table. Here are the main ways water will be used:

1) For the textile factory being built by Sae-A Trading Company – A large amount of water is needed for the manufacturing and dying processes. There will be significant waste waters needing multiple treatments.

2) For cleaning and other processes at the Sae-Trading and other apparel factories, and possibly for a furniture factory. (Origins Holdings has been listed in some documents as a potential tenant).

3) For the drinking, cleaning and waste treatment needs of workers and other staff, some of whom will live inside the PIRN confines, while others live nearby.

4) For the drinking, cleaning and waste treatment needs arising from the tens of thousands of new residents the PIRN is expected to attract to the region.

A waste treatment plant is planned for the park, but while all of the dye run-off, industrial waste and human waste can hypothetically be managed with proper treatment, all waste waters – clean or not – will eventually end up in the Trou du Nord River and probably the Caracol Bay.

“Even if the wastewater of the park are treated, there are various other dangers related to the development of the industrial park on this site which could put the ecosystem in danger,” the Koios consultants noted.

Water will also be used to cool the electrical plant being paid for by the U.S. government. The plant - being build for US$15 million by a Canadian company – will generate electricity using “heavy fuel oil,” also sometimes called “bunker fuel.” When dumped back into the Trou du Nord River, the temperature of water used to cool the turbines must not be more than 3 degrees centigrade different than when taken out, or it could have significant negative impacts on aquatic ecosystems. Needless to say, the use of oil in that fragile environment also poses a risk.

Risk 3 - Social

The Koios study estimates that the local population could grow by between 100,000 and 300,000 people: “Large industrial or mining projects in poor countries indicate that a large migration like this could occur, no matter what efforts are taken to prevent it.”

Other studies put the number of potential migrants much lower, but even the addition of 10,000 workers and their family members – 50,000 people – will change the region, currently home to about 250,000 people, mostly farmers and fishermen.

Without zoning laws, urban planning, and heavy police presence, the PIRN might give birth to a new set of slums. The country has already witnessed the “slumification” of areas around industrial parks in the capital and in Ouanaminthe, home to the CODEVI park, and it is likely a similar process will occur again.

The sudden arrival of thousands can have numerous negative impacts – more waste, uncontrolled use of water and trees (for cooking needs), and squatter settlements on farmland or in environmentally fragile areas. (U.S. tax dollars are going to be used to build 5,000 homes, but these appear to be slated for “expatriates” and management.)

Also, the Koios consultants noted: “There is… an elevated risk of tension between members of local communities and migrants coming to the region, especially if local residents feel they don’t have the opportunity to profit from the project, especially in terms of jobs.”

The Koios study warned that the negative repercussions of such conflicts might effect factory owners bottom lines, too. “Local and overseas criticism of the multinational companies operating in the park, as well as negative publicity vis-à-vis relations with the local communities (bringing about costly consumer boycotts, lawsuits, and other expensive consequences in terms of reputations and legal risks) are among the greatest consequences of bad management,” the report says.

Mitigating the risks

Not surprisingly, despite the risks they identified, the Koios, IDB and Environ studies all ended up endorsing the project. However, they also listed numerous steps that need to be taken in order to minimize or eliminate the risks. For scores of pages, the consultants outline laws to be voted, programs to be followed, and constructions that include the immediate creation of a marine protected area, an extensive 12 to 24 month environmental study, funding and building infrastructure and housing for the expected migrants both inside and outside the PIRN, and other steps.

Koios also optimistically wrote that “if a sufficient portion of the additional tax revenues are spent on development and on the improvement of the social and physical infrastructure in the region, many of these negative effects can be avoided or diminished.”

Indeed, massive funding could help mitigate risks. But Koios appears to have forgotten that PIRN tenants – textile giant Sae-A and other companies – won’t pay any taxes at all for 15 years, meaning that all the “supplementary tax revenues” will need to come from factory workers, most of whom will earn little more than $5 a day, who will thus be tax-exempt.

But even if the necessary funding is located, some critics, including the man currently serving as Environment Minister, say the recommendations don’t even go far enough.

In his 20-page report assessing the Koios study, dated Jun. 30, 2011, Joseph Ronald Toussaint said the document was a positive step but that it underestimated the “magnitude of impact,” “extent of impact,” “duration of impact,” and “biophysical changes.”

Then a ministry employee, Toussaint also said that Haiti’s then Environment Minister was not “associated in any thought in the identification of the site” [sic] nor in the terms of reference for the Koios impact study. As noted above, Toussaint also noted that the water-use estimates were too “conservative.”

Still, Toussaint’s report claimed a “win-win” situation was possible, if some $54.5 million in studies and mitigation efforts were implemented.

What did the MEF think of the recommendations and were they followed? In August and September of 2011, HGW tried repeatedly to meet with both then-Minister of Economy and Finance Ronald Baudin, and with Toussaint, and even obtained promises of interviews from both offices. In the end, however, both offices refused to speak to journalists.

Maybe the MOE has given up its struggle to protect the bay? No MOE representative was present at the Nov. 28 inauguration of the PIRN construction site. The environmental question and the Bay of Caracol were not even mentioned.

What do Caracol residents think?

Pierre Renel, like most people in and around Caracol, is a farmer. He other farmers who lost their crops last January have formed an association called Association for the Defense of Caracol Workers (ADTC in French).

“The spot they picked for the industrial park is the most fertile part of the department,” said Renel, president of ADTC. “We grow a lot of plantains, beans, corn, manioc, etc. That’s how families raise their children, educate their children… its like our ‘treasury!’”

But Renel and other local residents are not opposed to the park. On the contrary, they are hopeful they and their children will get some of the jobs officials and consultants have described. Some local people already have been hired – as guards or workers at an information kiosk.

According to the PIRN website, all farmers have also received either land or remuneration for their lost crops or – if they were owners – the value of their land. While the PIRN website says all farmers have been paid damages, in a recent telephone interview, several denied this, saying they were originally promised land and money. Also, some say they were not paid the amounts originally promised.

“They told us peasants would get land and cash, and according to Michaël De Landsheer [of the MEF], landowners were supposed get US$1,200 per hectare, but they are not respecting their word,” Renel told HGW.

Farmer Robert Etienne is excited about the factories. “They should have built something like this already!” he said, his eyes glittering. “Because there’s no work in this country.”

But Etienne, in his seventies, won’t be one of those hired. He is too old. Maybe his children will get jobs? Maybe, maybe not. There will be stiff competition, even with their sweatshop wages.

Etienne and Renel and others are probably unaware of how low salaries will be, and of how the local economy will likely change as construction moves forward and the factories start to open up: population explosion, higher rents, a growth in the “informal sector” and street merchants, lessened local agricultural production and perhaps even higher food prices.

As noted earlier, assembly factories with sweatshop wages are not social projects, despite claims made in the media and in studies. The Koios study, for example, claims the PIRN will supply the “means of subsistence to a maximum of 500,000 people, that is 10% of Haiti’s population.”

The claim is very difficult to substantiate. Most workers will earn a wage that can’t even pay the rent, much less send children to school.

In the very same study, the authors also offer up this more honest appreciation: the PIRN “was above all conceived to facilitate investment in enterprises.”

As previously described, Sae-A and the other textile factories are moving to Haiti in order to take advantage of cheap labor, no U.S. tariffs until 2020, a long tax holiday in Haiti, and proximity to the U.S. market. The PIRN is part of a global economy predicated on the exploitation of the lowest wages and a “race to the bottom.”

Are exploitation, potential environmental devastation and social upheaval really a “win-win” situation? Is it just to spend US$179 million in foreign public financing in Haiti, to the possible detriment of workers in other countries? Can a “new” Haiti really be built on sweatshop wages and free trade zones?

Haiti Grassroots Watch is a partnership of AlterPresse, the Society of the Animation of Social Communication (SAKS), the Network of Women Community Radio Broadcasters (REFRAKA) and community radio stations from the Association of Haitian Community Media. To see images, video and to access links to primary sources - http://www.haitigrassrootswatch.org