Impoverished Haiti is stabilizing but still risky

MIAMI, (Reuters) – How stable can a nation like Haiti  be, where U.N. soldiers still keep the peace, where a prime  minister was toppled by food riots 18 months ago and where a  president was overthrown by armed rebels five years ago?  

Former U.S. President Bill Clinton raised eyebrows at an  investor conference in Port-au-Prince last week by saying that  Haiti’s political risk was lower than it had ever been in his  lifetime.  

That period includes a popular uprising that ousted the  30-year Duvalier family dictatorship in 1986, a military coup  that sent President Jean-Bertrand Aristide packing in 1991 and  years of gang violence and political tumult.  

“It’s a slight exaggeration. If he had said lower than at  any time since 1986, the year Duvalier departed power, I might  be inclined to agree with him more,” said Jean-Germain Gros, a Haitian-born political analyst at the Univer-sity of Missouri.  

“But there is no question that things have stabilized  somewhat in the last two years,” he added.  

President Rene Preval’s government and the 9,000-strong U.N. peacekeeping force have calmed gang violence in the slums.  Kidnap-pings for ransom, rampant last year, have dropped  sharply.  

The legislature, once a forum of chaos and contention, passed a budget on time this year, a sign that Preval’s olive  branch to warring political factions is working.  

“This is the first time you see a relative willingness on  the part of the executive and legislative branch, with the  various parties represented there, to work together,” said Mark  Schneider, an analyst at International Crisis Group.  

 “WINDOW OF OPPORTUNITY”  

The charisma Clinton, appointed U.N. special envoy to Haiti  in May, lured several hundred potential investors to the  capital Port-au-Prince last week and many said they believed a  window of opportunity had opened to put money into a country  desperately in need of roads, power and foreign investment.  

About 70 percent of Haiti’s 9 million people live on less  than $2 a day. 

Clinton brought representatives of the Multilateral  Investment Guarantee Agency, the arm of the World Bank that  insures political risk in emerging economies. The agency has  never written a policy in Haiti but said its window is open.  

“We would be very happy and ready to look at very good, sound projects to underwrite,” said Noureddin Ennaboulssi, a  senior MIGA underwriter who visited Haiti last week.  

“My sense right now is that the country is moving in the  right direction,” he said. “The country is doing a lot to  provide a climate conducive to foreign direct investment.”  

Ennaboulssi said MIGA had had recent inquiries from firms  involved in agriculture, textiles, infrastructure and tourism.  

He declined to reveal MIGA’s risk rating on Haiti, a  proprietary formula used to determine insurance pricing. MIGA  writes insurance on currency, war and civil disturbance,  expropriation, breach of contract and other risk factors.  

But Belgian risk insurance agency ONDD has Haiti’s  medium-to-long term political risk for export transactions  rated a seven, the highest measure on its 7-point risk scale.  

The Belgian agency’s Haiti ratings across all measures of  war, expropriation and political risk are higher than poor  African nations like Guinea Bissau and Burkina Faso.  
 
BETTER POLICE, BUT WEAK COURTS  

The Haitian National Police force, which replaced the  dreaded army in the mid-1990s, is not nearly ready to provide  enough security to allow peacekeepers to withdraw, analysts  said. The force has grown to about 9,000 trained officers and  the government’s goal is 14,000 by 2011.  

And while the police force is stronger, potential investors  could be deterred by a weak judicial system whose ability to  enforce business contracts is in question, Gros said.  

“That’s the big black hole in Haitian governance. If there  is one area in which no one can claim progress it’s in the judiciary,” he said. “Prisons are overcrowded. There is still a  lack of judges and those that are on the bench are corrupt.”  

Investors will watch with interest a current debate on  whether to reinstate the army, which terrorized the country  before it was disbanded by Aristide in 1995. Many Haitians are  believed to oppose such a move.