May 27, 2018
The Dominican Republic ditched Taiwan for China. Is Haiti next to cut diplomatic ties?
May 27, 2018 07:00 AM
Anyone who has been to Haiti’s capital knows that crumbling infrastructure, terrible gridlock and blackouts are the norm.
Youri Chevry, the mayor of Port-au-Prince, says foreign aid can help him change all that — but not from Haiti’s traditional partners. From mainland China.
“We don’t have a city,” said Chevry, who campaigned on reviving the destitute capital city, which was destroyed in the 2010 earthquake. “It’s not about China, or anybody else. It’s about rebuilding Port-au-Prince. China is offering me something that I like and I want to go for it.”
A young woman is carried across a flooded street by a man charging 5 gourdes (10 cents) for his service during a rainstorm in Port-au-Prince, Haiti, Saturday, June 20, 2015.
The Dominican Republic, Haiti’s next door neighbor on the island of Hispaniola, has just entered into a new partnership with China after it reportedly offered $3.1 billion in investments and loans. In the process, the Dominican Republic severed diplomatic ties with Taiwan, a relationship it has had for 77 years.
Will Haiti be the next to find China’s money too tempting to turn down?
Since last summer, two Chinese companies — Southwest Municipal Engineering Design and Research Institute and the Metallurgical Corporation of China (MCC), a state-owned construction firm — have been negotiating with Chevry over a $4.7 billion plan to rebuild the municipality of Port-au-Prince and transform it into a more modern city, according to the mayor and representatives of the Haitian firm involved in the negotiations.
Southwest Municipal did not respond to an email seeking comment and MCC could not be reached. But in an Aug. 25, 2017, letter sent by Chevry to Southwest adviser Xie Yong Jian, the city government confirmed its acceptance of the proposal. The letter was signed by Chevry and his two vice mayors. The mayors said they decided to support the project “after thorough research and prudent consideration.”
Youri Chevry, mayor of the city of Port-au-Prince, Haiti, wants to remake his quake-ravaged municipality with Chinese investments.
Jose A. Iglesias JIglesias@Miamiherald.com
Among the offerings to the city of Port-au-Prince: a 600-megawatt power plant, a 559-mile water distribution network, a sewage system with wastewater treatment plants, reconstructed roads, street security cameras, and a reconstructed downtown with a rebuilt city hall, parks and markets.
“If these things happen, it’s going to be a real start for Haiti, not just Port-au-Prince,” said Chevry, who initially just wanted to rebuild City Hall and the famous Croix-des-Bossale market where slaves were once sold, before the Chinese offered much more.
But there is a problem. Haiti remains loyal to Taiwan, which has been scrambling to hold on to its diplomatic allies as China steps up its campaign to force formal recognition of its “One China” policy by luring countries away from Taiwan with economic incentives. Because Beijing considers Taiwan to be a breakaway province that will one day be reunified with China, it won’t extend diplomatic relations to countries that recognize Taiwan. The Dominican Republic became the second country in the region, after Panama last year, to make the switch to Beijing, reducing Taiwan’s diplomatic allies to just 19.
China’s latest poaching comes amid a threat of a trade war with the United States, and rising concerns by some U.S. lawmakers and the State Department about China’s expansion into Latin America. A State Department spokesperson for the western hemisphere said the department is not only disappointed by the Dominican Republic’s decision, but also “the timing of that decision; and the manner in which it was conveyed to the Dominican Republic’s international partners.”
In Port-au-Prince, U.S. embassy officials have been trying to assess the state of Haiti and Taiwan’s relationship, which dates back to 1956 following Taiwan and China’s bitter 1949 split and the start of their rivalry for global recognition.
On the heels of the Dominican move, Taiwan’s ambassador to Haiti, Hu Cheng-Hao, met with the president of the Lower Chamber of Deputies, Gary Bodeau, and President Jovenel Moïse to convey Taiwan’s desire to invest more in Haiti’s agriculture.
Days earlier, in Taipei, Hu’s government agreed to a $150 million low-interest loan for Haiti’s rural power grids as it hosted Haiti Foreign Minister Antonio Rodrigue. Rodrigue had traveled to Taiwan to negotiate additional assistance and prepare for an official state visit by Moïse, planned for May 26.
Moïse, who has been in office 15 months, is facing a $155 million budget deficit, dwindling foreign aid and mounting discontent over expected increases in fuel prices. He is under considerable pressure to find external financing to improve Haiti’s poor economic outlook and fulfill a slew of campaign promises, including bringing 24-hour electricity to all of Haiti within the next 13 months.
But with members of the country’s private sector intensifying pressure for Haiti to follow in the footsteps of the Dominican Republic, Moïse faces tough questions about whether Haiti is missing out on development opportunities by sticking with Taiwan. While Taiwan recently financed the construction of Haiti’s new post-quake supreme court building, its assistance has often been criticized as helping to enrich politicians rather than boosting development because aid checks are often given with little, if any, conditions or oversight.
“After 59 years of diplomatic relations, Haiti has been accustomed to an ally giving money directly to the authorities without ‘conditionalities,’ ” said Fritz Jean, an economist who was briefly prime minister of Haiti. “It helps smooth out political tensions and opens the door for non-orthodox behavior.”
Asked what he expects Moïse to get out of a Taiwan visit, Jean said, “beside the honor of being received as the commander in chief? Well, maybe $50 million more.”
That’s enough to pay for roughly 31 miles of new paved road in Haiti, or even a presidential election.
Haiti, which inherited Taiwan’s embassy and ambassador’s residence in Washington after the Carter administration decided to recognize the People’s Republic of China as the only legitimate representative of the Chinese people, “is shortsighted,” Jean said.
In this file photo from 2015, a woman walks along the Champ de Mars public square in Port-au-Prince where a new Ministry of Interior building, left, and Supreme Court, right, financed by Taiwan, PATRICK FARRELL Miami Herald file photo
“It’s a brave new world out there and mainland China is evolving to be on top of it economically and otherwise,” he said, noting that the Dominican Republic is demonstrating it understands the changing international landscape. “Sooner or later, we will have to concede involuntarily to the new world order [but] without the capacity to negotiate as our neighbors did. And we will receive peanuts.”
Nicolás Santo, an entrepreneur who has experience in doing business with China and its investments in Latin America, said the Dominican Republic was right to join “the overwhelming majority of the world in recognizing the [People’s Republic of China]. This decision will certainly bring a lot of prosperity to the Dominican people.
“Rejecting the possibility of establishing diplomatic ties with the largest economy in the world makes no sense. China is the largest exporter in the world, the second largest importer, the second largest investor. By not having diplomatic ties with the PRC, a country is only missing the biggest opportunity of the century,” he said.
And, Santo said, China also would get something out of the deal. “Helping Haiti and investing in Haiti would help China create a great regional branding and prove that when [former U.S. Secretary of State] Rex Tillerson said that China was an imperial power, he was wrong.”
Chinese assistance isn’t without problems or critics.
In remarks delivered at the annual Washington Conference on the Americas at the State Department last week, Florida Sen. Marco Rubio, chairman of the Senate Foreign Relations Western Hemisphere subcommittee, called China a threat and said its expansion into the region needs to become a priority for the United States.
“The Chinese investment is not like our investment,” Rubio said. “Number one, they bring their own workers. Number two, it’s a one way street, but they use their political leverage to try to align the foreign policy of the country with theirs, and often against ours, including votes in international forums. And the third is, it’s a fountain of corruption. If an American company tries to bribe an official in one of these countries they’re going to go to jail. That is a matter of practice, that’s the way they conduct business, and that’s difficult to compete against.”
At a Senate Foreign Relations subcommittee hearing on Tuesday, Rubio, questioning Deputy Assistant Secretary of State Alex Wong, asked if the State Department was reaching out to countries in the hemisphere about leaving Taiwan for Beijing and telling them “we don’t want to continue to see them to do so?”
“Attempts to close off the international space of Taiwan and to alter the status quo across the strait are disturbing to the United States,” Wong said. “Any moves to strip Taiwan of its diplomatic partners disturbs that status quo and that’s something that we make clear to our partners and we make clear to Beijing as well.”
“So we made it clear to the Dominican Republic that they shouldn’t do what they did?” Rubio asked.
“That is my understanding,” Wong said.
“And they did it anyway,” Rubio said.
Motorcycle taxis ride in the traffic-clogged streets of Port-au-Prince, Haiti, in 2015. The Chinese-made vehicles began to flourish after Haiti’s devastating earthquake of 2010, when foreign aid workers brought them in as part of their disaster-relief efforts.
Dieu Nalio Chery AP
Daniel Erikson, a former Obama administration expert on Latin America, said while a few members of Congress have been vocal, the Trump administration has been sending out mixed messages on whether its sees Chinese engagement in Latin America as a threat, a nuisance, or a fact of life.
“The paradox here is that the Trump administration professes to be greatly concerned about Chinese influence in the hemisphere, but then yawns when China succeeds in peeling away Taiwan’s allies,” Erikson said. “Why should countries in Latin American take broader U.S. warnings about growing Chinese influence seriously?”
The Port-au-Prince municipal renovation project is not the first time Haitian leaders have sought Chinese assistance. In 2015, then-President Michel Martelly’s government signed a $289.3 million contract with the Chinese to build a new airport terminal and upgrade Toussaint Louverture Airport. The contract required Haiti to pay down $42.5 million on the loan, which interim President Jocelerme Privert’s government paid months later.
Privert was forced to back away from the contract after the U.S. and other donors objected because it violated Haiti’s agreement with the International Monetary Fund, which had cancelled Haiti’s debt after the earthquake. Under the agreement, Haiti can only accept low-interest or concessional loans, which the Chinese money was not. Up to now, Haiti has been unable to recover its down payment from China, Haiti’s finance minister confirmed last week.
Under the Port-au-Prince deal being discussed with China, the money is a combination of low-interest and commercial-rate loans, said Hans Tippenhauer, CEO and vice president of Bati Ayiti. A local company, Bati Ayti has partnered with Metallurgical Corporation of China (MCC).
Tippenhauer said the funds would not be allocated to the municipality of Port-au-Prince or Haiti’s central government, but rather a yet-to-be-created Haitian private-public company. The company would manage the investment during the construction and then operate the projects for 30 years, under what’s known as build-operate-transfer, to recover the funds before transferring everything over to the municipality.
“All contracts are already signed and we are just now waiting for the president and prime minister to make up their minds,” said Tippenhauer. “China is offering Haiti an opportunity to not only repair its infrastructure, but also change its story and become a platform for the development of other Caribbean countries.”
Still, former government ministers and some economists remain skeptical of the project’s feasibility. They cite not only the lack of diplomatic relations with China and Haiti’s loan restraints, but question Port-au-Prince’s ability to repay such a debt even under the proposed build-operate-transfer structure. The city has very limited resources and even delivery of basic services like trash pickup is a challenge.
Chevry acknowledges his city has a revenue problem. His budget last year was just $7.7 million for more than a million residents living in a densely urbanized area. Meanwhile, a 2016 survey of 47,000 houses, found that only 5,000 had actually paid taxes.
“I won’t be able to repay $4 billion,” he concedes. “This isn’t a loan, it’s a type of financing. They are going to build these things…run it and they are going to get their money back.”
Wilson Laleau speaks in a convoluted manner about Haiti’s interests and the challenge of making the best decision for the Nation. In his comments, immediate cash gratification seems to be the focus, while he has a blindfold on with regard to the cold realities of life.
I hope our president isn’t suffering from the same blind spots.
The cold realities of life do not focus upon the bags of cash Taiwan, or the Peoples Republic of China may place on the table. These are transitory elements in a massive, life-and-death combat of geopolitics for the United States.
The major opponent/potential enemy of the United States is not Putin/Russian – it is the PRC and Chinese mainland. Taiwan is a stone in the PRC’s shoe. Taiwan is an ally, and always has been an ally, of the United States.
Taiwan has always been Haiti’s ally, since Haiti was one of the first to give Taiwan recognition after it 1949 break-away from the mainland China.
Taiwan is the battle ground between the Americans and the PRC. Even as I type this note, PRC atomic bombers are landing on a newly created air base, on a reef in the South China Sea.
Think of the situation we would face, with regard to the Americans, should Haiti dump Taiwan and recognize the PRC mainland Chinese??
With the Dominican Republic recognizing them, Haiti’s recognition would give them the entire Island of Hispaniola. The next thing we would see is a big Chinese warship making a “friendly visit” to Port-au-Prince. Perhaps long-range Chinese atomic bombers would pass by for a refueling stop.
Even a simple think like a hurricane could see the Chinese relief vessel pop into our harbour, like the USS Comfort
A huge and overwhelming embarrassment, and loss of face for the United States.
We must stop focusing on short-term cash.
The basic danger here, and the Americans have tried to send the message subtly,
“Screw with Taiwan and lose our phone number!!”
Haiti must recognize the dangers, and the severity of this decision, which is not just a “Black & White” who give the most money situation, which always appeals to the greedy among our leaders – and that includes all but a couple.
THIS IS A BIG INTERNATIONAL PISSING CONTEST AND HAITI’S WRONG CHOICE WILL SEE US DROWNED IN URINE!!
FOR SHORT-TERM GAINS ARE WE WILLING TO LOSE AMERICAN AID – FOREVER??
One of Jovenel’s key advisors asked: “But what about the Dominican Republic?” when the question came up and the DR had just switched to the PRC.
Well now, the DR does not need the United States. They have stability, law-and-order, investment, tourists, agriculture and a budget of more than $10 billion.
They can stand on their own.
Haiti has chaos, no law-and-order, no investment, bad agriculture and a budget of slightly more than $1.5 billion.
HAITI NEEDS THE UNITED STATES!!! BUT THE USA DOES NOT NEED HAITI AND TRUMP COULD PULL THE PLUG FOREVER!!