In response to near-universal calls for the cancellation of Haiti’s debt, President Ma Ying-jeou (馬英九) has made two strikingly specious claims. The first is that the more than US$90 million owed to Taiwan is private debt. The second, a corollary of the first point, is that he cannot enforce cancellation of these debts.
The first claim is disingenuous at best. Despite interminable evasions by government officials from the relevant departments, it is plain that these private institutions are guaranteed by public money. After all, how likely is it that the banks saw lending to Haiti as a sound investment?
David Roodman, a research fellow with the independent Center for Global Research, concurs.
“These are considered sovereign credits, since the Taiwanese government is ultimately on the hook for the loans,” he said by e-mail. “I think this is a good guess because it is extremely hard to imagine private Taiwanese banks lending US$90 million to Haiti without such guarantees; they must be carrying out Taiwanese government policy.”
“The standard statistical source (Global Development Finance) lump such loans with government loans under the heading ‘Public and publicly guaranteed (PPG) debt’ as distinct from ‘Private non-guaranteed (PNG),’” Roodman said.
Speaking on condition of anonymity, an employee of the International Cooperation and Development Fund (ICDF), Taiwan’s official development aid agency, confirmed this. The agency has outstanding loans with Haiti and as much as it likes to pass itself off as an NGO, it is indisputably an organ of the Ministry of Foreign Affairs. Though he could not give a precise figure, the employee named the government-owned Export-Import Bank (EXIM) of the Republic of China as one of the creditors.
Andy Chen of EXIM confirmed that the bank had loaned money to Haitian institutions but would not give specifics on the amount or any guarantees.
“I’ve been instructed to tell you ‘no comment,’” Chen said.
As with the ICDF, though, these loans are ipso facto public. So in this case, at the very least, Ma is not being honest.
When contacted about the status of Haitian debt, government officials almost uniformly skirt around the issue, bandying development jargon and irrelevant statistics. In response to two simple questions — whether debts are guaranteed and whether they will be canceled — Joanne Ou, a section chief with the foreign ministry, began a three-minute monologue that consisted of such pearls as: “Haiti is a very poor country” and “our government definitely wants to help Haiti, that’s for sure.”
The Department of Latin American and Caribbean affairs was similarly platitudinous in its response.
“Haiti is a loyal diplomatic ally to the Republic of China and, given the extent of the devastation caused by the earthquake there, Taiwan is obliged to do everything it can to assist,” a spokesperson said. “In addition to the medical care, relief supplies and other emergency humanitarian aid provided to Haiti thus far, Taiwan will also be playing an active role in Haiti’s reconstruction in the future.”
When pressed to answer the question of debt, Ou said: “We have to talk to the banks. We’re in the process of establishing whether they’re guaranteed.”
The illogicality of this statement hardly needs pointing out. If the government guaranteed the loans, you would hope they might know something about it.
On the issue of cancellation, a senior desk officer at the foreign ministry said that a report had been submitted to the president by a foreign affairs think tank under the National Security Council and that a decision was pending.
Ou, however, denied that the report had been submitted and stressed that, even if cancellation were given the green light, it would need to be approved by the legislature. This brings us to second of Ma’s claims: That he is not in a position to order the debts canceled.
“Even if the state is the guarantor, we would require congressional approval,” Ou said.
“We need to consult the legislature and [for] them to pass a law and plan a budget for this. Then finally we need consensus from the public,” she added.
It is hard to see how this could be the case, at least in the instances I have outlined. Once again, it looks like cart-before-horse reasoning. Presumably the legislature cleared the original guarantees. If not, this either wasn’t required by law, or the guarantees are illegal. Why would implementing them now require the passing of a special bill?
As for public backing being necessary, this is patent nonsense. Taiwan’s aid to its diplomatic allies has long been a focal point for populist rabble-rousing. But short of a citizen-initiated referendum — the right to which was in any case restricted by the 2003 Referendum Act (公投法) — there is no legal requirement for public consultation.
It is well known that Taiwan’s development was spurred by aid that was never repaid. Though the nation’s post-war recovery was hindered in the early years by an incompetent and rapacious Chinese Nationalist Party (KMT) kleptocracy, Taiwan’s woes have never come close to the decades of misery Haiti has endured.
One of the excuses being trotted out by Ou et al is that Taiwan has not been invited to participate in multilateral dialogue with groups like the Paris Club, which wrote off Haitian debt last month, or the G7 nations, which followed suit last week. But now is no time to be engaging in diplomatic tit-for-tat.
Now that Venezuela, a country in financial dire straits, has canceled the US$295 million it was owed by Haiti, Taiwan remains the sole sovereign creditor to this devastated Caribbean nation. This is an unenviable position to be in. For a country so desperate for international recognition, an altruistic display of goodwill would surely impress.
But whatever the decision on cancellation, Ma should stop selling us these red herrings and be honest about the matter. Haiti’s debt to Taiwan is guaranteed by public money and, as such, there should be no barrier to waiving it.
John Smith is a freelance writer based in Taipei.
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