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Haitians hope free zone will lure investors to impoverished border area
San Juan Star / February 23, 2004

By Larry Luxner

PORT-AU-PRINCE, Haiti — One recent afternoon, as thousands of angry Haitians rallied for and against President Jean-Bertrand Aristide downtown, Max Antoine II sat quietly in his air-conditioned office at the Ministry of Finance, wondering how to improve living conditions along Haiti's border with the Dominican Republic.

"Out of 16 million people in Hispaniola, one million Haitians and 600,000 Dominicans live close to the border, which is the poorest area of both countries," he said. "In the border area, potable water and electricity are very scarce, and on the Haitian side, health-care facilities don't exist at all."

Antoine's official title is executive director of Haiti's Fonds de Développement Frontalier, or Frontier Development Fund. That group, born out of a business conference in Miami 10 years ago, encompasses the private sectors of both countries and aims to attract foreign investment — mainly in apparel, textiles, electronics and toy manufacturing.

As early as the 1960s, Haiti's low-wage advantages had helped it become a leader in the Caribbean export-assembly industry. At its height in 1987, the country employed 50,000 people in 130 factories, generating more than $200 million in annual foreign exchange. Haiti's most famous export was baseballs; companies like Rawlings Sporting Goods Co. and MacGregor Sporting Goods supplied 90% of the balls used in major-league games.

But by early 1992, with Aristide overthrown by a military coup and its dictatorship under an international embargo, most U.S. companies had pulled out, leaving only 600 workers in the three or four plants still operating.

"In 1994, following the coup and the embargo, Haiti's economy was devastated," Antoine told The STAR. "The private sector was completely decapitalized, and production was destroyed."

Things aren't much better today, as Haiti rapidly descends into a new and dangerous cycle of violence. Many Haitians are unemployed, and the lucky ones — about 35,000 to 40,000 people — toil in factories, earning an average $1 a day plus fringe benefits. That's low even by Dominican standards; on the other side of the border, wages average $2 a day plus fringes.

On the other hand, Antoine points out, Haiti has no U.S. apparel quota.

"The Dominicans do have quotas, so apparel manufactured on the Haitian side could be exported without any problem," he said. "Secondly, it would diversify investment on the island, since some people would prefer to invest in Haiti and others in the Dominican Republic."

Before his current job, Antoine directed the Haiti Chamber of Commerce and established the Haitian-Dominican Foundation. The economist, who speaks fluent French, Spanish and English, said he's sure the border area — comprised of 16 Haitian departments and five Dominican provinces — would benefit from this kind of cooperation.

"It would allow the business sectors of both countries to join forces and invest to promote development throughout Hispaniola," he said. "It would create an economic development zone and attract foreign investment. This is my vision."

Yet it may remain just that — a vision — given Haiti's current political chaos and a general feeling here that the Dominicans are out to exploit their less fortunate Haitian neighbors.

Such feelings, which have deep historical and racial roots, were evident last October, when the World Bank's private-sector financing arm, known as the International Finance Corp. (IFC), approved its first loan to Haiti in five years.

Non-governmental groups, fearing potential labor abuses, tried to stop the $23 million loan to Grupo M, a Dominican company that assembles jeans for Levi Strauss at a free zone in Santiago de los Caballeros and is now building a 54-hectare free zone near the Haitian border town of Ouinaminthe.

But the loan was approved by the IFC's board without objections from any of its shareholders, according to Mark Constantine, the IFC's principal strategist.

"There is a complete lack of private investment going on there and pretty miserable conditions for the local community," said Constantine. "It's a very poor area, and the people working there are thrilled to have jobs."

Constantine said that because the texile plants in the proposed free zone plan to subcontract for major U.S. retailers, Grupo M will probably stick to the rules even though they are not set out in the IFC deal. "The Levis and Liz Claibornes of the world cannot afford the reputational risk that comes with lousy practices," he noted.

According to Antoine, the plant would employ 4,000 workers, "and in Haiti, when you hire one person, five to seven people benefit from that one job."

Even so, he said, "some people didn't want it because they were afraid foreigners would take their land away. But there is zero agriculture in Ouinaminthe. Here's a foreign company that's willing to invest. And Grupo M says it'll offer technical assistance and agriculture. They're going to set up two or three mobile clinics and provide electricity and clean water."

Antoine added that Grupo M's president, Fernando Capellán, "has committed himself to offering scholarships to the area's 10 best students and sending them to the Catholic University of Santiago."

An estimated 500,000 Haitians live in the Dominican Republic, where they hold menial jobs in agriculture and construction. Antoine says these Haitians "contribute strongly to Dominican wealth though they sometimes feel hate," whereas Dominicans, "a couple of thousand living in Haiti and working at small restaurants and hair salons, as mechanics or hookers, get no resentment."

Whether Antoine's free-zone vision will ever materialize is questionable, as is his prediction that "the Haitian side of the border has the potential for ecotourism development, with a lake area and Fort Libertie," a seaside town at the border's northern end.

In any case, he said, "we're ready to build. We may never overcome this mutual distrust, but we can work around it and make something positive of it."

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