VZCZCXRO3353
PP RUEHQU
DE RUEHPU #0700/01 1341833
ZNR UUUUU ZZH
P 131833Z MAY 08
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 8200
INFO RUEHZH/HAITI COLLECTIVE PRIORITY
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1910
RUEHSA/AMEMBASSY PRETORIA PRIORITY 1702
RUEHQU/AMCONSUL QUEBEC PRIORITY 1130
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 PORT AU PRINCE 000700 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON HA EAGR
SUBJECT: HAITI: PRIVATE SECTOR INITIAL RESPONSE TO VIOLENT 
RIOTS FUELED BY RISING FOOD PRICES 
 
REF: A. PORT AU PRINCE 575 
     ¶B. PORT AU PRINCE 583 
     ¶C. PORT AU PRINCE 577 
     ¶D. PORT AU PRINCE 344 
 
PORT AU PR 00000700  001.2 OF 003 
 
 
Summary 
------- 
 
¶1. (SBU) Haiti's business community is slowly recovering from 
the shell-shock of the April rioting.  The property damage 
they suffered was minor compared to the psychological blow. 
They see these disorders as a major setback in Haiti's 
stabilization.  Some are asking whether Haiti can recover and 
ever become a normal country.  Many blame the government for 
not acting sooner on food inflation, and believe President 
Preval intervened too late, and with subsidy policies that 
are unsustainable.  A small minority believes that MINUSTAH 
and the government collaborated to protect government 
facilities but ignored attacks on private property.  The 
Haitian Chamber of Commerce of Industry is demanding 
government compensation for damage to their property -- for 
which Preval has said there are no government funds to pay. 
However, the business community is beginning to recover. 
Representatives of the American Chamber of Commerce, the 
Haitian Chamber of Commerce and Industry, and other 
associations generally remain committed to resuming 
government-private sector dialogue and to helping the 
government fashion and implement a modernized market economic 
and anti-crime agenda.  End Summary. 
 
Private Sector Condemns Violence 
-------------------------------- 
 
¶2. (SBU) A majority of business community representatives 
Post has contacted after the early April food riots view the 
violence that rocked Haiti as a major setback to Haiti's 
stabilization efforts.  The business community widely 
believes that demonstrators with criminal and political 
motives infiltrated legitimate protests against the rising 
cost of food prices in early April.  The private sector knew 
that rising food and fuel prices were hurting Haiti, but 
business leaders were surprised at the suddenness and scale 
of the violence that accompanied the demonstrations.  Most 
private sector associations published press releases 
condemning the violence, calling on the Government to arrest 
those who damaged property and pay compensation to businesses 
that suffered damage, and criticizing the "unhurried 
response" of the police.  (Note: At least 227 businesses -- 
both formal and informal -- and 22 gas stations were reported 
damaged in Port-au-Prince alone.  End note.) 
 
¶3. (SBU) Many private sector leaders believe political 
opponents of the government and criminals organized the 
violence.  In a meeting with AmCham board members April 23, 
businessman Rene-Max Auguste (protect) told the Ambassador 
that criminal elements, including some with links to the 
private sector, oppose democratic stabilization and prefer to 
exploit Haiti's weak institutions to further their own 
interests.  Auguste thought that these opportunists have 
greater influence than the "progressive private sector." 
Haitian Chamber of Commerce and Industry (CCIH) President 
Jean-Robert Argant (protect) told Econoff April 30 that some 
elements of the private sector fear they will not be as 
financially successful if economic reforms are instituted. 
 
MINUSTAH Conspiracy Theory 
-------------------------- 
 
¶4. (SBU) At the April 23 meeting with the Ambassador, AmCham 
board member Phillip Armand (protect) claimed MINUSTAH 
deliberately neglected to remove barricades, disperse violent 
protestors, and stop tire-burning, and concentrated on 
protecting the National Palace and President Preval.  (Note: 
He appeared to imply MUNISTAH complicity in a Preval plan to 
use the rioters to intimidate private businesses.  End note.) 
 Armand was the only person to express that extreme opinion, 
but other Board members agreed that although the Haitian 
National Police (HNP) lacked the capability to control the 
unrest, they had expected more forceful and effective 
intervention from MINUSTAH.  In response, the Ambassador 
stressed that MINUSTAH was not a security or development 
force, but a stabilization force.  She reaffirmed USG support 
for MINUSTAH and its efforts to support the HNP during the 
 
PORT AU PR 00000700  002.2 OF 003 
 
 
rioting.  She noted that Preval has often stated he did not 
envision MINUSTAH departing prior to the end of his mandate 
in 2011, given the need to restore long-term stability. 
 
Preval Reacts Too Late 
---------------------- 
 
¶5. (SBU) AmCham members told Ambassador a firm government 
response in the period immediately following the February 28 
interpellation of Prime Minister Alexis (ref D), or 
immediately after the outbreak of violence in Les Cayes April 
3, might have prevented unrest in Port-au-Prince.  The period 
of mounting criticism of Alexis in late February would have 
been an ideal time for the GoH to go to the public with 
policy reforms to address food inflation.  Most believed that 
Preval's April 10 and 12 public messages urging an end to 
violence and proposing agricultural reforms came too late 
(ref A). 
 
Pessimism As To Whether Haiti Can Make It 
----------------------------------------- 
 
¶6. (SBU) Newly elected AmCham President Gladys Coupet 
(protect) of Citibank said that the violent unrest had shaken 
her faith in the prospect that Haiti can move beyond the 
Aristide-era political instability.  She said that even 
before the April events, poor GoH management had produced 
political reform and economic growth that were just too slow. 
 Board members believed that the psychological impact of the 
violence on the private sector, the Haitian population, and 
prospective investors would cause a major setback in Haiti's 
growth and stabilization.  Coupet said that some business 
owners have begun thinking of "exit strategies" from Haiti in 
lieu of continuing to build up their businesses here.  Now, 
she lamented, the private sector will have to "start from 
scratch" with the appointment of a new government. 
 
¶7. (SBU) Many AmCham members conceded that the GoH lacks 
capacity and resources, but laid the crisis at the door of 
GoH mismanagement and corruption.  Members said Preval is too 
involved in directly managing the government -- doing his 
prime minister's job -- which is proving detrimental to 
government effectiveness.  Government-private sector dialogue 
has all but stopped, but for a few close private sector 
"friends" of Preval who act as advisors.  Rene-Max Auguste 
remained determinedly optimistic, declaring that he was 
"staying put" in Haiti, and that the private sector had no 
choice but to continue to engage the new government to 
develop and implement needed reforms.  He got most AmCham 
board members to agree that the private sector must press for 
regular, "institutionalized" government-private sector 
consultations to develop a plan of action, and that this is 
the only way Haiti can move beyond the setback it suffered in 
early April. 
 
Private Sector Response to Food Plan 
------------------------------------ 
 
¶8. (SBU) There is considerable private sector skepticism over 
the President's rice subsidy plan.  In a meeting with the 
Ambassador, Center for Free Enterprise and Democracy member 
Bernard Craan recommended the GoH avoid a short-term policy 
focus on subsidizing food, and instead invest in sustainable 
short-term projects that create jobs, such as financing 
communal kitchens and irrigation projects.  Supermarket chain 
and auto dealership owner Reginald Boulos warned the 
Ambassador April 29 that while rice subsidies would work for 
a short time, the re-opening of school next fall would be the 
next political crunch point for the government, since parents 
faced greatly increased school fees and other education 
costs.  He recommended a public-private sector partnership to 
subsidize school fees, implement school breakfast programs, 
help poor families pay for school supplies, and organize a 
system of school buses.  JMB S.A. mango factory owner 
Jean-Maurice Buteau was similarly skeptical toward the 
President's agricultural help plan, telling Econoff April 24 
that fertilizer and seeds would not help Haiti in the short 
term as the spring planting season has already ended. 
 
Division within the Private Sector 
---------------------------------- 
¶9. (SBU) UniBank Vice-Chairman Edouard Baussan explained to 
Ambassador April 19 that the private sector speaks with 
 
PORT AU PR 00000700  003.2 OF 003 
 
 
different voices.  He said that some business persons are 
genuine advocates for reform in Haiti and want to support the 
GoH's agenda, while others want to take advantage of the 
government's past corrupt management practices to further 
their own interests.  Addressing the issue of private sector 
unity, Coupet recommended consolidating the numerous private 
sector associations for greater effectiveness. 
 
A Tentative Way Forward 
----------------------- 
 
¶10. (SBU) Despite the immediate shell-shock among certain 
AmCham board members in the April 23 meeting, we detect broad 
but not universal agreement among business leaders that they 
have little choice but to soldier on and work with President 
Preval and the new government to implement needed reforms. 
Baussan told Ambassador that the forward-looking part of the 
private sector, and Haitians in general, do not want to "go 
back in time."  The principal private sector recommendations 
to the GoH include continued democratic reform, reinforcement 
of the tax system and a crackdown on the drug trade.  Most 
business persons we hear from say that not subsidies but job 
creation is the solution to poverty and the rising cost of 
living.  AmCham in particular strongly supports the extension 
of the Haiti Hemispheric Opportunity through Partnership 
Encouragement Act (HOPE) and international debt relief. 
 
¶11.  Most business leaders are still willing to give Preval 
the benefit of the doubt, if only because they see no real 
alternatives on the horizon.  French-Haitian Chamber of 
Commerce President Gregory Brandt said Preval is clear about 
his intention to move the country forward, and is committed 
to staying on course with the GoH's agenda of promoting 
democratic reform and ridding the country of drug smuggling. 
Some leaders, especially new AmCham President Gladys Coupet, 
believe the business community should consolidate the 
numerous private sector associations to better concentrate 
their policies and message, and to engage the government more 
effectively.  There is also general agreement with Baussan's 
point that the international community must maintain its 
commitment to Haiti and support for the GoH and Preval. 
SANDERSON