As Haiti teeters on the brink of state collapse amid a marked resurgence of kidnappings, insecurity, and gang violence, Western powers have resorted to their usual strategies to try to stabilize the country: sanctions on Haitian elites connected to gangs and efforts to strengthen the national police. Meanwhile, after nearly a year of debate, international actors including Kenya and the United States have inched closer to fulfilling Haitian Prime Minister Ariel Henry’s calls for yet another foreign intervention in the country.
There may be a role for punitive measures in the international community’s approach, but any strategy that focuses purely on criminal justice or military-style security mechanisms is doomed to fail, just as past U.S. interventions did. Pervasive state-sanctioned gang activity is just the most visible reflection of the primary, though under-recognized, driver of Haiti’s catastrophe: the country’s broken monetary system, which is a legacy of its colonial past.
The dollarization, devaluation, and hyperinflation that have decimated Haiti’s economy and left most Haitians in poverty are merely the latest offshoots of a financial crisis many centuries in the making. International efforts will only succeed if they confront and make amends for Haiti’s brutal history of colonization. Rather than using force yet again, Western powers—especially France and the United States—should turn to monetary policy and financial tools to address the roots of Haiti’s crisis and restore the country’s monetary sovereignty.
The French colonization of Saint-Domingue, as Haiti was known in the 18th century, kicked off more than two centuries of monetary imperialism. It began under the auspices of French corporate trading monopolies, which brought the sugar revolution to the Caribbean islands and populated them with white settlers and enslaved people from West Africa. Eventually, Saint-Domingue would become the world’s most lucrative colony.
In 1720, following the disastrously costly wars of French King Louis XIV’s reign, the royal government harnessed the colony—and particularly its enslaved laborers—in the service of paying off France’s enormous debts. France used its monopoly over the slave trade to Saint-Domingue as part of the collateral for a scheme to convert its debts into corporate equity. It did this by selling shares in a global trading consortium known as the Company of the Indies. This attempt at a debt financing revolution mostly fell apart by the end of 1720, but it showed France’s willingness to subordinate Haiti to its own financial and political interests.
Around the same time, as tensions grew among Saint-Domingue’s leading white sugar planters, colonial administrators, and the colony’s growing maroon communities—groups of individuals who escaped from slavery—French administrators put in place a system of fugitive slave militias. Free people, including people of color, were charged with capturing and punishing maroons in the mountainous escapes and frontier regions of the colony. These militias were, in effect, publicly financed private gangs, and their systematic use starting in the 1720s marks the beginning of the culture of domestic insecurity and public-private terror that has repeatedly wreaked havoc on Haitian civil society in the modern period.
The revolution of 1791-1804 brought Haiti its independence, but it did not fully free the country from France. In 1825, France imposed on Haiti an indemnity of 150 million francs as a condition of recognizing Haiti’s (already won) independence. France justified the massive penalty, perversely, as a form of reparations to the former slaveholders. It is hard to fully capture the upside-down logic of this arrangement: The indemnity amounted to a demand that Haiti’s formerly enslaved people compensate their oppressors for their loss of property—including not just land, but also enslaved people. Under threat of military action, Haiti acquiesced.
Although France later reduced the amount, it still forced Haiti to finance the extortion with a 30-million-franc loan from none other than French banks—the first of several onerous loans. The resulting double debt—aptly named a “ransom” in a landmark May 2022 New York Times investigation into the money—took the Haitian government more than a century to pay down. Haiti ultimately paid France a total of 112 million francs, or $560 million in today’s money. This hobbled Haiti’s chances of developing viable financial and democratic institutions for much of the 19th and 20th centuries.
The legacy of the 1825 indemnity links French and U.S. actors, both public and private, in an ugly web of foreign financial aggrandizement at the expense of Haiti’s people. The Bank of France delegated control over Haiti’s financial future to a range of leading international banks based in Paris. The most important of these, Credit Industriel et Commercial (CIC), acquired Haiti’s double debt in the 1870s and promptly erected Haiti’s first central bank in 1880 as a front for its own and other French financial interests.
By the early 20th century, the United States’ Wall Street, actively seeking financial outposts in the Caribbean after the end of Spain’s American empire in 1898, began to insinuate itself into U.S. State Department conversations about Haiti’s future. When French and German investors reorganized Haiti’s central bank as a multinational consortium in 1910, U.S. Secretary of State Philander Knox encouraged National City Bank, Citibank’s predecessor, to acquire a stake in the venture. French shareholders resented U.S. involvement but were ultimately powerless to prevent the U.S. military occupation of Haiti that began in 1915.
That intervention, which lasted until 1934, gave the United States outright control of the Bank of Haiti and ensured that payments on the double debt would flow securely to Wall Street. The military occupation and Wall Street’s control of Haiti’s public finances worked hand in hand, each justifying and supporting the other. By 1920, National City Bank had bought out the remaining European investors in the Haitian national bank. The money that had once gone to French banks—nearly half of Haiti’s public revenues—now entered Wall Street’s coffers and would continue to do so for another 13 years after the occupation ended.
The U.S. occupation hindered Haiti’s political as well as financial development. The U.S. military’s reign fostered domestic institutions of repressive terror that would culminate in the dreaded Tontons Macoutes, the personal police force of the dictator François Duvalier and his son, Jean-Claude, from the late 1950s to the 1980s. Haiti’s current state-implicated gangster economy is a direct descendant of that arrangement. The Haitian politicians and business magnates now suspected of ties with organized gangs understand, as their predecessors did, that power and money flow from harnessing the ability to terrorize the population and control access to key infrastructure sites.
As an example, one of Haiti’s most notorious gangs recently closed the main road to the Port-au-Prince harbor, effectively blocking shipments of gas from Houston and, in the process, taking the nation’s entire transportation system hostage. This entrenched history of corruption, fed by external and internal actors, explains why the regime of U.S. and Canadian sanctions against Haitian elites faces an uphill battle.
Meanwhile, the post-World War II displacement of the pound sterling by the U.S. dollar as the dominant global currency under the Bretton Woods system effectively extended Washington’s financial empire in Haiti and elsewhere in the world. The dollar’s influence only expanded when then-U.S. President Richard Nixon severed the dollar from the gold standard in the 1970s, ushering in the contemporary era of floating exchange rates and sophisticated foreign exchange trading.
The dollarization of Haiti’s economy, which began in the early 20th century and is still unfolding, has rendered the gourde a national currency in name only. International transactions in Haiti are denominated almost exclusively in dollars. Dollars are sometimes used in the informal domestic economy, but few Haitians have access to them because money transfers from relatives in North America are usually paid in gourdes. And the gourde offers Haitians little purchasing power. The U.S. Federal Reserve’s current inflation targeting regimen has only intensified the gourde’s downward spiral: Higher interest rates mean that the dollar appreciates relative to the gourde. The value of $1 relative to the Haitian gourde grew from 100 gourdes to 150 gourdes from 2022 to 2023 alone.
Haitians are not alone in their financial predicament. But Haiti has been the canary in the coal mine of the international financial order. The dismal state of its currency and economy prefigured the fate of so many post-colonial nations, from Venezuela to Tunisia. Few countries today are free of the damaging effects of dollarization and hyperinflation. But that is no reason for the United States and France to abdicate the special responsibility in Haiti that stems from their direct role in producing the country’s very specific version of financial catastrophe.
Restoring monetary sovereignty in Haiti is a big, open-ended challenge that will involve sacrifice on the part of wealthier, Western nations—above all, France and the United States.
The starting point should be the legitimate demands of the Haitian people themselves. A long line of Haitian intellectuals since the 19th century has highlighted and condemned the indemnity. In 2004, at the time of the bicentennial of Haiti’s independence, former Haitian President Jean-Bertrand Aristide officially demanded that France restitute $21 billion to Haiti. That corresponds to the best estimate we have, based on conservative assumptions, of the double debt’s present-day economic cost to Haiti, including lost opportunities for domestic investment. (The New York Times project estimated that the actual economic cost may be as high as $115 billion.)
But France is not the only party with moral and historical obligations here. A consortium of public authorities and private financial entities that profited from the indemnity—led by the U.S. Federal Reserve system, the Bank of France, Crédit Mutuel (the European financial conglomerate that now owns and operates CIC), and Citibank—should make arrangements for a $21 billion fund to be held in escrow by the Bank of Haiti.
The Paris Club, an informal group of creditor nations, could provide a forum for France and the United States, together with Haiti, to determine who should pay what and the conditions that Haiti must satisfy before its treasury can receive the money. Those terms should be informed by consultation with Haiti’s leading civil society actors—currently embodied in the Montana Accord, a group that seeks to guide the country toward new elections. At minimum, holding free and fair national elections in a secure climate should be a prerequisite.
Writing a $21 billion check, however, will not come to close to solving the country’s financial woes. France, the United States, and other responsible actors, both public and private, also need to immediately open up a second front in the war on Haiti’s financial crisis with the strategic use of monetary and trade policy.
First, these actors urgently need to work together to deploy foreign exchange trading operations. Central banks use foreign exchange trading to influence exchange rates, selling one reserve currency to make another more valuable. In this case, central banks should coordinate efforts to strengthen the gourde relative to the dollar.
France, the United States, and other North Atlantic nations should also promote preferential trade agreements that benefit Haiti. Since a more valuable gourde will make Haitian exports to the United States more expensive, Haiti will need support in developing sufficient export capacity to ease the pressures imposed by its severe imbalance of payments. The United States should renew and expand existing legislation, such as the Haitian Hemispheric Opportunity through Partnership Encouragement Act and Haiti Economic Lift Program Act—two acts, set to expire in 2025, that buttress the Haitian garment sector. There is also great potential to expand the North American market for Haitian agricultural products, including coffee and cacao beans.
Finally, Haiti needs complete and permanent debt relief. The World Bank and the International Monetary Fund led the way in canceling $1.2 billion of Haiti’s external public debt back in 2009, after many delays, and then again in 2010 after the devastating earthquake. As a result, the ratio of Haiti’s external public debt fell from around 19 percent in 2009 to around 9 percent in 2011. But it has since started to climb back up. Now, North Atlantic powers and international organizations should not only cancel Haiti’s debt, but also recognize that debt has far too ugly a history in Haiti to be used in financial relationships with the country going forward. This does not mean that Haiti should fall back on foreign aid in the form of grants. Instead, strengthening Haiti’s gourde should be the priority, since a Haitian currency with real purchasing power will be able to exert the multiplier effects that North Atlantic currencies have long demonstrated as bank lending and consumer spending combine to stimulate economic activity.
Haiti needs genuine reconstruction, and these strategies can help the country find its financial footing as it seeks to rebuild its political institutions. A concerted international campaign to support Haiti’s financial sovereignty is the real intervention that Haiti needs—and possibly the only one.
Malick W. Ghachem is a professor of history and the head of the history faculty at the Massachusetts Institute of Technology. He is the author of The Old Regime and the Haitian Revolution and a member of the academic advisory board of France’s Foundation for the Memory of Slavery.