Why a Venezuelan Oil Program Is Fueling Massive Street Protests in Haiti

For more than four months, Haitians have been taking to the streets to demand the resignation of President Jovenel Moïse amid allegations he embezzled hundreds of thousands of dollars of government funds earmarked for badly needed social programs.

A damning report on government corruption, delivered to the Haitian senate by official auditors on May 31, has triggered fresh demonstrations, with thousands marching through the capital, Port au Prince, and other cities throughout June. On June 20, a delegation from the Organization of American States traveled to Haiti in hopes of “[lowering] the political temperature,” an official told the Miami Herald.

One government program, PetroCaribe, is at the center of the 600-page report––and protesters’ anger.

Under PetroCaribe, a strategic oil alliance signed with nearby Venezuela in 2006, Haiti––the poorest country in the Americas––saved precious dollars by borrowing fuel from its oil-rich neighbor and deferring payment for up to 25 years. Governments were supposed to use the extra money to develop the economy and fund social programs. Instead, at least $2 billion (equivalent to almost a quarter of Haiti’s total economy for 2017) went missing and Haitians saw few of the promised benefits, according to protesters and local media. Haitian taxpayers still owe Venezuela billions of dollars for the borrowed oil.

The scandal has become a rallying cry for anti-corruption activists, many of whom call themselves PetroChallengers. Here’s what to know about PetroCaribe and how it helped spark Haiti’s protests.

What is PetroCaribe?

Venezuela’s former president Hugo Chávez set up PetroCaribe in 2005. Venezuela has the world’s largest proven oil reserves and in the mid-2000’s, long before its current economic collapse, the country was producing around 2.5 million barrels of oil per day. Chávez wanted to convert those resources into greater regional influence and win allies against the U.S. in the Organization of American States.

The PetroCaribe program was effectively a way for Venezuela to give other countries development loans––except it loaned oil instead of cash. Venezuela’s state oil company sold oil to Haiti and 17 other Caribbean countries and allowed them to defer payment on 40% of what they bought for up to 25 years, charging a low rate of interest for the debt. Recipient governments then sold that oil and used the proceeds to pay for social programs. With global oil prices at record levels in the early years of the program, the oil sales generated a lot of cash.

The program suffered after Venezuela’s economy began to break down in 2014, as a drop in the oil price laid bare the effects of years of corruption and mismanagement. Venezuela’s oil production is down to 830,000 barrels a day and it stopped fulfilling its PetroCaribe commitments to Haiti last year, Reuters reports. Haiti is “one of the most vulnerable members” of the PetroCaribe agreement, according to analysts at the Economist Intelligence Unit and it is now suffering fuel shortages as a result of the program’s decline.

What happened to PetroCaribe in Haiti?

In Haiti the PetroCaribe money was precious. Particularly after the 2010 earthquake that killed more than 200,000 people and led to a still ongoing cholera outbreak, the government was supposed to use it to fund infrastructure and healthcare projects. It claimed to have funded around 400 such projects using almost $4 billion dollars raised by PetroCaribe oil between 2008 and 2016.

But a lack of visible results sparked suspicion. And in November 2017, a five-person commission in the Haitian senate investigated the program and reported evidence of widespread corruption in the use of the funds under three successive governments during that period. The amount of money in government coffers was misreported, exchange rates were adjusted and more than half of the contracts given to companies to service the projects did not go through the usual government bid process, according to the report.

Because the money was not from a conventional international aid package, analysts say there was little oversight of how governments spent the proceeds and few conditions on what they could do with it––leaving ample opportunity for corruption.

The missing funds became a simmering political scandal. But the corruption didn’t spark protest until after summer 2018, when inflation was spiraling and government plans to raise fuel taxes caused violent protests. Gilbert Mirambeau a Haitian videographer living in Canada Tweeted his frustration at Haiti’s economic situation with a photo of himself, blindfolded, asking, in Creole, “Where is the PetroCaribe money?”

Other social media users wondering the same thing helped spread the hashtags #KotKòbPetwoKaribea, #PwosèPetroCaribeA (meaning “prosecute those involved in PetroCaribe”) #PetroCaribeChallenge and rallies began taking place in cities around Haiti, demanding the resignation of politicians implicated in the ongoing investigation, including Moïse.

PetroCaribe is partly a cipher for Haiti’s widespread and deep-rooted corruption problem. The country is ranked 161 of 180 countries on watchdog group Transparency International’s annual Corruption Perceptions index and questions have also been raised about the destination of up to $13 billion in international aid sent to the country after its 2010 earthquake. The World Bank says corruption is a fundamental cause of Haiti’s staggering levels of poverty.

How is President Moïse involved in the PetroCaribe scandal?

Moïse took office in February 2017–after the period the PetroCaribe investigations looked at. But the report published May 31––the second phase of a three-part investigation––alleges that he helped embezzle funds from a large PetroCaribe project before he came to office, when he was head of the company Agritrans. Agritrans was paid around $700,000 to repair some roads––even though its entire businesses was growing bananas.

On June 12, Moïse denied any wrongdoing and reiterated that he will not step down, despite the ongoing protests.

“I’m looking you in the eye today to say: Your president, whom you voted for, is not guilty of corruption,” he said at a press conference, adding that those who had misused state funds would be “brought to justice in a fair, equitable trial without political persecution.”