Canceling Haiti's debt may not be a good idea...

Everyone knows that some of Haiti's problems are related to their national debt. When the island nation declared independence in 1804 the French saddled them with an outrageous severance package in exchange for French diplomatic recognition. It took Haiti 100 years to work that off.

Then in the 20th century various despots borrowed money on behalf of the country -- money which mysteriously ended up in their bank accounts. And the people of Haiti were left holding the $1.+ billion bar tab for their ousted dictators.

Since the earthquake there has been a social-media-driven movement afoot to get the world to cancel Haiti's debt so that the country could quickly become eligible to borrow more money for reconstruction. Some nations have already canceled debts. Others are trying to work out different forms of relief.

At first glance, from the vantage of Lady Justice, debt release would be the right thing to do. But perhaps not so fast. The world has long realized that Haiti is hopelessly bankrupt. And the IMF has been working with them for several years to cancel the debt through the Highly Indebted Poor Country Initiative. But forgiveness of debt through this program has strings attached -- reform and accountability. In a sense it's not too different from Chapter 11 bankruptcy in the US system.

You see, debt is not Haiti's biggest problem. They suffer from systemic corruption and political pettiness -- greed. And HIPCI is one of the few "weapons" that the intentional community has to force the leaders to deal with the problems.

The good news is that Haiti had actually completed a major portion of the program last spring. But there were four remaining triggers before more debt relief would be implemented.

To totally and quickly remove the debt could totally and quickly remove the incentive for leadership to complete the reform program. So, canceling Haiti's debt may not be such a good idea -- yet. Of course, if there were some other way to hold their feet to the fire...

If the systemic issues of corruption are not addressed no amount of debt relief is going to trickle out to the masses. A lot of the international funding will simply end up benefiting the ruling elite. That is how the problem perpetuated itself in the 20th century.

Whatever is done needs to be thought out so that the influx of money does not further empower the dysfunction that keeps people poor.

Canceling Haiti's debt is the right thing to do. But it needs to be done in such a way and in such a time frame that the people gain the most benefit.