Haiti, the Ghost State, and the War Economy: The Trap of the 2023 Tax Code

There is an invisible border in Port-au-Prince that no one draws on the official maps, but that every shopkeeper, every tap-tap driver, and every resident knows in their bones. It is the line where the Republic ends and another regime begins. It is not simply a lawless zone, as people like to repeat with culpable intellectual laziness. It is a zone of another law.

The Haitian state is not just losing square kilometers; it is losing the grammar of power. It goes on issuing decrees and drafting tax codes as if it exercised full and complete sovereignty over its capital. Yet Port-au-Prince now operates under a regime of fragmented sovereignty. Nearly 80% of the city lies beyond the effective control of the public authorities and falls instead under an armed coalition, Viv Ansanm, which is no longer content merely to exercise violence. It administers. It levies. It arbitrates. It regulates.

The misunderstanding is tragic. The Haitian state thinks and acts like a peacetime administration, with all its red tape and procedures, when what it faces is an urban war economy. This cognitive dissonance, this inability to align the state’s instruments with the reality on the ground, explains the repeated failure of public policy. The operational entry into force of the Tax Code adopted in January 2023, scheduled for September 2025, crystallizes this deadly contradiction. “This text is technically sound, perhaps even necessary in the abstract.” But it rests on an assumption that no longer holds: that of a state capable of guaranteeing economic order on its territory.

“A tax without security is not a tax. It is extraction, pure and simple. And when a state persists in extracting without governing, it does not strengthen its sovereignty. It unwittingly finances its own disappearance.”

The misdiagnosis: Viv Ansanm is not disorder, it is a rival order

The first mistake, and perhaps the most serious, is semantic. The state and part of the international community persist in describing Viv Ansanm as a collection of “gangs.” The term evokes delinquency, chaos, anarchy. It is politically reassuring to think that the enemy is nothing but a band of disorganized thugs. It is intellectually wrong.

What we face is a rival system of levies, territorially rooted and rational. In the neighborhoods under their control, predation is not random; it is systemic. Transit fees are codified. Markets operate under license. Transport operators factor the “security tax” imposed by the armed groups into their fixed costs, exactly as they would the turnover tax (TCA). This reality corresponds point for point to what the economist Mancur Olson theorized as the “stationary bandit.” The bandit who settles in for the long term has no interest in destroying the local economy. On the contrary, he captures it and gives it a minimum of protection, because stability maximizes his rent.

Faced with this efficient extraction machine, the Haitian state behaves as if it were the only legitimate collector. In reality, it has become a secondary collector, a junior creditor that comes after the armed coalition. This double taxation (first the gang’s, then the state’s) does not weaken the criminal economy. It bleeds the legal economy white.

The economist Paul Collier demonstrated it empirically: an insurgency lasts as long as it remains economically viable. In Haiti, out of bureaucratic blindness, the state attacks its own tax base without ever dismantling the insurgency’s profit structure. In this context, the 2023 Tax Code acts as an accelerator of collapse. From September 2025, applying it will require an administrative enforcement capacity the state no longer has. Tax inspectors will not go and audit the books in Canaan or Torcel. They will hound the few survivors downtown and in Pétion-Ville.

The result is mechanical: small businesses close, mobile firms relocate to the Dominican Republic or Florida, and those who stay slide into an informality negotiated with the armed groups in order to survive. The tax base shrinks, the war economy thrives, and the state, short of resources, tightens its grip even harder on the throats of those who still obey the law.

This suicidal pattern is neither a Vodou curse nor a Haitian exception. Other nations have stared into this abyss. And some managed to step back before they fell.

Baghdad: the lesson of economic strangulation

To understand what is playing out in Port-au-Prince, one has to look to Baghdad between 2005 and 2007. At the time, the Iraqi capital was a captured city. Shiite militias and Sunni insurgents were not content to plant bombs; they controlled entire neighborhoods, levied taxes on fuel, regulated markets, and, in their own way, secured trade. Yet the Iraqi state, holed up in the Green Zone, went on voting budgets and passing laws that ceased to apply as soon as one crossed the checkpoints.

The 2007 turning point, the famous “Surge,” has often been misread in the West as a simple military victory owed to the dispatch of American reinforcements. That reading is incomplete. The real victory was administrative and economic. Under the influence of strategists who had understood that the insurgency was above all an economic system, the authorities changed their approach.

They began by identifying the “critical economic nodes.” The great Shorja market, the beating heart of Baghdad’s wholesale trade, was secured as an absolute priority. Why? Because it was the city’s financial lung. Next, the administration reintroduced rules that were simple, blunt, but decisive. Trucks carrying strategic goods were required to hold strict transit permits. Sensitive goods (fuel, building materials, fertilizer) were subjected to targeted controls.

Legally, this was made possible by emergency rules (the Emergency Powers Regulations). These texts gave the administrative authorities the power to suspend or shut down immediately any economic activity identified as financing the militias, without going through lengthy and unenforceable criminal proceedings. This was not a denial of justice; it was an act of clear-sightedness: ordinary law does not work when the judge is afraid of being murdered.

When the militias lost access to commercial flows, their ability to pay their fighters collapsed. Violence did not vanish by magic, but it receded because it was no longer profitable.

Medellín: hitting wallets rather than heads

Closer to home, Colombia offers another mirror. In Medellín, in the 1990s and 2000s, criminal domination rested less on sheer terror than on economic integration. The armed organizations owned bus fleets, construction companies, buildings. The Colombian state eventually understood that the key was not heavier taxation but a restructuring of economic incentives.

Under the “Democratic Security” policy, the state used administrative law as a weapon of war. The seizure and freezing of assets (“Extinción de Dominio”) became tools used on a massive scale. The aim was not necessarily to prove an individual’s criminal guilt, which takes years, but to demonstrate the illicit origin of an asset so as to seize it immediately.

At the same time, the state created “breathing bubbles” for the legal economy: regulatory relief, targeted police protection for industrial zones, easier access to credit for those who refused to pay protection money. The aim was not to subsidize but to keep the legal economy alive on life support long enough to strangle the criminal rent. It was not the elimination of Pablo Escobar that changed Medellín; it was the moment when violence ceased to be the economically rational option for part of the population.

The Economic Security Decree: the indispensable break

These lessons all point to one overriding urgency for Haiti. We can no longer wait for security to return before reviving the economy. We must use the economy to restore security. That requires a new legal instrument, which is neither the 2023 Tax Code nor the classic security-driven state of emergency.

Haiti needs an Economic Security Decree.

What would such a text look like? Not a list of pious wishes, but an operational mechanism for combat.

First, recognizing reality. The decree must begin by giving legal recognition to the state of economic exception. It must acknowledge that in certain parts of the territory, the ordinary conditions of commercial activity are suspended. As long as this reality is not named in the Official Gazette, the law remains a fiction.

Second, targeting flows. The decree must establish a prior-authorization regime for the transport and storage of the strategic goods that feed the economy of violence: bulk fuel, heavy building materials, and certain foodstuffs shipped in large volumes to the red zones. The point is not to starve the population, but to control the wholesalers who, willingly or under duress, act as logisticians for Viv Ansanm.

Third, precautionary administrative seizure. The state must give itself the power to freeze immediately the assets (accounts, inventories, vehicles) of any economic entity whose financial flows show serious anomalies matching the typologies of money laundering or terrorist financing, without waiting for a criminal ruling. The burden of proof must be temporarily reversed: it is up to the holder of the funds to prove, within a short deadline, the lawful origin of the money.

Fourth, a tax sanctuary. For businesses that agree to play by the rules of full transparency and that operate in secured or strategic zones, the decree must suspend the new charges introduced by the 2023 Tax Code. In exchange for this “tax truce,” these businesses must accept full traceability of their flows. It is a pact: protection and relief in exchange for transparency and cooperation.

Seeing clearly again to save the state

Adopting such a decree will take immense political courage. It will collide with powerful interests. It will make those who profit from the current murkiness howl. The state will be accused of authoritarianism, or of infringing on freedom of trade.

But what is the alternative? To keep collecting taxes on corpses? To keep letting the gangs collect the country’s real turnover tax while the Directorate General of Taxes (DGI) chases ghosts?

Haiti’s tragedy is not fate. It is the result of an institutional refusal to think of the insurgency as an economy. As long as this denial persists, the state will go on governing on paper and losing on the ground. An economic security decree would not be an admission of the state’s weakness. It would be, for the first time in a long while, an act of clear-sightedness.

It would tell the nation, and the world, that the Haitian state has finally understood the nature of the war being waged against it. And that it has decided, at last, to cut off the money flowing to those who want it dead.