Helping Haiti

Although words fail us, the burden of relief, reconstruction, and development in Haiti is one that must be borne by all.  Effective plans need to be in place quickly, before the rains come bringing with them the threat of deeper catastrophe. 

The big questions at this point revolve around ownership of the overall task and the optimal extent of international involvement.  Does Haiti need to be put into some sort of receivership with its government sidelined (which is barely functioning anyway) while well intentioned outsiders reinvent the Marshall Plan in the Caribbean?

Or is that sort of “big push”, foreign-led approach mindless of Haiti’s complicated governance structures, the broken promises of previous aid efforts, and the enormous harm done to Haiti by foreign (including U.S.) intervention in the past?  Besides, who can be confident that foreign donors have the staying power to last even a year or two, let alone the decade or longer that will be needed for Haiti’s reconstruction?

The stakes in this Haiti challenge are huge, for the Haitian people and also for anyone concerned with development in Latin America.  Cynicism about the chances of delivering Haiti from its agony is understandable, but not helpful.  I would prefer to focus on the potential upside for Haiti and for the Western Hemisphere more broadly if a coordinated approach to relief, reconstruction, and development gets things approximately correct.

Ultimately, it defies reason that Haiti is fated to remain among the poorest countries on the planet given its reasonable resource endowment, the relative success of similarly endowed neighbors in the Caribbean, and its proximity to the U.S. market.  Yet it might well be consigned to a bleak future if the overall effort is poorly managed.

Big Picture: Priority Areas

So where to begin?  Three broad priority areas stand out, each critical, each fraught with its own peril.

The first is the intensification of the faltering relief effort with focus on the more than 800,000 displaced persons now scattered to the countryside or living in tent cities in the capital.  For all it has accomplished, the international safety net has gaping holes. The threat of starvation is dangerously near unless infrastructure is repaired to permit a flow of aid from abroad and from Haiti’s agricultural sector.  (Even before the quake, 1.8 million Haitians – almost 20% of the population – were “food insecure”, in that delicate UN parlance.)  Ominously, it is now apparent that another huge hole exists in the fabric of international relief – how to deliver massive health interventions quickly.  No bureaucracy exists globally to provide the medical relief and assistance that so many Haitians need which is why we see stories of foreign doctors leaving in frustration unable to perform their duties for a lack of supplies.

The second priority, related to the first, is the repair and reconstruction of the country’s damaged infrastructure.  The World Bank and other agencies are carrying out various “needs assessments” now, but it seems clear that ports, roads, sanitation facilities and a modern power network need to be put in place eventually, and the work must start immediately.   Probably the major priority is the port in the capital city and the system of roads needed to bring food in from the rural areas.  Over time, the goal must be not to rebuild Haiti’s infrastructure, but to re-imagine an infrastructure which creates in Haiti the physical basis for full integration into regional and U.S. markets.

The third priority is to accelerate the development process itself in Haiti, an effort that will involve harnessing the private sector (foreign and Haitian) to develop the country’s natural advantages in light manufacturing, tourism, and tropical agriculture.  While Haiti may be caricatured as a basket case in human development terms (ranked 146th out of 177 countries in the UNDP index) with a business climate approximating that of Afghanistan,  it offered before the earthquake reasonably attractive opportunities for foreign and domestic business. The Clinton initiative and, more importantly, the Hope II agreement with the United States in 2008 had already created some momentum for increased investment.  After the quake, as Paul Collier and Jean-Louis Warnholz remind us, those opportunities are changed, but not necessarily reduced.[1]

Getting Organized

Whose responsibility is it to deal with these mega-priorities and to deliver to the people of Haiti relief, reconstruction, and development rather than their more customary fare of neglect, corruption, and failure?

The first point that is clear in all of this is that the Haitian government, both the central government and local administrations, must be in charge of the overall effort, and not patronized, barely tolerated, or by-passed altogether.  Not even the best financed program of aid imaginable could succeed without this sine-qua-non of local ownership.

The second point is that the international donor community is going to have to be organized as never before to play the type of role that Haiti needs.  The natural tendency of the twenty or so government bilateral aid agencies active in Haiti is to pursue multiple agendas, closely tied to politics back home rather than to the actual needs in the recipient country.  A competition of sort sets in for high profile projects that play well in the press.  Few donors want to fund “cash for work” or “food for work” efforts or emergency job creation projects which happen to be what Haiti needs most right now.   And, of course, donor fatigue is virtually inevitable as crises arise in other parts of the world.

The goal must be to avoid donor gridlock – too many donors trying to operate in the same small space – and avert donor fatigue.  One suggestion is to use the upcoming Haiti donor conference in March 2010 to create a sort of multi-donor fund at a single entity capable of overseeing the reconstruction effort over the long run in close collaboration with the Haitians.  In my view, the World Bank and the various UN agencies are not well placed to play this role, but the Inter-American Development Bank with its 50-year history in Haiti and strong regional focus might be the ideal agency to work with the Haitians.  The model for this sort of a multi-year multi-donor fund would be the Aceh fund set up in the wake of the tsunami.  But other models are possible which could combine the core objectives of Haitian involvement, donor coordination, and effective donor oversight.  

How Much Is Needed?

Even before the earthquake, Haiti needed about $1.5 billion per year in all sorts of foreign assistance.  About one-quarter of this went for development assistance, with the rest in the form of international relief aid and support for peacekeeping operations.   Certainly, this amount of aid sets a sort of baseline for an expanded donor effort in Haiti capable of being sustained for a decade at least.

One might reasonably add on top of this baseline at least another $1 billion to $2 billion per year over the next three to five years for humanitarian assistance with an emphasis on water, shelter, and health delivery.  As it is now, international food efforts are probably reaching fewer than 500,000 people of the two million in dire need.  Beyond food and shelter, humanitarian assistance should be stretched to provide emergency employment in the cash for work programs.  Rebuilding the national health delivery system and constructing new schools fit under this heading as well.

Turning to the longer-run, Sachs and others have estimated that the costs of reconstruction and development over the next ten years are at least on the order of $1 billion or more per year. [2]    This would have to cover a wide range of infrastructure projects, but roads and ports and power plants would have to come somewhere near the top of the list, all that would help the private sector to take advantage of Haiti’s obvious strengths in tourism, light manufacturing, and tropical agriculture.

In all, the bill – or investment, better said – for Haitian relief, reconstruction, and development is not likely to be less than $3-4 billion per year over the next ten years or so.   This is very substantial for Haiti – something like 50% of GDP in 2008 – but it does not seem to be out of the question given the apparent donor interest at the moment.  The key will be to lock in firm commitments now before the cameras are switched off and attention fades.

The Payoff

Despite the magnitude of the disaster, the encouraging news is that Haiti does not need to be rebuilt totally from scratch.  It had acquired some modicum of economic momentum following the hurricanes in 2008.  Much of the reconstruction effort, if it succeeds, can remove the principal obstacle to growth in the past – an economic infrastructure near total collapse, coupled with severe deforestation.    

Yes, none of this can take place without effective leadership in Haiti itself, but do not lose sight of the fact that a measure of political stability has returned, thanks in part to the success of the Latin America-led UN peacekeeping mission.

Ultimately, it will be the response of the private sector that will determine whether this disaster has permanently pushed Haiti down another rung on the scale of world poverty.   My hunch would be that the private sector will respond once the relief efforts turn the corner and modern infrastructure begins to be put in place.

Political stability,  substantial foreign aid sustained over a decade, and a better business climate – that sounds like a recipe not only for recovery in Haiti, but for sustained growth over the long haul.

A reasonable goal for the next decade should be to close the gap in income with other Caribbean economies.  Per capita income in Haiti is on the order of $1,180 per year; compare that with $7,700 in the Dominican Republic.  The gap between two economies sharing the same island is indicative of problems past, but perhaps as well it suggests that a sustained effort can set Haiti on a path toward catching up.

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[1] “Building Haiti’s Economy, One Mango at a Time”, New York Times, January 29, 2010.  

[2] “After the earthquake, how to rebuild Haiti from scratch”, Washington Post, January 17, 2010  


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