[News] Outsourcing Haiti: How Disaster Relief Became a Disaster of its Own

Anti-Imperialist News news at freedomarchives.org
Wed Jan 29 13:42:14 EST 2014

  Outsourcing Haiti: How Disaster Relief Became a Disaster of its Own

Tue, 01/28/2014

      by Jake Jonston

Billions of dollars have been directed towards Haiti earthquake relief 
-- and most of the money has circled right back into the pockets of 
foreign corporations and NGOs. Hundreds of thousands remain in tents or 
dangerous dwellings. Yet, "by September 2013, nearly four years after 
the earthquake, only 7,500 new homes had been built and 27,000 
repaired---an incredibly small achievement."

    Outsourcing Haiti: How Disaster Relief Became a Disaster of its Own

      by Jake Jonston

/This article previously appeared in /_/Boston Review/ 
<http://bostonreview.net/> [4]_/./

"/Even the Clintons' supporters conceded that their staff and the 
foreign consultants did more harm than good."/

Across the country from Port-au-Prince, Haiti's capital, miles of 
decrepit pot-holed streets give way to a smooth roadway leading up to 
the gates of the Caracol Industrial Park, but no further. The fishing 
hamlet of Caracol, from which the park gets its name, lies around the 
bend down a bumpy dirt road. Four years after the earthquake that 
destroyed the country on January 12, 2010, the Caracol Industrial Park 
is the flagship reconstruction project of the international community in 
Haiti. Signs adorn nearby roads, mostly in English, declaring the region 
"Open for Business." In a dusty field, hundreds of empty, brightly 
colored houses are under construction in neat rows. If all goes as hoped 
for by the enthusiastic backers of the industrial park, this area could 
be home to as many as 300,000 additional residents over the next decade.

The plan for the Caracol Industrial Park project actually predates the 
2010 earthquake. In 2009, Oxford University economist Paul Collier 
released a _U.N.--sponsored report_ 
<http://www.focal.ca/pdf/haiticollier.pdf> [5] outlining a vision for 
Haiti's economic future; it encouraged garment manufacturing as the way 
forward, noting U.S. legislation that gave Haitian textiles duty-free 
access to the U.S. market as well as "labor costs that are fully 
competitive with China . . . [due to] its poverty and relatively 
unregulated labor market."

"/The earthquake presented an opportunity for the Clintons and the U.N. 
to fast track their plans."/

The report, embraced by the U.N. and the U.S., left a mark on many of 
the post-earthquake planning documents. Among the biggest champions of 
the plan were the Clintons, who played a crucial role in attracting a 
global player to Haiti. While on an official trip to South Korea as 
Secretary of State, Hillary Clinton brought company officials from one 
of the largest South Korean manufacturers to the U.S. embassy to sell 
them on the idea. U.N. Secretary General Ban Ki-moon, having just 
appointed Bill Clinton U.N. special envoy to Haiti, tapped connections 
in his home country, South Korea.

Then suddenly, the earthquake presented an opportunity for the Clintons 
and the U.N. to fast track their plans. The U.S. government and its 
premiere aid agency, USAID, formed an ambitious plan to build thousands 
of new homes, create new industries, and provide new beginnings for 
those who lost everything in the earthquake. Originally the plan was to 
build the industrial park near Port-au-Prince. But land was readily 
available in the North, and the hundreds of small farmers who had to be 
moved from the park's site were far less resistant than the wealthy 
land-owners in the capital. So the whole project moved to the Northern 
Department, to Caracol. Under the banner of decentralization and 
economic growth, the Caracol Industrial Park, with the Korean textile 
manufacturer Sae-A as its anchor tenant, became the face of Haiti's 

Now, only 750 homes have been built near Caracol, and the only major 
tenant remains Sae-A. New ports and infrastructure have been delayed and 
plagued by cost overruns. Concerns over labor rights and low wages have 
muted the celebration of the 2,500 new jobs created. For those who 
watched pledges from international donors roll in after the earthquake, 
reaching a total of $10 billion, rebuilding Haiti seemed realistic. But 
nearly four years later, there is very little to show for all of the aid 
money that has been spent. Representative Edward Royce (R-CA), the chair 
of the House Foreign Affairs Committee, bluntly commented in October 
that "while much has been promised, little has been effectively delivered."

The story of how this came to pass involves more than the problems of 
reconstruction in a poor country. While bad governance, corruption, 
incompetent bureaucracy, power struggles, and waste contributed to the 
ineffective use of aid, what happened in Haiti has more to do with the 
damage caused by putting political priorities before the needs of those 
on the ground.

*The Housing Crisis and the Interim Haiti Recovery Commission*

The earthquake decimated Haiti's housing stock: 100,000 were destroyed 
and more were damaged. There were $2.3 billion in damages in the housing 
sector alone, and 1.5 million people left living in makeshift tent 
camps. Unplanned and unregulated housing construction made 
Port-au-Prince, with population at least 3 million, extremely vulnerable 
to natural disasters. In less than a minute, entire shantytown 
neighborhoods came crashing down.

The Interim Haiti Recovery Commission was created by the international 
community to coordinate post-quake aid and align it with Haitian 
government priorities. Bill Clinton, as the U.N. special envoy and the 
head of the Commission, was optimistic. "If we do this housing 
properly," he affirmed, "it will lead to whole new industries being 
started in Haiti, creating thousands and thousands of new jobs and 
permanent housing."

Like the Caracol Industrial park, the Commission was presented as a 
response to the devastation of the earthquake. But its basic 
tenets---and its slogan, "Build Back Better"---were actually agreed upon 
by the U.S. and U.N. in the year prior. The commission's formation was 
handled not by the Haitian government, but by the staff of the Clintons, 
mainly Cheryl Mills and Laura Graham, as well as a team of U.S.-based 
private consultants. The commission's bylaws were drafted by a team from 
Hogan Lovells, a global law firm headquartered in Washington, D.C. A 
team from McKinsey and Company, a New York based consultancy firm, 
handled the "mission, mandate, structure and operations" of the 
commission. Eric Braverman, part of the McKinsey team, later went on to 
become the CEO of the Clinton Foundation.

According to Jean-Marie Bourjolly, a Haitian member of the commission, 
the body's "original sin" lay in concentrating the decision-making power 
in the Executive Committee of the Board, made up of Bill Clinton and 
then--Haitian Prime Minister Jean-Max Bellerive. In October 2010, just 
six months after its creation, Bourjolly wrote a memorandum to the 
co-chairs and the rest of the commission's board. The note cautioned 
that by "vesting all powers and authority of the Board in the Executive 
Committee, it is clear that what is expected of us [the rest of the 
Board] is to act as a rubber-stamping body." According to Bourjolly, the 
memorandum was not included in the official minutes of the October 
meeting at Clinton's behest, and the document has remained out of the 
public sphere. But one former commission employee confirmed the 
commission's role: he told me that many projects were approved because 
"they were submitted by USAID and State" and "that as long as USAID is 
submitting it and USAID is paying for it," it should be approved.

"/The commission's formation was handled not by the Haitian government, 
but by the staff of the Clintons, mainly Cheryl Mills and Laura Graham, 
as well as a team of U.S.-based private consultants."/

Bourjolly also contended that the commission was failing to live up to 
its mission "to conduct strategic planning, establish investment 
priorities and sequence implementation of plans and projects." Rather, 
Bourjolly wrote, "our action has so far been limited to accepting 
projects that. . . come our way on a first come, first served basis" and 
that it would result in "a disparate bunch of approved projects. . . 
that nonetheless do not address as a whole neither the emergency 
situation nor the recovery, let alone the development, of Haiti."

Even the Clintons' supporters conceded that their staff and the foreign 
consultants did more harm than good. A Haitian government official, who 
requested her name be withheld because of the power the Clintons 
continue to wield in Haiti, commented that "they were lucky to get 
someone as high-profile and experienced as Clinton" but that the staff 
"had no idea what Haiti was like and had no sensitivity to the 
Haitians." "Out of ignorance, there was much arrogance," the official 
said. "And who pays the price? The Haitian people, as always."

Article 22 of the Haitian constitution enshrines "the right of every 
citizen to decent housing," and civil society groups have long advocated 
for the government to protect this right through large-scale, affordable 
public housing. But in October 2011, the commission quietly closed its 
doors. Its eighteen-month mandate was not renewed, and little remained 
of the grand plans to build thousands of new homes. Instead, those left 
homeless would be given a small, one-time rental subsidy of about $500. 
These subsidies, funded by a number of different aid agencies, were 
meant to give private companies the incentive to invest in building 
houses. As efforts to rebuild whole neighborhoods faltered, the rental 
subsidies turned Haitians into consumers, and the housing problem was 
handed over to the private sector.

The number of displaced persons is down to 200,000 from its 1.5 million 
peak, according to the U.N. But only 25 percent of that decrease has 
anything to do with official programs to provide housing. Many were 
given a paltry subsidy and evicted from their camps. The highest profile 
and most visible camps were closed down, but those tucked in alleys, out 
of the view of the convoys of aid workers' vehicles, remain forgotten. 
Fifty-five thousand Haitians who moved to areas known as Canaan, 
Jerusalem, and Onaville were recently removed from the "official" list 
of Internally Displaced Persons camps. Though those who were pushed out 
of the camps simply returned to their old homes, the international 
community claims progress. A USAID--sponsored study from the summer of 
2011 estimated that over a million Haitians were occupying damaged homes 
and that nearly half of them were living in "buildings that might 
collapse at any moment." In fact, if another quake happened today, 
they'd be more likely to die than they were living under tents in clearings.

By September 2013, nearly four years after the earthquake, only 7,500 
new homes had been built and 27,000 repaired---an incredibly small 
achievement when set against the billions of dollars and grand plans put 
together by the international community in the wake of the catastrophe. 
"Now, we have a return to the status quo, the same situation that was 
there before the earthquake, with no coordination and each project done 
haphazardly," Gabriel Verret, the former executive director of the 
commission, said.

*USAID's $33,000 House*

While the $500 rental subsidies recommended by the Clinton Commission at 
the end of its tenure became the preferred form of support by the 
Haitian government and international community, smaller projects to 
provide permanent housing that had already been approved by the 
commission were carried through. In December 2010, the commission's 
board had signed off on the U.S. government's "New Settlements Program," 
which called for the construction of 15,000 homes in Port-au-Prince and 
the North Department, where the new industrial park was to be located.

This June, the U.S. Government Accountability Office (GAO) issued _a 
report_ <http://www.gao.gov/products/GAO-14-47T> [6] revealing that only 
900 of those 15,000 homes had been built. The overall goal has been 
reduced to 2,600. At the same time, costs increased from $53 million to 
over $90 million. The GAO found that the program suffered from a fatal 
flaw: original estimates had drastically low-balled how much the houses 
would cost. The calculation of 15,000 planned houses was based on an 
estimate of each costing around $8,000. With the cost of preparing the 
land, the total cost per house was over $33,000.

USAID assembled a team of shelter experts in August of 2010. The goal, 
according to Duane Kissick, the head of the shelter planning team, was 
to put the majority of available resources into the damaged communities. 
The plan they came back with was simple and meant to be implemented 
quickly. Jerry Erbach, another member of the Shelter Team, recalled that 
"there was a good deal of pressure to develop a series of projects very 
quickly and at low cost in order to meet the needs of those households 
who became homeless after the earthquake." The plan was to build homes 
that were simple, modest and small, but that could expand over time.

The narrative put forth by the Shelter Team experts is confirmed by 
USAID's Shelter Sector Activity Approval Document (AAD), which I 
obtained through a Freedom of Information Act request. The plan called 
for construction to be completed by December 2012 and specifically noted 
that "USAID programs will seek wherever possible to work with local 
partners." A USAID-funded study by the International Housing Coalition 
recommended the same thing, noting that "wherever possible, USAID should 
utilize Haitian construction contractors." Letting local companies or 
individuals handle the work means more money for Haiti, its economy, and 
its people. It's also cheaper, and has worked in the past.

"/I don't understand, for all the money that came into Haiti, why there 
aren't houses everywhere."/

Food for the Poor, an NGO that has worked in Haiti for decades, utilizes 
small local construction teams to build 1,000 homes each year at a cost 
of just $6,400 each. Brad Johnson, the president of Mission of Hope, 
another NGO working in Haiti, told the /New York Times/, "We're not one 
of the big groups that sit in Washington, D.C., and get the financing. . 
. But we're managing to get it done for $6,000 a house*. *I don't 
understand, for all the money that came into Haiti, why there aren't 
houses everywhere."

But the recommendations for using local contractors and the plan to 
build $8,000 homes were ignored. More international companies were 
brought in, additional studies were undertaken, and the first contract 
to actually build a house was not awarded until April of 2012, nearly 
two and half years after the quake and eight months after the project 
was approved. The contracts ended up going not to small local companies 
but to large international ones. Thor Construction, based in Minnesota, 
received $18 million, and CEMEX, a Mexican company, got over $7 million. 
Another $35 million went to two Haitian-American firms based in Maryland 
for environmental assessments, construction management, site 
preparation, and other associated projects.

Outsourcing the construction drove the price up, since international 
companies had to fly in, rent hotels and cars, and spend USAID 
allowances for food and cost-of-living expenses. To incentivize working 
in Haiti, the U.S. government also gave contractors and employees 
"danger pay" and "hardship pay," increasing their salaries by over 50 
percent. With all these costs included in contracts, it's not hard to 
see how prices ballooned. Bill Vastine, a long-time contractor and 
member of the Shelter Team, said, "if the American people saw the true 
cost of this, they'd say 'you've got to be out of your mind.'" The 
changing priorities undermined any cohesion in the program.

With 200,000 still homeless and hundreds of thousands more living in 
grossly inadequate and often structurally unsound buildings, the 900 
homes that USAID has built won't go very far. No current USAID employees 
agreed to speak about the project on the record, despite repeated 
requests for comment. In remarks before Congress, USAID administrator 
Beth Hogan stated that "we were significantly off in terms of what our 
original estimates were. . . when we got back bids from offerers who 
were going to actually build these homes. . . the estimates increased 
even further."

The Shelter Team also initially planned to build two-thirds of the homes 
in the Port-au-Prince area. But this has changed: the current plan is to 
build 75 percent of the homes in the Northern Department of Haiti, all 
within 13 miles of the new industrial park. Many USAID staffers on the 
ground wanted to focus on Port-au-Prince, where the damage was greatest. 
But the State Department had made a commitment to building houses in the 
North, in support of the Caracol Industrial Park.

"/Every agency has its own little fiefdom, their own little budgets to 
protect and their own cadre of people they protect."/

The State Department's political intervention in the project also 
delayed the process of getting people into the houses that did manage to 
get built. According to Erbach, who also worked with an international 
NGO assisting the Haitian Government in selecting households to benefit 
from the new housing, pressure from the Department of State led to a 
"significant amount of time and effort being wasted on identifying and 
vetting workers from the industrial park who were not IDPs." The 
internal shelter AAD warned that "if the process is perceived as 
inequitable, opaque, or led by the United States, the [government] will 
appear to be 'choosing winners,' resulting in political problems." As 
Vastine describes it: "Every agency has its own little fiefdom, their 
own little budgets to protect and their own cadre of people they protect 
and they don't work well together; there is no cohesiveness with our own 
internal bureaucracy in the United States, much less with everything 
else that's here, from all the other countries."

Speaking before Congress, USAID Administrator Hogan conceded that, "what 
we realized as we were going into this. . . is that new homes isn't 
[/sic/] the solution for Haiti." USAID is now officially out of the 
home-building business in Haiti.

As for the 750 houses under construction in Caracol, as the four-year 
mark comes and goes, the first families are just now starting to move 
in. Meanwhile, back in Haiti's capital, at least 200,000 quake victims 
face another year living under tattered tarps.

*Too Big to Fail*

Over the last twenty years, the American foreign aid system, much like 
the military, has become increasingly reliant on private contractors. 
 From 1990 to 2008, USAID experienced a 40 percent decline in staff 
while funds under their responsibility skyrocketed. A 2008 report from 
the American Academy of Diplomacy found that "implementation of programs 
has shifted from Agency employees to contractors and grantees and USAID 
lacks . . . [the] capacity to provide effective oversight and 
management." In her Senate confirmation hearing for Secretary of State, 
Hillary Clinton said "I think it's fair to say that USAID, our premier 
aid agency, has been decimated. . . It's turned into more of a 
contracting agency than an operational agency with the ability to 
deliver." Billions have been shifted to private corporations and NGOs. 
Many of those who actually implement foreign aid projects are explicitly 
for-profit companies, but even top employees at some USAID-funded 
non-profits earn over $300,000 a year.

Before he became head of the recovery commission, Bill Clinton urged 
those working in Haiti to ask, "Are we helping [the Haitian people] to 
become more self-sufficient? Are we building infrastructure in local 
development plans? Are we creating local jobs? Are we paying salaries 
for teachers, doctors, nurses, police, civil servants? Are we giving 
money to support government agencies that provide those services?"

The answers to these questions would seem to be mainly in the negative. 
In Haiti, _a report_ 
[7] (which I co-authored) at the Center for Economic and Policy Research 
revealed that less than 1 percent of the more than $1.3 billion in 
assistance provided by USAID was awarded directly to Haitian companies 
or organizations. USAID awarded more money to one Washington D.C.-based 
for-profit contractor, Chemonics, than to the entire Haitian government 
since the earthquake.

Haiti is not unique; these problems erode U.S. aid across the globe. A 
revolving door between NGOs, development companies, and the U.S. 
government has entrenched the system so deeply that any movement for 
change will be long and difficult. Fortunately, development agencies are 
slowly realizing that aid goes much further when more of it stays in the 
local economy. For its part, USAID has launched an ambitious reform 
program called "USAID Forward," which aims to totally overhaul the 
procurement system, working directly with local institutions. USAID 
Administrator Beth Hogan told Congress that in Haiti, the United States 
is "trying to reach 17 percent of our overall budget to be channeled 
through local institutions." But already, for-profit development 
companies have formed a lobbying group and hired the influential, 
Democratic party-linked, Podesta Group to get their message out. Their 
selling point: foreign companies are harder to hold accountable. It's an 
argument that rings hollow when you realize that not a single USAID 
awardee, NGO, or for-profit has been suspended or reprimanded publically 
for their work in Haiti, despite all the high-profile failures.

The failure of Haiti's reconstruction is, sadly, another chapter in a 
long history of poverty perpetuated by outside powers. Bureaucracy, 
internecine quarrels, moneyed lobbying, waste and inefficiency---these 
are not monopolies of poor, "developing" countries such as Haiti. They 
are the problems of the United States and its foreign aid complex.

Jake Johnston is a Research Associate at the Center for Economic and 
Policy Research (/_www.cepr.net_/ <http://www.cepr.net/> [8]/) in 
Washington, DC./

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