Donor nations help Haiti with earthquake reconstruction, debt

Friday, April 2, 2010

THE BUDGET of Haiti, a country of more than 9 million people, is slightly smaller than that of the Fairfax County school system, which has 173,500 students. Yet without urgent international aid for the earthquake-ravaged nation, Haiti will be unable to meet even its modest current annual expenditures of about $2.2 billion; at the moment, it is some $320 million short.

That might not sound like much, but if the government is forced to print money to meet its immediate obligations, it will add inflation to the toxic mix of destabilizing forces it already faces. As Dominique Strauss-Kahn, the managing director of the International Monetary Fund, put it to a United Nations conference Wednesday: "There will be no medium term if we aren't able to manage the short term, which is mainly a question of budget support."

That was among the more sobering topics in an otherwise hopeful U.N. conference of international donors for Haiti. Donors led by the United States, Europe and Brazil exceeded the goal of about $3.9 billion in pledges for reconstruction aid over the next two years. Since the Jan. 12 earthquake, donors have delivered faster and more fully on their promises of emergency relief than they did after a series of hurricanes and major storms in Haiti in 2008. So hurray for that.

Still, there remains the urgent challenge of covering Haiti's deficit, which will require additional commitments by countries wary of giving directly to the Haitian government. After that, the broader agenda for lifting Haiti from its current wretched state remains daunting, long and complex. What follows is a primer on the good and the bad facing Haiti.

The good. Donor nations have forgiven around 80 percent of Haiti's outstanding debt, which was well over $1 billion before the quake. That's a significant burden lifted from a country whose ministries, capital city and already severely limited infrastructure were badly damaged or destroyed in the temblor. Still, a number of creditors, including Taiwan, have not yet excused Haiti's remaining debt, which still totals several hundred million dollars.

There are encouraging signs that Haiti's government and interim reconstruction agency, which is to be co-chaired by Bill Clinton, U.N. special envoy for Haiti, and Haitian Prime Minister Jean-Max Bellerive, a competent technocrat, will incorporate tough anti-corruption measures pushed by World Bank President Robert B. Zoellick and others. These include internal audits, an anti-corruption unit within the reconstruction agency, a commitment to expose malfeasance as it arises and a requirement that any official who handles relief funds make a full declaration of assets.

Haitian officials also say they are prepared to accept an important role for outside experts in the reconstruction agency and to adhere to strict rules for transparency and accountability so that the allotment and status of funding is available online. Such steps will promote trust among Haitians, who have so far seen only modest results from emergency aid delivered. They should also help provide confidence for donors.

The bad. It remains unclear to what extent non-governmental aid organizations in Haiti -- a huge but fractured sector and a critical part of relief and rebuilding -- are prepared to coordinate their efforts with the government and the interim reconstruction agency. Without such cooperation, Haiti's reconstruction could devolve into islands of development amid a sea of desperation.

Moreover, as the rainy season begins, hundreds of thousands of people remain homeless and living in jury-rigged camps and shelters in the streets in and around Port-au-Prince. Of those, an estimated 25,000 to 40,000 are at

immediate risk when ravines and hillsides

turn to mud; avalanches are a particular worry. Haiti's government and international relief agencies must rush to relocate them and provide at least temporary dwellings before a new tragedy unfolds.

Haiti's supine government, under the uncertain leadership of President René Préval, possessed limited administrative abilities even before Jan. 12. After the destruction of most of its agencies and departments and the deaths of rank-and-file officials, it is barely functioning. Critical records and databases such as voter rolls have been destroyed. Elections, crucial for the government's legitimacy but costly and complex to organize, are on hold. Tax collections, never robust, have fallen off to a trickle. Without dramatic improvement, the government will remain unable to meet its basic obligations. And land ownership is shrouded in confusion, inadequate or nonexistent documentation and fuzzy laws. That discourages foreign investment, hampers watershed management and interferes with resettling the homeless.

The bottom line. Mr. Clinton, who has taken a personal interest in Haiti for decades, brings energy and his usual political savvy to the project of rebuilding Haiti -- or, as donors like to say, "building it better." He is enormously popular in Haiti. His efforts, and those of international donors, must be matched by those of Haiti's government and the hundreds of nongovernmental organizations operating there. Without that, this hopeful moment will pass, and Haiti's misery will deepen.

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