Putting a price on rebuilding Haiti

Marketplace Staff Mar 16, 2010

Putting a price on rebuilding Haiti

Marketplace Staff Mar 16, 2010


Kai Ryssdal: You wanna know how little interest rates matter right now? The Federal Reserve had a meeting today and nobody noticed. Well, people did notice but not like in the days where the Fed actually did something with rates. Short-term rates are going to stay right where they are, just about zero, for, in the Fed’s words, an extended period. Haiti’s earthquake was a little more than two months ago. In New York in a couple of weeks, major foreign donors are going to announce how much long-term aid they plan to give. Word today is that the Haitian government plans to ask for $11.5 billion, almost $1200 per man, woman and child on the island. Brett Neely explains how they decide who gets what.

BRETT NEELY: Donors asked the same question after the 2005 Indian Ocean earthquake that devastated Indonesia. Daniel Kaufmann at the Brookings Institution says that country set up a special agency to handle foreign aid. It appointed Indonesians with an impeccable reputation for honesty to run it.

DANIEL KAUFMANN: It did report to the president, but it had a lot of independence.

Kaufmann thinks Haiti needs the same thing but with trustees who can’t be bought.

KAUFMANN: Notables like Bill Clinton, outgoing President Bachelet from Chile, Lula and so on.

Dan Erikson at the Inter-American Dialogue says Haiti faces another challenge.

DAN ERIKSON: Perhaps an even bigger problem is that they just don’t have the manpower or the institutions to absorb the aid effectively.

Haiti’s lack of institutions turned deadly when the earthquake struck. For example, the country’s lax building codes meant structures were shoddy. Erikson says donors will have to subsidize high building standards.

ERIKSON: For example, providing certain earthquake-proof materials at a discount.

To rebuild schools, ports and hospitals quickly, Erikson says Haiti’s going to have to rely on foreign contractors.

ERIKSON: The upside is you tend to have much better financial and accounting procedures but the downside is that some portion of that money is actually going to be paid out ultimately not to Haitians but to foreign companies.

Erikson says another downside to foreign labor is that it won’t cut the country’s 70-percent unemployment rate.

The paradox is that donors will spend billions of dollars, but it may not mean jobs for Haitians. Experts say social unrest is another fault line in Haiti’s future.

In Washington, I’m Brett Neely for Marketplace.

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