[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
REBUILDING HAITI'S COMPETITIVENESS
AND PRIVATE SECTOR
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
INTERNATIONAL MONETARY
POLICY AND TRADE
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 16, 2010
__________
Printed for the use of the Committee on Financial Services
Serial No. 111-111
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56-775 PDF WASHINGTON : 2010
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HOUSE COMMITTEE ON FINANCIAL SERVICES
BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama
MAXINE WATERS, California MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina RON PAUL, Texas
GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California WALTER B. JONES, Jr., North
GREGORY W. MEEKS, New York Carolina
DENNIS MOORE, Kansas JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts GARY G. MILLER, California
RUBEN HINOJOSA, Texas SHELLEY MOORE CAPITO, West
WM. LACY CLAY, Missouri Virginia
CAROLYN McCARTHY, New York JEB HENSARLING, Texas
JOE BACA, California SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia RANDY NEUGEBAUER, Texas
AL GREEN, Texas TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois JOHN CAMPBELL, California
GWEN MOORE, Wisconsin ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota KENNY MARCHANT, Texas
RON KLEIN, Florida THADDEUS G. McCOTTER, Michigan
CHARLES A. WILSON, Ohio KEVIN McCARTHY, California
ED PERLMUTTER, Colorado BILL POSEY, Florida
JOE DONNELLY, Indiana LYNN JENKINS, Kansas
BILL FOSTER, Illinois CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana ERIK PAULSEN, Minnesota
JACKIE SPEIER, California LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York
Jeanne M. Roslanowick, Staff Director and Chief Counsel
Subcommittee on International Monetary Policy and Trade
GREGORY W. MEEKS, New York, Chairman
LUIS V. GUTIERREZ, Illinois GARY G. MILLER, California
MAXINE WATERS, California EDWARD R. ROYCE, California
MELVIN L. WATT, North Carolina RON PAUL, Texas
GWEN MOORE, Wisconsin DONALD A. MANZULLO, Illinois
ANDRE CARSON, Indiana MICHELE BACHMANN, Minnesota
STEVE DRIEHAUS, Ohio ERIK PAULSEN, Minnesota
GARY PETERS, Michigan
DAN MAFFEI, New York
C O N T E N T S
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Page
Hearing held on:
March 16, 2010............................................... 1
Appendix:
March 16, 2010............................................... 35
WITNESSES
Tuesday, March 16, 2010
Birdsall, Nancy, President, Center for Global Development........ 12
Boisson, Pierre-Marie, Chairman, Sogesol......................... 8
D'Sa, Mark, Senior Director, Sourcing & Production, Gap Inc...... 10
Fairbanks, Michael C., Founder, SEVEN Fund....................... 5
Skrobiszewski, Francis J., Associate, VisionAmericas LLC......... 15
APPENDIX
Prepared statements:
Meeks, Hon. Gregory.......................................... 36
Birdsall, Nancy.............................................. 40
Boisson, Pierre-Marie........................................ 46
D'Sa, Mark................................................... 60
Fairbanks, Michael C......................................... 62
Skrobiszewski, Francis J..................................... 74
REBUILDING HAITI'S COMPETITIVENESS
AND PRIVATE SECTOR
----------
Tuesday, March 16, 2010
U.S. House of Representatives,
Subcommittee on International
Monetary Policy and Trade,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2128, Rayburn House Office Building, Hon. Gregory W. Meeks
[chairman of the subcommittee] presiding.
Members present: Representatives Meeks, Waters, Watt,
Driehaus; Miller of California, and Paulsen.
Ex officio present: Representative Bachus.
Also present: Representatives Clay and Maloney.
Chairman Meeks. This hearing of the Subcommittee on
International Monetary Policy and Trade will come to order.
For the record, and without objection, all members' opening
statements will be made a part of the record.
What I will do is open up with an opening statement at this
time. Before I begin, I would like to thank my friend and
colleague, Representative Miller from California, the ranking
member of this subcommittee, for his help in planning this
hearing, and to express again my gratitude for our ability to
work in a truly bipartisan manner in seeking solutions to the
critical situation in Haiti.
This hearing is the second in a series of hearings on the
situation in Haiti, and I was so thrilled to see such strong
bipartisan support last week for the Haiti debt relief bill,
which passed with unanimous support out of the full House,
following its passage out of this subcommittee.
Finally, I want to reiterate my sincere thanks to the
chairman of this committee, Barney Frank, and the ranking
member, Spencer Bachus, for their continued support for Haiti
and the work of this subcommittee.
I want to give a special thank you to Representative Bachus
for his touching remarks on the plight of Haiti on the House
Floor last week in support of the bill, where he reiterated how
Haiti from even its very beginnings, its own independence, was
riddled with debt because they had to pay for that
independence. He was very eloquent on the Floor of the House
last week.
I would like to thank our panel of witnesses for appearing
here today and for sharing their thoughts and experience on
rebuilding Haiti's competitiveness and private sector.
Haiti's recovery will happen in my opinion in three
distinct if not overlapping phases. Phase one consists of the
crisis response, focused on basic survival needs which began in
the hours immediately following the devastating earthquake of
January 12, 2010. Phase one is likely to be ongoing for some
time, particularly for the most vulnerable groups in Haiti.
Phase two, which is in its very early stages of development
today, consists of rebuilding the basic physical and governance
infrastructure of Haiti. This phase will take several years to
complete, but must get under way quickly, and it is critical to
allowing the government and the people of Haiti to get back to
work and to retain some minimal sense of normalcy.
Phase three, the plan which is being developed today and
for which this hearing is trying is cover, is a continuation of
the extensive work already underway prior to the earthquake. It
consists of implementing a long-term economic strategy for
Haiti, allowing it to grow prosperous and to move beyond the
dependency on aid which has characterized the country for
decades. As our witnesses will address here today, much of the
preparatory work for phase three was already being done prior
to the earthquake under the leadership of President Preval.
These plans have been modified as a consequence of the
earthquake, but not fundamentally changed.
It is my hope that today's hearing and the testimony of our
panel of witnesses will shed some light on how we can empower
the Haitian institutions and the private sector to enable the
successful and rapid progression of Haiti from phase one,
crisis response mode, where it is today, to phases two and
three, of long-term economic planning in a manner that lays the
foundation for a new sustainable, stable, and prosperous Haiti,
providing hope and opportunity for all its population and not
just the privileged elite.
You cannot rebuild without the private sector. It has to be
that joint venture between the public and the private sector.
We know how important that is.
I look forward to hearing about how we can ensure the
effective coordination of the multitude of development efforts
including especially the multilateral and international
development institutions under the leadership and stewardship
of the Haitian people themselves.
Eventually, we have to move so that the Haitian people can
lead and govern as they build a future for themselves and
according to their plans, their culture, and their vision for a
resurgent Haiti.
With that, I yield back the balance of my time and
recognize the ranking member, my friend and colleague from
California, Mr. Miller.
Mr. Miller of California. Thank you, Chairman Meeks. I
would like to associate myself with your comments regarding the
cooperation of processing the previous bill that we experienced
on the Floor last week.
You have been an effective and strong voice for the needs
of the Haitian people and I want to publicly commend you for
that. I know it is a passion for you and it is a good effort we
have undertaken.
I would like to thank you for holding this hearing to
discuss ways American resources can be leveraged to more
effectively help Haiti recover from the massive earthquake that
devastated the country and economy.
I was pleased when this committee and subcommittee of this
Congress were able to pass legislation last week supporting the
international debt relief effort in Haiti. I am currently
working on legislation that we discussed previously to involve
American labor and American expertise in the process of
rebuilding Haiti. Because we are going to be expending American
tax dollars, we should be looking also at how do we employ
American workers, who have the expertise, in benefitting and
helping to recover from the impact in Haiti.
Last week, Congress overwhelmingly passed legislation
originating from the subcommittee requiring the Secretary of
the Treasury to instruct the U.S. executive members of the IMF,
the World Bank, the Inter-American Development Bank, and other
multilateral development institutions to seek immediate and
complete cancellation of all debts owned by Haiti to such
institutions.
Unfortunately, this is only part of the recovery effort
that must be undertaken in Haiti. The IDB estimates a total
cumulative construction cost of at least $14 billion, which is
double Haiti's national GDP. According to State Department
figures, an estimated 230,000 people died, which included up to
40 percent of the country's civil service. Further, 28 to 29
government ministry buildings were destroyed, 70 percent of the
population is unemployed, and a third is illiterate.
At present, international aid efforts are focusing on
meeting Haiti's basic survival needs. Haiti's long-term
economic recovery rebuilding will need to rely on public/
private partnerships and internationalists to supply the nation
with heavy equipment and technical expertise needed to clear
the estimated 78 million cubic yards of rubble to begin
rebuilding an infrastructure that can more effectively
withstand disaster in the future.
Impeding efforts to rebuild are lack of uniform building
standards, mistrust in the government by Haitian people, a high
perception of government corruption, and a total lack of heavy
machinery and equipment needed to undertake a task of this
proportion.
Recently, the Washington Post quoted Haiti's largest
contractor, who estimated the entire nation of Haiti has nearly
100 excavators, nowhere near the amount needed to clear the
public rubble they have experienced. If you took the rubble
that we are facing in Haiti and stacked it 727 feet on the
Mall, that is equivalent to what we have to move with 100
pieces of equipment.
We need to effectively make sure that the resources are
there needed to deal with this impact and the American labor
force who need to be employed are also put there, and I think
at that point, we can benefit the people of Haiti.
I yield back the balance of my time.
Chairman Meeks. Mr. Bachus?
Mr. Bachus. Thank you, Mr. Chairman. I thank you for
holding this important hearing. This is the second hearing that
the subcommittee has held on Haiti. I applaud you and Mr.
Miller and other members of the committee for your continued
efforts to respond to the distress and suffering citizens of
this devastated country.
If you picked a capital in any country in the world that
could least deal with an earthquake, it would be Port-au-
Prince, Haiti. The human tragedy following the January 12th
earthquake is overwhelming, and as Haitians seek to rebuild, we
must stand alongside them.
The House took the first step to provide assistance last
Wednesday, agreeing to legislation which I was proud to
support, that helps address Haiti's national debt.
Haiti was born into debt. The French upon leaving Haiti
imposed a heavy debt on the Haitian people and they have
suffered under that debt and additional debt for their entire
history. I think that explains to some extent why they have
never had the funds to achieve any type of economic
independence.
Rebuilding Haiti will not be an easy task. Some estimates
place reconstruction costs as high as $14 billion. Such a
challenge will require a comprehensive coordinated effort.
The United States and Haiti cannot afford to have resources
stolen or wasted on redundant efforts by various groups working
completely independent of one another without any coordination
whatsoever.
Additionally, Mr. Chairman, this effort must have the buy-
in and support of both the Haitian Government and the Haitian
people. The goal must be to break the cycle of aid dependency
that has kept Haiti mired in poverty for generations. Rather,
we should provide the tools for Haiti to become a competitive,
self-sustaining country. That is really what the Haitian people
desire.
To bring this about, the private sector should be an
important engine towards sustainable growth. International aid
can take the Haitian economy only so far.
Achieving this goal will require consultation with the
Haitian Government and its people to ensure that aid is
delivered in a transparent and fair manner and to those in
need. We must make certain that the policies implemented are
not undermined by corruption that siphons off limited resources
and disenfranchises the Haitian people.
The United States has always been a benevolent and caring
country. Even during our current economic challenges, we have
not lost our compassion. In fact, our present travails have in
some respects, I believe, given us a greater appreciation for
the desperation and suffering of those facing challenges and
hardships, although the hardships and challenges that Haiti
faces are almost unimaginable for most Americans.
Providing assistance to a nation devastated by a natural
catastrophe is consistent with our principles. We can lead by
example while we lend a helping hand.
Mr. Chairman, I again commend you and Mr. Miller for your
commitment to this matter. You have assembled before us today a
distinguished group of panelists, each of whom will be able to
provide us with unique insights into how to help the Haitian
people to realize their potential and achieve sustainable
development.
This legislation is important to help the people of Haiti
get back on their feet, and I look forward to working with you
and other members of this committee going forward.
With that, I yield back the balance of my time.
Chairman Meeks. Thank you, Mr. Bachus. Before you got here,
I mentioned that I wanted to publicly thank you for your
eloquent statement you just made on the record on the Floor of
the House as we passed the Haiti debt relief bill.
At that time, Chairman Frank and the gentlelady from
California, Maxine Waters, also just talked about how for a
long time you have been working collectively in a bipartisan
manner with them to try to overcome poverty and debt problems
to help Haiti.
I just want to thank you for your commitment and your hard
work in this endeavor. We really appreciate you.
Without objection, each witness' statement will be made a
part of the record. You will be recognized for a 5-minute
summary of your testimony, but your written testimony will be
considered part of the entire record.
First to testify, we have with us Mr. Michael Fairbanks.
Mr. Fairbanks is the co-founder of SEVEN, a philanthropic
foundation run by entrepreneurs whose strategy is to produce
films, books, and original research to markedly increase the
rate of diffusion of enterprise solutions to global poverty.
He is the founder and chairman emeritus of the OTF Group, a
strategy consulting firm based in Boston, and the first
venture-backed U.S. firm to focus on developing nations. He was
a U.S. Peace Corps teacher in Kenya.
His most recent projects include advising the president of
the Inter-American Development Bank on opportunities for the
majority initiative, working for the president of Rwanda to
improve the competitiveness of that nation's tourism, coffee,
and agro industry sectors, and advising the minister of finance
of Afghanistan on private sector reforms.
He has co-authored many books, including the Harvard
Business School's landmark book on business strategy in
emerging markets, ``Plowing the Sea, Nurturing the Hidden
Sources of Advantages in Developing Nations,'' which Business
Magazine said, ``points the way towards creating prosperity in
developing nations.''
He co-conceived and contributed to the global bestselling
book, ``Culture Matters, How Value Shape Human Progress,'' and
I just finished reading his most recent book entitled, ``In the
River They Swim: Essays from Around the World on Enterprise
Solutions to Poverty,'' which was released, I believe, last
year.
With that, let me welcome Mr. Michael Fairbanks.
STATEMENT OF MICHAEL C. FAIRBANKS, FOUNDER, SEVEN FUND
Mr. Fairbanks. Thank you, Mr. Chairman, and members of the
subcommittee. Thank you for the opportunity to discuss
enterprise solutions to poverty and the United States' aid
policy in Haiti.
I would like to start with a couple of foundational
concepts, and I am going to build on those towards the end.
The first thing I want to talk about is prosperity. It is
the ability of an individual, group or nation to provide
shelter, nutrition and other material goods that enable people
to live a good life according to their own definition.
Prosperity helps to create the space in people's hearts and
minds so that unfettered by the everyday concern of the
material goods that are required to survive, they might develop
a healthy emotional and spiritual life, again, according to
their own preferences.
There's another definition of ``prosperity'' that is
equally important, and that is using the stock view of
prosperity. This is in regard to the enabling environment. In
every country, whether it is Haiti or the United States or
anyplace else in the world, this country has seven types of
wealth.
There are natural resources. There is man-made capital.
There is financial capital. These are the easy to see, easy to
measure forms of wealth that exist in every nation.
The more important types of capital are the ones that are
difficult to measure, impossible to see sometimes, and these
are what I call the ``higher forms of capital.'' Institutional
capital, like rules of law and democracy, both of which are
very positively correlated with economic growth.
Knowledge capital, like databases and ideas. International
patents would represent a robust level of knowledge capital.
Human capital, which is skills and abilities and insights
that are basically knowledge capital with legs. It can leave
the country, and this is very pertinent to the case of Haiti.
Finally, we have the most important type of capital, which
is cultural capital. Not just the explicit articulation of
culture, fashion and music and design, food and language, but
the ideas and the attitudes, the beliefs, the assumptions and
the goals of people who can either promote innovation and
prosperity or can diminish innovation and prosperity.
With that as a foundational base of my comments, I would
like to make several further points. First of all, most foreign
aid never achieves its desired impact. This is according to one
of the most prominent aid organizations on the planet Earth
whose leader showed me their internal report before he had to
shelf it because if he were to make these findings public, he
would not be able to do his job any more.
According to him, and it is a name we all know, 80 percent
of all the foreign aid around the world never achieves its
desired impact. In fact, there are reasons to believe the
opposite.
Aid largesse can distort private initiatives, stifle
democracies, amplify ethnic based patron/client relationships,
and promote corruption.
The former Finance Minister of Afghanistan, Ashraf Ghani,
who is known to everybody in this room, is short-listed to lead
the United Nations, short-listed to lead the World Bank,
observes that aid can even ``sever the sovereign relationship
between people and their leaders.''
What I want to talk about today is the microeconomic
foundations of growth, how growth really occurs, where do taxes
come from, where does employment come from.
The greatest quote that I have ever heard with regard to
this is that every farmer in Haiti is the private sector. Every
fisherman in a little boat off the Haitian Coast is the private
sector. Every kid selling chiclets or Coca-Cola on the street
corner is the private sector.
We should not think of the private sector as monolithic
family-owned conglomerates that engage in rent-seeking
activities, monopolistic access to government favors, raw
materials, and markets.
The private sector is the farmer. We need to keep that in
mind.
Nations that do not create wealth for their citizens share
much in common. Our evidence suggests that they are overreliant
on natural resources, including cheap labor, and they believe
in simple advantages of climate, location, and government
favors.
My recommendations for Haiti are to build modern
institutions on top of traditional values, to find new segments
of the market in which to cooperate, and my recommendation for
the United States Government is to consider focusing on our own
values and attitudes and what we can do better, not what the
Haitians can do, and to focus very particularly on USAID
procurement services. It is the most non-competitive aspect of
the American economy.
The consultants we send overseas are mediocre. They are
underappreciated. They are overpaid. The fact is what we are
finding is that the vendors to USAID are really nothing more
than head hunters who extract a rent for providing a service to
the U.S. Government. They have no intellectual property. They
do not train their consultants. They do not understand the
needs of the countries in which they work, and their real
client is the United States Government, not the poor nations of
the world.
I ask you very much to look at my written comments for some
support of those.
Thank you very much for the opportunity to speak to you
today, and I hope you and your staff will rely on me for
further briefings as you may require them.
[The prepared statement of Mr. Fairbanks can be found on
page 62 of the appendix.]
Chairman Meeks. Thank you. Next, we have Mr. Pierre-Marie
Boisson. Mr. Boisson is the founder of Sogesol, Haiti's largest
microfinance company and a 50 percent owner of the subsidiary,
Sogebank, Haiti's largest commercial bank.
He is also an economic advisor to Sogebank's executive
committee and was the bank's chief economist for 15 years.
Sogesol was created 10 years ago and is a long-term partner
of ACCION International.
Mr. Boisson is also vice president of the Board of
Sodaphetees, a private development finance corporation, and
secretary of the board of E-Power, an independent power
producer. He is a member of the Presidential Working Group on
Competitiveness and the Private Sector Economic Forum, and sits
on executive committees of both groups.
Before joining Sogebank in 1991, he led USAID-sponsored
reorganization of Haiti's professional banking association in
1990.
He is a former staff member of the World Bank's IFC, where
he spent 2 years, and he also worked a total of 9 years with
the Haitian public sector.
He holds an MBA from Harvard University and an MSM from
Arthur D. Little's Management Education Institute, and a BS in
civil engineering from the State University of Haiti.
Welcome.
STATEMENT OF PIERRE-MARIE BOISSON, CHAIRMAN, SOGESOL
Mr. Boisson. Thank you, Mr. Chairman. Mr. Chairman and
honorable members of the House Subcommittee on International
Monetary Policy and Trade, thank you for inviting me to talk to
you about the Haiti reconstruction effort and especially the
precious role that the private sector can and should play in
that country's rebirth.
Two months ago, Haiti suffered one of the most terrible
catastrophes ever to hit a nation. Over 200,000 people died and
1.2 million got displaced and millions more are still
traumatized.
Beyond suffering, however, lies a real opportunity to build
a better Haiti, more prosperous and more equitable. Haiti has a
real chance to create over a million jobs and attract $5
billion worth of private investments over the next 5 years.
The Presidential Working Group on Competitiveness, with the
help of the OTF Group, and following extensive international
dialogue, identified five priority clusters where we could spur
inclusive growth and generate tax resources.
The Group is supported by the Private Sector Economic
Forum, which includes the main business associations and major
financial groups. The Forum believes that the private sector
must partner with government and civil society to create a new
social compact for all.
Granted, Haiti's poverty and cultural mistrust raises
doubts about social commitment to private led growth and
public/private corporations. The good news is that Haiti was
already moving toward removing such doubts way before the
earthquake.
In fact, 2009 was the fifth consecutive year of growth with
a 2.9 percent mark even in the midst of a world recession.
Inflation had been in retreat and more than $700 million of
private investments, including FDIs, were recorded over the
last 5 years.
Many signs of public/private corporations emerged as well,
including the creation of the Commission itself, which reflects
serious efforts by President Preval to partner with civil
society.
I have listed a lot of examples of corporations over the
last 10 to 15 years in my written remarks. Those are maybe
considered episodes of goodwill but they reveal serious change
in the mentality of Haitians. They reveal profound mutations of
Haitian society including the growth of the Diaspora itself.
I am confident that the earthquake itself will urge
Haitians to unite against fatality and reinforce our will to
build partnerships.
The vision of both the Group and the Private Sector Forum
is that without economic growth and increased fiscal revenue,
popular demand for subsidies and welfare will always be the
domain of donor and this is as Professor Fairbanks has
explained, and we agree with that, a mixed blessing for Haiti.
We are encouraged that the private sector will be more
responsive to social needs and really to be disciplined
taxpayers, but in fact, the most important thing is to really
build growth which is the basis for the revenues that the state
will have to do the needed social redistribution.
We have identified five clusters where significant
investment can be done to empower the private sector to really
act for the common good.
We listed the food and tubers' sector, which is
agriculture, where we could create 300,000 jobs over the next 5
years with investment of $190 million in post-harvest centers,
crop insurance, etc.
Animal husbandry, where we could create 400,000 jobs, also
with $180 million of investment that I have listed in my
written remarks, including sea ports, quality assurance,
laboratory, dairy cooperatives, etc. All of those are in my
written remarks.
The garments sector has already benefitted from significant
U.S. help in the form of the HOPE II legislation. There, we can
create a lot of jobs and help, because one of the things the
earthquake has taught us is that it is very important to have a
more balanced growth in Haiti.
Fourth is tourism, facing a lot of challenges, but a sector
also that could be really powerful in creating jobs and
attracting investments and boosting Haiti's image.
Lastly, the earthquake really brought housing and urban
development as a major growth sector for the next 5 years. It
is really a place where we will need more foreign aid. This is
not something that we can do alone. We will not have enough to
provide for the $4.5 billion that will be necessary for
rebuilding 250,000 units of housing.
We will need to avoid the crowding out of private
investment that can be consequential to the huge amount of
dollars that will enter the economy because of that.
On the governance, we really support the creation of an
entity that will really better coordinate foreign aid and
better coordinate also the insurgence of policy making into the
exercise. That is already approved in fact by the government
itself, but it needs to be approved by the parliament, but we
think this kind of governance instrument will be necessary to
manage this huge flow of foreign aid and dollars, regardless of
the real impact it will have on the economy.
Mr. Chairman, in closing, I once again thank you for this
opportunity to address such a crucial matter for my country. I
will be happy to answer your questions and contribute to your
thoughts about how the United States can help restore our
nation and the dignity of our people.
Thank you.
[The prepared statement of Mr. Boisson can be found on page
46 of the appendix.]
Chairman Meeks. Thank you very much. Next, we have Mr. Mark
D'Sa, who is the senior director of sourcing and production for
Gap Inc. His responsibilities include directing product
development, placement strategies, and procurement in North,
Central, and South America and parts of Asia.
He is currently located in Miami from where he leads a team
that oversees price negotiations, placement, execution,
quality, product integrity, logistics, and other supply chain
operations related to the product made for Gap Inc. in the
Americas.
He has 38 years of global experience in the textile and
apparel industry, having lived and worked in India, Thailand,
Canada, Singapore, and the United States.
He has previously worked with several brands including
Polo, Ralph Lauren, and Levi Strauss & Company.
In the 1980's, he was a consultant to the Government of
Thailand for quota negotiations, and more recently he was
actively involved in Gap's efforts to support the passage of
ATPDEA.
Welcome.
STATEMENT OF MARK D'SA, SENIOR DIRECTOR, SOURCING & PRODUCTION,
GAP INC.
Mr. D'Sa. Thank you. Thank you, Mr. Chairman, and members
of the subcommittee. Thank you for inviting me to be a part of
this discussion today.
Gap Inc. has been sourcing product in Haiti for a number of
years and we remain committed to continue doing business there.
Even before the tragedy, we were exploring internal
recommendations to improve the business environment and how we
could encourage more investment to come to Haiti so that
companies might want to establish a footprint in that country
and help build out the infrastructure.
Prior to the earthquake, we had determined that it made
good sense to source out of Haiti because of the quality, the
competitiveness, the efficiency of the factories, the
workforce, and the proximity to the United States.
As you may know, goods shipped from Haiti can reach the
United States in 3 to 4 days, as compared to 5 to 6 weeks from
some of the locations in Asia.
Despite the recent devastating tragedy, we are committed to
Haiti resuming its rightful place in the sourcing community.
Our staff is working with Gap Inc.-contracted factories to
facilitate a full return to business while working with the
Haitian Government and Departments of the U.S. Government to
explore some of the ways that the environment might be improved
in order to attract potential investors to that country.
Haiti needed help before the earthquake and it needs it
more than ever now. The apparel industry employed approximately
28,000 people before the earthquake and we believe more
sustainable jobs could be created in textiles and apparel if
the current trade legislation were amended to allow a wider mix
of product from Haiti to have duty free access to the United
States.
My colleagues and I have met with people in the various
committees with jurisdiction over trade policy and we are
hopeful that some of the current legislation can be more
liberalized in order to make the environment more conducive to
investors to want to come into Haiti.
Currently, there are investors standing in the wings
looking critically at what we are doing at this point in time.
Haiti is important to U.S. retailers from a supply chain
perspective. Its geography and its workforce are its two major
strengths. The workforce is motivated, dedicated, and friendly.
The resilience of the people came across stronger than anything
else after the earthquake.
Despite their personal losses and tragedies, people were
back at the factories 72 hours after the earthquake.
I remember one of our vendors telling me that he spoke to
his workers offering them time off but people said no, we have
lost our houses, we have lost our near and dear ones, but we
need to work. They live from day to day and that is their
situation.
Another strength of that country is its proximity. In order
to leverage the proximity and human capital, we need to ensure
that the legislative environment that currently exists, the
HOPE II agreement, which is largely underutilized because of
the way it is constructed and because of some of the exclusions
under the tariff preferential limits need to be re-examined and
made more user-friendly and more applicable to the industry as
it stands today.
We have encouraged both the Haitian and United States
Governments to focus on infrastructure development which would
benefit both local and foreign companies as well as the Haitian
people themselves.
Improvements to the ports and roads, power supply and
communication, as well as urban transportation are critical to
long-term sustainable development. In the short term, of
course, progress must continue to be made in ensuring delivery
of food and the provision of better shelter for the Haitian
people.
One thing we have to be cognizant of is there are large
communities of people today living in tents. They are out in
the open. There is no drainage and sewage.
In a couple of months, the rainy season will start. That
could bring on a number of health problems. Something has to be
done immediately to help and remediate that situation.
Following the earthquake in Haiti a few months ago, our
company and our employees joined forces and have made donations
to Mercy Corps, which works on short-term efforts as well as
long-term reconstruction for the country. At the same time, the
factory that makes our clothes was among the first to be able
to put Haitian employees back to work and continues to provide
them with food, clothing, and shelter. We also continue to
explore other ways that the company might be able to help.
I want to thank the U.S. Government for taking such strong
and proactive action in the aftermath of the earthquake as well
as for their commitment to supporting a real recovery in the
textile and apparel production sector, which can continue to
create more sustainable jobs for Haiti.
We appreciate the swift action and encourage this committee
to work with your colleagues here in Congress and all the
relevant governmental agencies to coordinate an effort that can
be lasting and sustainable for the investment environment in
Haiti.
Gap Inc. remains committed to sourcing in Haiti and we
continue to explore how we can increase our sourcing over time
with a goal of fostering the sustainability and growth of the
industry over the long term.
Thank you, Mr. Chairman, and members of the subcommittee
for your commitment to and interest in Haiti, and thanks again
to you and the committee for inviting me to be a part of the
discussion today.
[The prepared statement of Mr. D'Sa can be found on page 60
of the appendix.]
Chairman Meeks. Thank you. Next, we have Ms. Nancy
Birdsall, who is the Center for Global Development's founding
president. From 1993 to 1998, she was executive vice president
of the Inter-American Development Bank, the largest of the
regional development banks, where she oversaw a $30 billion
public and private loan portfolio.
Before that, she worked for 14 years in research, policy,
and management positions at the World Bank, including as
director of the Policy Research Department.
She is the author, co-author or editor of more than a dozen
books and over 100 articles in scholarly journals and
monographs. Shorter pieces of her writing have appeared in
dozens of U.S. and Latin American newspapers and periodicals.
She received her Ph.D. from Yale University and her MA from
Johns Hopkins School of Advanced International Studies.
Prior to launching the Center, she served for 3 years as
senior associate and director of the Economic Reform Project at
the Carnegie Endowment for International Peace where her work
focused on globalization, inequality, and the reform of the
international financial institutions.
Welcome.
STATEMENT OF NANCY BIRDSALL, PRESIDENT, CENTER FOR GLOBAL
DEVELOPMENT
Ms. Birdsall. Thank you very much, Chairman Meeks, Ranking
Member Miller, and other members of the subcommittee. As
always, it is a great privilege to have this opportunity to
speak with you.
I would like to set out three principles for how the United
States might follow up on the tasks you have set out so well in
Haiti, and suggest three specific actions that I hope this
subcommittee will support.
First, the three principles. The first is that it is about
more than aid, you said this yourself, Chairman Meeks. It is
about all the other ways the United States can support Haiti--
trade, investment, support of the Diaspora--and I will return
to that issue in a minute.
The second principle is about coordination. I think there
is endless discussion of the need for donor coordination. We
just cannot let the ideal be the enemy of the good.
It is true that it is not going to be easy in Haiti until
the government itself is ready to coordinate the donors. That
could take some time. It is good that the initial step Mr.
Boisson mentioned has been taken, but we have to recognize that
prior to the earthquake, the government was weak on this issue
compared even to some countries in Africa which are becoming
more assertive in taking charge.
What can the United States do? I think as one of the
largest single donors, it can lead on pushing the other donors,
including the United Nations, to set out who is the lead donor
on key sectors.
For example, on reconstruction, is it the IDB or the World
Bank? On social sector provisioning in the short run, who is
it? Is it the British? Is it the Canadians? Is it USAID? And so
forth.
More important, I urge this committee to push USAID in
particular to set the tone on transparency of what it is doing
and what the other donors are doing. The only way to create
accountability to Haitian taxpayers, Haitian citizens, and to
U.S. taxpayers is to maximize the information about what each
donor is doing in a timely way to all of you and to civil
society groups in Haiti.
How to do that, it means thinking through what should be
published on a Web site, whether there can be a platform that
all donors would use for monthly information about their plans,
their commitments, their actual disbursements.
The third principle has to do with the way we organize
ourselves in this government, and that is the need to make it
very clear that USAID is not only the lead agency, as the
President designated Dr. Rajiv Shah, the administrator, for
humanitarian relief, but is the lead agency for this medium-
term development challenge that you all have emphasized in your
opening remarks.
And that USAID should take the lead, at least for its own
activities, and the activities of other U.S. agencies on
planting now the seeds of good, rigorous evaluation and a
process of learning as the aid program and Haiti's own
development programs evolve, so that adjustments can be made,
so there is a dynamic process of evaluation, and an openness to
innovation and new ways of doing things.
Let me go to the three actions. The first has already been
referred to indirectly, but let me try to be as clear as
possible.
This subcommittee, this committee, could push hard for
provision of duty-free/quota-free access for Haitian exports,
including apparel, and making that access permanent. Already,
we see the benefits of the recent rounds of legislation on
opening up the U.S. market to Haitian exports before the
earthquake.
The issue now is to take further steps to encourage
investment even more than has been the case so far. First, to
lift the current quota on Haitian apparel exports, which may be
discouraging potential investors. Gap is going ahead. There
might be more without the current quotas that are imposed.
Second, there should be full product coverage, as Mr. D'Sa
mentioned. Third, change the program rules to allow the
broadest possible sourcing of fabric and other inputs rather
than restricting key imports. This would get the Haitian
preference closer to what we have in the African Growth and
Opportunity Act.
Finally, make these preferences permanent. There could be
an opt-out for the Congress or the U.S. Administration in the
case of a coup or human rights' violations that were egregious
in some future government of Haiti.
This, by the way, would have minimal effects on U.S.
textile production.
Action to create more flexibility in our immigration policy
to allow in more Haitians. I would refer you to the written
testimony for more clarity on this, but the idea could be to
have a numbers neutral improvement that is substituting again
some of the other existing ways to get in, and allow something
like 10,000 more Haitians a year to come here.
This would reduce greatly the embarrassment that I see in
the future and that colleagues of mine see when we are turning
back boats of Haitians in the next year or more.
An action to take every possible step to channel as many of
the U.S. resources as can be reasonably channeled through the
multilateral development banks, through the trust fund that Mr.
Boisson mentioned.
I do not know which bank, IDB or World Bank, maybe both of
those. In particular, the IDB has the multilateral investment
fund which was a George H.W. Bush initiative in the late
1980's, works on the private sector, and would make a lot of
sense.
Let me also add that these two banks, as you know, are now
seeking capital increases, and I think one of the big reforms
that could be encouraged is that they develop more insurance
and risk management instruments.
Haiti benefitted from an $8 million payout against a very
small insurance program that the World Bank had set up. It
should and could be more because these small, very poor nations
are subject to all kinds of weather and other external shocks.
Thank you very much, Mr. Chairman.
[The prepared statement of Ms. Birdsall can be found on
page 40 of the appendix.]
Chairman Meeks. Thank you. Last, but far from least, we
have Mr. Skrobiszewski, who has 30 years of experience spanning
investment fund management, socioeconomic development, crises
communications, public affairs, government agency reform, and
strategy development working in the United States, Europe,
Africa, Asia, and the Middle East.
For much of his career, he has been called upon to conceive
and implement innovative solutions to extraordinary challenges.
At the outset of communism collapse in 1989, he was called to
the White House by President Bush to discuss strategies for the
redevelopment of the Polish economy, and later to meet Lech
Walesa within days of the fall of the Berlin Wall.
In 1990, he prepared a forward-looking U.S. Labor
Department strategy anticipating the fall of the remaining
Soviet bloc regimes.
He was recruited to draft a business plan for the Polish-
American Enterprise Fund, a successful private equity firm
conceived by the President and the U.S. Congress to promote
development of the Polish private sector and the institutional
foundation for a market economy.
He served initially as an officer of the PAEF and later in
its sister enterprise fund in Hungary, where he conceived and
managed the latter's cutting edge, high-tech VC fund.
He is also director of portfolio management of a Polish
privatization fund, advised on the establishment of the
Eurasian Development Bank, and serves today on the Investment
Committee for the Polish National Capital Fund, financing new
high tech VC funds in Poland.
Welcome.
STATEMENT OF FRANCIS J. SKROBISZEWSKI, ASSOCIATE,
VISIONAMERICAS LLC
Mr. Skrobiszewski. Thank you, Mr. Chairman, and members of
the subcommittee. I am pleased to be here to describe my
experiences as an officer of the Enterprise Funds in Poland and
Hungary and to discuss how this model could be instrumental in
today's rebuilding of Haiti.
The Miami Herald's Jacqueline Charles recently observed
that the prospects of massive spending already has groups
jockeying for roles in Haiti's revival. For such spending to be
effective, we must address fundamental questions of what are we
doing to empower the Haitian people to help themselves? How do
we support the Haitians in revitalizing their own country and
give the little people a chance they never had before?
In building back better, an enterprise fund designed for
Haiti would focus beyond relief and reconstruction, provide in
a deliberate and prudent manner essential financing Haitian
businesses need, to create jobs that are sustainable and offer
genuine opportunity for the Haitian people at the grassroots
level.
In 1989, the enterprise fund was an innovative vehicle
conceived by visionaries in the U.S. Congress and the first
Bush Administration to support Central and Eastern Europe's
unprecedented transformation by jump starting the local private
sector.
Congress recognized that capital would be the catalyst to
building private businesses and to be effective, that capital
had to be professionally deployed. Financial investors were not
ready to take unknown risks and enter those markets.
Thus, through the SEED Act of 1989, Congress authorized the
establishment of initial enterprise funds with publicly sourced
capital of $240 million for Poland and $60 million for Hungary
to be privately managed by bipartisan boards of investment and
other professionals appointed by the President, with the
mandate to provide financing and related support to viable
private businesses.
In following years, Presidents Bush and Clinton created
additional enterprise funds under the SEED Act and for
countries of the former Soviet Union under the Freedom Support
Act.
Later, without the benefit of congressional legislation,
the Clinton Administration also created a modified form of
enterprise fund chaired by Ambassador Andrew Young for post-
apartheid empowerment of local SMEs in Southern Africa.
Such an innovative business-to-business approach applied to
a developmental mission was driven by private sector strategic
thinking, decision-making and risk taking, and was executed by
employing sound operational standards and established
commercial disciplines, subject, of course, to appropriate
public oversight.
This model proved exceedingly effective in terms of
achieving Congress' primary development objectives but also
performed beyond expectations in financial terms. This is
illustrated by the detailed results outlined in my written
materials.
The enterprise funds put their publicly sourced capital to
work financing tens of thousands of local businesses, those
little people, the little farmers, the entrepreneurs, the small
people and across-the-board to larger enterprises.
They established banks and other institutions to extend
their reach and created underpinnings of market economies, and
in the aggregate, diligently grew their assets through prudent
investment decisions.
Thus, on the completion of their missions, the enterprise
funds in the CEE region are in varying degrees returning their
capital to the U.S. Treasury, and with the residual investment
proceeds, they are establishing charitable foundations in their
host countries to carry on developmental work.
For example, the Bulgarian-American Enterprise Fund with an
initial capital base of only $55 million from Congress returned
its public funding and established a $400 million foundation in
Bulgaria.
Most Central and Eastern European enterprise funds have
also raised private capital, enabling them to expand their
operations while returning their public capital.
The Polish-American Enterprise Fund's now independent
investment team has raised over $1.8 billion in a series of
private funds, and in doing so, they demonstrated to global
investors the opportunities that existed in Poland and
attracted competing funds with billions of dollars more in
capital.
There is no reason a congressionally-mandated enterprise
fund for Haiti could not likewise achieve significant private
sector development objectives while maintaining the value of
its assets by operating in a commercially disciplined manner as
its predecessor enterprise funds have demonstrated is possible.
To do so would take one, a critical mass of capital that
can be freely and flexibly deployed, for example, providing
long-term equity financing for businesses, capitalizing SME and
microenterprise loan facilities to provide working capital,
creating modern financial institutions for mortgage banking, ag
financing, leasing, traditional commercial lending, and related
institutional infrastructure.
Two, appointment of a bipartisan board comprised of
investment and knowledgeable professionals who understand their
fiduciary responsibilities and are allowed to freely employ
private sector approaches unencumbered by bureaucratic
constraints as could be mandated by Congress.
Three, a commitment by donors to sustainable development
through financing local Haitian businesses, which create real
sustainable jobs and will empower a new Haitian middle class of
private entrepreneurs.
Thank you, Mr. Chairman, and subcommittee members. I would
be happy to answer any questions.
[The prepared statement of Mr. Skrobiszewski can be found
on page 74 of the appendix.]
Chairman Meeks. Thank you all. Thank you for your extremely
well-informed testimony.
Let me start with Mr. Boisson. One of the things that I
hear often is the situation in regards to Haiti about Haiti's
long-term dependency on aid and the fact that we have over
9,000 NGOs which things are going through in Haiti.
There seems to be a general sense among the general
population and among Haitian government institutions that the
model of NGOs basically governing things must change after the
earthquake.
What is your opinion on that and how do you think we could
be of assistance there?
Mr. Boisson. Thank you, Mr. Chairman. My answer to that
would be the large number of NGOs working in Haiti reflect a
perception that Haiti needs to be assisted, that it is a poor
country. What I have observed myself is there are many Haitians
who on profitable businesses can build productive capacity, it
is just a matter of giving them the proper environment.
The more you mistrust the private solutions, the more you
handicap them. One example is because there is so much money
coming from aid and charity and NGOs, that crowds out
completely the incentive to create private enterprise. That
crowds out even the economic signal. The attention of the
government is completely out of private investors, out of
businessmen.
NGOs are necessary but just to supplement, not to replace
private enterprise and the real support to create a viable
economy.
Chairman Meeks. Mr. Fairbanks, let me ask you really quick,
Mr. Watt and I traveled not too long ago to Rwanda. We had a
chance to speak with President Kagame and go see what was going
on over there with the microenterprises.
What are the key success factors that are observed in
Rwanda and other places that you think Haiti will have to
implement so that it can be the success story that basically we
were seeing taking place in Rwanda?
Mr. Fairbanks. Thank you for that question. Rwanda is the
greatest success story in the history of Africa in terms of its
economic growth, justice, and participation of women in
government. Paul Kagame will go down in history with President
Nyerere, President Mandela, and others as the greatest leaders
in Africa.
He did two or three things that nobody ever thought he
could do. The first thing was he built modern institutions on
top of traditional values.
If there is one thing we take away from my part of this
discussion, it is that when he needed to get something done, he
did not listen to the multilaterals, he did not listen to fancy
academics, and frankly, he did not listen to me, and what he
did was he went deep into the history of his culture and he
found the historical almost archaeological mechanisms and to
upgrade and improve and he made them modern, and that improved
the receptivity to the entire nation to do something.
For example, when he wanted to clean the country, he found
the notion of Umaganda, which was something the villagers used
to all go out once a week and clean their villages. He made
Umaganda a national phenomenon, and then he role-modeled this
by going out the third Saturday of every month and sweeping the
sidewalk in front of his own house.
Gacaca courts, which I am sure you heard about when you
were there, was a traditional village system of justice that
was actually more adaptable to trying hundreds of thousands of
perpetrators of the genocide than any modern court system that
could be imported from any other part of the world. Paul Kagame
found a way to rely on traditional values to solve modern
problems.
The second thing, in his relationship with the multilateral
system and the bilateral system, Paul Kagame insisted on four
things. Number one, there be a shared vision between the
provider and the recipient. You do not get to do the strategy,
I do. I am the elected president of the country and you should
be willing to be guided by my vision and if you are not, then
you have to go.
Number two, disbursement has to be made through national
and indigenous institutions. He is very upset with USAID and he
loves DFID because DFID will work with him in that way.
Number three, he wanted investment to increase competence
beyond applying for more aid. This is what was being discussed
a few minutes ago. An entire nation will turn its attention and
configure to receive more aid rather than build the private
sector, build the academy and build civic institutions, and he
will not let that happen.
Finally, there were no parallel donor structures that
undermine all of the above. Right now, we are talking about a
big reconstruction institution in Haiti. I think that is
probably appropriate when the population is vulnerable to
natural disasters, but it is never going to build the nation.
It has to be given a very finite timeframe, like 36 months,
a short timeframe, where it can work to alleviate the suffering
of vulnerable populations, but then the locus of responsibility
for building a nation has to put on the shoulders of the
Haitians. You know what? Whether they are ready for it or not.
The 5 or 10 percent of leakage through corruption is worse
than the 40 percent of leakage through the insufficiency of aid
bureaucracies.
Chairman Meeks. Thank you. One more question and then we
are going to go another round. I want to ask Ms. Birdsall a
question. We always talk about capacity building and the need
to build capacity, especially human capacity. In the
earthquake, Haiti has lost almost 40 percent of its public
servants.
I was wondering if you had any ideas of where the
international community should invest mostly in rebuilding
local and human capital and if there are any models you know of
that can help that happen quickly.
Ms. Birdsall. Thank you, Chairman Meeks. I think there is a
model that was developed at our Center for Global Development
on the basis of a gift that our chairman made to the President
of Liberia.
It is a model under which young people are recruited,
people who are in their early 30s, and go to work in the public
service of the government, and through being special assistants
to key ministers, actually provide unimaginably important
service to those ministers who are completely beleaguered and
overwhelmed.
In the case of Haiti, for some time it is not going to have
very much support within their own ministries, partly because
so many Haitians will be going to work for all the NGOs and for
all the donors who are now flooding into Haiti.
I think Mr. Boisson mentioned not only does this influx of
aid from so many different players crowd out private sector
initiatives, it actually can undermine the ability of the
government itself to manage the donors and to manage its own
expenditures.
This is one example of a model which I think could be built
on to have maximum use and deployment of the very skilled
Haitian Diaspora, particularly in this country, if there were
any arrangements set up, say by USAID or another agency with
encouragement from the Congress, that made it easier for
members of the Haitian Diaspora to go for 6 months, for a year,
for 2 years into public service in Haiti, then that would be
part of building up the capacity of that public service.
This has worked very well in the case of Nigeria, in the
case of Malawi, in the case of other countries in Africa where
there has been some mechanism by some private donor often to
create a channel that provides a framework for people to go
into the public service at different levels.
The model we have, I think, is a very low-cost one which
does not take away management functions from the key ministers
because people go when they are young and they are special
assistants. They do many of the things that no doubt you have
staff help on yourself and your colleagues have here on Capitol
Hill, which can be very important, and which can be part of a
larger process of gradually recruiting and building up local
Haitian capacity in key functions that are very nitty-gritty,
not glamorous.
Just to give you a feel, we had as many as a dozen of these
special assistants in Liberia being paid $30,000 to $35,000 a
year, which was far more than most of the public servants but
far less for most of them than they might have been earning
here. Half of the people who applied to do this activity were
Liberians themselves and several have ended up as vice
ministers and in other offices of the government.
Chairman Meeks. Thank you. Mr. Miller?
Mr. Miller of California. Thank you, Mr. Chairman.
This hearing today was based on some conversations we had
in the previous hearing and my concerns with what we have to do
in Haiti. I really enjoyed all the testimony today.
If we are looking at long-term development of an economy,
that is one issue. We are dealing with the immediate impact to
a disaster today in Haiti.
If you just look at the 78 million cubic yards of rubble
that have to be dealt with, the entire nation has about 150
excavators, we are not talking about what you would see on
American construction sites. We are talking about old, worn-
out, antiquated units sold off to that country by many
contractors in the United States and other countries, and they
are not capable of doing the work.
They do not have the technical expertise within the labor
force and the construction industry to deal with the
infrastructure needs of electrical, roadways, bridges, sewers,
storm drains, and if that is debatable, go look at what they
had, and it will tell you clearly they do not have that
expertise.
The United States is going to be the largest donor helping
Haiti, no doubt about it. As I talked to the chairman and other
members, we need to look at providing the ability to rebuild
this country.
I really enjoyed the comments of Mr. Fairbanks where you
were saying that 80 percent of the aid never gets to the
purpose intended, and Haiti is prolific with corruption, as
many countries are, because you have a disaster today of $14
billion with a GDP of half of that.
We are going to have a tremendous amount of money going
into Haiti in a very short period of time, and for that reason
alone, I think we need to take the responsibility as the United
States Government if we are going to provide this aid, let's
provide the expertise.
With 15 million people unemployed in this country and
tremendous labor force in the construction industry who have
the expertise to immediately deal with the impact on this
nation and the reconstruction of this nation, we should do
that.
Mr. D'Sa with Gap, you have done a great job. You employ
people. You put them to work. In order to do that, you have to
have everything in place to do that.
Haiti has an ability we do not have in this country as far
as environmental standards and labor standards. They do not
have to deal with things American labor deals with, and we are
going to deal with trade issues and investment issues later,
and when we do that, we need to look at the impact we have on
American industries in the future, too.
Like China has a tremendous benefit over the United States'
workforce and businesses as far as trade standards. They have
virtually wiped out the manufacturing industries and the
furniture interests, specifically in North Carolina and
California and other States in our Nation. They no longer can
compete with China.
We do need to look at helping the Haitian people without a
doubt once reconstruction occurs, but we have to reconstruct
immediately.
My concern and the chairman's concern is throwing money
into a nation and thinking 80 percent of it or 50 percent or 40
percent could disappear based on corruption, putting the
dollars in the hands of individuals who are not used to dealing
with these types of dollars and expending that amount of
currency in a very short period of time to deal with the
immediate impact and disaster that we are facing over there.
None of my comments should be taken in a negative term. It
is not meant that way.
We need to help these people. The best way to help these
people is to provide the expertise, talent, and the resources
necessary to immediately mitigate the impact on this country. I
believe if we do not take some oversight over it based on the
American tax dollars we are investing in it, we will not be
doing a service to the Haitian people and there is a tremendous
labor force available in Haiti, manpower to get out and do
specific jobs, but they do not have the expertise, and that is
not impugning the people, they do not have it.
One hundred and fifty pieces of equipment, that would be an
embarrassment on an American construction site. In fact, these
units would not even be allowed on American construction sites
because they do not meet the standards and the environmental
requirements placed on them by the government here.
Mr. Fairbanks, I would like to let you respond and maybe if
you think I am incorrect in some way, I would like to have you
expand on that.
Mr. Fairbanks. No, sir. I think what you are saying is a
very valuable perspective on the short-term needs versus the
long-term requirements.
I think our points of view reconcile around the way that
the work is procured. I would make two suggestions. The first
one that I would hazard a guess we would agree on and the
second one, we will not agree on, but I would like to put it
out anyway.
The first one is as we go out to procure services through
USAID, we should envision contracts where the vendors are
punished for poor performance and rewarded for superior
performance.
Right now, what we are seeing is too much responsibility in
the proposal process and too little responsibility over the
outcomes. That is the way to characterize aid vendors right
now.
In the proposal, they can do anything. You have a problem,
I can fix it. You have a problem, I already solved it somewhere
else. Six months later, 2 years later, I could not do it
because the people are stupid. I could not do it because the
government is corrupt.
We go from too much responsibility to too little
responsibility.
Mr. Miller of California. If we invest American expertise
in our companies, combined with Haitian labor, the result will
be what we need it to be, and that is beneficial to the people
of Haiti and it will be done in a proficient way, done
properly, and the resources that are there when we leave are
going to be long-term resources. They are not going to be
substandard electrical systems, substandard bridges,
substandard highways, substandard sewer systems. They will be
done in a fashion that they should be done in and the Haitian
people can build upon that when we pull back out.
Mr. Fairbanks. That is correct, sir. In fact, you get
development twice. You move the rubbish and you leave behind
skilled people. That is a great vision.
What I want to focus on is the procurement process to make
sure the contracts are done right so that the incentives are--
Mr. Miller of California. I agree with you 100 percent on
that.
Mr. Fairbanks. That is really broken right now. The vendors
get away with murder.
The second comment I would like to make which I do not
think we will agree upon but I would love the opportunity to
test it with you, is that I think eventually USAID needs to go
to untied aid, which means we have to give aid that is not tied
to American suppliers.
I know this is not the time in our Nation's economic cycle
to have that discussion. The fact is other countries already do
this, Japan and the United Kingdom. They are much more accepted
as development partners around the world. You also get
development twice.
If we were to put out a contract that procured services
from the Dominican Republic or governance consultants from
Rwanda, we would also get development twice because we would be
helping the Haitians solve a problem and we would be helping
the other countries to develop that capacity.
This is not the time or place for that argument, but some
day, it has to happen.
Mr. Miller of California. In closing, we are dealing with
an immediate disaster. I cannot think of any group more capable
of dealing with that than the American workforce and American
contractors, in combination with Haitian labor.
When that immediate disaster is dealt with, we pull back
out, the Haitian Government takes control of their own destiny,
and hopefully at that point of time, the infrastructure is in a
situation and modernized enough where it really will benefit
the Haitian people in the future, plus it gives the Haitian
people a matrix that they can look at on how things should be
done. It gives Haitian contractors an opportunity to work with
American companies to realize how things can better be produced
for the long-term benefit of their people.
I feel strongly, Chairman Meeks, we need to look at that.
We need to not only be concerned about the Haitian people. We
also need to be concerned about the American workforce and how
that American labor in conjunction with labor of the Haitian
people can resolve the impact on these people immediately, deal
with the disaster, and move on and then let their country take
over.
I yield back.
Chairman Meeks. Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman. Let me thank the
chairman for convening the hearing. It has been a very
interesting hearing.
Mr. Miller's questions actually helped me try to reconcile
some of the things the panelists were saying, particularly Mr.
Fairbanks. When I first heard his testimony, your oral
testimony, not having read the written testimony, I was a
little concerned that we were going to read too much into it,
but then I went back and skimmed quickly what you said in your
written testimony, and just wanted to make sure that we do not
overread what you were saying.
It sounded like initially you were saying, let's do away
with this aid and not bother with it. You are more concerned
about how it plays itself out. I think that is a concern that
Mr. Miller expressed and all of us are concerned about.
Let's make sure that we are just not providing fish, we are
really teaching or supporting the ability to learn how to fish,
so there is a longer-term impact. That is really what you are
saying, I think.
Mr. Fairbanks. I would take it even further, Congressman,
by suggesting that we should be teaching the Haitians how to
export the world's most sophisticated fishing rods to the
world's most demanding fishermen for the highest possible price
points.
Mr. Watt. Gotcha. I would not argue with that as a general
proposition. I do not think any of us would.
There is some notion that we are really better-positioned
to do that with Haiti than in some other locations because we
really have never had a direct or for a while we have not had a
direct relationship with the Haitian Government because of the
U.S. concerns about corruption and what-have-you.
A lot of the infrastructure that is there that we have
worked through has been through NGOs that give the capacity to
have a different relationship with non-government
organizations, although I am not sure Mr. Miller or any of us
would think building up and supporting a more robust and honest
and transparent government is not also necessary.
This is somewhat a philosophical discussion about very
concrete needs and some of these things can by necessity be
done more effectively through government structures than
through private sector or non-government organizations.
I guess what we are trying to figure out here is how you
appropriately balance those things in somewhat of an emergency
situation and play it out long term so there are some skills
left at the end of the day.
Any arguments with any of that--the gentleman whose name
did not roll off your lips either--I was kind of hoping at some
point Stephane, who has that French flavor to his presentation
might do some of these introductions. I think a lot of these
names might have been done a better service.
I think at the end of the day, it sounds to me like
everything that all five panelists are saying is reconcilable
and perhaps maybe more so in Haiti than in some other settings.
Mr. Skrobiszewski. Thank you, sir. We had capital and we
came into Poland with the capital in the early days, and we
worked with the government when it was appropriate to work with
the government to influence policy change, influence
development of institutions, but at the same time, our focus
was on developing the private sector by providing capital to
build businesses.
In building those businesses, you build the fundamentals
and on that basis, you create the ecosystem from the bottom up.
Mr. Watt. Basically, what you are suggesting is we follow
the same or a similar approach in Haiti?
Mr. Skrobiszewski. Commerce is taking place every day in
Haiti by the little people and those little people need capital
to grow. By helping them build their businesses, you also help
build the other institutions that support those businesses.
Mr. Watt. I am not arguing with that. I agree with you. I
do not want us to walk away from here with the message that I
thought I was hearing first from Mr. Fairbanks, and I came full
circle when I read it, that this can be done solely through
that mechanism as opposed to supporting a robust, honest,
transparent government that has an important role to play.
Mr. Skrobiszewski. It is one piece of a large pie, exactly.
In the SEED Act in 1989, there were a range of traditional aid
programs and the enterprise fund, which was an innovative
unprecedented approach.
Mr. Watt. I think I have heard that message and I do not
disagree with it. I think we need to be cognizant of that. I
thank the gentleman for recognizing me and for convening the
hearing, and I yield back.
Chairman Meeks. Ranking Member Bachus had a number of
questions that he wanted to ask, and we talked about how he had
been instrumental before, and he left the questions, so I am
going to allow Mr. Miller to ask the questions of Mr. Bachus.
Mr. Miller of California. Thank you. Mr. Skrobiszewski?
Correct?
Mr. Skrobiszewski. Correct.
Mr. Miller of California. I did that pretty good for a
German.
Mr. Watt. You did not do all that well either.
[laughter]
Mr. Miller of California. I was going to give you a lesson
in that but I said not to my friend.
His question, first of all, is how did the enterprise funds
avoid local government corruption, private enterprise
corruption?
Mr. Skrobiszewski. As I stated to mention to the previous
question, it takes two to tango. We had the capital. If we
smelled anything, we did not put the capital into the
particular venture. We had the local authorities, we had the
national authorities working closely with us because they
wanted to see--
Mr. Miller of California. You also kept control of it, it
sounds like.
Mr. Skrobiszewski. Pardon me?
Mr. Miller of California. You also kept control.
Mr. Skrobiszewski. We kept control of the money. We had
control. We took a disciplined approach. If we smelled anything
of corruption, we did not do it. We did not put the money out.
Money talks.
Mr. Miller of California. I agree. What are the fundamental
reasons for the enterprise fund's success in helping rebuild
the private sector of Central and Eastern Europe?
Mr. Skrobiszewski. I would say first and foremost, the
professional management that was appointed to bipartisan boards
and the professionals they hired that were able to take a
disciplined approach in putting out the capital.
Mr. Miller of California. Qualified expertise.
Mr. Skrobiszewski. Exactly. They were primarily American
driven. We brought over our capabilities, and of course, we had
the benefit of a lot of Polish Diaspora that came to the United
States during the marshal law period, as there are many Haitian
Diaspora here today.
We also had the freedom to operate freely. That is we did
not have to go back and ask permission. We made commercial
decisions because we had provisions in the legislation that
allowed us to do that.
Mr. Miller of California. I think that is a great pattern
for American investment, too, in the future.
Mr. Fairbanks, you point out that, ``Aid largesse can
distort private initiatives, stifle democracies, amplify ethnic
based patron/client relationships and promote corruption.''
Given the amount of aid that is likely to flow into Haiti,
how do you prevent such negative side effects?
Mr. Fairbanks. All of those side effects are going to
occur, so it is a question of balancing the benefits with these
disadvantages.
Any time you put a lot of money into a situation, you get
Dutch disease, which is inflation to the local economy. You
also get the leadership distracted, as Mr. Boisson had
mentioned very eloquently, and you also promote cultural values
that are anti-innovation, paternalism, looking at wealth as a
series of bureaucratic relationships and so on.
These things are unavoidable and you still need to go ahead
and do it, as you pointed out, sir, in the short run, to
alleviate catastrophe.
The important point is we decide at what point in the near
future we are switching from dealing with acts of God and
starting to deal with acts of man.
My own sort of swag at this is it is very short, 36 months.
At that point, the budget is declining. The locus of decision-
making is moving from the metro polls of North America, Europe
and Asia onto the Haitians themselves, and that they know about
this.
That we set up punishment and reward systems, allocate
decision rights, and look at very clear metrics of performance,
and then we get out of the way.
There will still be problems, but it will promote, if you
excuse this paternalistic phasing in itself, the maturation of
that society.
Mr. Miller of California. I agree with you 100 percent. A
general overall question for the panel, whomever would like to
respond to it. He says, how can the United States navigate
through the tricky waters of helping Haiti rebuild speedily
without seeming to take jobs away from the Haitians and are
there some instances in which speed of reconstruction is more
important than maximum employment of the Haitian workers and if
so, who would make that determination?
Yes, sir?
Mr. Boisson. I would like to address your question and
complete what Mr. Fairbanks was saying. I think that what we
need to do is two things. First of all, we have to build a new
Haiti, not only in response to the emergency, but build a new
Haiti.
That means if we lose sight of that, we are going to
provoke a catastrophe because the catastrophe was partly
manmade. It was bad governance, for example, with there was a
complete lack of control of the construction center, it was
because of bad government. Yes, we have to respond to the
emergency but we have to build human capacity and its
institutions.
As the private sector is concerned and the importance of
buying--using Haitian resources, there must be almost an
obligation of U.S. companies, be they competent as they are, to
build local capacity. There also must be an obligation of
multilateral and bilateral donors to build capacity.
That means, for example, if you have a rubble contract,
yes, its expertise lies with the U.S. company, but there is
nothing that prevents them from sourcing from some of the
manpower in anything they can source from Haiti and building
capacity so that in 2 to 3 years time, you may have a Haitian
firm ready to do any job of that sort.
Mr. Miller of California. We have trained them.
Mr. Boisson. Train them. In a sense, this is exactly the
same image we should use for the international community.
If you have, for example, that big unit that is going to
manage and you do not address the issue of institution and
political institution in Haiti, and how that society can
control their government and avoid corruption, you just are
pouring money, you may just increase the corruption.
Mr. Miller of California. You are; yes.
Mr. Boisson. Building institution and being able to provide
public or private services, we must have a result where there
is as much competition as possible, and that is what Mr.
Fairbanks was saying. I support it. I think by having--the
reason why the private sector works, be it in Haiti, the United
States or anywhere, is because private entrepreneurs are
penalized, they disappear, when they do not manage well. That
does not happen somehow in providing international aid
supported public services, and that is bad for the economy and
that is bad for the society.
Mr. Miller of California. Thank you. I yield back the
balance of my time.
Chairman Meeks. I would just want to say this, if there is
anyone who has been focused on Haiti through all of its time,
up's and down's and around, the person who has been focused on
Haiti and making a difference and keeping Haiti on the
forefront here in the United States Congress, one of those
individuals is the gentlelady from California, who was the
writer of the debt relief bill that we passed unanimously in
the House last week, and I yield to the Honorable Maxine
Waters.
Ms. Waters. Thank you very much, Mr. Chairman. I certainly
appreciate the leadership that you are providing on this issue
and the fact that already you have held two hearings and not
letting this issue die after the crisis is focused on for a few
weeks or so, and your commitment to have a redevelopment plan,
a national plan for Haiti. I think that is very important.
I am sorry that I was not here to hear all of the witnesses
this morning, but I have quickly glanced at some of the
testimony that has been given, and in going through the
testimony, I see that a lot of what has been said seems to be
basically a growing consensus about the direction that all of
the funding agencies and donors and USAID and everybody needs
to take in order to deal with the redevelopment of Haiti.
Let me just say that on my last visit to Haiti a couple of
weeks ago, we organized about 130 would-be business people who
are basically lawyers, doctors and educated people in Haiti who
have not been involved in business per se in Haiti, not been
involved necessarily in government. I think it is typical of
the middle class that has been left out and the middle class
that has not been developed for Haiti.
I am convinced that we have to develop through our work a
middle class in Haiti. That, I think, can be done in a number
of ways. One of the testimonies that I glanced through talked
about the investment in education and all of that in order to
develop this middle class and the creation of jobs, etc.
I think that is all true. I want to say that USAID is
working very, very hard. The U.N. is working very, very hard.
They are working despite the fact they have lost some of their
own personnel, etc.
But it is very frustrating to see that the only way that
services can be delivered in Haiti is through the NGOs. I hear
numbers anywhere from 6,000 to 10,000 NGOs in Haiti, and while
I agree that there are a lot of social services that must be
delivered and work that must be done, I get this feeling that
increasingly some of the NGOs are taking over what should be
business in Haiti. That is frustrating.
I want to give you an example of that. I have some pictures
we took, Mr. Chairman, and I will pass them down to you, of the
temporary shelters that are being built in some locations. This
is very slow getting off the ground.
As a matter of fact, they are disseminating the plastic
sheets to provide some kind of shelters. The need is so great
until even these temporary shelters, not many of them are going
to be built, and the NGO that is kind of responsible said maybe
they might get 20,000 of them built, I doubt it.
This is a business. This should be done by business people.
This should not be done by a nonprofit. I talked to the persons
who were working on it and the guy who really knew how to do
it, who was on payroll, really should have been the business
that owned this operation and providing this temporary shelter.
I think we have a job to do working with the government to
try and do everything that we can in this crisis to help create
some small businesses, and to help get people who have some
expertise in contracting, in building, and doing some things
into some new business opportunities rather.
I invited USAID to send over the contracting officer with
the 130 business persons that I organized, and he was very
generous and he came over. He brought with him basically the
requirements for doing business with USAID.
The first thing is, it was all in English, it was not in
Creole, not even in French. We had interpreters there. We had
people, a lot of them could speak English, but when you start
to use terminology that people may not be familiar with, you
really have to translate it, even for some of the English-
speaking people.
Everybody started to laugh at one point when he said that
for unsolicited proposals, you need to have 3 years of audited
receipts. We were talking to people whose homes and everything
else was blown away and everything they owned. Even the
government downtown in Port-au-Prince, the government
buildings, all their papers are still on the ground.
This young man was great. He was intent on talking about
how to do business with USAID, but I had to talk with him and
say this will not cut it, this will not do it.
That is one of the problems we have. It is a problem. It is
an innocent problem. It is not a contrived problem. It is an
innocent problem. A lack of knowing how to understand the
culture and deal with the people you say you want to help.
There are several things that we have to do. First of all,
all of the clusters in Haiti, local people are not involved.
The NGOs run them. You have health clusters, education
clusters. They meet every day. It is a secured operation. Local
people cannot get into the clusters where the planning is going
on for the very people who they are planning for.
The other thing is, just reverting a little bit back to
what is going on now, many of the camps that have opened up are
not getting serviced.
I was in a camp of 650. They have tarps. They still need
latrines and some of those things. The way it works, the camp
has to be identified by an NGO. The camp has to organize its
little committee with who is going to be in charge of some
things. Then they cannot get the tarps, they cannot get the
food, they cannot get the water and they cannot get the
latrines until the NGO gets to them.
This crisis, they should have these plastic sheets on some
flatbed trucks rolling around putting them everywhere they can
put them and not the organizational structure that ensures the
NGO is running it and in charge. I think that is important.
That is something that can come, but the way that it works,
until again the NGO identifies the camp, they have to sit there
and wait.
I was in a camp that had nothing. They had been building
frames for the tarps to go over, and we finally went to USAID
and brought them out there on a Sunday and met with the people
who had already formed the committee, etc.
The point of all this is there is a lot of room for
business. Not only the big business that some of us are talking
about, but small business that Haitians could be doing, that
would help them not only to earn money but to become better at
being business persons.
I just think that we cannot have redevelopment without
Haitian involvement and Haitian ownership. That is really
important. The development of the middle class, Haitian
ownership, and I would like to see--I have talked with the
chairman about this--credits given to American firms, any other
firms that come in to do business that have included in that
proposal a way that they are going to include people on the
ground in Haiti. I think they should be given credits for that.
I think American firms, firms from Canada or France,
everybody has a role to play. We cannot play that role in the
absence of involvement and ownership of the Haitian people.
Just yesterday, there was a meeting that was put together
by the Inter-American Development Bank, some of you may be
aware of it, in Haiti, with the international community.
I talked with the director and I said I want to know if you
think you have some people who are smart enough to be in
business, Haitians, who are invited to this conference, and not
just the same, for lack of a better description, five families.
We know where people turn because this is what people know
and understand about Haiti, that which is referred to as kind
of the business elite, etc., that is involved in all the
export/import, etc., and the fact that this emerging middle
class or would be middle class have not been involved.
They said no, we gave them 10 names because they were
almost at capacity, to invite some of the business people that
we had at the meeting of the 130 where USAID had come out and
they have agreed to come to some other meetings that we will be
setting up with the middle class or emerging middle class.
In all that we do in the redevelopment of Haiti,
encouraging those firms who really want to do good business,
and you are right, we are not talking about shoddy business,
who really want to do good business, to come in and include
joint ventures and participation on the ground and maybe not
even joint venture ways, but some ownership ways that can be
created.
Unless we do that and we have an appreciation for the
culture and we have Creole that is used in the explanation of
how our culture works and what we expect, we are going to make
the same mistakes that I think we have made historically in
Haiti.
I just want to thank all of you for your expertise and your
background and for what you had to offer, but let us all
collectively work very hard to do it and do it right, and to
make sure that working with USAID and with the U.N. and with
the Inter-American Development Bank and others that we include
the kind of approaches and training and development of those
that we want to understand what we are talking about with how
to do business with USAID.
I cannot do business with USAID. Many of the minorities we
represent cannot do business with USAID. We cannot follow this
so we cannot comply with it.
We have to undo the mystery of it and get right down to
getting it done.
Thank you for the time, Mr. Chairman. I yield back and I
appreciate it.
Chairman Meeks. I ask unanimous consent that Mr. Clay be
permitted to participate in today's hearing. Without objection,
it is so ordered.
Mr. Watt. Can I object? Oh.
[laughter]
Mr. Watt. Can I reserve the right to object, just long
enough to tell Mr. Fairbanks that he probably has been
surprised at how entrepreneurial and community-oriented we are
on this panel. Sometimes, we get accused of being anti-
business. I think you could relate to the comments that
Representative Waters made in a special kind of way.
With that, I will not object to my friend participating in
this hearing.
Mr. Clay. I thank my friend from North Carolina and let me
say Amen to what Ms. Waters said and thank the chairman for
conducting this hearing and allowing me to be a part of it. I
appreciate that.
Let me thank all of the witnesses for their testimony and
along the same lines as Mr. Miller and Ms. Waters, I have heard
from several members of my church who minister in Haiti who
have talked about some of the more immediate concerns that they
have, especially with the rainy season here, with the situation
not really moving like they would like to see it move.
Let me just say I put this question out to the panel. Going
forward, what should we do differently as far as rebuilding the
infrastructure of Haiti, as far as involving Haitian citizens?
Will there be groups like Habitat for Humanity involved in
helping rebuild homes? Will there be new building codes for
building these structures, to make them somewhat earthquake
resistant? Will the Haitian people, as Ms. Waters mentioned,
benefit from getting some skills and being able to support
themselves and their families with a job?
Is there a timetable for that? Can anyone try to answer?
Yes, sir?
Mr. Skrobiszewski. Yes, sir. Thank you. I can respond to
some of those questions. It is really stimulating the local
Haitian private sector and putting capital in their hands, as
we did with our first program at the enterprise fund addressing
the very concerns that Congresswoman Waters was raising, that
avoided the complexities of the USAID requirements.
We did community lending. That was one of the first
programs we did. Thousands of Poles lined up to get the money.
They did not understand some of the aspects. We had a small
application and we went back and cleaned it up. It was all in
Polish. Some of them learned more about their business than
they ever knew before in just filling out the application, even
though they might not have gotten the loan. That ended up
making 10,000 loans over the 10-year period, and we did another
126,000 micro-loans.
That establishes the foundation, and then if you are also
working--it is the private sector that is making investments in
these kinds of firms that are imposing the standards. They want
to see construction according to certain standards, if they are
making investments in that construction, because it is a
longer-term return you are looking for.
When we created a mortgage bank, when we invested in
construction companies, we impose those kinds of standards, and
then that filters down through the economy.
Mr. Clay. Yes, Ms. Birdsall?
Ms. Birdsall. When I was listening to Congresswoman Waters,
Congressman Clay, I got a little depressed. I endorse fully the
remarks of Mr. Skrobiszewski regarding having these enterprise
funds.
I want you, because you, with all due respect, you
representing the Congress are part of the problem of USAID's
complex arrangements. As he said in speaking, in Poland and in
Eastern Europe, we avoided the complexities of USAID, went
around them.
I think if you want to have something happen differently in
Haiti, one important step would be to support USAID having the
flexibility to do the kinds of things that Congresswoman Waters
was talking about, without having to worry so much about an
accretion of rules, an accretion of procurement arrangements,
the problems of everything being tied in terms of aid that
Michael Fairbanks referred to.
Mr. Clay. Would that require some kind of legislative
change or allowing them to waive the rules that they operate
under now?
Ms. Birdsall. One approach would be to say since Haiti is
so special, it is so close to the United States, let us give
the new Administrator of USAID some special period of greater
flexibility and test it out and see what happens.
There is a lot of eagerness at USAID to clean up and have
greater capacity to do exactly the kinds of things--
Mr. Clay. Their hands are tied now?
Mr. Birdsall. Their hands are largely tied. I think if this
subcommittee could use Haiti as a vehicle for also helping our
Administration get much greater value for money and work much
more effectively with the government of Haiti on building
government capacity, that would be tremendously good.
The second thing I would say is it is not politically easy,
I understand this, but to the extent possible, I urge the
Congress to put some of the resources, as much as possible,
through the multilateral institutions.
Why? They have more open procurement. You reduce the
problem of coordination. If every donor insists on putting her
flag or her flag on every health clinic or every can, then you
are creating this burden for the government of Haiti to finally
take charge in the way that you are making it harder for the
new administration in Haiti to do what President Kagame was
able to do in Rwanda, as other members of the panel have said.
It is just a thought in response to the very good
statements you are all making, that there is a way perhaps to
have Haiti, a response in Haiti, be the leading wedge of a
larger reform that should be on the agenda.
I am sure you know that some of your colleagues in other
committees are thinking about new foreign assistance
legislation. There has not been new authorization legislation
in decades.
To support that new legislation as well, but perhaps to
build some momentum for it by having some special interim
arrangement for Haiti.
Mr. Clay. Any other thoughts on the panel?
Mr. Skrobiszewski. Yes. I just want to clarify that we work
closely with USAID. They had their capabilities and we had
ours, and ours was focused on commercial practices. That is
investing and lending on commercial terms, according to
commercial disciplines.
That worked very well together. They brought other
resources to bear. We had that flexibility that I mentioned
because Congress granted it to the enterprise fund specifically
in the SEED Act, that gave us the capability to do our
investments in a way that were commercially responsible.
Mr. Clay. Thank you for your responses. I thank the
chairman for his indulgence.
Chairman Meeks. Thank you. Before we close out, Mr. D'Sa,
let me just ask you a question. Gap is still doing business and
pursuant to some of the questions that Ms. Waters talked about,
do you have any examples? Are you using Haitians now? Are you
still getting your shipments in and exports and imports in now?
Can you just tell us what you are doing in regard to Haitians
on the ground now?
Mr. D'Sa. Thank you, Mr. Chairman. Ms. Waters, I love the
story you told us about USAID and the missing Creole
translations.
In one of my first visits to Haiti, when we usually walk
around, we do an evaluation of the factories. I talked to the
people on the floor, and the owners, of course, told me what a
wonderful factory they had and how strong the management was,
and how they could take care of productivity efficiency and
quality.
I speak a little bit of French, no Creole. I asked one of
the Creole supervisors there to explain to me why he did what
he did, and he could tell me what he did but he could not tell
me why he did it.
As I dug deeper, what I found was the management of the
factory, the senior management was from Asia. The middle
management was from the Dominican Republic. You had people who
spoke English, who spoke Spanish, one or two spoke a little bit
of French, and nobody who spoke Creole.
Just like you had with USAID, we had disconnects 3 years
ago in our factories as well. We have been working to change
that. Similar stories.
Mr. Chairman, coming to your question, we have been working
with Haiti and with Haitian suppliers of services and some
foreign investment as well. We had identified certain
impediments to investment and challenges before the earthquake.
Since the earthquake, those challenges have only been
exacerbated, but yes, we have been working with our suppliers
there and things have been moving along, and yes, we have
Haitian services in place.
The one thing that Gap does in most of the countries that
it works in is capacity building and empowerment to the labor.
A few years ago, there was hesitation on the part of Congress
and there was a requirement for certain elevations in the
factories that we worked in, sustainability, social
responsibility, labor standards, management, etc.
With the expertise we have, the intellectual property we
own within the company, we rolled out workshops, not just for
our suppliers, but for all suppliers in several Central
American countries, to help them elevate their standards,
taught them situational leadership, enlightened management, and
then for the workers, you have to keep in mind that in most of
these countries, people who work in the apparel industry tend
to be illiterate. They do not know when they are eligible for
overtime or how to manage their own wages, etc.
Simply teaching them not just the entrepreneurial skills
but self-management skills, how do you track what your earnings
are, what are you entitled to, how do you manage your funds at
home, how do you do budgeting, these are the kind of classes
that we roll out. This is the kind of education that we do.
In several countries in Asia today, Gap is involved in what
we call the competitive literacy initiative, teaching people to
read and write and from there on, creating career advancement
opportunities.
There is another program we have called PACE, which stands
for personal achievement and career enhancement. To a smaller
extent, some of these have already started to be rolled out in
Haiti in cooperation with a company called TC2 out of North
Carolina, that started with training the trainers who are
Haitians, and then the Haitians go out and start training
workers in factories to be able to manage their careers, to be
able to manage their personal lives.
That is one place where we are beginning to empower the
Haitian labor, the Haitian supervisors.
Yes, we are working with Haitian services, transportation,
catering services in the factories.
Around the apparel industry, yes, there are a number of
opportunities for Haitian medium and small enterprises and it
is beginning to happen and hopefully if HOPE II is
reconstructed to be able to, as Ms. Birdsall and I have
referred to, if we raise the TPLs and we open the product
offering that is available, we should be able to do a lot more
for the Haitian people.
Thank you.
Chairman Meeks. Thank you. Let me, at this time, thank all
of the witnesses for your testimony. I think it has been very
enlightening. As I think Mr. Watt has indicated, and if there
is something that is uniting, it has been your testimony that
we need to create jobs for the Haitian people.
We need to get money in their hands so they can provide for
their families. We need to teach them how to sell that
exclusive fishing rod to us in the United States, so they can
participate in the global economy.
With that also comes the human capacity building of a
government so that the people can gain the confidence and have
confidence in it as was beginning to happen prior to this
earthquake.
We are going to stay focused. This subcommittee will
continue to stay focused on Haiti, even when the cameras are
gone. We are already preparing our next hearing on Haiti, which
will be dealing with microenterprises, so we can make sure that
there is continuing progress.
Congresswoman Clarke, for example, she has some ideas, and
I believe she is working with you in trying to make sure we
create a fund.
We will be continuing to move forward for a marshal plan
for Haiti because as I think Ms. Birdsall said and Ms. Waters,
we need coordinating of all this, so we know what we are doing
and it is not one hand working against the other. We are all
pulling in the same direction and working in the same direction
for making a difference with Haiti.
Again, thank you for your testimony. Thank you for being
here. I look forward to having conversations and dialogue with
you in the near future.
With that, the Chair notes that some members may have
additional questions for this panel which they may wish to
submit in writing, and without objection, the hearing record
will remain open for 30 days for members to submit written
questions to these witnesses and to place their responses in
the record.
This hearing is now adjourned.
[Whereupon, at approximately 12:00 p.m., the hearing was
adjourned.]
A P P E N D I X
March 16, 2010
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