U.S. State Department Geographic Bureaus: Latin America Bureau

U.S. DEPARTMENT OF STATE
OFFICE OF THE SPOKESMAN
OCTOBER 26, 1994

[EXCERPT FROM OCTOBER 26, 1994 DAILY PRESS BRIEFING]

BRIEFING ON HAITI BY
MARK SCHNEIDER
ASSISTANT ADMINISTRATOR FOR LATIN AMERICA AND CARIBBEAN
AGENCY FOR INTERNATIONAL DEVELOPMENT
OCTOBER 26, 1994

MS. SHELLY: Good afternoon, ladies and gentlemen. Mark Schneider, the Assistant Administrator for Latin America and the Caribbean in the Agency for International Development is our guest and opening speaker for this afternoon's briefing. He's going to talk to you and take your questions related to the Haitian recovery program.

I will be following our usual format and doing questions on other subjects, including anything on Haiti that Mark would not be covering. So I'll be happy to do that after Mark finishes with his remarks and his questions. So without any further ado, let me turn it over to Mark, and then we'll do other subjects after that. Thanks, Mark.

MR. SCHNEIDER: Over the course of last week, I spent five days in Haiti, and it was part of the response to the return of President Aristide and the beginning of the implementation of our program of assistance to the restored constitutional government.

I want at the outset just give you some sense of what I found there, which was despite the poverty of the country which remains the poorest in the Western hemisphere, and despite the suffering during three years of de facto rule, that there is a really impressive degree of optimism among the people, both in Port-au-Prince and outside.

I went out to a small community, Pignon, in the central plateau, and again there is a sense that it really meant something for the return of democracy. It meant in fact a return of a sense of hope and optimism that hadn't been there before.

I also had a chance to talk with some of the victims of human rights abuse. One of the programs that we've had is support for human rights fund that goes through Haitian NGOs. What was interesting there was a commitment on their part -- these are the victims -- to abide by President Aristide's call for reconciliation, and they essentially were agreed that the future in Haiti meant trying to work together with all of the people in the country, regardless of those who participated during the de facto regime.

In general, the economic recovery program that we've put together, as you may understand, is part of a multilateral effort that's being done together with the World Bank, the IDB, the rest of the international system, United Nations agencies and other donors, and it responds to a consensus analysis of Haiti's needs. It also responds to the presentation that Haiti's economic team put together at a recent informal donors meeting.

It focuses on three areas: humanitarian needs, the needs in the area of democracy and restoration of government, and the area of economic recovery itself. That is, the infrastructure that permits private industry, commerce, to begin to work, begin to create jobs, and the establishment of a relationship with the international financial community again.

The overall estimate of the requirements for the first year are approximately $555 million, and those estimates were the consensus of this international donors meeting that met recently in Paris, sponsored by the World Bank.

In the area of humanitarian needs, we're talking about continuing a program that has provided some million individuals, mostly the most vulnerable parts of the Haitian population, children under five, women and the elderly with one meal a day. It includes providing access to health services to some two million Haitians through a network of non-governmental organizations.

Our own program supports approximately 39 U.S. PVOs and Haitian non-governmental organizations that provide these health services across the country in clinics.

The third part of the humanitarian program is jobs -- short-term jobs that are linked to public health and public sanitation, cleaning the irrigation canals and picking up garbage. In August we were funding some 16,000 jobs. We're now up to about 35,000. We hope to get up to about 50,000 by the end of the year, over the next two months, let's say.

The overall estimate of need for the course of the first year in the humanitarian area is approximately $95 million. The United States is going to provide approximately $57 million, and other donors at the various conferences have indicated their commitment to provide the other funding.

The second area of concern is the area of economic recovery itself. Over the course of the past year, there is an analysis by a joint World Bank-IDB mission that estimated the infrastructure requirements at approximately $210 million. That mission was undertaken a year ago, and in two weeks there will be a new mission led by the Inter-American Development Bank that will be reviewing those initial estimates. The expectation is that, if anything, during the past year the situation has deteriorated.

The overall estimate of need in the area of economic recovery is approximately $375 million. I mentioned, approximately $210 million with respect to infrastructure. The additional requirements relate to clearing the arrears of Haiti to the international financial institutions -- the World Bank and the IDB and the IMF particularly.

The overall arrears by the end of October will be approximately $76.18 million -- more than approximate -- will be $76.18 million. By the end of the year, those arrears would have risen to $83 million. About ten days ago, the United States Treasury Department organized a support group meeting at which USAID pledged $25 million and some 15 other nations present pledged the remaining $53 million, which means that we have pledges now for $78 million which covers the arrears beyond the end of October.

We anticipate in the next several days to receive other pledges from several other countries present which will permit arrears to be cleared for Haiti beyond the first of the year.

I think it's important to emphasize that what that will do is that it will free up approximately $260 million in either pipeline from the World Bank and the IDB in projects which are essentially approved and have been frozen during the period of the de facto government or permit fast dispersing balance of payments in the case of the IDB, somewhere between $30-$40 million and similarly in the case of the World Bank approximately the same amount.

So it will mean that over the course of the next 12 to 15 months the clearing of arrears will permit major flows of capital into Haiti to provide a reconstruction of the nation's infrastructure in the area of electric power, roads, ports on the physical side; and it also will permit on the social side investment in the physical infrastructure of the health system and education system. And these are fundamental elements in permitting the economy to recover in Haiti.

Another area in the economic recovery that I want to mention is the immediate requirements with respect to balance of payments. Haiti obviously during this period is not -- during the period of embargo has not had export earnings to any degree, and at the same time they need vitally to obtain the inputs to permit the businesses to begin to produce again; the inputs of seed, fertilizer, etc., for the agricultural sector to begin to operate again effectively.

You have to remember that in Haiti, two-thirds of the labor force is concentrated in agriculture, mostly very small holdings; and at the same time the vast majority of Haiti's poor are in the rural areas. So in order to permit agricultural recovery, you have to begin to get fertilizer, seeds and implements into the country, and it's one of the crucial concerns in providing approximately $15 million a month in balance-of-payments support.

When I was in Haiti, I signed the first balance-of- payments agreement for $15 million with President Aristide, and that will permit the beginnings of imports. It permitted, actually, the first cargo of petroleum to come into the country, and at the same time the local currency that's generated is used by the government to finance its operations.

The third area is with respect to democratic institutions and governance. Let me go back a second. In the economic recovery area, the overall estimate with respect to the plan was $375 million, of which the U.S. contribution will be approximately $87 million; the remainder coming, as I indicated, from the international financial institutions and from other bilateral donors.

The third area, as I said, is democracy and governance, and that covers helping the restored government to carry out local and parliamentary elections called for under the constitution which are to take place before the second week in January. We've already provided a grant to the U.N. electoral unit to provide technical assistance to the government.

The mission led by the head of the U.N. electoral unit will be traveling to Haiti tomorrow, along with the Haitian official who has been designated by President Aristide as his point person on elections, and they will be meeting with President Aristide and with the Haitian political leaders to define the calendar that will permit elections to take place during the constitutional period.

I understand that President Aristide is meeting tomorrow with some of those political leaders to attempt to reach some agreements with respect to that calendar.

The other areas in the area of governance include strengthening local governments, helping the new ministries which have been gutted during the recent period. When I say "gutted," I mean furniture, equipment, everything that you can think of taken, to helping them begin to essentially re-equip themselves, both on the physical side with respect to furniture and everything else, and on the planning side, to work with them to develop sectoral plans in each of the ministries that will permit the government to carry out its overall plan.

I think it's important to emphasize that President Aristide's plan focuses on something which is unique in Haiti's history, which is the decentralization of authority and responsibility down to local government.

One of the problems in Haiti traditionally has been the concentration of power and, as a result, corruption at the central level. One of the reasons for the failure to create strong democratic institutions has been the failure to create them at the community level.

One of the key elements in his plan, which we're supporting and which other institutions are supporting, is to strengthen local government.

The third area is justice reform which we'll be working on with both other countries and with the Minister of Justice. That links to the new civilian police which also, as you know, was the major part of the overall program of restoration of the constitutional government.

And, finally, in this area as well, we're providing support for the integration of ultimately demobilized members of the FAD-H and police over a six-month period to reintegrate back into civilian life.

One of the clear expressions of President Aristide's announced call for reconciliation is that every time that we've discussed with him this overall economic recovery plan, one of the first things that he's asked is to be sure that the ex- members of the FAD-H, that they do have jobs to go into as they get demobilized.

Let me just conclude and take your questions, by saying three things.

First, the overall plan that we're engaged in is part of an international effort to help ensure that the restoration of constitutional government is followed by the recovery of the Haitian economy and then beginning to provide new opportunities to include the vast majority of the Haitian people who traditionally have been excluded from the political life as well of the country, to permit them to participate.

Second, that we are very optimistic about the initial decisions that President Aristide has made with respect to the character of the plan that he's put forward and with respect to reaching out to all sectors of Haitian society to indicate his desire that they participate in this process.

And, third, I mentioned the mission that's going down from the international community in two weeks. We're very optimistic about the international community's ability to provide the resources that are called for under this plan.

Why don't I stop there.

Q On privatization, does the U.S. Government support privatization? What companies do you think should be privatized? And do you think, in the short time, privatization might lead to more inefficiency than efficiency?

MR. SCHNEIDER: Just the reverse. The parastatals in Haiti have traditionally been a source of corruption, inefficiency, and monopoly-controlled by a small sector of the economy. The privatization proposals put forward in the presentation by the Aristide economic team, which we fully support, essentially involved democratization -- less monopoly- control. They call for taking companies like the flour company, which has been a parastatal institution, the cement company, and reprivatizing them and taking them out of the hands of government and providing an opportunity for them to become more efficient -- fundamentally, to become less corrupt as well. Those two things go together.

So we're going to provide support with the IOC, from the World Bank, along with other technical assistance. One of the key elements in their program, which we support, is that -- one of the goals is, less monopoly control over those institutions. There are about seven that they've identified.

Q Just to follow up. Isn't it true that the only people who can afford to purchase shares in privatization are those very people who have benefited from the parastatals?

MR. SCHNEIDER: No. There are a couple of different mechanisms that you can use to avoid that. They've clearly indicated their intention to prevent that from occurring. We're confident, when you look at the Bolivia model and others, that you can do that.

Q Do you have some sort of transparancy demands for auditing to make sure that this money does not go into somebody's pockets?

MR. SCHNEIDER: With respect to our funding, we have a tremendous amount of auditing that takes place. With respect to the overall program, they've asked us to help them to put into place mechanisms for financial accountability.

One of the first things that we're doing with the banks -- that is, the World Bank and also UNDP -- is to put together virtually in each ministry some technical assistance teams that will help them ensure that they have control over the financial flows.

Similarly, the Central bank -- we're sending down a team next week, as a matter of fact, to help, first, see what occurred during the past year. As you all know, the Central Bank was under the control of the de facto regime. It essentially created massive inflation. Undoubtedly, it was used to permit resources to flow into the hands of some parts of the military.

So one of the first things that we're doing is to have a team in place to work with them. They've named a fairly outstanding five-member committee to go into the Central Bank. They're made up of economists who have international experience -- to go into the Central Bank and to begin analyzing what, in fact, the situation is. We're sending down a team next week that will work with them.

Q Can you tell us how much has been earmarked for demobilizing the military? How long that program is called to go for? How many people you think it will cover, and what sorts of jobs do you think you're going to find in an economy that has no jobs?

MR. SCHNEIDER: A couple of things. First, we've provided a grant to the International Organization of Migration, which is an intergovernmental organization that many of you, I'm sure, know has worked in Mozambique and other countries in demobilization. Based on their experience, we felt that they were the best organization to move quickly in Haiti. So they're already down there. They've been there now for two weeks looking at the questions that you've raised and have begun to identify the steps that will take place as the individuals are identified through this vetting process that are not going to participate either in the police or the military.

They've identified both the kinds of jobs and the process that will get them into those jobs.

What we're essentially going to do is to cover the management costs and the costs of supplies and helping to make the jobs happen. The salaries will be covered by the Government of Haiti. It's basically a six-month transition period.

In some cases, the option of training them for a specific task, where they would either go into private-sector activities, is one that's been identified. This is all being done with the Government of Haiti. These are the options that are being provided to these individuals. These are the kinds of jobs.

Our program will continue for about six months. I want to say $6 million is roughly where it is.

Q In Mozambique, of course, they didn't have jobs for most of these people and still don't. They just basically said, "We're going to give you this money to pay you, not to pick up a gun and --

MR. SCHNEIDER: These will be jobs. Initially, for example, we've identified public works kinds of activities, road construction, helping to repair schools and clinics. There's a desire on the part, we think, of those individuals to be seen as contributing to the country's rebuilding, reconstruction. So they're going to be put into those kinds of activities.

Q Mr. Schneider, how long before there will be a return to self-sufficiency in agricultural production? What do you foresee as the need to feed the people that are not currently being fed? A little bit about agriculture?

MR. SCHNEIDER: You have to remember that Haiti -- I don't know how far you want to go back, but it has not been self- sufficient so far as I know for a very long time.

I'll take you back to 1978. At that time, the study that we did showed that, if my memory is correct -- with CDC as well -- it showed approximately 75 percent of the children under five malnourished. The overall food deficit in 1990, I believe, was about 336,000 metric tons a year.

So talking about getting back to self-sufficiency is probably not the right the question. Let's say, moving to the point where the agricultural production is beginning to provide a greater source of food for the population so that you begin to reduce the level of feeding that takes place on a humanitarian basis.

All I can tell you is that that obviously our goal. It is not a short term possibility. We anticipate that this level of feeding will continue and, in fact, be increased over the course of this next year without any question. We're moving to about 1.3 million meals a day that we're going to be providing. The other donors -- World Food Program, the rest of the international community -- I suspect will be increasing as well. They're currently providing approximately 250,000 meals a day. So you have to assume that over the course of this year we'll be feeding somewhere around 1.5 million.

I would hope that over the course of the next three to five years that you'll be seeing increase in food production so that you can see a significant reduction over several years in that level of feeding.

There's a fundamental problem we have mentioned, but it's obviously underpinning the overall challenge of recovery in Haiti, and that is environmental destruction which has taken place not merely during the past three years, but historically in Haiti. That makes it very difficult to simply move from where we are today to an effective, productive agricultural sector.

We have and we have to continue to expand sustainable agricultural practices. We have to do more to protect the watersheds. We have a project that deals with that, that will move forward. That's something that is vital to Haiti's recovery.

We will begin next month -- November. We will begin working with the government and other donors in a national environmental action plan process that will be aimed at defining a long-term environmental protection program for Haiti.

President Aristide recognizes this as one of the fundamental challenges facing the country.

Q Many economists have talked about the problems of absorptive capacity in Haiti. What would you say are the chief problems, obstacles, in carrying out this $555 million program?

MR. SCHNEIDER: I think that the environmental problem is one of them. You should not underestimate the potential difficulties in terms of carrying out the overall economic recovery in a way that ensures that you're also enhancing and protecting the environment. It is extremely fragile and it's fundamental to the country's recovery.

The overall absorptive capacity issue relates, to a significant degree, to bringing the -- as you know, there are many talented, experienced, and educated Haitians who have been outside the country -- obtaining some of their participation and contribution in the recovery process.

It depends on our beginning to make those decentralization programs work; in fact, translating President Aristide's call for decentralization. The legislation on decentralization, which he submitted to the parliament -- translating that into reality and creating at the local level a capacity to manage and implement government programs. It's basically a training and education program.

Over the mid to long-run, the fundamental issue in Haiti is going to be human capital investment. To what degree are we going to be able, in an intelligent way -- in a sustainable way -- to ensure that the majority of Haitians have an opportunity to be healthy, to be educated, and to participate then in the economic life and political life of the country?

In terms of education, it's important to understand that barely 30 percent of the children who start elementary school in the cities complete sixth grade. So you're beginning with a major challenge with respect to education. Haiti has the highest percentage of illiteracy of any country in Latin America or the Caribbean.

Q Some of the private businesses have had a tough decade dealing with Haiti -- are saying they're looking for some sort of signal to come out of this whole plan -- that it's time to come back and talk about manufacturing. One of the things they always mention is trade arrangements with this country.

Are you working on an interagency basis -- USTR, Commerce, anybody -- to assure that the gates are open if manufacturers get in there and start producing products that can come over here?

MR. SCHNEIDER: A couple of things on that. That's obviously crucial. Not just the manufacturing sector but broadly -- the private enterprise, generally.

We did a recent survey. About 22 or 25 assembly plants that were in Haiti plan to return, so that's a very positive indicator. We met at the Old Executive Office Building on the Thursday before President Aristide returned, I believe, or the week before that, with a range of Haitian and American business owners and potential investors. That was OPIC, the Department of Commerce, and ourselves -- and discussed precisely those questions.

There's a clear, both a desire and intent, on the part of the people present to begin to go back into Haiti. I think that this recent survey indicates that.

With respect to trade itself, Haiti will have access as of the ending of the embargo and the return of President Aristide to the CVI benefits and to GSP. Once the interim trade program is adopted in the Congress, they will have access to that as well.

Q What about barriers for them trading with our country -- barriers for textiles, barriers for all the things that we like to have quotas on?

MR. SCHNEIDER: Most of the products fall under the CVI --

Q So it's all waived?

MR. SCHNEIDER: On the textile side, the quotas that came back -- as soon as the sanctions were lifted, virtually automatically then, the quotas come back. But there are at levels so high that there would not be any possibility of their affecting any outcome over the next year, at least. We will be reviewing that if it appeared that those ceilings were beginning to have any impact.

Q This $555 million will be spent in this year, right? What happens then? Do we pat them on the back and --

MR. SCHNEIDER: No because that's the beginning part of a mid- and longer-term development program. What I quoted to you there, in terms of contributions from the banks, that's the beginning of a several-year lending program that will continue over the course of the next several years.

In addition, the European Union program extends for the next 18 months to two years. That's something like $160 million right there.

The other item that I wanted to mention is that our contribution overall -- to that $555 million figure -- is approximately $200 million, when you take what I've mentioned is humanitarian, governance and economic recovery.

MS. SHELLY: One last question? Okay. Thank you very much.

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