* * *
* * *
The challenge of “building back better,” a phrase borrowed from my husband and his work with President George H. W. Bush after the Asian tsunami in 2004, was daunting. The earthquake was a disaster of unprecedented scope that devastated Haiti’s economic center and much of its productive infrastructure, including the main port and airport, power lines and substations, and important trunk roads. Préval and his Prime Minister, Jean-Max Bellerive, recognized early on that Haiti required bold economic development strategy that would use recovery funds to create lasting improvements in the lives of the Haitian people. They had plenty of prescriptions to choose from as Haiti became the focal point of an ongoing debate about development and the role foreign aid can play in stimulating an economy and improving a government.
What emerged was a development strategy crafted by the Haitian government that served as a guide for reconstruction. Two of its central tenants, to create economic opportunity in regions called growth corridors outside of congested Port-au-Prince and to expand jobs in agriculture and light manufacturing, became hallmarks of U.S. assistance to Haiti.
The idea of letting the local government set priorities and guide the development was not exactly new. In his celebrated speech launching the Marshall Plan in 1947, George Marshall argued that, “It would be neither fitting nor efficacious for this Government to undertake to draw up unilaterally a program designed to place Europe on its feet economically.” But Marshall’s wisdom was often overlooked in the following decades. Donor nations and NGOs swooped into developing countries with their own plans and ideas. That impulse was understandable, considering that local governments often required expert advice, but it often led to unintended consequences. Aid workers in the field sometimes griped about the “10,000-mile screw driver” with which officials back in Washington or various European capitals tried to micromanage development efforts. Plans that sounded good on the drawing board foundered when applied in the real world, and without local cooperation and buy-in they didn’t translate.
Eventually the international development community rediscovered General Marshall’s guidance as the principle of “country ownership,” and we put it at the heart of our efforts in Haiti and around the world. Country ownership meant that for us, as much as possible, we would work with local officials and national ministries on the needs they identified, to help them build up their capacities and ensure a coherent, unified approach with all donors and organizations working together toward those ends, rather than in parallel or in competition. Our development model could not be formulaic. What works in Papua New Guinea may not work in Peru. We had to go case by case, country by country, even village by village, to analyze needs, assess opportunities, and tailor investments and partnerships to maximize our impact.
In Haiti and elsewhere, the primary vehicle for our development work would be USAID, an agency filled with determined public servants but plagued by years of dwindling resources and drifting focus. In the 1990s Republicans in Congress led by Senator Jesse Helms of North Carolina called for abolishing USAID altogether, arguing that the end of the Cold War had removed the strategic rationale for large-scale foreign aid. Although Helms failed to dismantle the agency, he was able to drastically reduce its budget. Lost in the debate were the real consequences of pulling back and letting problems fester, especially in places like Afghanistan. When the United States walked away after the Soviet withdrawal in 1989, we created the space for the Taliban to emerge. It was a costly error.
Interestingly, near the end of my husband’s presidency Senator Helms came to support Bill’s initiative to forgive the debts of poor countries if they put all the savings into health care, education, or economic development. A lot of the credit for that goes to Bono, lead singer of U2, who proved surprisingly persuasive with the cantankerous Senator.
The Bush Administration had its own take on development. The President’s brand of “compassionate conservatism” led him to invest in new development programs outside of the existing bureaucracy of USAID that have made huge impacts, especially in sub-Saharan Africa. The Millennium Challenge Corporation provided generous assistance to countries that met certain standards and made reforms on corruption and governance. President Bush’s Emergency Plan for AIDS Relief built clinics, distributed drugs, and saved lives all over Africa. It was an amazing success.
When I became Secretary, rebuilding and refocusing USAID was a top priority. Without reforms, including reducing our reliance on outside contractors and increasing our ability to innovate and execute, we were in danger of being outpaced and outclassed by other countries. Many European nations had excellent development programs that operated with more local involvement and much lower overhead than typical USAID efforts. China was spending huge sums across the developing world. We might not have thought highly of their methods, which prioritized extracting resources and bringing in their own people rather than adding value, increasing employment, and protecting the environment, but there was no disputing the scale and scope of their engagement. As I found all over the world, few people could identify tangible symbols of American aid, but in many nations people drove by a Chinese-built stadium or on a superhighway every day. We didn’t want to emulate their approach or discount the value of less visible projects, especially ones that boosted crop yields and prevented unnecessary deaths from AIDS, TB, and malaria. But we did need to keep improving and innovating so that American development programs would remain the most respected in the world.
To run USAID we found a thoughtful and talented young man at the Department of Agriculture, Dr. Rajiv Shah. A trained doctor and health economist who had run major programs at the Gates Foundation, Raj soon became a valued partner who shared our commitment to reforming the agency and elevating development within our foreign policy.
The Obama Administration proposed doubling foreign assistance by 2014, but just as important, we planned to reform how that money was spent, making sure less was diverted to salaries and overhead for for-profit contractors and more went directly into programs on the ground. I also wanted to reverse the “brain drain” at USAID by increasing the number of development professionals and making it once again an exciting and fulfilling place to work.
Raj and I agreed that to succeed, USAID needed a new emphasis on innovation, investment, and self-sufficiency. We began looking for new ways to identify and support the best development ideas from outside government that could help us solve problems around the world, especially market-driven solutions that would empower people and encourage creativity. USAID launched “Grand Challenges” competitions—contests to support potentially game-changing innovations. We also created a venture capital–style fund to invest in big ideas that could yield big results. The first round of financing supported projects like solar lighting in rural Uganda and mobile health services in India. New partnerships with the National Science Foundation and the National Institutes of Health began connecting American scientists working on development research with their counterparts around the world. New science fellowships allowed us to bring in more researchers, engineers, and physicians to work with USAID. In 2008 USAID spent roughly $127 million to support research and development. By 2014 that number was up to $611 million.
Starting in 2011, Raj and I began discussing a centerpiece project for this innovation agenda: a state-of-the-art development laboratory run by USAID in partnership with research universities, NGOs, the tech community, and U.S. corporations. After three years of preparation I was proud to join Raj in early April 2014 to help launch what is now called the U.S. Global Development Lab. It will focus on breakthrough solutions in water, health, nutrition, energy, education, and climate change, with the goal of helping 200 million people in the first five years.
Another major push was to find new ways to stimulate private-sector investment in developing countries. American companies often struggle to navigate the complicated array of U.S. agencies involved in international investment and t
rade, including the Overseas Private Investment Corporation (OPIC), the State Department, USAID’s Development Credit Authority, the Trade and Development Agency, and the Export-Import Bank. Before I left office, I presented President Obama with a plan to build up OPIC into a full-scale “development finance institution” that could mobilize resources from across the government to incentivize private-sector investments that would require no additional taxpayer money. Other countries have these kinds of institutions; we should too. It’s good for American businesses and for our partner countries.
While we improved our own development capacities, it was also crucial to help our partners improve theirs. I was especially concerned about corruption and poorly functioning tax systems in developing countries we were trying to help. Foreign aid is a hard enough sell under the best of circumstances, but it’s even more difficult when elites in our partner countries do everything they can to avoid doing their fair share. That was something I saw all over the world, and it outraged me. When a country makes reforms to improve tax collection, expand transparency, and fight corruption, it can ignite a virtuous cycle. Taxpayers can see what they’re getting for their money. Higher revenues allow governments to provide better services and pay decent wages to public employees. All this, in turn, creates a more attractive climate for both foreign investors and development donors and puts countries on the path toward self-sufficiency.
* * *
* * *
Helping rebuild Haiti would be a major test for USAID and for how well we could work with the Haitian government while increasing its capacities, and coordinating with all our international partners, including governments, NGOs, and institutions.
I began calling leaders around the world right after the earthquake, starting with the Foreign Ministers of France, Brazil, Canada, and the Dominican Republic. At a Haiti Donors Conference in the spring of 2010 the United States began the process of allocating more than $3.5 billion in assistance, and we encouraged other nations to follow our example. All told, the conference yielded in excess of $9 billion in government pledges for long-term development, in addition to substantial commitments from the private sector. Every country in our hemisphere got involved. I was especially glad to see that the Dominican Republic, which shares the island of Hispaniola with Haiti and has not always gotten along with its neighbor, went above and beyond to help. We even cooperated with Cuba and Venezuela.
UN Secretary-General Ban Ki-moon had asked Bill to serve as his Special Envoy to Haiti starting in May 2009, a position he held until 2013. Then President Obama asked him and former President George W. Bush to lead a postearthquake campaign that raised tens of millions of dollars to start new enterprises and increase employment. By Bill’s side was Dr. Paul Farmer, a cofounder of the organization Partners in Health, whom Bill had asked to become the UN Deputy Special Envoy in August 2009. Partners in Health started working in Haiti in 1983, developing a unique model of providing quality care with limited resources to poor people in rural areas. After the earthquake Paul and his team managed to build a full-fledged teaching hospital, Hôpital Universitaire de Mirebalais, in Mirebalais, Haiti, which is also the country’s largest solar-powered building.
The international relief and reconstruction effort did a lot of good, especially in the immediate aftermath of the quake, but there were shortcomings in the efforts. Tens of thousands of relief personnel set up camp in what felt like a city under siege, and they were not always well coordinated. Too many well-meaning NGOs clogged the pipelines. And, in a heartbreaking case of unintended consequences, the cholera epidemic that broke out in the fall of 2010 likely started with Nepalese peacekeepers brought in by the UN.
USAID missed the mark in some important places. The hospital referral networks that one of our health experts designed never materialized, largely due to bureaucratic infighting. On energy, the United States built a power plant and did repairs, but our grander plans of energy transformation have not yet come to fruition.
There were, however, important successes. As of January 2013, 7.4 million cubic meters of rubble had been removed, one third of it by the U.S. government. The number of Haitians living in tent camps declined from a high of 1.6 million to less than 200,000. More than 300,000 people have found safer housing thanks to USAID-funded programs. And the cholera response and vaccinations led by the Centers for Disease Control (CDC) helped drive down the fatality rate of the cholera epidemic from 9 percent to just over 1 percent. The United States supported 251 primary care and fifty-two secondary care sites across Haiti, which were estimated to reach the health care needs of nearly 50 percent of the Haitian population. We helped nearly ten thousand farmers access improved seeds and fertilizer and introduced new techniques for better productivity. Rice yields have more than doubled, and corn yields have more than quadrupled.
The primary goal of our long-term development strategy in Haiti was to jump-start the economy, create jobs that would pay people decent wages, and reduce dependence on foreign assistance over time. A centerpiece of our efforts was a $300 million industrial park at Caracol, in the northern part of Haiti, funded jointly by the State Department, USAID, the Haitian government, and the Inter-American Development Bank. It quickly became a global effort, with a Korean textile company, Sae-A Trading Co., committing to build and run a factory there to make T-shirts and other items for Wal-Mart, Kohl’s, and Target. When I visited for the October 2012 dedication, 1,050 Haitians already worked there, with more expected to be hired soon.
The Caracol project was in keeping with a broader trend in our development work around the world. We were shifting our focus from aid to investment. In the 1960s, when President Kennedy created USAID, official development assistance from countries like the United States represented 70 percent of the capital flows going into developing countries. Since then, even though countries have actually increased development budgets, official development assistance represents just 13 percent of those capital flows. That’s mainly due to surging private investment and trade in emerging markets, which is good news. Given this shift, it made sense to refocus our approach to development so we can better harness market forces and make smart public-sector investments that could catalyze sustainable economic growth.
The United States was not abandoning traditional aid, such as sacks of rice or cases of medicines. That kind of assistance is still a vital tool, especially as part of an emergency response to a disaster. But through investment we sought to break the cycle of dependence that aid can create by helping countries to build their own institutions and their own capacity to deliver essential services. Aid chases need; investment chases opportunity.
By the end of 2013, just over a year after it opened, the industrial park at Caracol was providing jobs to about 2,000 Haitians. There were six private-sector tenants, a million square feet of leased factory and office space, and $26 million in annual exports. Over the course of 2014 employment and exports are on track to more than double as manufacturers move into newly completed factories. It also has a modern waste water treatment facility, a new electric grid providing reliable power to surrounding towns for the first time, as well as new housing, schools, and health clinics.
In a 2013 column in the Financial Times, Haiti’s Prime Minister Laurent Lamothe noted that the majority of Haitian families make around $700 a year in subsistence agriculture and are “never certain if heavy rains may wash away their harvest.” So when Caracol opened, fifty applications came in for every job. “A single mother in Caracol now earns an average annual salary of $1,820 in her first ever wage job,” Lamothe wrote. “If she advances to become a line supervisor, she can earn up to 50 per cent more. Previously unemployed, she now can afford to send her kids to school, pay for a mobile phone and 24/7 electricity and have some discretionary income to save. She also benefits from paid vacation, health care and one of the best worker rights and worker safety regimes in the world.”
The day that the Caracol industrial park was dedicated in October 2012 was a
n occasion for all of us who had lived through Haiti’s darkest days to celebrate a little good news, and no one deserved applause more than Préval himself. By that point, however, he had been out of office for more than a year, and his relationship with the new President was far from warm.
The ill will dated back to the November 2010 elections, just ten months after the earthquake. The official government tally and an independent count by the Organization of American States (OAS) reached different conclusions about which candidates should advance to a run-off. Many Haitians, who had already endured so much, were outraged that after all they had endured their votes might not be counted. The streets were soon full of loud and unruly protests.
I decided to go to Haiti to meet with Préval and the candidates to see if there could be a peaceful resolution that would avoid a crisis when there was so much work still to be done in the aftermath of the earthquake. Préval’s preferred candidate, who the OAS said had actually finished third, complained that the international community was pushing him out of the race. I insisted that just wasn’t the case. After all, I explained, people tried to push me out of the race when I ran for President in 2008. Just as President Obama and I did, he and the other two candidates had to respect the voters’ preference. “Look, I’ve run in elections,” I said. “I’ve won two, and I’ve lost a big one. So I know how it feels. But what’s more important is that democracy be protected.” Unlike a professional diplomat or an academic or businessperson, I could put myself in these candidates’ shoes. Elections can be painful. Democracy is tough. In some places you can be killed because you want to run or you want to vote, or you can be imprisoned and bankrupted. You have to understand the risks that people are taking, the worries they have, their need to feel respected.
Hard Choices Page 68