27749: Durban (comment): Cite Soleil Project III - Financing (fwd)

[Bob Corbett <corbetre@webster.edu>]

Lance Durban <lpdurban@yahoo.com> writes:

The third and final section of Cité Soleil Project was written a few
days ago, but in spite of Monday's electoral events, I think most of it
is still quite applicable.  For anyone interested in an e-mail with all
three sections of "the Project", please e-mail be off list.


                III. Cite Soleil Project - Financing

If all weapons in Cite Soleil are peacefully turned in, as has been
hinted by one of the gang leaders, this dangerous enclave might seem to
be ready to re-join the rest of the country.  Let's hope for the best,
but plan for the worst.  Cite Soleil Project - Overview, and Cite
Soleil Project - Politics set out a development plan for this
poverty-stricken and dangerous slum.  What will it cost and how will we
finance it?

To put things in perspective, the election was estimated to cost $60 to
$75 million dollars.  The U.N. peace-keeping presence reportedly costs
an additional $43 million per month.  Both may be essential, but this
is real money.  If Cité Soleil can be "solved" in the next 12 months,
we should be more than willing to earmark several months of
peace-keeping expenses in the knowledge that the savings will be
realized through a shortened or reduced requirement for peace-keepers
later on.

Here is a very rough guess of what the proposed project will cost, but
these numbers are very definitely subject to closer analysis:
 1.  Cement blocks, 15 cm                         $ 3,000,000
        Approximately 5 linear miles, 8' high
 2.  37,500 tents, waterproof, 5 person             3,750,000
        Suitable for 150,000 people
 3.  500 Mess kitchens                              1,000,000
        Each suitable for feeding 300 people
 4.  Food (incl propane or kerosine for cooking)   29,750,000
        partial subsidy - 150M people for 365 days
 5.  Direct Labour                                  1,250,000
        Block-stacking, tent erection, road building
 6.  Displacement Subsidies                         5,000,000
        $100/adult who opts to not move into tent city
 7.  Management and project supervision            12,000,000
 8.  Miscellaneous unforseens                       4,250,000
                            Total Project.......  $60,000,000

Financial administration of this project should be assigned by the
Haitian government to the United Nations Development Program.  The UNDP
has been active in Haiti for years, and locally has the experience and
financial integrity needed to inspire confidence in the donor
community.   Before any financing will be made available, the project
and a project budget need to be fleshed out by a multi-discipinary team
of experts working on a tight timeline.  Give them four weeks.

Where does the money come from?  A well-planned donor's conference,
would be organized by the Latortue Administration for March, possibly
even before the inauguration of a new president.  The leading
presidential candidates should be called in and brought up to speed on
the project.  First, however, there is the little matter of the
elections... which might better be taken as an opportunity.

I would suggest an urgent convocation of all 33 candidates to a
closed-door session with the interim government and CEP head Jacques
Bernard.  René Préval has received more than 4 times as many votes as
the 2nd place candidate, and while an expensive run-off election may
technically be necessary, there is no way the 2nd place finisher will
have any realistic chance of catching the leader.  All the candidates
already know this.

Here is an excellent opportunity for a gracious 32 part concession
speech, which could be encouraged by the public announcement by the
foreign donors who have financed this election that any savings
realized by NOT holding a presidential run-off will be calculated and
re-directed to the Cité Soleil Project.  Gentle persuasion and/or
arm-twisting by the interim government may be necessary, but I am
betting that every one of the losing candidates will eventually get on
board to congratulate the new president.  Mr. Preval's traditional
soft-spoken and magnanimous personality will prove invaluable, and his
own awareness that he will need all the help he can get should be the
clincher.  Then too, no one wants to be seen as a sore loser when it is
pretty obvious to everyone in the country that he or she has lost.


So where does the money come from?  Here are the four main sources:

1.  International (U.N., bi-lateral aid, NGO's)
Political harmony will help encourage international funding.  Much of
the food aid can simply be an earmarking of monies already budgeted in
U.S. government foreign aid.  The U.N. might fund temporary housing
(tents) as a form of long term investment in disaster preparedness.
Following the project the tents will be stored for future crises.
There a plenty of NGO's already working in Haiti, and those interested
should be given responsibility for specially-targeted sub-projects.

2.  Wealthy Haitian in and out of Haiti
The Haitian banking sector will also be a major source of financing
through a new Central Bank fee structure.  The Diaspora will be hit
with additional charges on remittances sent through registered money
changers (CAM, Boby Express, Western Union, etc.), Travellers will be
hit with an additional $10 tax when leaving the country, and there will
be a surcharge on property taxes in metropolitan Port-au-Prince.

3. U.S. taxpayers (& the Haitian poor)
Raising the duty on imported rice from the current 3% back to the 35%
which was in force 20 years ago will, in effect, divert U.S. farm
subsidies already being paid by U.S. taxpayers to the new Haitian
government.  Of course it will raise the price of imported rice for the
Haitian consuming public, a political risk for any Haitian government.
However, this "risk" is offset by the enormous boost it would give to
the rice-growing region of Haiti (the Artibonite) who would finally
find a level playing field.

4. Deficit Financing
The Interim Government?s Minister of Finance has expressed pleasure
with his relatively balanced budget, and maintenance of a stable
gourde/dollar exchange rate does have some advantages.  However, in a
time of severe economic distress, striving for a balanced budget sounds
a little too much like Depression-era President Herbert Hoover in the
U.S.  It took a radical new approach by Franklin Roosevelt, influenced
strongly by British economist John Maynard Keynes, to accept deficit
financing as a means of creating employment.  The key is not so much
whether you have a surplus or a deficit, but rather how the government
is spending its money.  Big houses and cars, no-show civil servants,
excessive foreign travel by government officials are a problem.  By
contrast, the Cite Soleil Project is designed to prime the economic
pump.  Besides solving a huge crime problem, it will put money into the
hands of poor people who will spend it.

                        *************************

In closing, it is worth pointing out that although "security" may be
the spark that gets this project going, the "humanitarian" aspect
should be at least as important.  In the final analysis, everyone with
an interest in Haiti's long term development should understand the
importance of coming to the aid of the people of Cité Soleil.

L. Durban