Institute Notes: A Dialogue on Overcoming Hunger and Poverty

Building Haiti Back Better

In a packed hearing yesterday of the Senate Foreign Relations Committee, Chairman Kerry reminded us that prior to the earthquake, Haiti had actually begun to show some signs of progress, with violent crime declining and increased access to the U.S. market. Indeed, this week a CNN report, examined the garment industry, which before the quake employed 130,000 people, with workers earning $4 a day (more than half of Haiti’s minimum wage) and new investments fueling a potential resurgence of the sector.  Much of this gets lost in the flood of stories about how the earthquake has destabilized a “basket case” of a country. But I digress.

U.N. Deputy Special Envoy for Haiti, Dr. Paul Farmer, turned our attention to a new set of health concerns, such as outbreaks of cholera and water-borne diseases in the newly formed tent cities. He also urged a focus on quickly establishing safe schools, hospitals, and storm-resistant housing.  Wreckage must be cleared, students need to be back in school, and life -- as wretched as it appears in the present -- must continue. Dr. Rony Francois detailed the massive infrastructure challenges. Among them is assessing the structural integrity of the remaining buildings. We know that many people, even with homes intact, are loathe to return to them. He also called for a long-term plan to decentralize Port-au-Prince and reinvest in agriculture, food security, jobs, roads, and the like. James Dobbins of Rand Corporation pointed out that as post-conflict environments go, Haiti is “no Somalia, Iraq, or Afghanistan.” So we don’t need American troops in Haiti for the long haul, but we do need to focus on creating jobs, alleviating poverty, and enhancing Haiti’s capacity to govern. We should also pay Haitians to build back their own country as my colleague discussed earlier this week.

In light of the billions anticipated for recovery and reconstruction, all commentary led back to what Farmer described as the failed “aid machinery” and how to do it better than it has been done in the past. The AP reported this week that of the $379 million the U.S. spent on earthquake relief in Haiti, less then a penny of each dollar is going to the Haitian government in cash. See the full article for a breakdown on how this money has been spent. To date, $2 billion in relief has streamed into Haiti, almost all into the hands of NGOs. With more NGOs per capita than any other country in the hemisphere, this is no surprise. 

Some creative measures were put on the table, such as coordinating Haitian-American volunteers into small groups linked with their former hometowns and institutions in Haiti; creating a multilateral recovery fund and new ground rules for NGO involvement in Haiti; and my favorite, appointing a U.S. Haiti “czar” comparable to the role Ambassador Richard Holbrook now plays in Afghanistan. This could raise the profile of the recovery effort and help improve coordination among U.S. agencies. But there were no easy prescriptions for engaging the Haitian government, other than the acknowledgment that yes, there is corruption and weak capacity, but a “better” Haiti is one in which strengthening governance, civil institutions, and the economy is central. 

Haiti: Toward Reconstruction

Efforts in Haiti now turn to the wrenching task of clearing wreckage (with untold numbers still trapped in rubble) and housing hundreds of thousands before the rain and hurricane seasons start. Still reeling, Haiti must quickly turn to reconstruction and recovery, while balancing ongoing relief for the 2 million people affected.

On Monday, Haiti’s top leaders gathered with international donors in Montreal to assert their central role in the reconstruction agenda. Foreign ministers from 14 countries largely agreed that we are looking at a decade, at minimum, of concerted investment in Haiti. The outcomes of the meeting outlined the obvious: Haiti will need deep and broad long-term assistance. A more involved donors conference will convene down the road where actual dollars will be pledged following an independent needs assessment.

While the beleaguered Haitian government presented an initial $3 billion plan to salvage Port-au-Prince (housing the homeless and rebuilding infrastructure), others have begun to press for unprecedented levels of aid and coordination.

On Project Syndicate this week, Jeffrey Sachs recommends focusing on five key sectors for long-term reconstruction and development: smallholder, or peasant, agriculture; reconstruction; port services and light manufacturing; local small-scale trade; and public services, including health care and education. He also pushes for an overarching framework and an unprecedented display of international cooperation led by the Inter-American Development Bank because of its track record in Haiti. His price tag for this effort: $10-$20 billion over 10 years.

To naysayers of aid to Haiti, Sachs says:

“Other countries have risen from the rubble of natural disaster and war, and Haiti can do the same over the next five to ten years. For the next decade, however, and especially for the next five years, there will be no escape from the need to rely on international financing, and mainly grant assistance, to finance the rebuilding effort. The world has spent heavily in Haiti before, but very ineffectively. This time, it must be done right.”

So world leaders must now grapple with how to structure aid efforts in Haiti, with its history of corruption and weak institutions. In a statement following the meeting, Secretary of State Hillary Clinton said,

"It's important that we see ourselves as partners with Haiti, not patrons… We bear a responsibility to our taxpayers to assure that the money that our government commits will be well spent transparently and with results on the ground for the Haitian people.”

Let’s see if the interest, concern, and good will emerging from this tragedy can be channeled into a coherent, transparent, and collaborative development agenda that prioritizes broad-based economic growth, debt relief, and poverty reduction. This is our opportunity.

Haiti Needs Debt Relief

Haiti owes the International Monetary Fund $165 million for loans incurred before last week's devastating earthquake. These loans should be forgiven. How in the world will the country be able to pay them now?. In a sense, this is beside the point.

It’s worth noting the conditions under which the IMF loans were made, as Richard Kim did in The Nation last week.

Debt relief activists tell me that these loans came with conditions, including raising prices for electricity, refusing pay increases to all public employees except those making minimum wage and keeping inflation low.

And now, as Kim explains, the IMF is offering a new loan to Haiti for $100 million, with mostly the same conditions attached.

At this point, it's helpful to have a refresher on Haiti’s historical experience with creditors. As Kim writes:

As historians have documented, the impoverishment of Haiti began in the earliest decades of its independence, when Haiti's slaves and free gens de couleur rallied to liberate the country from the French in 1804. But by 1825, Haiti was living under a new kind of bondage--external debt. In order to keep the French and other Western powers from enforcing an embargo, it agreed to pay 150 million francs in reparations to French slave owners (yes, that's right, freed slaves were forced to compensate their former masters for their liberty). … It took Haiti 122 years, but in 1947 the nation paid off about 60 percent, or 90 million francs, of this debt (it was able to negotiate a reduction in 1838).

Then of course there are the structural adjustment policies imposed by the IMF and World Bank in the 1990s. In 1995, for example, the IMF forced Haiti to cut its rice tariff from 35 percent to 3 percent, leading to a massive increase in rice-dumping, the vast majority of which came from the United States. …During this period, USAID invested heavily in Haiti, but this "charity" came not in the form of grants to develop Haiti's agricultural infrastructure, but in direct food aid, furthering Haiti's dependence on foreign assistance while also funneling money back to US agribusiness.

A 2008 report from the Center for International Policy points out that in 2003, Haiti spent $57.4 million to service its debt, while total foreign assistance for education, health care and other services was a mere $39.21 million. In other words, under a system of putative benevolence, Haiti paid back more than it received.

Lately there’s been a lot of chatter on editorial pages about why Haiti is such a development "basket case." The agenda—and, frankly, it appears to me the earthquake has been exploited to forward that agenda—is to bash foreign aid.  In The Wall Street Journal, Brent Stephens tells us the reason Haiti is such a basket case is because we haven’t treated Haitians like adults. David Brooks in the The New York Times blames it on voodoo and a Haitian predisposition to fecklessness. Interesting.

Here we have two polar opposite views of Haitians, but the same agenda to discredit aid. What's missing from theirs and others' anti-aid agenda is how we might have done things differently and gotten better results. Rather than explore that angle, they conclude we should stop providing aid. 

Indeed, we need to do aid better in Haiti—because we owe it to Haitians, for one thing. But first let’s clear the decks. Debt relief for Haiti should come first. More on how to do aid correctly in the coming days.

More than a Billion Hungry

The Food and Agriculture Organization (FAO) of the UN came out with new numbers late last week on the state of global food insecurity, and the bottom-line message is there are now more than a billion chronically hungry people in the world. To be exact, the number is 1.02 billion, or roughly one of every six people on the planet. 

Every year FAO publishes a report on the state of food insecurity, and this year's was released on the eve of World Food Day, October 16. It seems apt given the historic crossing of the threshold. This is the first time the number of hungry in the world has crossed over a billion, and while in recent decades the percentages of chronically hungry people have been decreasing (in the1960s, one out of every three people was hungry), the trends over the last 15 years or so suggests progress has become much tougher to come by.

 
The financial crisis and the severity of the global recession have had a profound effect on the dramatic rise in hunger from 2008 to 2009. If things seem rough here at home, where Americans spend between 5-15 percent of their income on food, the situation is downright grim in the developing world, where poor people spend 70 percent of their income on food in good times.

The White House Weighs in on Development Assistance Reform

President Obama has signed a Presidential Study Directive authorizing a U.S. government-wide review of global development policy.  This effort is to be led by the National Security Council -- specifically the NSC’s Senior Director for Development and the Director for Democracy. It is expected to reach across multiple government agencies, including State, USAID, Defense, Treasure, Agriculture and others, to develop a more coordinated and strategic approach to development policy.

This is a positive step, in line with recommendations of the MFAN network and numerous studies, and with legislation introduced in Senate and passed by the HFAC. Bread for the World, along with many allies in the foreign aid reform movement, strongly supports this initiative.  It is impressive that the President is giving attention to this issue out of an already full agenda.

One is left to wonder, though, the extent to which this initiative is emblematic of a broader problem – namely, just who’s in charge of our development assistance?  And are the State Department and the National Security Council singing from the same song sheet? The State Department, after all, had already announced its Quadrennial Diplomacy and Development Review (QDDR), designed to “provide the short-, medium-, and long-term blueprint for our diplomatic and development efforts.” The QDDR is being led by the Deputy Secretary for Management and Resources, with the Administrator of USAID and the Director of the Policy Planning serving as co-chairs. According to the press release, the findings and recommendations of the QDDR are intended to contribute to an interagency process aimed at developing a whole-of-government approach to foreign policy. 

The President Gives Birth to a bouncing $3.4 T Budget

It was a busy day here in Washington as details on the budget were announced. The newspapers have tended to focus on the topline numbers - a $3.4 trillion dollar budget with cuts of about 17 billion in programs deemed inefficient or ineffective.

The attention at Bread for the World has been on the budget accounts that matter for hungry and poor people. My colleague Sophie Milam pointed out that the budget includes $5 million to implement the Hunger Free Communities Act, a piece of legislation Bread worked hard to ensure was included in the last Farm Bill. The HFCA will provide small grants to local groups seeking innovative solutions to hunger in their own communities. After all of the hard work put in by Bread members and staff to get the program authorized, it was a delight to see the program get funding.

For my part, I spent some time combing through the international affairs portion of the budget.

Surprising Success at the G20

The conclusion of the G20 seems, at first blush, to provide a great deal of positive news for developing countries. The official Communique begins with the recognition that

prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today’s population, but of future generations too.

To achieve financial stability and promote a return to trade and economic growth, G20 leaders had to act boldly, and it appears they have.

Building Momentum for an Anti-Hunger Agenda

It's been a busy week here in DC. On the domestic side, the release of the President's budget is being scrutinized in detail for spending on domestic nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP) and The Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

The President's Budget proposes funding for WIC to serve 9.8 million participants in 2010, an increase above the 9 million people currently enrolled in the program. WIC is instrumental in supporting pregnant and new mothers and young children who fall below a minimum income threshold. The large increase is intended to meet the needs of a growing pool of applicants particularly in this period of economic recession.

The President also requests an additional $5 billion over the next five years to strengthen Child Nutrition programs in the upcoming reauthorization. Congress is due to reauthorize the School Breakfast and Lunch Programs and programs that provide meals and snacks to children afterschool and during the summer. Bread for the World supports the administration's goal of expanding program access and participation so that more vulnerable children have the food assistance they need. My colleague here at Bread, Sophie Milam, noted that while the proposed increase is positive, more is needed:

"The President's budget blueprint is titled "A New Era of Responsibility." In it, President Obama calls on Congress to lay a new foundation upon which we can "renew the promise of America," with the Budget as the first step in that journey.

 

"The "promise of America" must be a place where no child goes to bed hungry. The President's budget includes $1 billion per year in new investments for Child Nutrition Programs. While it is a good start, this level of funding is not adequate to meet the President's goal of ending child hunger by 2015"

Meeting this ambitious goal requires an investment of $4 billion a year.

Another Run at Boosting Agricultural Development Assistance

Senators Lugar (R-Indiana) and Casey (D-Pennsylvania), the ranking member and chairman, respectively, of the Senate Foreign Relations Committee, have re-introduced legislation, the Global Food Security Act, which would significantly increase funding for long-term agricultural development and poverty alleviation while making possible a more efficient and flexible U.S. emergency response mechanism. The legislation and attendant statements reinforce the message of the 2009 Hunger Report, to the effect that we need to restore the balance in U.S. foreign assistance by reversing the past several decades’ decline in support for agricultural development.

The press release quotes Senator Lugar, who notes that hunger is both a humanitarian and security challenge for the United States: roughly one billion people in the world already suffer from food insecurity. By 2050, it is projected that food production must double to meet demands generated by population and income growth. Increases of this magnitude require a sharp increase in investment, both by donors and developing countries.

The bill has four major components: First, it creates a special coordinator for global food security located within the executive office of the President who will be responsible for developing and implementing a “whole of government” global food security strategy: second, it authorizes significant increases in authorized levels for agriculture, rural development and nutrition, beginning at $750 million in FY 2010 and increasing to $2.5 billion in 2014 ( FY 2008 funding, by comparison, was under $300 million); third, it creates a new program for the development of higher education capacity in the field of agriculture; and fourth, it creates an emergency food assistance fund, administered by USAID, with the authority to use up to $500 million dollars for local and regional procurement of commodities to meet emergency needs.

While it’s possible to quibble over details of the legislation, overall it constitutes a major step forward. A companion bill is currently being prepared for introduction in the House. Senators Lugar and Casey deserve kudos for their initiative.

The Mother of All Stimuli – II

My colleague, Todd Post, wrote last week about the economic stimulus package being considered by the Congress and new administration, and the opportunity this may provide to tackle some of this country’s fundamental economic weaknesses and inequities. I would just like to highlight the scale of what is being considered relative to the government’s foreign aid budget. The economic stimulus package unveiled by House Democrats last week calls for $550 billion for new investments. This is incremental, on top of what the government is already spending. By contrast, the government’s TOTAL foreign assistance budget for 2008 was $32.8 billion. When the various politically-oriented and humanitarian relief programs are subtracted, poverty-focused development assistance – that portion of foreign aid on which Bread for the World concentrates its advocacy – came to $15.4 billion. Yet, when looking for areas where government spending could be reduced, it’s foreign aid that’s usually identified. (Even Vice President Biden, when pressed during the campaign for areas in which spending could be reduced, reflexively fell back on this tried and true response.) The problem is that this only feeds the public perception that foreign aid is a big piece of the federal budget. It isn’t. Poverty-focused development assistance amounts to less than 0.5 percent of the total federal budget.