[Senate Hearing 106-5]
[From the U.S. Government Publishing Office]
S. Hrg. 106-5
U.S. RELIEF EFFORTS IN RESPONSE TO HURRICANE MITCH
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HEARING
BEFORE THE
SUBCOMMITTEE ON WESTERN HEMISPHERE,
PEACE CORPS, NARCOTICS AND TERRORISM
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
MARCH 2, 1999
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/senate
U.S. GOVERNMENT PRINTING OFFICE
55-231 CC WASHINGTON : 1997
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas PAUL D. WELLSTONE, Minnesota
CRAIG THOMAS, Wyoming BARBARA BOXER, California
JOHN ASHCROFT, Missouri ROBERT G. TORRICELLI, New Jersey
BILL FRIST, Tennessee
James W. Nance, Staff Director
Edwin K. Hall, Minority Staff Director
------
SUBCOMMITTEE ON WESTERN HEMISPHERE,
PEACE CORPS, NARCOTICS AND TERRORISM
PAUL COVERDELL, Georgia, Chairman
JESSE HELMS, North Carolina CHRISTOPHER J. DODD, Connecticut
RICHARD G. LUGAR, Indiana BARBARA BOXER, California
JOHN ASHCROFT, Missouri ROBERT G. TORRICELLI, New Jersey
(ii)
C O N T E N T S
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Page
Chapman, James, Director for Latin America Region, World Vision,
Washington, DC................................................. 16
Prepared statement........................................... 18
Fonseca, Rene, President, Consultants International,
Tegucigalpa, Honduras.......................................... 7
Prepared statement........................................... 9
Isaacs, James Kenneth, Director of Projects, Samaritan's Purse,
Boone, NC...................................................... 11
Prepared statement........................................... 14
Jaeger, Mark, Vice President and General Counsel, Jockey
International, Kenosha, WI..................................... 2
Prepared statement........................................... 4
Torricelli, Hon. Robert G., U.S. Senator from New Jersey,
prepared statement of.......................................... 30
(iii)
U.S. RELIEF EFFORTS IN RESPONSE TO HURRICANE MITCH
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TUESDAY, MARCH 2, 1999
U.S. Senate,
Committee on Foreign Relations,
Subcommittee on Western Hemisphere,
Peace Corps, Narcotics and Terrorism,
Washington, DC.
The subcommittee met, pursuant to notice, at 3:06 p.m. in
room SD-419, Dirksen Senate Office Building, Hon. Paul
Coverdell (chairman of the subcommittee) presiding.
Present: Senators Coverdell and Helms.
Senator Coverdell. We are going to bring the meeting of the
Western Hemisphere Subcommittee to order. Let me make a brief
opening statement and then I will make a brief comment about
each of our panelists and we will begin.
I would hope that--I do not know how long your statements
are, but maybe we might limit them to around 7 minutes. Of
course everything will go into the record.
The purpose of the hearing today is to take a careful look
at U.S. relief efforts in the wake of one of the most deadly
and destructive natural disasters to hit this hemisphere.
Hurricane Mitch blazed a path of destruction through Central
America that left 9,000 people dead and more than 1 million
people homeless. Estimates reach as high as $8.5 billion in
damage to homes, roads, hospitals, crops, and businesses
throughout the region.
I had the opportunity to travel to Central America and see
this terrible destruction first-hand. I believe the U.S.
Government relief efforts to date have been impressive by any
measure. We have provided more than $300 million in food,
medicine, and shelter and agriculture and infrastructure
assistance. Private efforts in response to the devastation have
been overwhelming, thanks in large part to the efforts of our
distinguished panelists and the various organizations you
represent.
Yet it is clear that the region still faces major
challenges in rebuilding countries and restoring hope. In all
of the affected countries, clean water is scarce and disease
from contaminated water sources is a continuous threat. As
highlighted in an article in this morning's Los Angeles Times,
the potential for widespread health epidemics still looms as
water and sanitation systems were severely damaged by the
storm. The article claims that in many places broken sewer
pipes allow sewage to fall freely into the water.
I think it is clear that the region is not out of trouble
yet and we need to continue to focus our attention on the
immediate needs of these countries. That is why I have asked
for this hearing and I have asked these distinguished panelists
to share their thoughts with us today.
Our witnesses have been on the ground and have seen the
destruction with their own eyes. They have played crucial roles
in the recovery effort, and I look forward to hearing about
their experiences and what they think still needs to be done. I
look forward to your recommendations and innovative approaches
on the long-term solution for the economic problems in the
region.
One final thought. In addition to short-term emergency
disaster relief, I believe that it is critical both for the
region and the United States that we focus on the long-term
solutions for a successful recovery in Central America. Over
the past several years, Central America has taken significant
steps in strengthening democracy, promoting human rights, and
encouraging economic opportunity. The destruction and despair
wrought by Mitch make these important gains tenuous. The
progress over the last decade is not irreversible. That is why
it is so important that the United States lend a hand to its
Central American neighbors, not only to help with the immediate
problems of food and medicine, but also to assist this region
in the long-term recovery.
It is imperative that we help get economies back on their
feet, rebuild infrastructure, and restore optimism in the
region. We owe it to allies and friends in the affected
nations. I believe we owe it to our own national security and
economic prosperity that we do not allow a destabilization to
occur because of a natural disaster in our own hemisphere.
Now, to begin I am going to start with Mr. Mark Jaeger. The
committee welcomes vice president and general counsel for
Jockey International. Jockey is an international manufacturer
and marketer of apparel products headquartered in Wisconsin.
Jockey has a manufacturing plant in my State which employs over
500 people and as I understand it has a plant in Honduras which
employs 600 people.
I look forward to your comments on long-term solutions to
reconstruction in Central America and particularly about trade
enhancement.
Mr. Jaeger.
STATEMENT OF MARK JAEGER, VICE PRESIDENT AND GENERAL COUNSEL,
JOCKEY INTERNATIONAL, KENOSHA, WI
Mr. Jaeger. Thank you very much, Senator, and good
afternoon.
Jockey International, Inc., appreciates the opportunity to
testify before this subcommittee on the subject of Central
American and Caribbean reconstruction. With the approval of the
committee, I have presented a written statement for the record.
Jockey is an international manufacturer and marketer of
apparel products, including underwear, bras, and sheer hosiery.
Jockey's products are manufactured in the U.S. in places like
Millen, GA, where there are some 500 employees. Jockey's
offshore operations include a company-owned plant in Honduras
that employs some 600 people.
As general counsel for Jockey, I am familiar with trade
issues that affect the company and the apparel industry. I am
also aware of the devastation to Honduras and other Caribbean
Basin countries by Hurricanes Mitch and Georges. Jockey's
operation in Honduras was spared by the hurricane. Jockey's
employees, however, did suffer. Many Jockey employees lost
homes, personal possessions, or worse.
While Jockey's plant in Honduras is fully operational, it
is clear that the reconstruction will be a long process, as
much of the infrastructure, housing, and crops have been
destroyed.
I would like to thank the committee and you, Mr. Chairman,
for your leadership on the important issue of reconstruction in
the Caribbean Basin following the hurricanes. I understand you
made a personal visit to the region to view the impact of the
hurricanes. Your bill, S. 371, takes important steps to help
the region recover from the twin disasters.
I would like to address one component of S. 371, CBI
enhancement. Caribbean Basin trade enhancement will build upon
the successful U.S.-Caribbean partnerships already at work in
dozens of locations across the region. It would expand U.S.
market opportunities for apparel and other products assembled
in Central America and the Caribbean. This would put people in
the region back to work, a critical need since many traditional
sources of employment have been wiped out by the hurricanes.
Because most of that apparel is manufactured using U.S.
textiles and related inputs, American workers and their firms
would benefit as well. Jockey, like other American apparel
companies, has invested in the Caribbean Basin because of the
proximity to U.S. operations and markets, and because of the
trade incentives offered by the original 807 program. This
program has helped Jockey to be more competitive and serves to
support U.S.-based employment.
The 807 incentives are straightforward. Duty is assessed on
only the value added. Duty rates vary from 7 to 8 percent for
underwear to 17 percent for bras to over 20 percent for other
categories of apparel.
Let me emphasize that the apparel production move to the
CBI Basin has been necessary for companies like Jockey to
remain competitive. However, with the elimination of tariffs
under NAFTA and with the slightly easier and cheaper
transportation between Mexico and the United States versus that
between the Caribbean and the United States, Mexico has a
significant trade advantage. Competition from Mexico has caused
many United States apparel companies to move their investments
and contracting relationships from CBI countries to Mexico.
Mexico's total share of apparel imports has increased
fivefold since NAFTA. While Jockey has maintained its presence
in the Caribbean, it has increased contracting from Mexico and
the Far East. If the business goes to the Far East, Caribbean
and U.S.-based jobs are at risk and the progress the United
States fostered in the Caribbean Basin will in large part be
reversed. Such a loss, especially if Caribbean Basin jobs are
lost to Mexico or Asia, could not come at a worse time for the
countries affected by the hurricanes.
In summary, passage of NAFTA adversely affected the
competitiveness of the CBI region by diverting existing and
potential investment from the region to Mexico. Further erosion
has occurred with competitive pressures from Asia. Caribbean
Basin trade enhancement assures a level playing field will
exist between the CBI region and Mexico and makes our joint
production arrangement with the Caribbean competitive vis-a-vis
Asia. Without it, U.S. companies already in the region will
disinvest existing manufacturing facilities, essentially
destabilizing the economies of the region.
There has long been a need for CBI enhancement legislation.
It should have been enacted 5 years ago. The damage caused by
Hurricanes Mitch and Georges makes it even more imperative that
it be enacted. S. 371 should move forward and it should
continue to include CBI enhancement provisions.
Once again, Jockey appreciates the opportunity to submit
this testimony, and I thank you, Mr. Chairman, for your
leadership on the issue. I would be pleased to respond to any
questions you may have now or throughout the hearing.
[The prepared statement of Mr. Jaeger follows:]
Prepared Statement of Mark Jaeger, Vice President and General Counsel,
Jockey International, Kenosha, WI
introduction
Jockey International, Inc. (Jockey) appreciates the opportunity to
submit testimony to the Subcommittee on the subject of Central American
and Caribbean reconstruction. Jockey is a privately held apparel
company headquartered in Kenosha, WI. Jockey is an international
manufacturer and marketer of apparel products including underwear, bras
and sheer hosiery. Jockey's products are manufactured in the U.S. in
places like Millen, Georgia where there are some 500 employees.
Jockey's offshore operations include a company owned plant in Honduras
that employs some 600 people.
As General Counsel for Jockey, I am familiar with trade issues that
affect the company and the apparel industry. I am also aware of the
devastation to Honduras and other Caribbean basin countries by
Hurricanes Mitch and Georges.
Jockey's operation in Honduras was spared by the Hurricane.
Jockey's employees, however, did suffer. Many Jockey employees lost
homes, personal possessions or worse. Jockey coordinated a relief
effort using its plant to distribute supplies to affected employees and
their families. Jockey resumed operations within twelve (12) days of
the hurricane. Today, Jockey is operating at full capacity providing
jobs, paychecks and a sense of economic security for employees. Many
other apparel contractors also are back to work providing the
opportunities the Honduran people need to help rebuild their country.
Of course, this will be a long process as much of the infrastructure,
housing and crops have been destroyed.
I would like to thank the Committee and you, Mr. Chairman, for your
leadership on the important issue of reconstruction in the Caribbean
basin following the hurricanes. I understand you made a personal visit
to the region to view the impact of the hurricanes. Your bill, Senate
371 takes important steps to help the region recover from the twin
disasters. I would like to address one component of S. 371, CBI
enhancement.
cbi policy
S. 371 includes measures for aid, debt relief and support services
from various U.S. agencies. Such relief will help these countries
continue their response to the crisis. U.S. support for long term
reconstruction, however, will be necessary to sustain economic growth
in the region. U.S. interests in this regard are clear:
The Caribbean Basin is the 9th largest destination of U.S.
exports worldwide, and is one of the few regions where the U.S.
maintains a consistent trade surplus.
U.S. commercial and security interests demand
uninterrupted access to transit routes through the Caribbean Sea and
the Panama Canal.
Political and economic instability in the Caribbean basin
often manifests itself in the U.S. through increased narcotics
trafficking or waves of immigrants and refugees.
Many U.S. residents and communities share family ties with
individuals in the Caribbean basin.
cbi enhancement
Expanding the U.S./CBI trade relationship will be a vital element
in helping the countries of the Caribbean and Central America recover
from devastation caused by Hurricanes Mitch and Georges.
A Caribbean Basin Trade Enhancement package would build upon the
successful U.S./Caribbean partnerships already at work in dozens of
locations across the region. It would expand U.S. market opportunities
for apparel and other products assembled in Central America and the
Caribbean. This would put people in the region back to work, a critical
need since many traditional sources of employment have been wiped out
by the hurricanes. And because most of that apparel is manufactured
using U.S. textiles and related inputs, American workers and their
firms would benefit as well.
Over the past 15 years, the U.S. government and private sector have
invested substantial political and financial capital to secure peace
and economic prosperity in this region. Passage of a Caribbean Basin
Trade Enhancement package--as an element of hurricane reconstruction--
keeps that investment viable.
Jockey, like other American apparel companies, has invested in the
Caribbean basin because of the proximity to U.S. operations and markets
and because of the trade incentives offered by the original 807
program.
This program has helped Jockey to be more competitive and serves to
support U.S. based employment. The 807 incentives are straightforward.
Under 807, a $5.00 bra usually has $3.00 in U.S. components and about
$2.00 in value-added by offshore assembly. The duty is assessed on only
the value-added. That duty is 17.6 percent for bras, which on $2.00 is
35 cents. This is equivalent to 7 percent on the value of the entire
garment. With wholesale and retail markups, a bra from the CBI region
carries a penalty of approximately $.70 as compared to the same garment
assembled in Mexico of NAFTA origin fabric.
In 1986, 807 was modified by the creation of the 807-A program.
Under 807-A, duty still was paid on the value-added in the region,
however, the creation of Guaranteed Access Levels (GALs) essentially
made many products from the region quota-free. 807-A was duplicated for
the Mexican industry and named the Special Regime.
impact of no cbi enhancement
Before commenting on the future of apparel trade in the Caribbean
basin without CBI enhancement, I do need to emphasize that the apparel
production moved to the CBI basin has been necessary for companies like
Jockey to remain competitive. Without the incentives of 807-A, NAFTA
and hopefully CBI trade enhancement, that production would probably
have gone to the Far East where there would be little U.S. involvement
in the manufacturing process.
With the deflationary environment in the Far East and the prospect
of further reduction and eventual elimination of apparel and textile
duties and quotas, Asia will be a formidable apparel and textile
competitor for the U.S., Mexico and the Caribbean basin. It is critical
that duties between the U.S. and the CBI region come down quickly to
prepare for the coming challenge. Otherwise, we may not be in a
position in the future to rely on CBI-based industries like apparel to
provide U.S. and Caribbean based jobs.
With the implementation of NAFTA, apparel made of U.S. formed
fabric assembled in Mexico enters the U.S. market quota and tariff-
free. However, duties are still charged on the offshore value added to
garments assembled in and then imported from the CBI countries. This
places the CBI countries at a great competitive disadvantage vis-a-vis
Mexico. Competition from Mexico has caused many U.S. apparel companies
to move their investments and contracting relationships from the CBI
countries to Mexico. While Jockey has maintained its presence in the
Caribbean Jockey has increased contracting from Mexico and the Far
East. If the business goes to the Far East, Caribbean and U.S. based
jobs are at risk, and the progress the U.S. fostered in the Caribbean
Basin will, in large part, be reversed.
With the elimination of tariffs under NAFTA, and with the slightly
easier and cheaper transportation between Mexico and the United States
versus that between the Caribbean and the U.S., Mexico has a
significant trade advantage. An effective 7 percent duty may not appear
to be significant, but the average profitability of an apparel firm in
the U.S. is usually less than that.
The effects of NAFTA on the CBI region have become apparent. Since
NAFTA went into effect on January 1, 1994, apparel imports from Mexico
have increased 611 percent. While starting from a larger base, imports
from the CBI have increased at one-third that rate.
Now, for the first time, the CBI region actually is losing share of
the import market. In 1998, the CBI region accounted for less than 23.8
percent of the garments imported into the United States, a decline of
1.4 percentage points from the 25.1 percent market share in 1997.
During that same year, Mexico's market share increased to just over 15
percent--about five times its size before NAFTA took effect.
807 production created thousands of good jobs in Mexico and the
Caribbean Basin. By establishing business relationships in the CBI
region, Jockey and other apparel companies have been able to maintain
U.S. based jobs and to use U.S. based inputs like fabric and thread in
CBI production. There is a concern that without CBI enhancement,
desperately needed apparel jobs could be lost in the Caribbean basin.
Such a loss could not come at a worse time for the countries affected
by the Hurricanes.
summary
Caribbean trade enhancement makes good foreign policy. It is
clearly in the best interests of the United States to have stable,
democratic governments in our hemisphere, and the jobs available in the
apparel industry contribute considerably to that stability. By enacting
legislation affording NAFTA parity for the Caribbean Basin, the U.S.
will continue to encourage CBI countries to assume their full
obligations under a free trade agreement and to further open their
markets to U.S. products, services and investment.
The continued economic health of the CBI region is tied
inextricably to the growth of the region's apparel assembly industry.
Export revenues generated by apparel assembly encourages Caribbean
Basin governments to increase and accelerate economic reform, including
investment liberalization, protection of intellectual property rights
and market access. Job creation in the region would have been stagnant
without the demand for apparel assembly workers. Improving economic
conditions contributes to political stability, deters illegal
immigration, and creates an alternative to the production and
trafficking of illegal drugs.
In summary, there is a strong and consistent movement by countries
of the CBI region toward democracy, economic reforms and trade and
investment liberalization. During the past few years, countries of the
Caribbean Basin initiated significant economic restructuring and trade
liberalization and continue to do so as part of their move to NAFTA
accession.
Programs such as CBI and 807 contributed significantly to the
political stability and economic growth in the region. Progress in the
region enhances each country's political security, as well as the
United States'.
Passage of NAFTA adversely affected the competitiveness of the CBI
region by diverting existing and potential investment from the region
to Mexico. Caribbean Basin trade enhancement assures a level playing
field will exist between the CBI region and Mexico. Without it, U.S.
companies already in the region, competitively disadvantaged by the
elimination of Mexican duty rates and quotas, will disinvest existing
manufacturing facilities, destabilizing the economies of the region.
There has long been a need for CBI enhancement legislation. It
should have been enacted five years ago. The damage caused by
Hurricanes Mitch and Georges makes it even more imperative that it be
enacted. S. 371 should move forward and it should continue to include
CBI enhancement provisions.
Once again, Jockey appreciates the opportunity to submit this
testimony and I thank you, Mr. Chairman, for your leadership on this
issue.
Senator Coverdell. I believe that what we will do is
proceed through the panelists and then open it up to a general
dialog.
Next we are going to hear from Rene Fonseca. He has a
special relationship. His lovely wife is right behind him,
Deborah, who when I first arrived here without this grey hair
was employed with the Senate Foreign Relations Committee, and
it is very good to see you back.
Rene is here as a private citizen. He does not represent
the Honduran government. He is a businessman who owns and
operates several companies in several Central American
countries. He has visited just about every square mile in
Honduras, either during his highly distinguished military
career or as a Presidential candidate in 1997.
In addition to being an eyewitness to the devastation
wrought by Hurricane Mitch, we are especially interested in
your ideas as to how the United States can best help the
Honduran people.
Again, welcome back.
STATEMENT OF RENE FONSECA, PRESIDENT, CONSULTANTS
INTERNATIONAL, TEGUCIGALPA, HONDURAS
Mr. Fonseca. Mr. Chairman, I thank you for inviting me to
testify today about the devastating Hurricane Mitch which
destroyed so much of Central America, particularly in Honduras,
my home country. It is an honor for me to appear before the
Senate Foreign Relations Committee, for more than one reason.
As you have mentioned, I would have not met my wife Deborah
DeMoss if this committee had not had so much important work to
do in Central America back in the 1980's.
I am very grateful to this committee that now I have her
and four precious children. But I believe that there are more
grateful people at Foggy Bottom, for instance, that I took her
away from Washington.
It is a very moving experience for me to relate to you a
firsthand perspective of Hurricane Mitch. I am a businessman
representing U.S. companies in Central America and I have been
asked to discuss how many of us in the private sector believe
that U.S. aid can be utilized in the most efficient way.
To begin, I must express deep gratitude to the Government
and the people of the United States of America for all of the
assistance you have sent us since the first week the deadly
hurricane hit our beautiful Bay Islands and rapidly tore
through our mainland. Many of the members of this committee
worked very hard to get emergency assistance to Central
America. The U.S. military has been instrumental and many of
the U.S. media, most notably Ted Koppel and Nightline, have
done a tremendous service in calling attention to our plight.
I also am aware that so many private citizens, including
the Capitol Hill Police, got together boxes of food, medicine,
and clothes for the hurricane victims. There have been scores
of doctors, missionaries, and independent citizens who have
donated their time and skills. I know that I speak for hundreds
of thousands of families when I say thank you from the bottom
of my heart to all of you.
When Hurricane Mitch struck the Honduran Bay Islands on
October 26 last year, it registered winds of 180 miles per
hour, the strongest recorded hurricane in history. It continued
to sweep across the Honduran mainland as a devastating
hurricane and then as a deadly tropical storm for more than 10
days.
Mitch hit the capital of Honduras, Tegucigalpa, on Friday,
October 30, and even as it was hovering over us we had no idea
of the magnitude of the storm. We were given virtually no
warning.
On October 31, I left our home at dawn with a neighbor to
see if we could be of any help in rescue efforts throughout the
capital. It was not until the previous evening that we were
made aware by the media that we were in the eye of a killer
hurricane. We wanted to do anything to help those who were
already in grave danger.
We went to a riverbank and saw that the river had
dramatically risen about 20 feet and expanded over 150 feet to
the sides. In the middle of it, a two-story middle class home
was still standing and surrounded by violent waters. The family
who lived there had managed to open a hole in the roof and get
to the top of it. They were screaming for help and we were on
the edge of the river bank watching, without being able to do
anything.
Then we saw how three adults and three children were
swallowed when the house collapsed in a matter of seconds.
Sadly, this is not an isolated story. There are many like this
in the country.
When Hurricane Mitch had run its fatal path, it left
approximately 5,700 dead in Honduras and 4,000 more dead in the
rest of Central America. Thousands more are still missing and
thousands are injured in Honduras alone. Millions in the region
were homeless, left homeless, too many to count. It is
estimated in Honduras that one out of every four people has
been affected directly by the hurricane. Many claim that this
was perhaps the most catastrophic natural disaster since
Biblical times.
The emergency phase of foreign assistance should begin now
to wind down. We are currently in the phase of repairing
whatever can be repaired and containing epidemics. The final
phase will be the toughest one--rebuilding $8.5 billion worth
of destroyed infrastructure and perhaps billions more in
recouping lost crops and rebuilding destroyed businesses
throughout Central America.
In Honduras some experts believe that Mitch has set us back
about 25 years in infrastructure and perhaps twice that long in
certain parts of the agricultural sector. It is important to
know that, due to the lack of expertise and resources, we are
still vulnerable to this kind of disasters in the future.
There are many private sector and disaster relief
organizations that are now on the ground trying to help us
rebuild Central America, primarily Honduras and Nicaragua,
which together sustained about 80 percent of the real damage.
Two of these organizations are represented at this table today,
Samaritan's Purse and World Vision. Both are doing a terrific
job.
My wife Deborah is the director of Samaritan's Purse in
Honduras, so I am more familiar with their substantial
commitment, particularly in the areas of housing, medical
brigades, and community social services. I highly commend both
these institutions to implement certain projects in the
country.
Should I go on, Senator?
Senator Coverdell. Try to--if it only takes a few more
minutes, go ahead and try to finish your statement. That would
be better.
Mr. Fonseca. I would like to address at this minute, while
at the risk of being presumptuous, I want to mention some ideas
which you might consider----
Senator Coverdell. Please.
Mr. Fonseca [continuing]. In the supplemental aid package
for Central America. Allow me to give two typical examples of
the type of people who suffer due to the hurricane. The first
example is the family of our nanny, Hilda. She is from an upper
lower class family. Several members of her immediate family had
their own businesses, each employing others. They lost both
their businesses and their personal belongings. Yet they do not
qualify for any long-term credits to restart their lives.
The second example involves a family of a prominent upper
class lawyer who has been living in our home since they lost
everything as a result of Mitch. They have been told everywhere
that there will be no help for the middle class. Consequently,
they must make an enormous further personal sacrifice.
So I strongly recommend finding ways to help people like
this--small business owners, middle class professionals with a
solid work track, as well as small commercial farmers.
There is another great way you could help Central America
to rebuild the agricultural sector. In Honduras we have one of
the best agricultural sciences universities in the world, El
Samorano. I would suggest making available a substantial amount
of funds to provide scholarships for students to attend El
Samorano.
In closing, let me say as a private citizen I know that I
am not alone in saying that God can bring something good out of
this tragedy. Honduras and other countries in Central America
may still witness a blessing in disguise. We now have a bold
challenge before us and one we believe we can fulfill with your
help. We want your aid to be used in the very best manner.
Transparency in the use of the aid should be first and foremost
in any legislation. It would be difficult to handle such huge
amounts of aid and investments coming into any country after a
natural disaster of this magnitude.
Thank you again, Mr. Chairman, for the opportunity to be
here today.
[The prepared statement of Mr. Fonseca follows:]
Prepared Statement of Rene Fonseca, President, Consultants
International, Tegucigalpa, Honduras
Mr. Chairman, I thank you for inviting me to testify today about
the devastating Hurricane which destroyed so much of Central America--
particularly in Honduras, my home country. It is an honor for me to
appear before the Senate Foreign Relations Committee for more than one
reason. As you know, I would not have met my wife Deborah DeMoss if
this Committee had not had so much important work to do in Central
America, during the 1980's. So I am very grateful to you that I now
have her, and our four precious children! (As you can see, we've been
busy the last 5 years since she left the Committee.)
It is a very moving experience for me to relate to you a first-hand
perspective of Hurricane Mitch and also as a businessman representing
U.S. Companies in Central America, I have been asked to discuss how
many of us in the private sector believe the U.S. aid can be utilized
in the most efficient way. To begin, I must express deep gratitude to
the Government and the people of the United States of America for all
of the assistance you have sent us since the first week the deadly
hurricane hit our beautiful Bay Islands, and rapidly tore through our
Mainland.
Many of the Members of this Committee worked very hard to get
emergency assistance to Central America. The U.S. military has been
instrumental. And many in the U.S. media--most notably Ted Koppel and
Nightline--have done a tremendous service in calling attention to our
plight. I also am aware that so many private citizens--including the
Capitol Hill Police--got together boxes of food, medicine, and clothes
for the Hurricane victims. There have been scores of doctors,
missionaries, and independent citizens who have donated their time and
skills. I know that I speak for hundreds of thousands of families when
I say ``thank you from the bottom of my heart'' to all of you.
When Hurricane Mitch struck the Honduran Bay Islands on October 26,
last year, it registered winds of 180 m.p.h.--the strongest recorded
hurricane in history. It continued to sweep across the Honduran
mainland as a devastating hurricane, and then as a deadly tropical
storm, for more than ten days. Mitch hit our capital, Tegucigalpa, on
Friday, October 30. Even as it was hovering over us, we had no idea of
the magnitude of the storm. We were given virtually no warning.
On October 31, I left our home at dawn with a neighbor to see if we
could be of any help in rescue efforts throughout the Capital. It was
not until the previous evening that we were made aware by the media,
that we were in the eye of a killer hurricane. We wanted to do anything
to help those who were already in grave danger. We went to a riverbank,
and saw that the river had dramatically risen about 20 feet and
expanded over 150 feet to the sides. In the middle of it, a two-story
middle-class home was still standing up and surrounded by violent
waters. This family had not had time to evacuate, and had forced a hole
in the roof, and climbed on top where they screamed for help. We stood
on the edge, and watched helplessly as three children, and three adults
were swallowed by the river in a matter of seconds. Sadly, this is not
an isolated story.
When Hurricane Mitch had run its deadly path, it left approximately
5700 dead in Honduras, and 4000 more dead in the rest of Central
America. Thousands more are still missing, and thousands are injured in
Honduras alone. Millions in the region were left homeless. Too many to
count. It is estimated in Honduras, that one out of every four people
has been affected directly. Many claim that this was perhaps the most
catastrophic natural disaster since Biblical days.
The emergency phase of foreign assistance should now begin to wind
down. We are currently in the phase of repairing whatever can be
repaired, and containing epidemics. The final phase will be the
toughest--rebuilding $8.5 BILLION dollars worth of destroyed
infrastructure, and perhaps billions more in recouping lost crops, and
rebuilding destroyed businesses throughout Central America. In
Honduras, some experts believe that Mitch set us back about 25 years in
infrastructure, and perhaps twice that long in certain parts of the
agricultural sector. It is important to know that, due to lack of
expertise and resources, we are still vulnerable to this kind of
disasters in the future.
There are many private sector and disaster relief organizations
that are now on the ground trying to help us rebuild Central America--
primarily Honduras and Nicaragua, which together sustained about 80% of
the real damage. Two of these organizations are represented at this
table today--Samaritan's Purse and World Vision. Both are doing a
terrific job. My wife, Deborah, is the Director of Samaritan's Purse in
Honduras, so I am more familiar with their substantial commitment--
particularly in the areas of housing, medical brigades, and community
social services. I highly commend both of these organizations to you,
as A.I.D. seeks to implement certain projects through non-governmental
organizations.
In the four months since the Hurricane, my wife and I have traveled
extensively in Honduras while involved in relief efforts. We have
listened to hundreds of personal stories of tragedy, and of the
struggle to start life over. We have listened to hundreds of ideas on
the best way to rebuild Honduras--ideas from the private sector, the
agricultural sector as well as the Honduran Government. We have also
been briefed extensively by A.I.D. and Embassy officials. (And
parenthetically, I think that the A.I.D. Mission in Honduras has done a
fine job managing post-hurricane aid.) I am familiar with the aid
package request from the Office of Management and Budget to the
President, and believe that the United States assistance will be a very
significant part of all aid we receive worldwide.
At the risk of being presumptuous, I want to mention some ideas you
might consider in the supplemental aid package for Central America.
Permit me to give you two typical examples of types of people--close to
us--affected by Mitch who need aid, and have been unable to qualify
anywhere, thus far.
1. The first is the family of our nanny Hilda. She is from an
upper-lower class family. Several members of her immediate family had
their own businesses, each employing others. They lost both their
business and their personal belongings. Yet they do not qualify for any
long-term credits to re-start their lives.
2. The second example involves the family of a prominent, upper
middle-class lawyer who has been living in our home since they lost
everything as a result of Mitch. They have been told everywhere that
there will be no help for the middle-class. Consequently, they must
make an enormous further personal sacrifice.
I strongly recommend finding ways to help people like this--small
business owners, middle class professionals with a solid work track
record, as well as small commercial farmers--to get back on their feet.
These people are really the backbone of our society and our economy.
They provide employment, and could be helped with long-term soft loans,
or small grants. Enterprise Funds which provide credit and capital to
entrepreneurs might also be very positive.
After speaking to many other businessmen in the region, I believe
that it might prove to be very effective if there were a way to do
``turn-key'' projects. That way, you would employ Central Americans,
but you would maintain control of your projects. This was done in Chile
back in the 1960s, with A.I.D. financing, and with great success.
I know many of you have great concern about the possible effects
Mitch might have on illegal immigration. I understand that this issue
will be dealt with in the future, but in the meantime, I know that we
Hondurans are more than grateful with the generous decision by the
Administration to allow those already in this country before the end of
last year to stay for 18 months and work here. It is my dream to see
all of us work hard in the next 18 months to find ways to provide jobs
and create the conditions so that my fellow Hondurans will be able to
return to their homeland.
And on one other point, that I know is already being discussed by
the Administration for future legislation, I would do a disservice not
to mention that the Central American private sector strongly supports
CBI enhancement and Trade Agreements. This could make a significant
contribution towards renewed foreign investment and trade in the
region, as well as increased employment opportunities.
In closing, let me say that as a private citizen, I know that I am
not alone in saying that God can bring something good out of this
tragedy. Honduras, and other countries in Central America may still
witness a blessing in disguise. We now have a bold challenge before us,
and one we believe we can fulfill with your help. We want your aid to
be used in the very best manner.
Transparency in the use of the aid should be first and foremost in
any legislation. It would be difficult to handle such huge amounts of
aid and investment coming into any country after a natural disaster of
this magnitude. So help us to build up a stronger Honduras than before,
by providing the necessary mechanisms to ensure the most efficient use
of the funds being donated by the people of the United States. I am
happy to meet with your staffs to discuss details of the aid package.
Thank you again for the opportunity to be here today.
Senator Coverdell. Thank you, Mr. Fonseca.
Let me now turn to Mr. Ken Isaacs, Director of Projects for
Samaritan's Purse of Boone, NC. Samaritan's Purse is a private
Christian humanitarian relief organization doing tremendous
work in Honduras and Nicaragua, rebuilding homes and providing
essential health care to people affected by Hurricane Mitch,
and we appreciate the work that you have been doing and look
forward to hearing your personal experience here today.
STATEMENT OF JAMES KENNETH ISAACS, DIRECTOR OF PROJECTS,
SAMARITAN'S PURSE, BOONE, NC
Mr. Isaacs. Thank you, Mr. Chairman. It is a pleasure to be
here and I really appreciate the invitation.
My name is Ken Isaacs and I serve as the director of
projects for Samaritan's Purse, a nondenominational Christian
relief and development organization with ongoing programs in
about 60 countries. Our work is predominantly funded by private
donations. The president of Samaritan's Purse is Mr. Franklin
Graham, the son of the evangelist Dr. Billy Graham. Samaritan's
Purse, the strength of our organization, what we are known the
most for, is rapidly responding to crises brought by war and
natural disasters. We typically would work in places like
Bosnia distributing relief supplies or operating a hospital in
Sudan. We were involved in Rwanda in 1994 re-opening the
hospital there and transitioning that to the ministry of
health.
I introduce myself and the organization in this way
because, after visiting Central America, I have to say that it
really reminds me of a war zone. I have been in some and I have
seen them.
Over the last 4 months I have made 6 trips to Honduras and
spent 2 months in the country. I have met with the mayors of
Tegucigalpa, the capital city, San Pedro Sula, and numerous
other smaller cities. I have spent time with Honduran Federal
officials, businessmen, relief agency personnel, and church
leaders. I have talked in detail with many of the homeless who
are living in the camps and the shelters.
Death, destruction, stunned people, paralyzed local
capacity, and crippled infrastructures are what I have
witnessed in Honduras, Nicaragua, and the Dominican Republic.
While we have established significant programs in all three
countries, today I will only address the effects in Honduras
and what we are doing there.
I remember talking to a 65-year-old grandmother who lost
her daughter and her son-in-law, and she took in her 9
grandchildren, and they were living under the bleachers of a
stadium, sleeping in a space smaller than a one-car garage. She
did not have anywhere else to go.
I remember meeting a 45-year-old man with 6 children. He
had a taxicab, but their house had washed away. They had lost
everything they owned but the clothes on their backs. He could
not afford a down payment for a house, nor could he afford the
typical 18 to 28 percent interest that is charged for
commercial housing.
We talked with a young man in Tegucigalpa who watched his
wife and son die before his eyes when his house literally
sheared away in front of him, and his wife was reaching for him
and he could not get to them. He had been saving his neighbors
and he was able to console himself knowing that he had helped
25 other people live.
All of these people are now living in shelters. Hurricane
Mitch has made them homeless. A typical day in their life
consists of sleeping on the floor behind a privacy curtain if
they have one. They bathe in the sinks of public toilets if the
water is running that day. Clothes are washed on the floor of
the toilets or in buckets. The conditions are dirty and hostile
and crowded, and nobody wants to be there.
Many statistics of the number dead, missing, homeless, and
affected have been released. I do not believe there are nor
ever will be accurate numbers to portray the amount of
suffering and loss this storm has caused. There is no doubt,
however, that the entire region has been severely affected. I
do not think there are any short-term or quick-fix solutions,
however.
During the emergency phase of the Honduran crisis,
Samaritan's Purse supplied and distributed over 350 tons of
food, blankets, and plastic sheeting to victims throughout the
country. These materials were moved by the U.S. Government
under the Denton agreement. Additionally, we have committed $9
million to help Hondurans rebuild their lives. This is the
largest single commitment our organization has ever made.
Our efforts are focused mainly on housing, but we are also
conducting mobile medical clinics. These clinics are staffed by
dozens of volunteer American doctors. They give their time
freely. We have also bought a helicopter to reach people in the
most remote areas of the country.
Those left homeless have the longest--are the greatest
long-term need. In response, we have committed to build 4,000
houses in Honduras and 1,000 in Nicaragua. We began
construction in early February and to date we have completed 23
homes and have started 135 others. Every month the amount of
homes that we start will grow in number and we expect to
complete 3,500 by the end of this year.
These houses are simple block houses, built with local
materials and labor. They are modest in size, but sturdily
constructed so that they would not become victim to the next
hurricane. In many cases the house may in fact be better than
what was lost, but in all cases it will allow families an
opportunity to begin rebuilding their lives.
We feel it is important to the Honduran economy to work
through the market systems that are in place. We are using
locally available materials and we are keeping our expatriate
staff to a minimum. We have one American and one Peruvian on
our team of over 100 employees. We are working entirely through
local churches to reach into the communities and towns and
mobilize existing resources from a community-based approach.
The leadership of the evangelical churches has been essential
to our entire effort.
I have seen a renewed and unified spirit of cooperation
among Hondurans. They are working shoulder to shoulder with
relief organizations, churches and governments to build a
stronger and a better Honduras. This spirit is encouraging and
refreshing to all of us involved. They do see hope on the
horizon.
In addition to new home-buildings, we have identified over
1,400 houses that are inundated with mud and in need of
cleaning so that people can return to them, and in some
instances the people are actually living in the homes with up
to a foot of mud in it. Since November when we began this
response, we have cleaned over 650 homes and those families
have in fact returned. On January 4 of this year we asked for
OSDA assistance of $800,000 to help us in this effort.
The situation of the homeless is an urgent need. An
estimated 20,000 are in shelters and have no other place to go.
Many thousands more are living with family, friends, and in
makeshift housing. In addition to working with those in the
shelters, we are aggressively seeking out these other people to
find out where they are and how we may help them.
We are finding many individuals and communities who are
taking steps to help themselves. They do not have the materials
and they cannot pay for construction workers, but yet they are
doing their best. They have heard that aid is coming, but they
have not seen it. They are gathering what meager resources they
have to improve their situations. These type people are ideal
to partner with because they are already motivated.
I want to emphasize the basic need in Honduras is for
housing for those that have been made homeless by Hurricane
Mitch. Furthermore, I would suggest that funds for housing
reconstruction are best utilized when channeled through
nongovernment organizations and churches. Not only does this
provide better accountability of the funds, transparency, and
community ownership of the programs, but the people throughout
Honduras typically relate to their community churches and they
look to them in times of need to promote community development.
The communities know their churches and the leaders of those
churches. This relationship allows for better grassroots
ownership and accountability.
It has been 4 months since Hurricane Mitch did its damage.
Anything that this Congress could do to speed the percent of
releasing Government funds to organizations working in Central
America would be a tremendous help. This would, of course,
include anything to reduce the time and effort involved with
receiving Government grants.
Central America today stands at a critical juncture. After
decades of instability, the region now enjoys developing
democracies and free market systems. Hurricane Mitch impedes
and perhaps threatens that progress. The outpouring of
humanitarian response from the United States and its people has
been immense, but much more must be done. The emergency phase
is over, the situation is now off of the public's radar screen,
but now the long-term needs must be addressed.
Thank you for allowing me to address you today, Mr.
Chairman.
[The prepared statement of Mr. Isaacs follows:]
Prepared Statement of James Kenneth Isaacs, Director of Projects,
Samaritan's Purse, Boone, NC
Mr. Chairman and members of the Subcommittee,
Thank you for inviting me to address you today regarding the
situation in Central America resulting from Hurricanes Georges and
Mitch.
My name is Ken Isaacs and I serve as the Director of Projects for
Samaritan's Purse, a nondenominational Christian relief and development
organization with ongoing programs in about 60 countries. Our work is
predominantly funded by private donations. The President of Samaritan's
Purse is Mr. Franklin Graham, son of evangelist Dr. Billy Graham. The
main strength of Samaritan's Purse is rapidly responding to crisis
brought by war and natural disasters.
Normally we work in war torn areas like Bosnia distributing
urgently needed relief items. In Southern Sudan we operate a hospital
that serves an estimated population of 300,000.
In July of 1994 we reopened the 600 bed Central Hospital of Kigali,
Rwanda, and over the next two years transitioned its management to the
newly formed Ministry of Health. Our work in Rwanda was partly funded
by OFDA. USAID later funded our Healthcare Providers Education Program.
I have chosen to introduce myself by speaking of these areas of
mass destruction and suffering because Central America in many ways
reminds me of a war zone.
Over the last four months I have made six trips to Honduras and
spent two months in the country. I have met with the mayors of
Tegucigalpa, San Pedro Sula and numerous other smaller cities. I have
spent time with Honduran federal officials, businessmen, relief agency
directors, and church leaders. I have talked in detail with many of the
homeless in the shelters and camps around the country.
Death, destruction, stunned people, paralyzed local capacity and
crippled infrastructures are what I have witnessed in Honduras,
Nicaragua and Dominican Republic. While Samaritan's Purse has
established significant programs in all three countries, I will address
the effects of Hurricane Mitch on Honduras and our efforts there.
I recall a 65-year-old grandmother who lost her daughter and son-
in-law in the flooding. She has taken in her nine grandchildren and
they are living under stadium bleachers and sleeping on the concrete
floor in an area smaller than a one-car garage. They have no where else
to go.
I met a 45-year-old man with six children. He has a taxi and earns
a living. His house was washed away and they have no possessions but
the clothes on their backs. He does not have the money to make a down
payment on a house and can not afford the 18% to 28% interest typically
charged for a home loan.
We talked with a young man whose wife and baby died as he was
trying to rescue them from their house as the floor sheared in two with
only a few feet between them. The husband had been saving the lives of
his neighbors before he took his own family to a safer area. He took
comfort in knowing he had saved twenty-five people.
All of the above mentioned people are now living in shelters.
Hurricane Mitch has made them homeless. A typical day consists of
sleeping on the floor, behind a privacy curtain if they have one. They
bathe in the sinks of public toilets if the water is running that day.
Clothes are washed on the floor of the toilets or in buckets.
Conditions are dirty and hostile. No one wants to be there.
Many statistics of the number dead, missing, homeless and affected
have been released. I do not believe there are, nor ever can be,
accurate numbers to portray the amount of personal suffering and losses
caused by Hurricane Mitch. There is no doubt that the entire region has
been severely affected and will take years to recover. There are no
short-term or quick fix solutions.
During the emergency phase of the Honduran crisis, Samaritan's
Purse supplied and distributed over 350 tons of food, blankets and
plastic sheeting to victims throughout the country. These materials
were moved under the Denton Amendment.
Additionally, Samaritan's Purse has committed nine million dollars
to help Hondurans rebuild their lives. This is the largest single
commitment we have ever made. Our efforts are focused mainly on housing
but we also are conducting mobile medical clinics. These clinics are
staffed by dozens of American doctors who volunteer their time. We
supplied the program with a helicopter so that we could reach remote
areas.
Those left homeless have the greatest longterm need. In response,
we are building 4,000 homes in areas across Honduras and 1,000 in
Nicaragua.
We began construction in early February and to date we have
completed twenty-three homes and have started 135 others. We will begin
construction on new houses every month in 1999, and will have 3,500
completed by the end of the year.
These are cement block homes built with local materials and labor.
These homes are modest in size but sturdily constructed. In many cases
the house may be better than what was lost, but in all cases a family
will have a house from which they can begin rebuilding their lives.
We feel it important to the Honduran economy to work through the
market systems in place. We use locally available materials and keep
our expatriate staff to the minimum. Wc have one American and one
Peruvian on our team of over one hundred employees.
We are working entirely through local churches to reach into the
communities and towns and mobilize existing resources from a community-
based approach. The leadership of the evangelical churches has been
essential to our entire effort. I have seen a renewed and unified
spirit of cooperation among Hondurans to work shoulder to shoulder with
NGOs, churches and governments to build a stronger and better Honduras
This spirit is both encouraging and refreshing to those involved.
In addition to new home building, we have identified over 1,400
homes inundated with mud and in need of cleaning, so those residents
can return. Since November when we began this response, Samaritan's
Purse has cleaned over 650 homes so families can return. On January 4,
1999, we requested about $800,000 from the Office of Foreign Disaster
Assistance to help us in this effort.
The situation of the homeless is an urgent need! An estimated
20,000 are in shelters and have no other place to go. Many thousands
more are living with family, neighbors, or in makeshift housing. In
addition to working with those in the shelters, Samaritan's Purse is
aggressively seeking out those who are homeless but living with family,
friends or in shacks of plastic sheeting and cardboard.
We are finding many individuals and communities who are taking
steps to help themselves. They do not have materials and cannot pay for
the construction workers, but yet they are doing their best. They have
heard ``aid'' is coming but have not seen it and are trying to use what
meager resources they have to improve their situation. These situations
are ideal for us to support in partnership.
I want to emphasize the most basic need of the country is housing
for those made homeless.
Furthermore, I suggest that funds for housing reconstruction are
best utilized when channeled through the NGOs and churches. Not only
does this provide accountability, transparency and community ownership,
but also the people throughout Honduras relate to their community
churches and look to them to help in times of need to promote community
development. The communities know their churches and its leaders. This
relationship allows for better grassroots ownership and accountability.
It has been four months since Hurricane Mitch did its damage.
Anything this Congress could do to speed the process of releasing
government funding to organizations working in Central America would be
a tremendous help. This would of course include anything to reduce the
time and effort involved with receiving government grants.
Central America stands today at a critical juncture. After decades
of instability, the region now enjoys developing democracies and free
market systems. Hurricane Mitch impedes that progress. The outpouring
of humanitarian response from the United States and its people has been
immense but much more must be done. The emergency phase is over; the
situation is off of the public's radar screen, but now the long term
needs must be addressed.
Thank you for allowing me to testify before you.
Senator Coverdell. Thank you very much, Mr. Isaacs.
Now we will turn to Mr. James Chapman, Director of the
Latin America Region for World Vision, another humanitarian
relief organization doing outstanding work in assisting the
people in Nicaragua, Honduras, Guatemala, and El Salvador
affected by Hurricane Mitch. In addition to learning about the
various projects you administer, I look forward to hearing your
recommendations about innovative approaches to assist the
people of Central America.
Mr. Chapman.
STATEMENT OF JAMES CHAPMAN, DIRECTOR FOR LATIN AMERICA REGION,
WORLD VISION, WASHINGTON, DC
Mr. Chapman. Thank you very much.
My name is James Chapman. I am a former Peace Corps
volunteer in Peru and my first assignment with the Peace Corps
was to land in the Peruvian Andes shortly after the May 1970
earthquake and get directly involved in housing reconstruction
following that significant disaster.
I am currently Latin America Regional Programs Director for
World Vision U.S. Thank you for inviting me to testify before
the subcommittee to offer recommendations on how United States
aid to hurricane-affected Central American countries channeled
through private voluntary organizations that work with
communities and local governments can best promote recovery and
development in the region.
World Vision U.S. is an international faith-based relief
and development organization. It is part of an international
partnership of World Vision offices that supports more than
6,000 relief and development projects in 92 countries. In the
United States alone, World Vision is supported financially by
more than 800,000 families. In addition, World Vision also
receives funding from foundations, corporations, and the U.S.
Government to support its international programs.
World Vision has been active in Central America for more
than 25 years, with national offices in the four hurricane-
affected countries of Honduras, Nicaragua, Guatemala, and El
Salvador who are heavily engaged in relief and recovery
activities as we speak. More than $20 million in private
funding have already been committed by World Vision
International to relief and recovery programs in the four
countries.
For the purpose of this hearing, I will focus my remarks on
the situation in Nicaragua. Hurricane Mitch inflicted its
greatest damage in Nicaragua through severe rains that caused
extensive flooding and mudslides. Damage to infrastructure,
housing, and crop loss is estimated at $1.5 billion, or almost
40 percent of GDP. The U.S. embassy reports that about 415,000
people were displaced nationwide.
Rivers in the northern Atlantic coastal areas of Nicaragua
have overflowed their banks. A single mudslide in the northwest
province of Chinadega increased the death toll and left more
than 2,000 people missing from 10 communities situated at the
base of the Casitas Volcano.
Damage to roads and bridges and to the agricultural sector
is extensive. The Pan American Health Organization reports that
the value of the damage to the transportation network is about
$16 million. Many of the transportation linkages link farms to
markets.
World Vision Nicaragua operates 13 area development
programs. Each area program works with an average of 10
communities in the sectors of maternal-child health, education,
agriculture, animal husbandry, and microenterprise development.
All were seriously damaged by the rain or its aftereffects.
Significant crop loss occurred, with 100-percent loss in some
locations. More than 1,200 families lost their livelihoods.
The World Vision relief and recovery programs in Nicaragua
target six sectors: microenterprise development, farmland
rehabilitation, road repair, home repair and reconstruction,
distribution of medical supplies, and reconstruction of water
and sanitation systems.
Mr. Chairman, natural and manmade disasters offer the
opportunity to influence economic and social policies in
developing countries during the process of reconstruction and
rehabilitation. Under emergency conditions, the doors are open
to interventions that encourage market-led development which
may not be open under normal circumstances. As a result, rural
communities, the local private sector, national and local
government, and indigenous nongovernmental organizations,
NGO's, can undertake reconstruction and development activities
in areas where they have the greatest comparative advantage
within a market-oriented environment.
Following are four recommendations of how U.S. Government
aid channeled through private voluntary organizations who work
in partnership with communities and local governments can best
contribute to recovery over the long term in Nicaragua.
First, private and voluntary organizations like World
Vision can foster private sector activity by contracting with
and providing credit to small and microenterprises. Private
sector companies should be responsible for repairs to roads,
bridges, and other infrastructure. The government can stimulate
the economy and effectively rebuild the infrastructure by
offering contracts to private companies rather than undertaking
the work itself.
Various levels of government should be encouraged to
promote private enterprise. It should not be the producer of
goods and services. Government can be encouraged to undertake
provision of public goods in which it has a comparative
advantage.
Second, national and local governments should have the role
of coordinating disaster response. PVO's undertaking disaster
response programs with U.S. Government funding can play a key
role in informing national and local government disaster
coordinators of the gaps in services and recommend who can best
fill those gaps. They can also engage in policy dialogs in
terms of which policies best facilitate recovery and
development.
Third, indigenous nongovernmental organizations or
community associations are important components of civil
society as they engage in development activities and provide a
voice for communities in influencing economic and social
policy. U.S. private and voluntary organizations should help
strengthen local NGO's through collaboration in jointly managed
rehabilitation and development projects.
Fourth, the rural economies of Central America are
beginning their recovery after a severe hurricane. World Vision
is challenged to assist the process of sustainable economic
growth through market-led approaches in developing the
capacities of rural communities in production, marketing, and
micro and small enterprise.
The best approach is to provide an integrated package of
development interventions which capitalize on the synergistic
and complementary relationships. Interventions can also
increase the capacity of local NGO's, private and government
sectors to effectively and appropriately respond to disasters
and long-term rehabilitation.
Foreign aid intervention in the following areas, if
implemented strategically, can achieve recovery that will at
the same time help build a foundation for future growth. I will
list a few of the areas.
Provision of health and nutrition services, with the full
participation of communities and government.
Second, rehabilitation of rural infrastructure, including
water, sanitation, roads, schools, and health clinics through
contracts with existing and emerging contractors and private
businesses.
Encouragement of small and microenterprise development.
Business goes on during and after a disaster, and entrepreneurs
need working capital to restore and expand their businesses.
Provision of small loans not only revitalizes business
activity, but also instills market principles and practices.
The promotion of agricultural recovery through rapid
introduction of improved technologies and techniques with seeds
and tools is also an important development intervention.
Improved crop variety should be disseminated to farmers to
rapidly restore agricultural productivity and enhance family
incomes.
Finally, development of farmer organizations for
agricultural production and marketing should be fostered and
encouraged.
The provision of foreign assistance under emergency
conditions can help instill free market practices and promote
civil society as it helps people restore their own lives.
Foreign aid that reinforces old economic habits and creates or
continues dependency is a lost opportunity.
Mr. Chairman, thank you for this opportunity that you have
given to World Vision to offer its insights for effective
relief and recovery in Nicaragua based on our experience
working with local communities around the world for many years.
I would be happy to take questions from the subcommittee. Thank
you.
[The prepared statement of Mr. Chapman follows:]
Prepared Statement of Dr. James Chapman, Director for Latin America
Region, World Vision, Washington, DC
Mr. Chairman, I am a former Peace Corps Volunteer and currently,
Latin America regional programs director for World Vision US. Thank you
for inviting me to testify before the subcommittee to offer
recommendations on how United States aid to hurricane-affected Central
American countries, channeled through private voluntary organizations
that work with communities and local governments, can best promote
recovery and development in the region.
World Vision US is an international faith-based relief and
development organization. It is part of an international partnership of
World Vision offices that supports more than 6,000 relief and
development projects in 92 countries, In the U.S. alone, World Vision
is supported financially by more than 800,000 families. In addition,
World Vision also receives funding from foundations, corporations and
the U.S. government to supports its international programs.
World Vision has been active in Central America for more than 25
years. Our national offices in the four hurricane-affected countries of
Honduras, Nicaragua, Guatemala and El Salvador are heavily engaged in
relief and recovery activities. More than $20 million in private
funding have already been committed by World Vision International to
relief and recovery programs in the four countries.
For the purposes of this hearing, I will focus my remarks on the
situation in Nicaragua. Hurricane Mitch inflicted its greatest damage
in Nicaragua through severe rains that caused extensive flooding and
mudslides. Damage to infrastructure, housing and crop loss is estimated
at $1.5 billion, or almost 40 percent of GDP. The U.S. embassy reports
that about 415,000 people were displaced nationwide. Rivers in the
northern Atlantic coastal areas of Nicaragua have overflowed their
banks. A single mudslide in the northwestern province of Chinadega
increased the death toll and left more than 2,000 people missing from
10 communities situated at the base of the Casitas Volcano. Damage to
roads and bridges and to the agricultural sector is extensive. The Pan
American Health Organization reports that the value of the damage to
the transportation network is about $16 million; many of the farm-to-
market linkages.
World Vision Nicaragua operates 13 Area Development Programs. Each
area program works with an average of 10 communities in sectors of
maternal-child health, education, agriculture, animal husbandry and
microenterprise development. All were seriously damaged by the rain or
its after-effects. Significant crop loss occurred, with 100 percent
loss in some locations. More than 1,200 families lost their
livelihoods.
The World Vision relief and recovery programs in Nicaragua target
six sectors:
microenterprise development
farmland rehabilitation
road repair
home repair and reconstruction
distribution of medical supplies
reconstruction of water and sanitation systems
Mr Chairman, natural and man-made disasters offer the opportunity
to influence economic and social policies of developing countries
during the process of reconstruction and rehabilitation. Under
emergency conditions, the doors are open to interventions that
encourage market-led development which may not be open under normal
circumstances. As a result, rural communities, the local private
sector, national and local government, and indigenous non-governmental
organizations (NGOs) can undertake reconstruction and development
activities in areas where they have the greatest comparative advantage
within a market-oriented environment.
The following are four recommendations or how U.S. government aid,
channeled through private voluntary organizations who work in
partnership with communities and local governments, can best contribute
to recovery over the long-term in Nicaragua:
1. Private voluntary organizations like World Vision can foster
private sector activity by contracting with and providing credit to
small and micro-enterprises. Private sector companies should be
responsible for repairs to roads, bridges and other infrastructure. The
government can stimulate the economy and effectively rebuild the
infrastructure by offering contracts to private companies rather than
undertaking the work itself.
The various levels of government should be encouraged to promote
private enterprise. It should not be the producer of goods and
services. Government can be encouraged to undertake provision of
``public goods'' in which it has a comparative advantage.
2. National and local governments should have the role of
coordinating disaster response. PVOS undertaking disaster response
programs with U.S. government funding can play a key role in informing
national and local government disaster coordinators of the gaps in
services, and recommend who can best fill those gaps. They can also
engage in policy dialog in terms of which policies best facilitate
recovery.
3. Indigenous NGOs or community associations are important
components of civil society as they engage in development activities
and provide a voice for communities in influencing economic and social
policy. U.S. private and voluntary organizations should help strengthen
local NGOs through collaboration in jointly-managed rehabilitation and
development projects.
4. The rural economies of Central America are beginning their
recovery after a severe hurricane. World Vision is challenged to assist
the process of sustainable economic growth through market-led
approaches, and developing the capacities of rural communities in
production, marketing and micro- and small enterprises. The best
approach is to provide an integrated package of development
interventions, which capitalize on synergistic and complementary
relationships. The interventions can also increase the capacity of
local NGOs, private and governmental sectors to effectively and
appropriately respond to disasters and long-term rehabilitation.
Foreign aid intervention in the following areas, if implemented
strategically, can achieve recovery that will, at the same time, help
build a foundation for future growth.
Provision of health and nutrition services with the full
participation of communities and government;
Rehabilitation of rural infrastructure, including water,
sanitation, roads, schools and health clinics, through contracts with
existing and emerging contractors and private businesses;
Encouragement of small- and micro-enterprise development.
Business goes on after a disaster, and entrepreneurs need working
capital to restore and expand their businesses. Provision of small
loans not only revitalizes business activity, but also instills market
principles and practices;
Promotion of agricultural recovery through rapid
introduction of improved technologies and techniques with seeds and
tools. Improved crop varieties should be disseminated to farmers for to
rapidly restore agricultural productivity and enhance family incomes;
Development of farmer associations for agricultural
production acquisition and marketing.
The provision of foreign assistance under emergency conditions can
help instill free market practices and promote civil society as it
helps people restore peoples' lives. Foreign aid that reinforces old
economic habits and creates or continues dependency is a wasted
opportunity.
Mr. Chairman, thank you for this opportunity for World Vision to
offer its insights for effective relief and recovery in Nicaragua based
on our experience working with local communities for many years. I
would be happy to take questions from the subcommittee.
Senator Coverdell. Thank you.
I am going to turn to the distinguished chairman of the
Foreign Relations Committee, the distinguished Senator from
North Carolina.
The Chairman. Well, Mr. Chairman, I thank you for
scheduling this meeting, and I fully intended to be here from
the beginning because I have some contact and relationship with
everybody here.
Rene Fonseca, I cannot pronounce his name, but I can
pronounce Deborah DeMoss.
Senator Coverdell. Right, she is here, too.
The Chairman. Deborah DeMoss was my boss for--how long,
Debby? About 15 years. She came when she was 4.
This is a great hearing and I am looking forward to reading
the transcript of it.
Now, Mr. Isaacs, I am a close personal friend of Billy
Graham's son, who is head of Samaritan's Purse. I believe he is
going to be the successor to Billy. I think that has been
decided. He does wonderful work, as does Samaritan's Purse, or
through Samaritan's Purse as a matter of fact. We have tried to
help in that.
I do not know whether you know the number of planeloads of
boxes at Christmas time. How many did you do last time?
Mr. Isaacs. Two and a half million.
The Chairman. Two and a half million. We helped them get
the planes, people all over this country and indeed all over
the world who have more than those poor people that have
nothing. I think Franklin Graham is just tops. I look forward
to working with him, and you give him my best regards.
I have got to ask about my godson, Rene, if I may call you
that. How is he?
Mr. Fonseca. He is doing fine, sir. He said hello.
The Chairman. How old is he?
Mr. Fonseca. He is four and a half years now.
The Chairman. Four and a half years? Time does fly, does it
not?
Senator Coverdell. It really gets by.
The Chairman. You ought to see a picture of him. He looks
like his mama. No, he looks like both of them.
Could I ask a question?
Senator Coverdell. Please.
The Chairman. One of my folks came in, Mr. Jaeger, and he
said that you mentioned that most of your apparel is
manufactured using U.S. textiles and related imports, and
because of this American workers and their firms, he quoted you
as saying, would benefit under CBI. Do you know the story in
North Carolina among the textile mills?
Mr. Jaeger. I am sorry, I did not hear that.
The Chairman. Do you know the story under CBI what happened
in North Carolina among the many textile mills we have there?
In the last year alone, we have had nine textile mills of some
size, Burlington included, close their doors, and somewhere
between 8,000 and 10,000 workers have lost their jobs and they
have not been able to find work. To be sure, some of them
retired thanks to a retirement plan, but not the vast majority.
Now, I am asked everywhere I go in North Carolina how CBI
enhancements are going to help these kind of people when it
happens to them. Did you explain that--well, it has not helped
anybody yet, and I just wondered if you had any explanation
that you could give me that I could give them.
Mr. Jaeger. I will certainly try, Senator. Initially I
would like to point out we do have three operations in your
State of North Carolina, in distribution and hosiery and
textile manufacturing. We feel with CBI as it exists today----
The Chairman. Where are you in North Carolina?
Mr. Jaeger. We are in the Cooleemee or Mocksville area with
two operations, and another operation over in Randalman, NC.
The Chairman. That is in the Piedmont section.
Mr. Jaeger. The Piedmont section, right.
One of our goals is to maintain those jobs in those
facilities. We feel that with market competitive pressures that
we are facing, with imports from the Far East, with pressures
from Mexico with goods coming in under NAFTA, and the pricing
pressures that we face, that we need to take steps to control
our costs and to partner with the countries in the CBI region
in order to develop and compete with foreign imports.
The fact is--I am sorry, Senator.
The Chairman. What was the total, the highest total
employment of North Carolinians that you have had? How many
have you lost, if you have lost any?
Mr. Jaeger. In North Carolina?
The Chairman. Yes.
Mr. Jaeger. We have not lost any jobs in North Carolina,
Senator.
The Chairman. So you would not know anything about the
anguish of the people, those 8,000 to 10,000.
Mr. Jaeger. We are familiar with that, Senator. We have
lost employment. Employment loss in the apparel industry,
unfortunately, is inevitable. The real question I think that we
face is where is that loss going to happen? Is it going to
happen in the CBI region going forward because the jobs are
going to shift to Asia, or will we be able to maintain those
jobs that are already offshore in regions like Honduras through
measures like CBI enhancement?
We feel that partnering with the Caribbean provides us the
opportunity to keep some jobs in the United States while also
relying on our existing investments in the region.
Senator Coverdell. Just for the purposes of the debate, for
the panel, the fact that we are on the economic question should
not in any way suggest that the committee is not eminently
aware of the personal anguish and the issues that each of you
have discussed, and we are going to come back to that in just a
moment.
But ours is a textile State, too, Georgia, and we have
assembled, Mr. Chairman, a task force of textile interests on
this question that you have raised. A general conclusion is
that if nothing is done at all the jobs will continue to
dwindle. Worse, if the actual manufacturing, so to speak,
shifts to Asia, then in addition to that function moving away
we would also lose a market for our textiles themselves that
are manufactured.
Currently these facilities in the Caribbean and in Mexico
are using American goods. If that function moves to Asia, Asia
will not use necessarily American goods. So you have two
sectors that begin to collapse on us. Whereas if we keep these
certain functions in the Caribbean and in Mexico, it reinforces
at least the utility of American goods.
This is the way at least it has been characterized as we
have tried to confront this very serious issue. And we have
lost some very significant jobs as well.
Before the chairman came I was going to ask you to try to
elaborate on that, is that premise in your mind correct or
incorrect. So as an adjunct to the chairman's question, I will
now pose that one. I mean, this is sort of the way we have
sorted it out at home in Georgia.
What is your take on that, Mr. Jaeger?
Mr. Jaeger. I think that is correct. That is the way we
feel about it. We feel that those jobs are going to move
regardless of whether this bill passes or not. The real
question is where are we going to have those jobs? Are they
going to be in the CBI region, where U.S. goals and policies
are well served, or are they going to be in the Far East, where
U.S. inputs are minimized or nonexistent?
We feel that a partnership that has been in place since the
mid-eighties with the CBI region will serve U.S. interests of
stability and growth and allow apparel manufacturers to provide
jobs in that region and maintain to the extent feasible jobs in
the United States.
The Chairman. No further questions.
Senator Coverdell. If I might, then, Mr. Chairman, I would
like to turn to Mr. Fonseca, Mr. Chapman, and Mr. Isaacs and
yourself, Mr. Jaeger, as well. You touched on this, Mr. Isaacs,
but my exposure was probably maybe the week after it hit, about
30 days. I was quite taken with the fact that despite the scope
and magnitude of this crisis, the way the people themselves
were rallying and fighting, fighting back. You alluded to that.
So my first question is how do you find the general morale
at this juncture? Is that fight still in your mind being waged?
Is it setting in? Because everything does not happen as quickly
as people would like. Is that causing there to be a sink in the
struggle on the ground to rebuild?
I will begin with you, Mr. Isaacs, because you alluded to
this, and then any of the rest of you that might want to talk
about it, please do.
Mr. Isaacs. I can respond to it, Mr. Chairman, as an
outsider. I am not a Honduran and I think that Rene Fonseca can
address it from a different perspective. But I have certainly
noticed that people are saying, let us build a new Honduras.
And they are not talking about structures and roads and
bridges, they are talking about political structures, they are
talking about getting corruption out of the government, they
are talking about a new tomorrow.
You know, there is a certain amount of fatigue with the
people who are long-term in the camps, that have no other
option, and that is to be expected. But my opinion and
observations are that society as a whole sees this as a
devastating storm, a devastating crisis, but it is a chance for
a new tomorrow, to build a better Honduras.
Senator Coverdell. Rene, would you want to comment on that?
Mr. Fonseca. Yes, Senator. I think a tragedy like the one
we have been through changes the mentality and changes the
attitudes of the people. I certainly could not have said it
better than Ken, because I have seen a lot of changes in the
people. They have a new attitude. They want to rebuild the
country, and things have turned around very nicely.
Honduras is turning around beautifully. I see new attitudes
and everybody is cooperating with everybody. Political
partisanship is not noticeable. It is going very good. I think
this is a boost to morale, what we have been through. It is a
good time to reflect about our new future, a change in our
laws, political institutions and the like, and start over again
with the new millennium. We all look forward to a new country.
Senator Coverdell. Mr. Jaeger or Mr. Chapman, would you
want to comment on that inquiry?
Mr. Chapman. Yes, I would. I think after a natural disaster
such as what has been experienced with Hurricane Mitch there is
obviously an initial international focus, a lot of aid, a lot
of things coming in. I think people are extremely glad to
receive that and really feel the warmth and compassion of the
world community.
I think the challenge is over the medium and the longer
term, as you brought out, and in terms of how is the thing
going to unfold, what kinds of activities are going to go on.
Obviously, there is the need to respond immediately to the
relief question, to make sure people have food and shelter. But
as you move forward you need to quickly reconstruct and
rehabilitate the economy, get them back into business, get them
back into agriculture, those who are farmers, and get things on
a more normal track. That does take time.
I think sort of after the initial shock and perhaps the
encouragement, I think it will be a struggle, and I think we
need to be very determined, very strategic in terms of
providing the right kind of aid that really jump-starts the
reconstruction of the economy.
Senator Coverdell. Mr. Jaeger.
Mr. Jaeger. If I could comment, the operation in Honduras,
despite the devastation, was back to work within 12 days of the
cessation of the hurricane. The employees clearly wanted to
come back to work at Jockey. They walked long distances to do
that. We were pleased to have a place for them to come back and
work.
We feel and it is my belief that jobs are the key to the
long-term recoverability of the region. CBI is a good measure
forward toward that long-term recovery.
Senator Coverdell. Mr. Fonseca--one of you alluded to
transparency. Now, one of the things that struck me as I went
through the region--and as you know, we had the Presidents of
the five major countries all here on Capitol Hill in December,
with the exception of President Arzu of Guatemala, who was ill,
so we had the Vice President here. We all met with Senate and
House leadership.
It was somewhat of an historic meeting in that sense. It
does not happen that often. I was quite taken with the attempts
or the efforts being made to assure that the aid was managed
differently. At least when I was there, they were talking
transparency and certifying, trying to avoid the pitfalls from
previous disasters where accusations start flying.
You are never going to escape that completely, but is it
your combined judgment--are they achieving that or not?
Mr. Fonseca. Well, I know there is a great concern from the
giver and the recipient of aid about the way the funds are
invested and used. Back in the 1960's the United States had a
great experience with Chile. The AID--through the financing of
AID, they built up projects that they named turnkey projects.
In other words, they would provide the funds, but they would
still keep the control of the projects. That guaranteed the
good use of funds. That would be an idea.
I know that the AID is not doing it like that in this
instance. But there should be ways to hire auditors from
overseas to see that the funds are committed in a clean and
transparent way.
Senator Coverdell. Any comment from any of the rest of you
on this matter?
Mr. Isaacs. I could not speak to the issue of the need for
transparency, let me say, on the Federal Government level. But
I do believe that it is important to conduct business in a
practical and a commonsensical way, and it would probably be a
better relationship for an American NGO to report about how
they are building houses than it would be maybe a Honduran
agency to report about how they are building houses. It would
be more in our interest to make sure that you had all the
information that you wanted, and it would be easier for you to
get that information, you being the U.S. Government.
But overall, I have heard a lot of talk there among Federal
and city officials about the need for transparency. But I think
that there is transparency at multiple levels. Every level that
touches something needs to be transparent. When you are talking
about--in the case of what our response is in the housing
sector, you are talking about communities, you are talking
about towns and villages, small ones. So what we are striving
to do is maintain accountability and transparency at every
level and really to as much as possible shy away from
centralization of large building complexes.
Senator Coverdell. Mr. Fonseca, you mentioned something
that is a little disturbing in our opening statement, that
there is a cut where accessibility to recovery is needs-tested
in such a way that your middle class cannot get to it. If we
constructed a device that leaves talent on the sidelines, that
would be somewhat disturbing. These are the people that have to
be energized and put into the mix very quickly.
Do you want to elaborate on that?
Mr. Fonseca. Yes, sir. I consider the middle class to be
the backbone of the society and the economy, because they
provide employment or they have a secure job. A great amount of
these people have lost their belongings, their houses, and they
knock on doors and doors do not open for them because they are
not considered poor, whereas some of the poor that were
abjectly poor, they are getting homes and they did not have
anything before the Mitch.
So the middle class had something, had employment, had a
business, had a job, and suddenly there is nothing. The next
morning, they do not have anything. They go to a bank, they go
to a government institution, and all they hear is that there is
no aid for middle class.
So what I suggested is perhaps this aid--our local banks
could use lines of credit providing soft terms and long terms
for these small business people, because that would make the
economy recover fast.
I know that shelter is important, but having a job is more
important. But what do I do if I have a house but I do not have
a job? I will be unemployed. I will not have anything with
which to feed my family. I need the security of a job, and that
is where the middle class plays a big, vital role.
Senator Coverdell. Mr. Chapman, you mentioned the
microenterprise being one of your principal sectors. Would you
want to comment on this?
Mr. Chapman. Yes. Well, I think what Mr. Fonseca says is
right on, and I think there is a major problem there and we
need to target some of the aid funding toward, for example,
providing the loans and basically helping people restart their
businesses.
Obviously, the bulk of the aid goes to the disaster relief
effort, but I would say in the future, particularly in terms of
the whole rebuilding process, we need to focus on those sectors
of the economy that are going to be the entrepreneurs and the
ones who are eventually, once they get established, starting
business, providing employment, and those kinds of things.
So I think we need to look carefully at the programs and
target them toward those who are most able to respond and take
advantage of the opportunities that we are offering.
Senator Coverdell. Questions, Mr. Chairman?
The Chairman. The massive problem in solving this situation
baffles me. Now, the hurricane was about 4 months ago?
Senator Coverdell. October.
The Chairman. The latter part of October. Now, where are
you now in terms of percentages of people without homes?
Mr. Fonseca. It has been estimated that one out of every
four people in Honduras have been affected directly by the
hurricane. But the need of homes in the entire country is about
one million out of a population of 5.5 million.
Senator Coverdell. 20 percent.
Mr. Fonseca. Yes.
Senator Coverdell. I had a number of one million for the
region. Is that an understated number?
Mr. Fonseca. This information or statistic is from an
organization in the country and it probably covers the pre-
Mitch situation.
The Chairman. Any other country helping your country
besides the United States in any material way?
Mr. Fonseca. Yes, sir, indeed. There are other countries
who have provided aid, but the United States is the most
significant one.
The Chairman. Where are you in terms of restoring your
roads that were destroyed?
Mr. Fonseca. They were about 70 percent destroyed in the
entire country.
The Chairman. 70 percent?
Mr. Fonseca. Yes, sir. The pave was washed off from some
roads and bridges, about 225 bridges in the country. So the
main road system is back in operation with temporary bridges,
like Bailey bridges. We need some--we encourage the government
to provide concessions for private sector people to take over
those roads and administer them from a private perspective.
But the road situation in Honduras is deplorable right now.
The Chairman. Mr. Isaacs, what is your organization doing
now? I know you collected so much material, food and the rest
of it. Are you still--where does the food that your people eat
come from? You cannot grow it yet, can you?
Mr. Fonseca. Well, we have not had a lot of problems food-
wise. There is food in the country, not in excess. There is a
scarcity in some areas. But considering that the crops were
destroyed by 60 percent, we are going to have shortages this
year. We have not seen the effects so far, but there will be a
dramatic situation this year.
The Chairman. Are you shipping, are you and Franklin
shipping help now through Samaritan's Purse?
Mr. Isaacs. We shipped about 350 tons, Senator. You
remember that Saturday when Franklin called you at home?
The Chairman. Yes, sir.
Mr. Isaacs. Well, I went to him and said: Franklin, if you
could call Senator Helms right now and get him to call the
Department of Transportation, I bet we could get some
airplanes. So I was there with him when that happened.
We were doing that during what we call the emergency phase
of the storm, when it was really a life and death situation.
But in our opinion that time is past now, and we are looking at
longer term issues. Housing is the one that we are focusing on.
So we have committed to build 4,000 houses in Honduras and
1,000 in Nicaragua, and we have already begun that.
Senator Coverdell. On that, how many homes are--in other
words, if you were going to eliminate the homeless situation,
how many homes have to be rebuilt or cleaned or reopened? What
is the total number?
Mr. Isaacs. Well, I said in my address that I do not
believe that there are any accurate numbers, and I really do
not believe that there are any accurate numbers. If you read
the reports, there are everywhere from 1.4 million have been
made homeless to 40,000 or 50,000. I just do not think that
there is the data collecting capability there to know.
But I can relate it this way. One of the big issues that we
would have to work through is who do you give a house to, what
are the qualifications, and how do you know that a person's
appeal for a home is sincere? There are a lot of issues
involved.
But we put together two teams, one for the north of the
country and one for the south. We felt like that we could get
more accurate information if we were going to people and
getting the information rather than them coming to us. We would
not want to put an advertisement in the newspaper saying ``Free
homes.'' Within less than 1 month, we found 3,500 families
homeless in about 15 cities, maybe 20 cities and villages
across the country. And seriously, we have only scratched the
surface. We could do easily four times that much, but it is a
lack of resources. I have capped it this year at 3,500. That is
where we will stop this year.
The Chairman. Rene--and I am going to call you Rene because
you are my friend away from here and you are my friend during
this meeting----
Mr. Fonseca. Thank you, sir.
The Chairman. How did your banking structure function? How
is it functioning? I know there was a low point there.
Mr. Fonseca. As a result of Hurricane Mitch, a lot of
banking lines of credit are at default right now because they
had a lot of agricultural loans. Obviously, they are going to
need a lot of reinforcement to bring the banks back onto their
feet. The situation right now with the banking is lack of funds
because our central banking system cuts a great deal from
people that save in the banks. They cut 30 percent, 35 percent
of the savings as a reserve.
So the banking system could get lines of credit that could
be discounted at cheaper rates. Like right now to get a loan
for a house you pay 28 percent. That is awfully high. Nobody
could afford that. They would have to extend the mortgages to
100 years perhaps to make it, to make it more bearable.
If we could get lines of credit at somewhere around 3 to 5
percent and then the bank would charge for the discount another
2 percent, that would be 7 percent, which would be really good
to build a house.
The Chairman. I have got to confess that I do not know
whether AID participates in that or not. Do you know?
Senator Coverdell. I do not.
The Chairman. Do you know, Rene?
Mr. Fonseca. I beg your pardon?
The Chairman. AID, Agency for International Development,
are they helping with stabilizing the banking situation?
Mr. Fonseca. I do not know, sir. I am not aware of that
situation.
Senator Coverdell. We are told by your excellent staff that
that would be a function of Treasury. I would not think it
would be AID, but I would have to review it. I think it is very
interesting.
The Chairman. All right, I will ask this smart fellow here.
Is Treasury doing anything about it?
Mr. Grigsby. Yes, sir, they are.
The Chairman. Identify yourself and answer the question.
Mr. Grigsby. Garrett Grigsby, Foreign Relations Committee
staff.
They are requesting some funds in the supplemental
appropriation bill and they do technical assistance programs,
and in addition to that they would like to forgive a
substantial amount of debt to Honduras and Nicaragua and
affected countries, both U.S. bilateral debt and international
debt as well.
The Chairman. That is important for us to look at in this
bill.
Senator Coverdell. That is a key component, and the
Presidents when they visited here all raised this issue of some
forgiveness of debt.
The Chairman. Thanks for letting me horn in on your
hearing.
Senator Coverdell. I have one more question if I might, Mr.
Chairman, and then if you have a closing comment, we will let
these people get on with their day.
But my closing question deals with timing. I think
everybody has agreed or generally agreed that the initial
crisis of life and death, water, food, was done reasonably
well, military and NGO's, the countries themselves. And we all
know that it is when the TV cameras go off and the helicopters
are not buzzing around things settle down, the long-term
buildout begins.
I have some distinct familiarity with this because in 1994
my State suffered a 500-year flood. It covered over 200 square
miles. It is that long haul that is the toughest part.
Do you have any sense of how much time we have here before
this thing begins to turn more difficult for us? Do you have a
sense of the timing of what we need to do here, along with the
European Union and others that are being attentive to this
issue? Mr. Chapman, you are raising your hand.
Mr. Chapman. I think we are already at that stage. We do
quite a bit of monitoring in our areas of what is happening to
the people besides, obviously, providing services, and in three
of the countries we are picking up acute malnutrition, setting
in particularly among young children. So I think we need to
look very quickly at the longer term response. I do not think--
this is not going to be a one-time short deal.
Particularly with food production and things like that,
while there may be sufficient stocks of food in the country, it
is probably in many cases not out where it needs to be. The
roads, the infrastructure, is severely damaged. Basically, we
have got people approaching starvation now, and I think we need
to establish a partnership, particularly with U.S. farmers, in
terms of getting some of our excess agricultural produce down
there and getting it out there while it is needed particularly,
and at the same time enabling people to re-establish their
agricultural production so that we will be able to pull back
from that fairly quickly.
Senator Coverdell. Thank you.
Mr. Isaacs.
Mr. Isaacs. We expect to be in Honduras for a minimum of 2
years, but internally we are acknowledging it may be 5. I think
that would probably be the----
Senator Coverdell. More realistic?
Mr. Isaacs. Well, that is what we are thinking. So we just
have to see how it unfolds.
Senator Coverdell. Mr. Fonseca?
Mr. Fonseca. We certainly think that timing is of the
essence here for Honduras to receive the aid package. We would
urge the Senate to look at that bill the sooner the better. And
we certainly need help, but we need help that does not build
dependency in the long run, because that would not do us any
good.
We certainly need also a long-term commitment for long-term
institutions, such as our political institutions, our laws, our
infrastructure, things that do really good things for our
economy, not a one-shot deal. We look forward to a long
relationship of mutual help, mutual trade agreements in the
future, too.
Senator Coverdell. Mr. Jaeger.
Mr. Jaeger. The longer we wait to address CBI enhancement,
the more jobs that will be lost to the Far East and Mexico. I
think one thing that is clear here today is the importance of
jobs in that region. So, we think as soon as possible, action
is indicated.
Senator Coverdell. Please.
The Chairman. Mr. Chapman, has the Public Law 480 program
kicked in?
Mr. Chapman. Yes, it has. Public Law 480 title 2 is
working. I am not sure about the other ones. Title 2 is the one
that works with PVO's. And also, the world food program is
there. So there are some resources flowing. But I think, again,
it is going to be kind of a longer term effort, and we need to
make sure that we avoid the malnutrition cases that we are all
familiar with in other parts of the world, and I think we can
do it.
The Chairman. How about the medical profession of this
country and others? Now, I know in the Persian Gulf that a lot
of--a great many U.S. doctors went on their own hook and
Samaritan's Purse lined up a lot of them. Now, is that
happening? Or did you cover that earlier?
Senator Coverdell. No, but it has been addressed, and I am
personally aware of some of them from my State. I do not know
if it is sufficient.
Mr. Isaacs. Well, I can just say what we are doing at
Samaritan's Purse. We are probably having about 6 doctors, 6 to
10 a month, going there to serve for 1 to 2 weeks at a time. We
are working with the bamberos, the fire departments, to
identify villages that are cutoff and meet medical needs that
way.
The Chairman. Mr. Coverdell, thank you again for letting me
horn in. I notice we have a rollcall vote.
Senator Coverdell. Yes, we have a vote.
We will end on a vignette. The chairman and Deborah for a
long time dealt with another Central America. I thought it was
somewhat ironic when I was there that they were building these
stands in Nicaragua, and I said, what are we going to have
here? There was obviously going to be some sort of display.
The Nicaraguan Army and Government, much of which we have
struggled with in the past, were preparing to award the
American pilots who had confronted the storm directly with the
country's highest honor. Quite an ironic quirk in history to
see the Nicaraguan military coming together to award our
American pilots their highest military award. So, interesting
note to end on.
Thank you all very much for your testimony. We will leave
the record open in case, for what, 2 days, in the event
additional questions need to be asked of our panelists. We
thank each of you for taking time to share your personal
insight with us. Thank you very much.
Thank you, Mr. Chairman.
[Senator Torricelli submitted the following prepared
statement for inclusion in the record:]
Statement of Hon. Robert G. Torricelli
Last fall, our Central American and Caribbean neighbors
were hit by two powerful hurricanes. In September, Hurricane
Georges hit the northern and eastern Caribbean, leaving over
$1.5 billion in damages. Haiti and the Dominican Republic were
hit the hardest by Georges.
In October, Hurricane Mitch battered Central America for an
unprecedented ten day period. During this time, over 9,000
Central Americans were killed, and over 1 million people were
left homeless. Over 25 years of investment to infrastructure--
including roads, bridges, and sanitation facilities--was
destroyed by the storm.
Damage estimates are astronomical: rebuilding homes,
hospitals, schools, farms, and businesses throughout the region
will cost an estimated $8.5 billion.
Nicaragua and Honduras suffered the most extensive damage.
In Honduras, an estimated 70% of the country's crops were
destroyed, including the decimation of nearly 90% of its banana
industry. In Nicaragua, mudslides and extensive flooding
resulted in damages to its GDP of up to 40% and created
hazardous conditions conducive to outbreaks of malaria, dengue
fever, and cholera.
The United States has responded with a tremendous amount of
support. Since Hurricane Mitch, over $305 million in U.S. aid
has been provided to those affected countries in the Caribbean
and in Central America, The presence of the Department of
Defense, the Peace Corps, and countless volunteer and non-
government organizations in the region has helped to provide
the support and manpower these countries need in this time of
immense difficulty.
Still, much remains to be done, and countries like Honduras
and Nicaragua are years away from fully recuperating from the
aftermath of the hurricane. In response to the continued needs
of these countries, the Administration announced a $956 million
supplemental disaster relief package on February 16, 1999. The
bulk of the assistance will be provided to Central America:
$613 million will provide direct reconstruction, the
restoration of public health systems, economic development,
assistance to local governments, and environmental management
support. The package will also provide $50 million to the
Dominican Republic, Haiti, and the Eastern Caribbean for
reconstruction efforts. This package is an important first step
towards placing these nations on the path towards long-term
economic development.
Our assistance is vital to the economic and democratic
future of the region. We cannot ignore the plight of our
neighbors during this time of need.
[Whereupon, at 4:24 p.m., the subcommittee was adjourned.]