    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                       REBUILDING HAITI'S COMPETITIVENESS
                               AND PRIVATE SECTOR

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON

                             INTERNATIONAL MONETARY

                                POLICY AND TRADE

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 16, 2010

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 111-111

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                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     BARNEY FRANK, Massachusetts, Chairman

    PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
    MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
    CAROLYN B. MALONEY, New York         PETER T. KING, New York
    LUIS V. GUTIERREZ, Illinois          EDWARD R. ROYCE, California
    NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
    MELVIN L. WATT, North Carolina       RON PAUL, Texas
    GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
    BRAD SHERMAN, California             WALTER B. JONES, Jr., North
    GREGORY W. MEEKS, New York               Carolina
    DENNIS MOORE, Kansas                 JUDY BIGGERT, Illinois
    MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
    RUBEN HINOJOSA, Texas                SHELLEY MOORE CAPITO, West
    WM. LACY CLAY, Missouri                  Virginia
    CAROLYN McCARTHY, New York           JEB HENSARLING, Texas
    JOE BACA, California                 SCOTT GARRETT, New Jersey
    STEPHEN F. LYNCH, Massachusetts      J. GRESHAM BARRETT, South Carolina
    BRAD MILLER, North Carolina          JIM GERLACH, Pennsylvania
    DAVID SCOTT, Georgia                 RANDY NEUGEBAUER, Texas
    AL GREEN, Texas                      TOM PRICE, Georgia
    EMANUEL CLEAVER, Missouri            PATRICK T. McHENRY, North Carolina
    MELISSA L. BEAN, Illinois            JOHN CAMPBELL, California
    GWEN MOORE, Wisconsin                ADAM PUTNAM, Florida
    PAUL W. HODES, New Hampshire         MICHELE BACHMANN, Minnesota
    KEITH ELLISON, Minnesota             KENNY MARCHANT, Texas
    RON KLEIN, Florida                   THADDEUS G. McCOTTER, Michigan
    CHARLES A. WILSON, Ohio              KEVIN McCARTHY, California
    ED PERLMUTTER, Colorado              BILL POSEY, Florida
    JOE DONNELLY, Indiana                LYNN JENKINS, Kansas
    BILL FOSTER, Illinois                CHRISTOPHER LEE, New York
    ANDRE CARSON, Indiana                ERIK PAULSEN, Minnesota
    JACKIE SPEIER, California            LEONARD LANCE, New Jersey
    TRAVIS CHILDERS, Mississippi
    WALT MINNICK, Idaho
    JOHN ADLER, New Jersey
    MARY JO KILROY, Ohio
    STEVE DRIEHAUS, Ohio
    SUZANNE KOSMAS, Florida
    ALAN GRAYSON, Florida
    JIM HIMES, Connecticut
    GARY PETERS, Michigan
    DAN MAFFEI, New York

            Jeanne M. Roslanowick, Staff Director and Chief Counsel
            Subcommittee on International Monetary Policy and Trade

                      GREGORY W. MEEKS, New York, Chairman

    LUIS V. GUTIERREZ, Illinois          GARY G. MILLER, California
    MAXINE WATERS, California            EDWARD R. ROYCE, California
    MELVIN L. WATT, North Carolina       RON PAUL, Texas
    GWEN MOORE, Wisconsin                DONALD A. MANZULLO, Illinois
    ANDRE CARSON, Indiana                MICHELE BACHMANN, Minnesota
    STEVE DRIEHAUS, Ohio                 ERIK PAULSEN, Minnesota
    GARY PETERS, Michigan
    DAN MAFFEI, New York

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        March 16, 2010...............................................     1
    Appendix:
        March 16, 2010...............................................    35

                                   WITNESSES
                            Tuesday, March 16, 2010

    Birdsall, Nancy, President, Center for Global Development........    12
    Boisson, Pierre-Marie, Chairman, Sogesol.........................     8
    D'Sa, Mark, Senior Director, Sourcing & Production, Gap Inc......    10
    Fairbanks, Michael C., Founder, SEVEN Fund.......................     5
    Skrobiszewski, Francis J., Associate, VisionAmericas LLC.........    15

                                    APPENDIX

    Prepared statements:
        Meeks, Hon. Gregory..........................................    36
        Birdsall, Nancy..............................................    40
        Boisson, Pierre-Marie........................................    46
        D'Sa, Mark...................................................    60
        Fairbanks, Michael C.........................................    62
        Skrobiszewski, Francis J.....................................    74

                       REBUILDING HAITI'S COMPETITIVENESS
                               AND PRIVATE SECTOR

                                  ----------

                            Tuesday, March 16, 2010

                 U.S. House of Representatives,
                          Subcommittee on International
                             Monetary Policy and Trade,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The subcommittee met, pursuant to notice, at 10 a.m., in
    room 2128, Rayburn House Office Building, Hon. Gregory W. Meeks
    [chairman of the subcommittee] presiding.
        Members present: Representatives Meeks, Waters, Watt,
    Driehaus; Miller of California, and Paulsen.
        Ex officio present: Representative Bachus.
        Also present: Representatives Clay and Maloney.
        Chairman Meeks. This hearing of the Subcommittee on
    International Monetary Policy and Trade will come to order.
        For the record, and without objection, all members' opening
    statements will be made a part of the record.
        What I will do is open up with an opening statement at this
    time. Before I begin, I would like to thank my friend and
    colleague, Representative Miller from California, the ranking
    member of this subcommittee, for his help in planning this
    hearing, and to express again my gratitude for our ability to
    work in a truly bipartisan manner in seeking solutions to the
    critical situation in Haiti.
        This hearing is the second in a series of hearings on the
    situation in Haiti, and I was so thrilled to see such strong
    bipartisan support last week for the Haiti debt relief bill,
    which passed with unanimous support out of the full House,
    following its passage out of this subcommittee.
        Finally, I want to reiterate my sincere thanks to the
    chairman of this committee, Barney Frank, and the ranking
    member, Spencer Bachus, for their continued support for Haiti
    and the work of this subcommittee.
        I want to give a special thank you to Representative Bachus
    for his touching remarks on the plight of Haiti on the House
    Floor last week in support of the bill, where he reiterated how
    Haiti from even its very beginnings, its own independence, was
    riddled with debt because they had to pay for that
    independence. He was very eloquent on the Floor of the House
    last week.
        I would like to thank our panel of witnesses for appearing
    here today and for sharing their thoughts and experience on
    rebuilding Haiti's competitiveness and private sector.
        Haiti's recovery will happen in my opinion in three
    distinct if not overlapping phases. Phase one consists of the
    crisis response, focused on basic survival needs which began in
    the hours immediately following the devastating earthquake of
    January 12, 2010. Phase one is likely to be ongoing for some
    time, particularly for the most vulnerable groups in Haiti.
        Phase two, which is in its very early stages of development
    today, consists of rebuilding the basic physical and governance
    infrastructure of Haiti. This phase will take several years to
    complete, but must get under way quickly, and it is critical to
    allowing the government and the people of Haiti to get back to
    work and to retain some minimal sense of normalcy.
        Phase three, the plan which is being developed today and
    for which this hearing is trying is cover, is a continuation of
    the extensive work already underway prior to the earthquake. It
    consists of implementing a long-term economic strategy for
    Haiti, allowing it to grow prosperous and to move beyond the
    dependency on aid which has characterized the country for
    decades. As our witnesses will address here today, much of the
    preparatory work for phase three was already being done prior
    to the earthquake under the leadership of President Preval.
        These plans have been modified as a consequence of the
    earthquake, but not fundamentally changed.
        It is my hope that today's hearing and the testimony of our
    panel of witnesses will shed some light on how we can empower
    the Haitian institutions and the private sector to enable the
    successful and rapid progression of Haiti from phase one,
    crisis response mode, where it is today, to phases two and
    three, of long-term economic planning in a manner that lays the
    foundation for a new sustainable, stable, and prosperous Haiti,
    providing hope and opportunity for all its population and not
    just the privileged elite.
        You cannot rebuild without the private sector. It has to be
    that joint venture between the public and the private sector.
    We know how important that is.
        I look forward to hearing about how we can ensure the
    effective coordination of the multitude of development efforts
    including especially the multilateral and international
    development institutions under the leadership and stewardship
    of the Haitian people themselves.
        Eventually, we have to move so that the Haitian people can
    lead and govern as they build a future for themselves and
    according to their plans, their culture, and their vision for a
    resurgent Haiti.
        With that, I yield back the balance of my time and
    recognize the ranking member, my friend and colleague from
    California, Mr. Miller.
        Mr. Miller of California. Thank you, Chairman Meeks. I
    would like to associate myself with your comments regarding the
    cooperation of processing the previous bill that we experienced
    on the Floor last week.
        You have been an effective and strong voice for the needs
    of the Haitian people and I want to publicly commend you for
    that. I know it is a passion for you and it is a good effort we
    have undertaken.
        I would like to thank you for holding this hearing to
    discuss ways American resources can be leveraged to more
    effectively help Haiti recover from the massive earthquake that
    devastated the country and economy.
        I was pleased when this committee and subcommittee of this
    Congress were able to pass legislation last week supporting the
    international debt relief effort in Haiti. I am currently
    working on legislation that we discussed previously to involve
    American labor and American expertise in the process of
    rebuilding Haiti. Because we are going to be expending American
    tax dollars, we should be looking also at how do we employ
    American workers, who have the expertise, in benefitting and
    helping to recover from the impact in Haiti.
        Last week, Congress overwhelmingly passed legislation
    originating from the subcommittee requiring the Secretary of
    the Treasury to instruct the U.S. executive members of the IMF,
    the World Bank, the Inter-American Development Bank, and other
    multilateral development institutions to seek immediate and
    complete cancellation of all debts owned by Haiti to such
    institutions.
        Unfortunately, this is only part of the recovery effort
    that must be undertaken in Haiti. The IDB estimates a total
    cumulative construction cost of at least $14 billion, which is
    double Haiti's national GDP. According to State Department
    figures, an estimated 230,000 people died, which included up to
    40 percent of the country's civil service. Further, 28 to 29
    government ministry buildings were destroyed, 70 percent of the
    population is unemployed, and a third is illiterate.
        At present, international aid efforts are focusing on
    meeting Haiti's basic survival needs. Haiti's long-term
    economic recovery rebuilding will need to rely on public/
    private partnerships and internationalists to supply the nation
    with heavy equipment and technical expertise needed to clear
    the estimated 78 million cubic yards of rubble to begin
    rebuilding an infrastructure that can more effectively
    withstand disaster in the future.
        Impeding efforts to rebuild are lack of uniform building
    standards, mistrust in the government by Haitian people, a high
    perception of government corruption, and a total lack of heavy
    machinery and equipment needed to undertake a task of this
    proportion.
        Recently, the Washington Post quoted Haiti's largest
    contractor, who estimated the entire nation of Haiti has nearly
    100 excavators, nowhere near the amount needed to clear the
    public rubble they have experienced. If you took the rubble
    that we are facing in Haiti and stacked it 727 feet on the
    Mall, that is equivalent to what we have to move with 100
    pieces of equipment.
        We need to effectively make sure that the resources are
    there needed to deal with this impact and the American labor
    force who need to be employed are also put there, and I think
    at that point, we can benefit the people of Haiti.
        I yield back the balance of my time.
        Chairman Meeks. Mr. Bachus?
        Mr. Bachus. Thank you, Mr. Chairman. I thank you for
    holding this important hearing. This is the second hearing that
    the subcommittee has held on Haiti. I applaud you and Mr.
    Miller and other members of the committee for your continued
    efforts to respond to the distress and suffering citizens of
    this devastated country.
        If you picked a capital in any country in the world that
    could least deal with an earthquake, it would be Port-au-
    Prince, Haiti. The human tragedy following the January 12th
    earthquake is overwhelming, and as Haitians seek to rebuild, we
    must stand alongside them.
        The House took the first step to provide assistance last
    Wednesday, agreeing to legislation which I was proud to
    support, that helps address Haiti's national debt.
        Haiti was born into debt. The French upon leaving Haiti
    imposed a heavy debt on the Haitian people and they have
    suffered under that debt and additional debt for their entire
    history. I think that explains to some extent why they have
    never had the funds to achieve any type of economic
    independence.
        Rebuilding Haiti will not be an easy task. Some estimates
    place reconstruction costs as high as $14 billion. Such a
    challenge will require a comprehensive coordinated effort.
        The United States and Haiti cannot afford to have resources
    stolen or wasted on redundant efforts by various groups working
    completely independent of one another without any coordination
    whatsoever.
        Additionally, Mr. Chairman, this effort must have the buy-
    in and support of both the Haitian Government and the Haitian
    people. The goal must be to break the cycle of aid dependency
    that has kept Haiti mired in poverty for generations. Rather,
    we should provide the tools for Haiti to become a competitive,
    self-sustaining country. That is really what the Haitian people
    desire.
        To bring this about, the private sector should be an
    important engine towards sustainable growth. International aid
    can take the Haitian economy only so far.
        Achieving this goal will require consultation with the
    Haitian Government and its people to ensure that aid is
    delivered in a transparent and fair manner and to those in
    need. We must make certain that the policies implemented are
    not undermined by corruption that siphons off limited resources
    and disenfranchises the Haitian people.
        The United States has always been a benevolent and caring
    country. Even during our current economic challenges, we have
    not lost our compassion. In fact, our present travails have in
    some respects, I believe, given us a greater appreciation for
    the desperation and suffering of those facing challenges and
    hardships, although the hardships and challenges that Haiti
    faces are almost unimaginable for most Americans.
        Providing assistance to a nation devastated by a natural
    catastrophe is consistent with our principles. We can lead by
    example while we lend a helping hand.
        Mr. Chairman, I again commend you and Mr. Miller for your
    commitment to this matter. You have assembled before us today a
    distinguished group of panelists, each of whom will be able to
    provide us with unique insights into how to help the Haitian
    people to realize their potential and achieve sustainable
    development.
        This legislation is important to help the people of Haiti
    get back on their feet, and I look forward to working with you
    and other members of this committee going forward.
        With that, I yield back the balance of my time.
        Chairman Meeks. Thank you, Mr. Bachus. Before you got here,
    I mentioned that I wanted to publicly thank you for your
    eloquent statement you just made on the record on the Floor of
    the House as we passed the Haiti debt relief bill.
        At that time, Chairman Frank and the gentlelady from
    California, Maxine Waters, also just talked about how for a
    long time you have been working collectively in a bipartisan
    manner with them to try to overcome poverty and debt problems
    to help Haiti.
        I just want to thank you for your commitment and your hard
    work in this endeavor. We really appreciate you.
        Without objection, each witness' statement will be made a
    part of the record. You will be recognized for a 5-minute
    summary of your testimony, but your written testimony will be
    considered part of the entire record.
        First to testify, we have with us Mr. Michael Fairbanks.
    Mr. Fairbanks is the co-founder of SEVEN, a philanthropic
    foundation run by entrepreneurs whose strategy is to produce
    films, books, and original research to markedly increase the
    rate of diffusion of enterprise solutions to global poverty.
        He is the founder and chairman emeritus of the OTF Group, a
    strategy consulting firm based in Boston, and the first
    venture-backed U.S. firm to focus on developing nations. He was
    a U.S. Peace Corps teacher in Kenya.
        His most recent projects include advising the president of
    the Inter-American Development Bank on opportunities for the
    majority initiative, working for the president of Rwanda to
    improve the competitiveness of that nation's tourism, coffee,
    and agro industry sectors, and advising the minister of finance
    of Afghanistan on private sector reforms.
        He has co-authored many books, including the Harvard
    Business School's landmark book on business strategy in
    emerging markets, ``Plowing the Sea, Nurturing the Hidden
    Sources of Advantages in Developing Nations,'' which Business
    Magazine said, ``points the way towards creating prosperity in
    developing nations.''
        He co-conceived and contributed to the global bestselling
    book, ``Culture Matters, How Value Shape Human Progress,'' and
    I just finished reading his most recent book entitled, ``In the
    River They Swim: Essays from Around the World on Enterprise
    Solutions to Poverty,'' which was released, I believe, last
    year.
        With that, let me welcome Mr. Michael Fairbanks.

         STATEMENT OF MICHAEL C. FAIRBANKS, FOUNDER, SEVEN FUND

        Mr. Fairbanks. Thank you, Mr. Chairman, and members of the
    subcommittee. Thank you for the opportunity to discuss
    enterprise solutions to poverty and the United States' aid
    policy in Haiti.
        I would like to start with a couple of foundational
    concepts, and I am going to build on those towards the end.
        The first thing I want to talk about is prosperity. It is
    the ability of an individual, group or nation to provide
    shelter, nutrition and other material goods that enable people
    to live a good life according to their own definition.
        Prosperity helps to create the space in people's hearts and
    minds so that unfettered by the everyday concern of the
    material goods that are required to survive, they might develop
    a healthy emotional and spiritual life, again, according to
    their own preferences.
        There's another definition of ``prosperity'' that is
    equally important, and that is using the stock view of
    prosperity. This is in regard to the enabling environment. In
    every country, whether it is Haiti or the United States or
    anyplace else in the world, this country has seven types of
    wealth.
        There are natural resources. There is man-made capital.
    There is financial capital. These are the easy to see, easy to
    measure forms of wealth that exist in every nation.
        The more important types of capital are the ones that are
    difficult to measure, impossible to see sometimes, and these
    are what I call the ``higher forms of capital.'' Institutional
    capital, like rules of law and democracy, both of which are
    very positively correlated with economic growth.
        Knowledge capital, like databases and ideas. International
    patents would represent a robust level of knowledge capital.
        Human capital, which is skills and abilities and insights
    that are basically knowledge capital with legs. It can leave
    the country, and this is very pertinent to the case of Haiti.
        Finally, we have the most important type of capital, which
    is cultural capital. Not just the explicit articulation of
    culture, fashion and music and design, food and language, but
    the ideas and the attitudes, the beliefs, the assumptions and
    the goals of people who can either promote innovation and
    prosperity or can diminish innovation and prosperity.
        With that as a foundational base of my comments, I would
    like to make several further points. First of all, most foreign
    aid never achieves its desired impact. This is according to one
    of the most prominent aid organizations on the planet Earth
    whose leader showed me their internal report before he had to
    shelf it because if he were to make these findings public, he
    would not be able to do his job any more.
        According to him, and it is a name we all know, 80 percent
    of all the foreign aid around the world never achieves its
    desired impact. In fact, there are reasons to believe the
    opposite.
        Aid largesse can distort private initiatives, stifle
    democracies, amplify ethnic based patron/client relationships,
    and promote corruption.
        The former Finance Minister of Afghanistan, Ashraf Ghani,
    who is known to everybody in this room, is short-listed to lead
    the United Nations, short-listed to lead the World Bank,
    observes that aid can even ``sever the sovereign relationship
    between people and their leaders.''
        What I want to talk about today is the microeconomic
    foundations of growth, how growth really occurs, where do taxes
    come from, where does employment come from.
        The greatest quote that I have ever heard with regard to
    this is that every farmer in Haiti is the private sector. Every
    fisherman in a little boat off the Haitian Coast is the private
    sector. Every kid selling chiclets or Coca-Cola on the street
    corner is the private sector.
        We should not think of the private sector as monolithic
    family-owned conglomerates that engage in rent-seeking
    activities, monopolistic access to government favors, raw
    materials, and markets.
        The private sector is the farmer. We need to keep that in
    mind.
        Nations that do not create wealth for their citizens share
    much in common. Our evidence suggests that they are overreliant
    on natural resources, including cheap labor, and they believe
    in simple advantages of climate, location, and government
    favors.
        My recommendations for Haiti are to build modern
    institutions on top of traditional values, to find new segments
    of the market in which to cooperate, and my recommendation for
    the United States Government is to consider focusing on our own
    values and attitudes and what we can do better, not what the
    Haitians can do, and to focus very particularly on USAID
    procurement services. It is the most non-competitive aspect of
    the American economy.
        The consultants we send overseas are mediocre. They are
    underappreciated. They are overpaid. The fact is what we are
    finding is that the vendors to USAID are really nothing more
    than head hunters who extract a rent for providing a service to
    the U.S. Government. They have no intellectual property. They
    do not train their consultants. They do not understand the
    needs of the countries in which they work, and their real
    client is the United States Government, not the poor nations of
    the world.
        I ask you very much to look at my written comments for some
    support of those.
        Thank you very much for the opportunity to speak to you
    today, and I hope you and your staff will rely on me for
    further briefings as you may require them.
        [The prepared statement of Mr. Fairbanks can be found on
    page 62 of the appendix.]
        Chairman Meeks. Thank you. Next, we have Mr. Pierre-Marie
    Boisson. Mr. Boisson is the founder of Sogesol, Haiti's largest
    microfinance company and a 50 percent owner of the subsidiary,
    Sogebank, Haiti's largest commercial bank.
        He is also an economic advisor to Sogebank's executive
    committee and was the bank's chief economist for 15 years.
        Sogesol was created 10 years ago and is a long-term partner
    of ACCION International.
        Mr. Boisson is also vice president of the Board of
    Sodaphetees, a private development finance corporation, and
    secretary of the board of E-Power, an independent power
    producer. He is a member of the Presidential Working Group on
    Competitiveness and the Private Sector Economic Forum, and sits
    on executive committees of both groups.
        Before joining Sogebank in 1991, he led USAID-sponsored
    reorganization of Haiti's professional banking association in
    1990.
        He is a former staff member of the World Bank's IFC, where
    he spent 2 years, and he also worked a total of 9 years with
    the Haitian public sector.
        He holds an MBA from Harvard University and an MSM from
    Arthur D. Little's Management Education Institute, and a BS in
    civil engineering from the State University of Haiti.
        Welcome.

          STATEMENT OF PIERRE-MARIE BOISSON, CHAIRMAN, SOGESOL

        Mr. Boisson. Thank you, Mr. Chairman. Mr. Chairman and
    honorable members of the House Subcommittee on International
    Monetary Policy and Trade, thank you for inviting me to talk to
    you about the Haiti reconstruction effort and especially the
    precious role that the private sector can and should play in
    that country's rebirth.
        Two months ago, Haiti suffered one of the most terrible
    catastrophes ever to hit a nation. Over 200,000 people died and
    1.2 million got displaced and millions more are still
    traumatized.
        Beyond suffering, however, lies a real opportunity to build
    a better Haiti, more prosperous and more equitable. Haiti has a
    real chance to create over a million jobs and attract $5
    billion worth of private investments over the next 5 years.
        The Presidential Working Group on Competitiveness, with the
    help of the OTF Group, and following extensive international
    dialogue, identified five priority clusters where we could spur
    inclusive growth and generate tax resources.
        The Group is supported by the Private Sector Economic
    Forum, which includes the main business associations and major
    financial groups. The Forum believes that the private sector
    must partner with government and civil society to create a new
    social compact for all.
        Granted, Haiti's poverty and cultural mistrust raises
    doubts about social commitment to private led growth and
    public/private corporations. The good news is that Haiti was
    already moving toward removing such doubts way before the
    earthquake.
        In fact, 2009 was the fifth consecutive year of growth with
    a 2.9 percent mark even in the midst of a world recession.
    Inflation had been in retreat and more than $700 million of
    private investments, including FDIs, were recorded over the
    last 5 years.
        Many signs of public/private corporations emerged as well,
    including the creation of the Commission itself, which reflects
    serious efforts by President Preval to partner with civil
    society.
        I have listed a lot of examples of corporations over the
    last 10 to 15 years in my written remarks. Those are maybe
    considered episodes of goodwill but they reveal serious change
    in the mentality of Haitians. They reveal profound mutations of
    Haitian society including the growth of the Diaspora itself.
        I am confident that the earthquake itself will urge
    Haitians to unite against fatality and reinforce our will to
    build partnerships.
        The vision of both the Group and the Private Sector Forum
    is that without economic growth and increased fiscal revenue,
    popular demand for subsidies and welfare will always be the
    domain of donor and this is as Professor Fairbanks has
    explained, and we agree with that, a mixed blessing for Haiti.
        We are encouraged that the private sector will be more
    responsive to social needs and really to be disciplined
    taxpayers, but in fact, the most important thing is to really
    build growth which is the basis for the revenues that the state
    will have to do the needed social redistribution.
        We have identified five clusters where significant
    investment can be done to empower the private sector to really
    act for the common good.
        We listed the food and tubers' sector, which is
    agriculture, where we could create 300,000 jobs over the next 5
    years with investment of $190 million in post-harvest centers,
    crop insurance, etc.
        Animal husbandry, where we could create 400,000 jobs, also
    with $180 million of investment that I have listed in my
    written remarks, including sea ports, quality assurance,
    laboratory, dairy cooperatives, etc. All of those are in my
    written remarks.
        The garments sector has already benefitted from significant
    U.S. help in the form of the HOPE II legislation. There, we can
    create a lot of jobs and help, because one of the things the
    earthquake has taught us is that it is very important to have a
    more balanced growth in Haiti.
        Fourth is tourism, facing a lot of challenges, but a sector
    also that could be really powerful in creating jobs and
    attracting investments and boosting Haiti's image.
        Lastly, the earthquake really brought housing and urban
    development as a major growth sector for the next 5 years. It
    is really a place where we will need more foreign aid. This is
    not something that we can do alone. We will not have enough to
    provide for the $4.5 billion that will be necessary for
    rebuilding 250,000 units of housing.
        We will need to avoid the crowding out of private
    investment that can be consequential to the huge amount of
    dollars that will enter the economy because of that.
        On the governance, we really support the creation of an
    entity that will really better coordinate foreign aid and
    better coordinate also the insurgence of policy making into the
    exercise. That is already approved in fact by the government
    itself, but it needs to be approved by the parliament, but we
    think this kind of governance instrument will be necessary to
    manage this huge flow of foreign aid and dollars, regardless of
    the real impact it will have on the economy.
        Mr. Chairman, in closing, I once again thank you for this
    opportunity to address such a crucial matter for my country. I
    will be happy to answer your questions and contribute to your
    thoughts about how the United States can help restore our
    nation and the dignity of our people.
        Thank you.
        [The prepared statement of Mr. Boisson can be found on page
    46 of the appendix.]
        Chairman Meeks. Thank you very much. Next, we have Mr. Mark
    D'Sa, who is the senior director of sourcing and production for
    Gap Inc. His responsibilities include directing product
    development, placement strategies, and procurement in North,
    Central, and South America and parts of Asia.
        He is currently located in Miami from where he leads a team
    that oversees price negotiations, placement, execution,
    quality, product integrity, logistics, and other supply chain
    operations related to the product made for Gap Inc. in the
    Americas.
        He has 38 years of global experience in the textile and
    apparel industry, having lived and worked in India, Thailand,
    Canada, Singapore, and the United States.
        He has previously worked with several brands including
    Polo, Ralph Lauren, and Levi Strauss & Company.
        In the 1980's, he was a consultant to the Government of
    Thailand for quota negotiations, and more recently he was
    actively involved in Gap's efforts to support the passage of
    ATPDEA.
        Welcome.

    STATEMENT OF MARK D'SA, SENIOR DIRECTOR, SOURCING & PRODUCTION,
                                GAP INC.

        Mr. D'Sa. Thank you. Thank you, Mr. Chairman, and members
    of the subcommittee. Thank you for inviting me to be a part of
    this discussion today.
        Gap Inc. has been sourcing product in Haiti for a number of
    years and we remain committed to continue doing business there.
    Even before the tragedy, we were exploring internal
    recommendations to improve the business environment and how we
    could encourage more investment to come to Haiti so that
    companies might want to establish a footprint in that country
    and help build out the infrastructure.
        Prior to the earthquake, we had determined that it made
    good sense to source out of Haiti because of the quality, the
    competitiveness, the efficiency of the factories, the
    workforce, and the proximity to the United States.
        As you may know, goods shipped from Haiti can reach the
    United States in 3 to 4 days, as compared to 5 to 6 weeks from
    some of the locations in Asia.
        Despite the recent devastating tragedy, we are committed to
    Haiti resuming its rightful place in the sourcing community.
    Our staff is working with Gap Inc.-contracted factories to
    facilitate a full return to business while working with the
    Haitian Government and Departments of the U.S. Government to
    explore some of the ways that the environment might be improved
    in order to attract potential investors to that country.
        Haiti needed help before the earthquake and it needs it
    more than ever now. The apparel industry employed approximately
    28,000 people before the earthquake and we believe more
    sustainable jobs could be created in textiles and apparel if
    the current trade legislation were amended to allow a wider mix
    of product from Haiti to have duty free access to the United
    States.
        My colleagues and I have met with people in the various
    committees with jurisdiction over trade policy and we are
    hopeful that some of the current legislation can be more
    liberalized in order to make the environment more conducive to
    investors to want to come into Haiti.
        Currently, there are investors standing in the wings
    looking critically at what we are doing at this point in time.
        Haiti is important to U.S. retailers from a supply chain
    perspective. Its geography and its workforce are its two major
    strengths. The workforce is motivated, dedicated, and friendly.
    The resilience of the people came across stronger than anything
    else after the earthquake.
        Despite their personal losses and tragedies, people were
    back at the factories 72 hours after the earthquake.
        I remember one of our vendors telling me that he spoke to
    his workers offering them time off but people said no, we have
    lost our houses, we have lost our near and dear ones, but we
    need to work. They live from day to day and that is their
    situation.
        Another strength of that country is its proximity. In order
    to leverage the proximity and human capital, we need to ensure
    that the legislative environment that currently exists, the
    HOPE II agreement, which is largely underutilized because of
    the way it is constructed and because of some of the exclusions
    under the tariff preferential limits need to be re-examined and
    made more user-friendly and more applicable to the industry as
    it stands today.
        We have encouraged both the Haitian and United States
    Governments to focus on infrastructure development which would
    benefit both local and foreign companies as well as the Haitian
    people themselves.
        Improvements to the ports and roads, power supply and
    communication, as well as urban transportation are critical to
    long-term sustainable development. In the short term, of
    course, progress must continue to be made in ensuring delivery
    of food and the provision of better shelter for the Haitian
    people.
        One thing we have to be cognizant of is there are large
    communities of people today living in tents. They are out in
    the open. There is no drainage and sewage.
        In a couple of months, the rainy season will start. That
    could bring on a number of health problems. Something has to be
    done immediately to help and remediate that situation.
        Following the earthquake in Haiti a few months ago, our
    company and our employees joined forces and have made donations
    to Mercy Corps, which works on short-term efforts as well as
    long-term reconstruction for the country. At the same time, the
    factory that makes our clothes was among the first to be able
    to put Haitian employees back to work and continues to provide
    them with food, clothing, and shelter. We also continue to
    explore other ways that the company might be able to help.
        I want to thank the U.S. Government for taking such strong
    and proactive action in the aftermath of the earthquake as well
    as for their commitment to supporting a real recovery in the
    textile and apparel production sector, which can continue to
    create more sustainable jobs for Haiti.
        We appreciate the swift action and encourage this committee
    to work with your colleagues here in Congress and all the
    relevant governmental agencies to coordinate an effort that can
    be lasting and sustainable for the investment environment in
    Haiti.
        Gap Inc. remains committed to sourcing in Haiti and we
    continue to explore how we can increase our sourcing over time
    with a goal of fostering the sustainability and growth of the
    industry over the long term.
        Thank you, Mr. Chairman, and members of the subcommittee
    for your commitment to and interest in Haiti, and thanks again
    to you and the committee for inviting me to be a part of the
    discussion today.
        [The prepared statement of Mr. D'Sa can be found on page 60
    of the appendix.]
        Chairman Meeks. Thank you. Next, we have Ms. Nancy
    Birdsall, who is the Center for Global Development's founding
    president. From 1993 to 1998, she was executive vice president
    of the Inter-American Development Bank, the largest of the
    regional development banks, where she oversaw a $30 billion
    public and private loan portfolio.
        Before that, she worked for 14 years in research, policy,
    and management positions at the World Bank, including as
    director of the Policy Research Department.
        She is the author, co-author or editor of more than a dozen
    books and over 100 articles in scholarly journals and
    monographs. Shorter pieces of her writing have appeared in
    dozens of U.S. and Latin American newspapers and periodicals.
        She received her Ph.D. from Yale University and her MA from
    Johns Hopkins School of Advanced International Studies.
        Prior to launching the Center, she served for 3 years as
    senior associate and director of the Economic Reform Project at
    the Carnegie Endowment for International Peace where her work
    focused on globalization, inequality, and the reform of the
    international financial institutions.
        Welcome.

       STATEMENT OF NANCY BIRDSALL, PRESIDENT, CENTER FOR GLOBAL
                              DEVELOPMENT

        Ms. Birdsall. Thank you very much, Chairman Meeks, Ranking
    Member Miller, and other members of the subcommittee. As
    always, it is a great privilege to have this opportunity to
    speak with you.
        I would like to set out three principles for how the United
    States might follow up on the tasks you have set out so well in
    Haiti, and suggest three specific actions that I hope this
    subcommittee will support.
        First, the three principles. The first is that it is about
    more than aid, you said this yourself, Chairman Meeks. It is
    about all the other ways the United States can support Haiti--
    trade, investment, support of the Diaspora--and I will return
    to that issue in a minute.
        The second principle is about coordination. I think there
    is endless discussion of the need for donor coordination. We
    just cannot let the ideal be the enemy of the good.
        It is true that it is not going to be easy in Haiti until
    the government itself is ready to coordinate the donors. That
    could take some time. It is good that the initial step Mr.
    Boisson mentioned has been taken, but we have to recognize that
    prior to the earthquake, the government was weak on this issue
    compared even to some countries in Africa which are becoming
    more assertive in taking charge.
        What can the United States do? I think as one of the
    largest single donors, it can lead on pushing the other donors,
    including the United Nations, to set out who is the lead donor
    on key sectors.
        For example, on reconstruction, is it the IDB or the World
    Bank? On social sector provisioning in the short run, who is
    it? Is it the British? Is it the Canadians? Is it USAID? And so
    forth.
        More important, I urge this committee to push USAID in
    particular to set the tone on transparency of what it is doing
    and what the other donors are doing. The only way to create
    accountability to Haitian taxpayers, Haitian citizens, and to
    U.S. taxpayers is to maximize the information about what each
    donor is doing in a timely way to all of you and to civil
    society groups in Haiti.
        How to do that, it means thinking through what should be
    published on a Web site, whether there can be a platform that
    all donors would use for monthly information about their plans,
    their commitments, their actual disbursements.
        The third principle has to do with the way we organize
    ourselves in this government, and that is the need to make it
    very clear that USAID is not only the lead agency, as the
    President designated Dr. Rajiv Shah, the administrator, for
    humanitarian relief, but is the lead agency for this medium-
    term development challenge that you all have emphasized in your
    opening remarks.
        And that USAID should take the lead, at least for its own
    activities, and the activities of other U.S. agencies on
    planting now the seeds of good, rigorous evaluation and a
    process of learning as the aid program and Haiti's own
    development programs evolve, so that adjustments can be made,
    so there is a dynamic process of evaluation, and an openness to
    innovation and new ways of doing things.
        Let me go to the three actions. The first has already been
    referred to indirectly, but let me try to be as clear as
    possible.
        This subcommittee, this committee, could push hard for
    provision of duty-free/quota-free access for Haitian exports,
    including apparel, and making that access permanent. Already,
    we see the benefits of the recent rounds of legislation on
    opening up the U.S. market to Haitian exports before the
    earthquake.
        The issue now is to take further steps to encourage
    investment even more than has been the case so far. First, to
    lift the current quota on Haitian apparel exports, which may be
    discouraging potential investors. Gap is going ahead. There
    might be more without the current quotas that are imposed.
        Second, there should be full product coverage, as Mr. D'Sa
    mentioned. Third, change the program rules to allow the
    broadest possible sourcing of fabric and other inputs rather
    than restricting key imports. This would get the Haitian
    preference closer to what we have in the African Growth and
    Opportunity Act.
        Finally, make these preferences permanent. There could be
    an opt-out for the Congress or the U.S. Administration in the
    case of a coup or human rights' violations that were egregious
    in some future government of Haiti.
        This, by the way, would have minimal effects on U.S.
    textile production.
        Action to create more flexibility in our immigration policy
    to allow in more Haitians. I would refer you to the written
    testimony for more clarity on this, but the idea could be to
    have a numbers neutral improvement that is substituting again
    some of the other existing ways to get in, and allow something
    like 10,000 more Haitians a year to come here.
        This would reduce greatly the embarrassment that I see in
    the future and that colleagues of mine see when we are turning
    back boats of Haitians in the next year or more.
        An action to take every possible step to channel as many of
    the U.S. resources as can be reasonably channeled through the
    multilateral development banks, through the trust fund that Mr.
    Boisson mentioned.
        I do not know which bank, IDB or World Bank, maybe both of
    those. In particular, the IDB has the multilateral investment
    fund which was a George H.W. Bush initiative in the late
    1980's, works on the private sector, and would make a lot of
    sense.
        Let me also add that these two banks, as you know, are now
    seeking capital increases, and I think one of the big reforms
    that could be encouraged is that they develop more insurance
    and risk management instruments.
        Haiti benefitted from an $8 million payout against a very
    small insurance program that the World Bank had set up. It
    should and could be more because these small, very poor nations
    are subject to all kinds of weather and other external shocks.
        Thank you very much, Mr. Chairman.
        [The prepared statement of Ms. Birdsall can be found on
    page 40 of the appendix.]
        Chairman Meeks. Thank you. Last, but far from least, we
    have Mr. Skrobiszewski, who has 30 years of experience spanning
    investment fund management, socioeconomic development, crises
    communications, public affairs, government agency reform, and
    strategy development working in the United States, Europe,
    Africa, Asia, and the Middle East.
        For much of his career, he has been called upon to conceive
    and implement innovative solutions to extraordinary challenges.
    At the outset of communism collapse in 1989, he was called to
    the White House by President Bush to discuss strategies for the
    redevelopment of the Polish economy, and later to meet Lech
    Walesa within days of the fall of the Berlin Wall.
        In 1990, he prepared a forward-looking U.S. Labor
    Department strategy anticipating the fall of the remaining
    Soviet bloc regimes.
        He was recruited to draft a business plan for the Polish-
    American Enterprise Fund, a successful private equity firm
    conceived by the President and the U.S. Congress to promote
    development of the Polish private sector and the institutional
    foundation for a market economy.
        He served initially as an officer of the PAEF and later in
    its sister enterprise fund in Hungary, where he conceived and
    managed the latter's cutting edge, high-tech VC fund.
        He is also director of portfolio management of a Polish
    privatization fund, advised on the establishment of the
    Eurasian Development Bank, and serves today on the Investment
    Committee for the Polish National Capital Fund, financing new
    high tech VC funds in Poland.
        Welcome.

           STATEMENT OF FRANCIS J. SKROBISZEWSKI, ASSOCIATE,
                           VISIONAMERICAS LLC

        Mr. Skrobiszewski. Thank you, Mr. Chairman, and members of
    the subcommittee. I am pleased to be here to describe my
    experiences as an officer of the Enterprise Funds in Poland and
    Hungary and to discuss how this model could be instrumental in
    today's rebuilding of Haiti.
        The Miami Herald's Jacqueline Charles recently observed
    that the prospects of massive spending already has groups
    jockeying for roles in Haiti's revival. For such spending to be
    effective, we must address fundamental questions of what are we
    doing to empower the Haitian people to help themselves? How do
    we support the Haitians in revitalizing their own country and
    give the little people a chance they never had before?
        In building back better, an enterprise fund designed for
    Haiti would focus beyond relief and reconstruction, provide in
    a deliberate and prudent manner essential financing Haitian
    businesses need, to create jobs that are sustainable and offer
    genuine opportunity for the Haitian people at the grassroots
    level.
        In 1989, the enterprise fund was an innovative vehicle
    conceived by visionaries in the U.S. Congress and the first
    Bush Administration to support Central and Eastern Europe's
    unprecedented transformation by jump starting the local private
    sector.
        Congress recognized that capital would be the catalyst to
    building private businesses and to be effective, that capital
    had to be professionally deployed. Financial investors were not
    ready to take unknown risks and enter those markets.
        Thus, through the SEED Act of 1989, Congress authorized the
    establishment of initial enterprise funds with publicly sourced
    capital of $240 million for Poland and $60 million for Hungary
    to be privately managed by bipartisan boards of investment and
    other professionals appointed by the President, with the
    mandate to provide financing and related support to viable
    private businesses.
        In following years, Presidents Bush and Clinton created
    additional enterprise funds under the SEED Act and for
    countries of the former Soviet Union under the Freedom Support
    Act.
        Later, without the benefit of congressional legislation,
    the Clinton Administration also created a modified form of
    enterprise fund chaired by Ambassador Andrew Young for post-
    apartheid empowerment of local SMEs in Southern Africa.
        Such an innovative business-to-business approach applied to
    a developmental mission was driven by private sector strategic
    thinking, decision-making and risk taking, and was executed by
    employing sound operational standards and established
    commercial disciplines, subject, of course, to appropriate
    public oversight.
        This model proved exceedingly effective in terms of
    achieving Congress' primary development objectives but also
    performed beyond expectations in financial terms. This is
    illustrated by the detailed results outlined in my written
    materials.
        The enterprise funds put their publicly sourced capital to
    work financing tens of thousands of local businesses, those
    little people, the little farmers, the entrepreneurs, the small
    people and across-the-board to larger enterprises.
        They established banks and other institutions to extend
    their reach and created underpinnings of market economies, and
    in the aggregate, diligently grew their assets through prudent
    investment decisions.
        Thus, on the completion of their missions, the enterprise
    funds in the CEE region are in varying degrees returning their
    capital to the U.S. Treasury, and with the residual investment
    proceeds, they are establishing charitable foundations in their
    host countries to carry on developmental work.
        For example, the Bulgarian-American Enterprise Fund with an
    initial capital base of only $55 million from Congress returned
    its public funding and established a $400 million foundation in
    Bulgaria.
        Most Central and Eastern European enterprise funds have
    also raised private capital, enabling them to expand their
    operations while returning their public capital.
        The Polish-American Enterprise Fund's now independent
    investment team has raised over $1.8 billion in a series of
    private funds, and in doing so, they demonstrated to global
    investors the opportunities that existed in Poland and
    attracted competing funds with billions of dollars more in
    capital.
        There is no reason a congressionally-mandated enterprise
    fund for Haiti could not likewise achieve significant private
    sector development objectives while maintaining the value of
    its assets by operating in a commercially disciplined manner as
    its predecessor enterprise funds have demonstrated is possible.
        To do so would take one, a critical mass of capital that
    can be freely and flexibly deployed, for example, providing
    long-term equity financing for businesses, capitalizing SME and
    microenterprise loan facilities to provide working capital,
    creating modern financial institutions for mortgage banking, ag
    financing, leasing, traditional commercial lending, and related
    institutional infrastructure.
        Two, appointment of a bipartisan board comprised of
    investment and knowledgeable professionals who understand their
    fiduciary responsibilities and are allowed to freely employ
    private sector approaches unencumbered by bureaucratic
    constraints as could be mandated by Congress.
        Three, a commitment by donors to sustainable development
    through financing local Haitian businesses, which create real
    sustainable jobs and will empower a new Haitian middle class of
    private entrepreneurs.
        Thank you, Mr. Chairman, and subcommittee members. I would
    be happy to answer any questions.
        [The prepared statement of Mr. Skrobiszewski can be found
    on page 74 of the appendix.]
        Chairman Meeks. Thank you all. Thank you for your extremely
    well-informed testimony.
        Let me start with Mr. Boisson. One of the things that I
    hear often is the situation in regards to Haiti about Haiti's
    long-term dependency on aid and the fact that we have over
    9,000 NGOs which things are going through in Haiti.
        There seems to be a general sense among the general
    population and among Haitian government institutions that the
    model of NGOs basically governing things must change after the
    earthquake.
        What is your opinion on that and how do you think we could
    be of assistance there?
        Mr. Boisson. Thank you, Mr. Chairman. My answer to that
    would be the large number of NGOs working in Haiti reflect a
    perception that Haiti needs to be assisted, that it is a poor
    country. What I have observed myself is there are many Haitians
    who on profitable businesses can build productive capacity, it
    is just a matter of giving them the proper environment.
        The more you mistrust the private solutions, the more you
    handicap them. One example is because there is so much money
    coming from aid and charity and NGOs, that crowds out
    completely the incentive to create private enterprise. That
    crowds out even the economic signal. The attention of the
    government is completely out of private investors, out of
    businessmen.
        NGOs are necessary but just to supplement, not to replace
    private enterprise and the real support to create a viable
    economy.
        Chairman Meeks. Mr. Fairbanks, let me ask you really quick,
    Mr. Watt and I traveled not too long ago to Rwanda. We had a
    chance to speak with President Kagame and go see what was going
    on over there with the microenterprises.
        What are the key success factors that are observed in
    Rwanda and other places that you think Haiti will have to
    implement so that it can be the success story that basically we
    were seeing taking place in Rwanda?
        Mr. Fairbanks. Thank you for that question. Rwanda is the
    greatest success story in the history of Africa in terms of its
    economic growth, justice, and participation of women in
    government. Paul Kagame will go down in history with President
    Nyerere, President Mandela, and others as the greatest leaders
    in Africa.
        He did two or three things that nobody ever thought he
    could do. The first thing was he built modern institutions on
    top of traditional values.
        If there is one thing we take away from my part of this
    discussion, it is that when he needed to get something done, he
    did not listen to the multilaterals, he did not listen to fancy
    academics, and frankly, he did not listen to me, and what he
    did was he went deep into the history of his culture and he
    found the historical almost archaeological mechanisms and to
    upgrade and improve and he made them modern, and that improved
    the receptivity to the entire nation to do something.
        For example, when he wanted to clean the country, he found
    the notion of Umaganda, which was something the villagers used
    to all go out once a week and clean their villages. He made
    Umaganda a national phenomenon, and then he role-modeled this
    by going out the third Saturday of every month and sweeping the
    sidewalk in front of his own house.
        Gacaca courts, which I am sure you heard about when you
    were there, was a traditional village system of justice that
    was actually more adaptable to trying hundreds of thousands of
    perpetrators of the genocide than any modern court system that
    could be imported from any other part of the world. Paul Kagame
    found a way to rely on traditional values to solve modern
    problems.
        The second thing, in his relationship with the multilateral
    system and the bilateral system, Paul Kagame insisted on four
    things. Number one, there be a shared vision between the
    provider and the recipient. You do not get to do the strategy,
    I do. I am the elected president of the country and you should
    be willing to be guided by my vision and if you are not, then
    you have to go.
        Number two, disbursement has to be made through national
    and indigenous institutions. He is very upset with USAID and he
    loves DFID because DFID will work with him in that way.
        Number three, he wanted investment to increase competence
    beyond applying for more aid. This is what was being discussed
    a few minutes ago. An entire nation will turn its attention and
    configure to receive more aid rather than build the private
    sector, build the academy and build civic institutions, and he
    will not let that happen.
        Finally, there were no parallel donor structures that
    undermine all of the above. Right now, we are talking about a
    big reconstruction institution in Haiti. I think that is
    probably appropriate when the population is vulnerable to
    natural disasters, but it is never going to build the nation.
        It has to be given a very finite timeframe, like 36 months,
    a short timeframe, where it can work to alleviate the suffering
    of vulnerable populations, but then the locus of responsibility
    for building a nation has to put on the shoulders of the
    Haitians. You know what? Whether they are ready for it or not.
        The 5 or 10 percent of leakage through corruption is worse
    than the 40 percent of leakage through the insufficiency of aid
    bureaucracies.
        Chairman Meeks. Thank you. One more question and then we
    are going to go another round. I want to ask Ms. Birdsall a
    question. We always talk about capacity building and the need
    to build capacity, especially human capacity. In the
    earthquake, Haiti has lost almost 40 percent of its public
    servants.
        I was wondering if you had any ideas of where the
    international community should invest mostly in rebuilding
    local and human capital and if there are any models you know of
    that can help that happen quickly.
        Ms. Birdsall. Thank you, Chairman Meeks. I think there is a
    model that was developed at our Center for Global Development
    on the basis of a gift that our chairman made to the President
    of Liberia.
        It is a model under which young people are recruited,
    people who are in their early 30s, and go to work in the public
    service of the government, and through being special assistants
    to key ministers, actually provide unimaginably important
    service to those ministers who are completely beleaguered and
    overwhelmed.
        In the case of Haiti, for some time it is not going to have
    very much support within their own ministries, partly because
    so many Haitians will be going to work for all the NGOs and for
    all the donors who are now flooding into Haiti.
        I think Mr. Boisson mentioned not only does this influx of
    aid from so many different players crowd out private sector
    initiatives, it actually can undermine the ability of the
    government itself to manage the donors and to manage its own
    expenditures.
        This is one example of a model which I think could be built
    on to have maximum use and deployment of the very skilled
    Haitian Diaspora, particularly in this country, if there were
    any arrangements set up, say by USAID or another agency with
    encouragement from the Congress, that made it easier for
    members of the Haitian Diaspora to go for 6 months, for a year,
    for 2 years into public service in Haiti, then that would be
    part of building up the capacity of that public service.
        This has worked very well in the case of Nigeria, in the
    case of Malawi, in the case of other countries in Africa where
    there has been some mechanism by some private donor often to
    create a channel that provides a framework for people to go
    into the public service at different levels.
        The model we have, I think, is a very low-cost one which
    does not take away management functions from the key ministers
    because people go when they are young and they are special
    assistants. They do many of the things that no doubt you have
    staff help on yourself and your colleagues have here on Capitol
    Hill, which can be very important, and which can be part of a
    larger process of gradually recruiting and building up local
    Haitian capacity in key functions that are very nitty-gritty,
    not glamorous.
        Just to give you a feel, we had as many as a dozen of these
    special assistants in Liberia being paid $30,000 to $35,000 a
    year, which was far more than most of the public servants but
    far less for most of them than they might have been earning
    here. Half of the people who applied to do this activity were
    Liberians themselves and several have ended up as vice
    ministers and in other offices of the government.
        Chairman Meeks. Thank you. Mr. Miller?
        Mr. Miller of California. Thank you, Mr. Chairman.
        This hearing today was based on some conversations we had
    in the previous hearing and my concerns with what we have to do
    in Haiti. I really enjoyed all the testimony today.
        If we are looking at long-term development of an economy,
    that is one issue. We are dealing with the immediate impact to
    a disaster today in Haiti.
        If you just look at the 78 million cubic yards of rubble
    that have to be dealt with, the entire nation has about 150
    excavators, we are not talking about what you would see on
    American construction sites. We are talking about old, worn-
    out, antiquated units sold off to that country by many
    contractors in the United States and other countries, and they
    are not capable of doing the work.
        They do not have the technical expertise within the labor
    force and the construction industry to deal with the
    infrastructure needs of electrical, roadways, bridges, sewers,
    storm drains, and if that is debatable, go look at what they
    had, and it will tell you clearly they do not have that
    expertise.
        The United States is going to be the largest donor helping
    Haiti, no doubt about it. As I talked to the chairman and other
    members, we need to look at providing the ability to rebuild
    this country.
        I really enjoyed the comments of Mr. Fairbanks where you
    were saying that 80 percent of the aid never gets to the
    purpose intended, and Haiti is prolific with corruption, as
    many countries are, because you have a disaster today of $14
    billion with a GDP of half of that.
        We are going to have a tremendous amount of money going
    into Haiti in a very short period of time, and for that reason
    alone, I think we need to take the responsibility as the United
    States Government if we are going to provide this aid, let's
    provide the expertise.
        With 15 million people unemployed in this country and
    tremendous labor force in the construction industry who have
    the expertise to immediately deal with the impact on this
    nation and the reconstruction of this nation, we should do
    that.
        Mr. D'Sa with Gap, you have done a great job. You employ
    people. You put them to work. In order to do that, you have to
    have everything in place to do that.
        Haiti has an ability we do not have in this country as far
    as environmental standards and labor standards. They do not
    have to deal with things American labor deals with, and we are
    going to deal with trade issues and investment issues later,
    and when we do that, we need to look at the impact we have on
    American industries in the future, too.
        Like China has a tremendous benefit over the United States'
    workforce and businesses as far as trade standards. They have
    virtually wiped out the manufacturing industries and the
    furniture interests, specifically in North Carolina and
    California and other States in our Nation. They no longer can
    compete with China.
        We do need to look at helping the Haitian people without a
    doubt once reconstruction occurs, but we have to reconstruct
    immediately.
        My concern and the chairman's concern is throwing money
    into a nation and thinking 80 percent of it or 50 percent or 40
    percent could disappear based on corruption, putting the
    dollars in the hands of individuals who are not used to dealing
    with these types of dollars and expending that amount of
    currency in a very short period of time to deal with the
    immediate impact and disaster that we are facing over there.
        None of my comments should be taken in a negative term. It
    is not meant that way.
        We need to help these people. The best way to help these
    people is to provide the expertise, talent, and the resources
    necessary to immediately mitigate the impact on this country. I
    believe if we do not take some oversight over it based on the
    American tax dollars we are investing in it, we will not be
    doing a service to the Haitian people and there is a tremendous
    labor force available in Haiti, manpower to get out and do
    specific jobs, but they do not have the expertise, and that is
    not impugning the people, they do not have it.
        One hundred and fifty pieces of equipment, that would be an
    embarrassment on an American construction site. In fact, these
    units would not even be allowed on American construction sites
    because they do not meet the standards and the environmental
    requirements placed on them by the government here.
        Mr. Fairbanks, I would like to let you respond and maybe if
    you think I am incorrect in some way, I would like to have you
    expand on that.
        Mr. Fairbanks. No, sir. I think what you are saying is a
    very valuable perspective on the short-term needs versus the
    long-term requirements.
        I think our points of view reconcile around the way that
    the work is procured. I would make two suggestions. The first
    one that I would hazard a guess we would agree on and the
    second one, we will not agree on, but I would like to put it
    out anyway.
        The first one is as we go out to procure services through
    USAID, we should envision contracts where the vendors are
    punished for poor performance and rewarded for superior
    performance.
        Right now, what we are seeing is too much responsibility in
    the proposal process and too little responsibility over the
    outcomes. That is the way to characterize aid vendors right
    now.
        In the proposal, they can do anything. You have a problem,
    I can fix it. You have a problem, I already solved it somewhere
    else. Six months later, 2 years later, I could not do it
    because the people are stupid. I could not do it because the
    government is corrupt.
        We go from too much responsibility to too little
    responsibility.
        Mr. Miller of California. If we invest American expertise
    in our companies, combined with Haitian labor, the result will
    be what we need it to be, and that is beneficial to the people
    of Haiti and it will be done in a proficient way, done
    properly, and the resources that are there when we leave are
    going to be long-term resources. They are not going to be
    substandard electrical systems, substandard bridges,
    substandard highways, substandard sewer systems. They will be
    done in a fashion that they should be done in and the Haitian
    people can build upon that when we pull back out.
        Mr. Fairbanks. That is correct, sir. In fact, you get
    development twice. You move the rubbish and you leave behind
    skilled people. That is a great vision.
        What I want to focus on is the procurement process to make
    sure the contracts are done right so that the incentives are--
        Mr. Miller of California. I agree with you 100 percent on
    that.
        Mr. Fairbanks. That is really broken right now. The vendors
    get away with murder.
        The second comment I would like to make which I do not
    think we will agree upon but I would love the opportunity to
    test it with you, is that I think eventually USAID needs to go
    to untied aid, which means we have to give aid that is not tied
    to American suppliers.
        I know this is not the time in our Nation's economic cycle
    to have that discussion. The fact is other countries already do
    this, Japan and the United Kingdom. They are much more accepted
    as development partners around the world. You also get
    development twice.
        If we were to put out a contract that procured services
    from the Dominican Republic or governance consultants from
    Rwanda, we would also get development twice because we would be
    helping the Haitians solve a problem and we would be helping
    the other countries to develop that capacity.
        This is not the time or place for that argument, but some
    day, it has to happen.
        Mr. Miller of California. In closing, we are dealing with
    an immediate disaster. I cannot think of any group more capable
    of dealing with that than the American workforce and American
    contractors, in combination with Haitian labor.
        When that immediate disaster is dealt with, we pull back
    out, the Haitian Government takes control of their own destiny,
    and hopefully at that point of time, the infrastructure is in a
    situation and modernized enough where it really will benefit
    the Haitian people in the future, plus it gives the Haitian
    people a matrix that they can look at on how things should be
    done. It gives Haitian contractors an opportunity to work with
    American companies to realize how things can better be produced
    for the long-term benefit of their people.
        I feel strongly, Chairman Meeks, we need to look at that.
    We need to not only be concerned about the Haitian people. We
    also need to be concerned about the American workforce and how
    that American labor in conjunction with labor of the Haitian
    people can resolve the impact on these people immediately, deal
    with the disaster, and move on and then let their country take
    over.
        I yield back.
        Chairman Meeks. Mr. Watt?
        Mr. Watt. Thank you, Mr. Chairman. Let me thank the
    chairman for convening the hearing. It has been a very
    interesting hearing.
        Mr. Miller's questions actually helped me try to reconcile
    some of the things the panelists were saying, particularly Mr.
    Fairbanks. When I first heard his testimony, your oral
    testimony, not having read the written testimony, I was a
    little concerned that we were going to read too much into it,
    but then I went back and skimmed quickly what you said in your
    written testimony, and just wanted to make sure that we do not
    overread what you were saying.
        It sounded like initially you were saying, let's do away
    with this aid and not bother with it. You are more concerned
    about how it plays itself out. I think that is a concern that
    Mr. Miller expressed and all of us are concerned about.
        Let's make sure that we are just not providing fish, we are
    really teaching or supporting the ability to learn how to fish,
    so there is a longer-term impact. That is really what you are
    saying, I think.
        Mr. Fairbanks. I would take it even further, Congressman,
    by suggesting that we should be teaching the Haitians how to
    export the world's most sophisticated fishing rods to the
    world's most demanding fishermen for the highest possible price
    points.
        Mr. Watt. Gotcha. I would not argue with that as a general
    proposition. I do not think any of us would.
        There is some notion that we are really better-positioned
    to do that with Haiti than in some other locations because we
    really have never had a direct or for a while we have not had a
    direct relationship with the Haitian Government because of the
    U.S. concerns about corruption and what-have-you.
        A lot of the infrastructure that is there that we have
    worked through has been through NGOs that give the capacity to
    have a different relationship with non-government
    organizations, although I am not sure Mr. Miller or any of us
    would think building up and supporting a more robust and honest
    and transparent government is not also necessary.
        This is somewhat a philosophical discussion about very
    concrete needs and some of these things can by necessity be
    done more effectively through government structures than
    through private sector or non-government organizations.
        I guess what we are trying to figure out here is how you
    appropriately balance those things in somewhat of an emergency
    situation and play it out long term so there are some skills
    left at the end of the day.
        Any arguments with any of that--the gentleman whose name
    did not roll off your lips either--I was kind of hoping at some
    point Stephane, who has that French flavor to his presentation
    might do some of these introductions. I think a lot of these
    names might have been done a better service.
        I think at the end of the day, it sounds to me like
    everything that all five panelists are saying is reconcilable
    and perhaps maybe more so in Haiti than in some other settings.
        Mr. Skrobiszewski. Thank you, sir. We had capital and we
    came into Poland with the capital in the early days, and we
    worked with the government when it was appropriate to work with
    the government to influence policy change, influence
    development of institutions, but at the same time, our focus
    was on developing the private sector by providing capital to
    build businesses.
        In building those businesses, you build the fundamentals
    and on that basis, you create the ecosystem from the bottom up.
        Mr. Watt. Basically, what you are suggesting is we follow
    the same or a similar approach in Haiti?
        Mr. Skrobiszewski. Commerce is taking place every day in
    Haiti by the little people and those little people need capital
    to grow. By helping them build their businesses, you also help
    build the other institutions that support those businesses.
        Mr. Watt. I am not arguing with that. I agree with you. I
    do not want us to walk away from here with the message that I
    thought I was hearing first from Mr. Fairbanks, and I came full
    circle when I read it, that this can be done solely through
    that mechanism as opposed to supporting a robust, honest,
    transparent government that has an important role to play.
        Mr. Skrobiszewski. It is one piece of a large pie, exactly.
    In the SEED Act in 1989, there were a range of traditional aid
    programs and the enterprise fund, which was an innovative
    unprecedented approach.
        Mr. Watt. I think I have heard that message and I do not
    disagree with it. I think we need to be cognizant of that. I
    thank the gentleman for recognizing me and for convening the
    hearing, and I yield back.
        Chairman Meeks. Ranking Member Bachus had a number of
    questions that he wanted to ask, and we talked about how he had
    been instrumental before, and he left the questions, so I am
    going to allow Mr. Miller to ask the questions of Mr. Bachus.
        Mr. Miller of California. Thank you. Mr. Skrobiszewski?
    Correct?
        Mr. Skrobiszewski. Correct.
        Mr. Miller of California. I did that pretty good for a
    German.
        Mr. Watt. You did not do all that well either.
        [laughter]
        Mr. Miller of California. I was going to give you a lesson
    in that but I said not to my friend.
        His question, first of all, is how did the enterprise funds
    avoid local government corruption, private enterprise
    corruption?
        Mr. Skrobiszewski. As I stated to mention to the previous
    question, it takes two to tango. We had the capital. If we
    smelled anything, we did not put the capital into the
    particular venture. We had the local authorities, we had the
    national authorities working closely with us because they
    wanted to see--
        Mr. Miller of California. You also kept control of it, it
    sounds like.
        Mr. Skrobiszewski. Pardon me?
        Mr. Miller of California. You also kept control.
        Mr. Skrobiszewski. We kept control of the money. We had
    control. We took a disciplined approach. If we smelled anything
    of corruption, we did not do it. We did not put the money out.
    Money talks.
        Mr. Miller of California. I agree. What are the fundamental
    reasons for the enterprise fund's success in helping rebuild
    the private sector of Central and Eastern Europe?
        Mr. Skrobiszewski. I would say first and foremost, the
    professional management that was appointed to bipartisan boards
    and the professionals they hired that were able to take a
    disciplined approach in putting out the capital.
        Mr. Miller of California. Qualified expertise.
        Mr. Skrobiszewski. Exactly. They were primarily American
    driven. We brought over our capabilities, and of course, we had
    the benefit of a lot of Polish Diaspora that came to the United
    States during the marshal law period, as there are many Haitian
    Diaspora here today.
        We also had the freedom to operate freely. That is we did
    not have to go back and ask permission. We made commercial
    decisions because we had provisions in the legislation that
    allowed us to do that.
        Mr. Miller of California. I think that is a great pattern
    for American investment, too, in the future.
        Mr. Fairbanks, you point out that, ``Aid largesse can
    distort private initiatives, stifle democracies, amplify ethnic
    based patron/client relationships and promote corruption.''
        Given the amount of aid that is likely to flow into Haiti,
    how do you prevent such negative side effects?
        Mr. Fairbanks. All of those side effects are going to
    occur, so it is a question of balancing the benefits with these
    disadvantages.
        Any time you put a lot of money into a situation, you get
    Dutch disease, which is inflation to the local economy. You
    also get the leadership distracted, as Mr. Boisson had
    mentioned very eloquently, and you also promote cultural values
    that are anti-innovation, paternalism, looking at wealth as a
    series of bureaucratic relationships and so on.
        These things are unavoidable and you still need to go ahead
    and do it, as you pointed out, sir, in the short run, to
    alleviate catastrophe.
        The important point is we decide at what point in the near
    future we are switching from dealing with acts of God and
    starting to deal with acts of man.
        My own sort of swag at this is it is very short, 36 months.
    At that point, the budget is declining. The locus of decision-
    making is moving from the metro polls of North America, Europe
    and Asia onto the Haitians themselves, and that they know about
    this.
        That we set up punishment and reward systems, allocate
    decision rights, and look at very clear metrics of performance,
    and then we get out of the way.
        There will still be problems, but it will promote, if you
    excuse this paternalistic phasing in itself, the maturation of
    that society.
        Mr. Miller of California. I agree with you 100 percent. A
    general overall question for the panel, whomever would like to
    respond to it. He says, how can the United States navigate
    through the tricky waters of helping Haiti rebuild speedily
    without seeming to take jobs away from the Haitians and are
    there some instances in which speed of reconstruction is more
    important than maximum employment of the Haitian workers and if
    so, who would make that determination?
        Yes, sir?
        Mr. Boisson. I would like to address your question and
    complete what Mr. Fairbanks was saying. I think that what we
    need to do is two things. First of all, we have to build a new
    Haiti, not only in response to the emergency, but build a new
    Haiti.
        That means if we lose sight of that, we are going to
    provoke a catastrophe because the catastrophe was partly
    manmade. It was bad governance, for example, with there was a
    complete lack of control of the construction center, it was
    because of bad government. Yes, we have to respond to the
    emergency but we have to build human capacity and its
    institutions.
        As the private sector is concerned and the importance of
    buying--using Haitian resources, there must be almost an
    obligation of U.S. companies, be they competent as they are, to
    build local capacity. There also must be an obligation of
    multilateral and bilateral donors to build capacity.
        That means, for example, if you have a rubble contract,
    yes, its expertise lies with the U.S. company, but there is
    nothing that prevents them from sourcing from some of the
    manpower in anything they can source from Haiti and building
    capacity so that in 2 to 3 years time, you may have a Haitian
    firm ready to do any job of that sort.
        Mr. Miller of California. We have trained them.
        Mr. Boisson. Train them. In a sense, this is exactly the
    same image we should use for the international community.
        If you have, for example, that big unit that is going to
    manage and you do not address the issue of institution and
    political institution in Haiti, and how that society can
    control their government and avoid corruption, you just are
    pouring money, you may just increase the corruption.
        Mr. Miller of California. You are; yes.
        Mr. Boisson. Building institution and being able to provide
    public or private services, we must have a result where there
    is as much competition as possible, and that is what Mr.
    Fairbanks was saying. I support it. I think by having--the
    reason why the private sector works, be it in Haiti, the United
    States or anywhere, is because private entrepreneurs are
    penalized, they disappear, when they do not manage well. That
    does not happen somehow in providing international aid
    supported public services, and that is bad for the economy and
    that is bad for the society.
        Mr. Miller of California. Thank you. I yield back the
    balance of my time.
        Chairman Meeks. I would just want to say this, if there is
    anyone who has been focused on Haiti through all of its time,
    up's and down's and around, the person who has been focused on
    Haiti and making a difference and keeping Haiti on the
    forefront here in the United States Congress, one of those
    individuals is the gentlelady from California, who was the
    writer of the debt relief bill that we passed unanimously in
    the House last week, and I yield to the Honorable Maxine
    Waters.
        Ms. Waters. Thank you very much, Mr. Chairman. I certainly
    appreciate the leadership that you are providing on this issue
    and the fact that already you have held two hearings and not
    letting this issue die after the crisis is focused on for a few
    weeks or so, and your commitment to have a redevelopment plan,
    a national plan for Haiti. I think that is very important.
        I am sorry that I was not here to hear all of the witnesses
    this morning, but I have quickly glanced at some of the
    testimony that has been given, and in going through the
    testimony, I see that a lot of what has been said seems to be
    basically a growing consensus about the direction that all of
    the funding agencies and donors and USAID and everybody needs
    to take in order to deal with the redevelopment of Haiti.
        Let me just say that on my last visit to Haiti a couple of
    weeks ago, we organized about 130 would-be business people who
    are basically lawyers, doctors and educated people in Haiti who
    have not been involved in business per se in Haiti, not been
    involved necessarily in government. I think it is typical of
    the middle class that has been left out and the middle class
    that has not been developed for Haiti.
        I am convinced that we have to develop through our work a
    middle class in Haiti. That, I think, can be done in a number
    of ways. One of the testimonies that I glanced through talked
    about the investment in education and all of that in order to
    develop this middle class and the creation of jobs, etc.
        I think that is all true. I want to say that USAID is
    working very, very hard. The U.N. is working very, very hard.
    They are working despite the fact they have lost some of their
    own personnel, etc.
        But it is very frustrating to see that the only way that
    services can be delivered in Haiti is through the NGOs. I hear
    numbers anywhere from 6,000 to 10,000 NGOs in Haiti, and while
    I agree that there are a lot of social services that must be
    delivered and work that must be done, I get this feeling that
    increasingly some of the NGOs are taking over what should be
    business in Haiti. That is frustrating.
        I want to give you an example of that. I have some pictures
    we took, Mr. Chairman, and I will pass them down to you, of the
    temporary shelters that are being built in some locations. This
    is very slow getting off the ground.
        As a matter of fact, they are disseminating the plastic
    sheets to provide some kind of shelters. The need is so great
    until even these temporary shelters, not many of them are going
    to be built, and the NGO that is kind of responsible said maybe
    they might get 20,000 of them built, I doubt it.
        This is a business. This should be done by business people.
    This should not be done by a nonprofit. I talked to the persons
    who were working on it and the guy who really knew how to do
    it, who was on payroll, really should have been the business
    that owned this operation and providing this temporary shelter.
        I think we have a job to do working with the government to
    try and do everything that we can in this crisis to help create
    some small businesses, and to help get people who have some
    expertise in contracting, in building, and doing some things
    into some new business opportunities rather.
        I invited USAID to send over the contracting officer with
    the 130 business persons that I organized, and he was very
    generous and he came over. He brought with him basically the
    requirements for doing business with USAID.
        The first thing is, it was all in English, it was not in
    Creole, not even in French. We had interpreters there. We had
    people, a lot of them could speak English, but when you start
    to use terminology that people may not be familiar with, you
    really have to translate it, even for some of the English-
    speaking people.
        Everybody started to laugh at one point when he said that
    for unsolicited proposals, you need to have 3 years of audited
    receipts. We were talking to people whose homes and everything
    else was blown away and everything they owned. Even the
    government downtown in Port-au-Prince, the government
    buildings, all their papers are still on the ground.
        This young man was great. He was intent on talking about
    how to do business with USAID, but I had to talk with him and
    say this will not cut it, this will not do it.
        That is one of the problems we have. It is a problem. It is
    an innocent problem. It is not a contrived problem. It is an
    innocent problem. A lack of knowing how to understand the
    culture and deal with the people you say you want to help.
        There are several things that we have to do. First of all,
    all of the clusters in Haiti, local people are not involved.
    The NGOs run them. You have health clusters, education
    clusters. They meet every day. It is a secured operation. Local
    people cannot get into the clusters where the planning is going
    on for the very people who they are planning for.
        The other thing is, just reverting a little bit back to
    what is going on now, many of the camps that have opened up are
    not getting serviced.
        I was in a camp of 650. They have tarps. They still need
    latrines and some of those things. The way it works, the camp
    has to be identified by an NGO. The camp has to organize its
    little committee with who is going to be in charge of some
    things. Then they cannot get the tarps, they cannot get the
    food, they cannot get the water and they cannot get the
    latrines until the NGO gets to them.
        This crisis, they should have these plastic sheets on some
    flatbed trucks rolling around putting them everywhere they can
    put them and not the organizational structure that ensures the
    NGO is running it and in charge. I think that is important.
    That is something that can come, but the way that it works,
    until again the NGO identifies the camp, they have to sit there
    and wait.
        I was in a camp that had nothing. They had been building
    frames for the tarps to go over, and we finally went to USAID
    and brought them out there on a Sunday and met with the people
    who had already formed the committee, etc.
        The point of all this is there is a lot of room for
    business. Not only the big business that some of us are talking
    about, but small business that Haitians could be doing, that
    would help them not only to earn money but to become better at
    being business persons.
        I just think that we cannot have redevelopment without
    Haitian involvement and Haitian ownership. That is really
    important. The development of the middle class, Haitian
    ownership, and I would like to see--I have talked with the
    chairman about this--credits given to American firms, any other
    firms that come in to do business that have included in that
    proposal a way that they are going to include people on the
    ground in Haiti. I think they should be given credits for that.
        I think American firms, firms from Canada or France,
    everybody has a role to play. We cannot play that role in the
    absence of involvement and ownership of the Haitian people.
        Just yesterday, there was a meeting that was put together
    by the Inter-American Development Bank, some of you may be
    aware of it, in Haiti, with the international community.
        I talked with the director and I said I want to know if you
    think you have some people who are smart enough to be in
    business, Haitians, who are invited to this conference, and not
    just the same, for lack of a better description, five families.
        We know where people turn because this is what people know
    and understand about Haiti, that which is referred to as kind
    of the business elite, etc., that is involved in all the
    export/import, etc., and the fact that this emerging middle
    class or would be middle class have not been involved.
        They said no, we gave them 10 names because they were
    almost at capacity, to invite some of the business people that
    we had at the meeting of the 130 where USAID had come out and
    they have agreed to come to some other meetings that we will be
    setting up with the middle class or emerging middle class.
        In all that we do in the redevelopment of Haiti,
    encouraging those firms who really want to do good business,
    and you are right, we are not talking about shoddy business,
    who really want to do good business, to come in and include
    joint ventures and participation on the ground and maybe not
    even joint venture ways, but some ownership ways that can be
    created.
        Unless we do that and we have an appreciation for the
    culture and we have Creole that is used in the explanation of
    how our culture works and what we expect, we are going to make
    the same mistakes that I think we have made historically in
    Haiti.
        I just want to thank all of you for your expertise and your
    background and for what you had to offer, but let us all
    collectively work very hard to do it and do it right, and to
    make sure that working with USAID and with the U.N. and with
    the Inter-American Development Bank and others that we include
    the kind of approaches and training and development of those
    that we want to understand what we are talking about with how
    to do business with USAID.
        I cannot do business with USAID. Many of the minorities we
    represent cannot do business with USAID. We cannot follow this
    so we cannot comply with it.
        We have to undo the mystery of it and get right down to
    getting it done.
        Thank you for the time, Mr. Chairman. I yield back and I
    appreciate it.
        Chairman Meeks. I ask unanimous consent that Mr. Clay be
    permitted to participate in today's hearing. Without objection,
    it is so ordered.
        Mr. Watt. Can I object? Oh.
        [laughter]
        Mr. Watt. Can I reserve the right to object, just long
    enough to tell Mr. Fairbanks that he probably has been
    surprised at how entrepreneurial and community-oriented we are
    on this panel. Sometimes, we get accused of being anti-
    business. I think you could relate to the comments that
    Representative Waters made in a special kind of way.
        With that, I will not object to my friend participating in
    this hearing.
        Mr. Clay. I thank my friend from North Carolina and let me
    say Amen to what Ms. Waters said and thank the chairman for
    conducting this hearing and allowing me to be a part of it. I
    appreciate that.
        Let me thank all of the witnesses for their testimony and
    along the same lines as Mr. Miller and Ms. Waters, I have heard
    from several members of my church who minister in Haiti who
    have talked about some of the more immediate concerns that they
    have, especially with the rainy season here, with the situation
    not really moving like they would like to see it move.
        Let me just say I put this question out to the panel. Going
    forward, what should we do differently as far as rebuilding the
    infrastructure of Haiti, as far as involving Haitian citizens?
        Will there be groups like Habitat for Humanity involved in
    helping rebuild homes? Will there be new building codes for
    building these structures, to make them somewhat earthquake
    resistant? Will the Haitian people, as Ms. Waters mentioned,
    benefit from getting some skills and being able to support
    themselves and their families with a job?
        Is there a timetable for that? Can anyone try to answer?
    Yes, sir?
        Mr. Skrobiszewski. Yes, sir. Thank you. I can respond to
    some of those questions. It is really stimulating the local
    Haitian private sector and putting capital in their hands, as
    we did with our first program at the enterprise fund addressing
    the very concerns that Congresswoman Waters was raising, that
    avoided the complexities of the USAID requirements.
        We did community lending. That was one of the first
    programs we did. Thousands of Poles lined up to get the money.
    They did not understand some of the aspects. We had a small
    application and we went back and cleaned it up. It was all in
    Polish. Some of them learned more about their business than
    they ever knew before in just filling out the application, even
    though they might not have gotten the loan. That ended up
    making 10,000 loans over the 10-year period, and we did another
    126,000 micro-loans.
        That establishes the foundation, and then if you are also
    working--it is the private sector that is making investments in
    these kinds of firms that are imposing the standards. They want
    to see construction according to certain standards, if they are
    making investments in that construction, because it is a
    longer-term return you are looking for.
        When we created a mortgage bank, when we invested in
    construction companies, we impose those kinds of standards, and
    then that filters down through the economy.
        Mr. Clay. Yes, Ms. Birdsall?
        Ms. Birdsall. When I was listening to Congresswoman Waters,
    Congressman Clay, I got a little depressed. I endorse fully the
    remarks of Mr. Skrobiszewski regarding having these enterprise
    funds.
        I want you, because you, with all due respect, you
    representing the Congress are part of the problem of USAID's
    complex arrangements. As he said in speaking, in Poland and in
    Eastern Europe, we avoided the complexities of USAID, went
    around them.
        I think if you want to have something happen differently in
    Haiti, one important step would be to support USAID having the
    flexibility to do the kinds of things that Congresswoman Waters
    was talking about, without having to worry so much about an
    accretion of rules, an accretion of procurement arrangements,
    the problems of everything being tied in terms of aid that
    Michael Fairbanks referred to.
        Mr. Clay. Would that require some kind of legislative
    change or allowing them to waive the rules that they operate
    under now?
        Ms. Birdsall. One approach would be to say since Haiti is
    so special, it is so close to the United States, let us give
    the new Administrator of USAID some special period of greater
    flexibility and test it out and see what happens.
        There is a lot of eagerness at USAID to clean up and have
    greater capacity to do exactly the kinds of things--
        Mr. Clay. Their hands are tied now?
        Mr. Birdsall. Their hands are largely tied. I think if this
    subcommittee could use Haiti as a vehicle for also helping our
    Administration get much greater value for money and work much
    more effectively with the government of Haiti on building
    government capacity, that would be tremendously good.
        The second thing I would say is it is not politically easy,
    I understand this, but to the extent possible, I urge the
    Congress to put some of the resources, as much as possible,
    through the multilateral institutions.
        Why? They have more open procurement. You reduce the
    problem of coordination. If every donor insists on putting her
    flag or her flag on every health clinic or every can, then you
    are creating this burden for the government of Haiti to finally
    take charge in the way that you are making it harder for the
    new administration in Haiti to do what President Kagame was
    able to do in Rwanda, as other members of the panel have said.
        It is just a thought in response to the very good
    statements you are all making, that there is a way perhaps to
    have Haiti, a response in Haiti, be the leading wedge of a
    larger reform that should be on the agenda.
        I am sure you know that some of your colleagues in other
    committees are thinking about new foreign assistance
    legislation. There has not been new authorization legislation
    in decades.
        To support that new legislation as well, but perhaps to
    build some momentum for it by having some special interim
    arrangement for Haiti.
        Mr. Clay. Any other thoughts on the panel?
        Mr. Skrobiszewski. Yes. I just want to clarify that we work
    closely with USAID. They had their capabilities and we had
    ours, and ours was focused on commercial practices. That is
    investing and lending on commercial terms, according to
    commercial disciplines.
        That worked very well together. They brought other
    resources to bear. We had that flexibility that I mentioned
    because Congress granted it to the enterprise fund specifically
    in the SEED Act, that gave us the capability to do our
    investments in a way that were commercially responsible.
        Mr. Clay. Thank you for your responses. I thank the
    chairman for his indulgence.
        Chairman Meeks. Thank you. Before we close out, Mr. D'Sa,
    let me just ask you a question. Gap is still doing business and
    pursuant to some of the questions that Ms. Waters talked about,
    do you have any examples? Are you using Haitians now? Are you
    still getting your shipments in and exports and imports in now?
    Can you just tell us what you are doing in regard to Haitians
    on the ground now?
        Mr. D'Sa. Thank you, Mr. Chairman. Ms. Waters, I love the
    story you told us about USAID and the missing Creole
    translations.
        In one of my first visits to Haiti, when we usually walk
    around, we do an evaluation of the factories. I talked to the
    people on the floor, and the owners, of course, told me what a
    wonderful factory they had and how strong the management was,
    and how they could take care of productivity efficiency and
    quality.
        I speak a little bit of French, no Creole. I asked one of
    the Creole supervisors there to explain to me why he did what
    he did, and he could tell me what he did but he could not tell
    me why he did it.
        As I dug deeper, what I found was the management of the
    factory, the senior management was from Asia. The middle
    management was from the Dominican Republic. You had people who
    spoke English, who spoke Spanish, one or two spoke a little bit
    of French, and nobody who spoke Creole.
        Just like you had with USAID, we had disconnects 3 years
    ago in our factories as well. We have been working to change
    that. Similar stories.
        Mr. Chairman, coming to your question, we have been working
    with Haiti and with Haitian suppliers of services and some
    foreign investment as well. We had identified certain
    impediments to investment and challenges before the earthquake.
        Since the earthquake, those challenges have only been
    exacerbated, but yes, we have been working with our suppliers
    there and things have been moving along, and yes, we have
    Haitian services in place.
        The one thing that Gap does in most of the countries that
    it works in is capacity building and empowerment to the labor.
    A few years ago, there was hesitation on the part of Congress
    and there was a requirement for certain elevations in the
    factories that we worked in, sustainability, social
    responsibility, labor standards, management, etc.
        With the expertise we have, the intellectual property we
    own within the company, we rolled out workshops, not just for
    our suppliers, but for all suppliers in several Central
    American countries, to help them elevate their standards,
    taught them situational leadership, enlightened management, and
    then for the workers, you have to keep in mind that in most of
    these countries, people who work in the apparel industry tend
    to be illiterate. They do not know when they are eligible for
    overtime or how to manage their own wages, etc.
        Simply teaching them not just the entrepreneurial skills
    but self-management skills, how do you track what your earnings
    are, what are you entitled to, how do you manage your funds at
    home, how do you do budgeting, these are the kind of classes
    that we roll out. This is the kind of education that we do.
        In several countries in Asia today, Gap is involved in what
    we call the competitive literacy initiative, teaching people to
    read and write and from there on, creating career advancement
    opportunities.
        There is another program we have called PACE, which stands
    for personal achievement and career enhancement. To a smaller
    extent, some of these have already started to be rolled out in
    Haiti in cooperation with a company called TC2 out of North
    Carolina, that started with training the trainers who are
    Haitians, and then the Haitians go out and start training
    workers in factories to be able to manage their careers, to be
    able to manage their personal lives.
        That is one place where we are beginning to empower the
    Haitian labor, the Haitian supervisors.
        Yes, we are working with Haitian services, transportation,
    catering services in the factories.
        Around the apparel industry, yes, there are a number of
    opportunities for Haitian medium and small enterprises and it
    is beginning to happen and hopefully if HOPE II is
    reconstructed to be able to, as Ms. Birdsall and I have
    referred to, if we raise the TPLs and we open the product
    offering that is available, we should be able to do a lot more
    for the Haitian people.
        Thank you.
        Chairman Meeks. Thank you. Let me, at this time, thank all
    of the witnesses for your testimony. I think it has been very
    enlightening. As I think Mr. Watt has indicated, and if there
    is something that is uniting, it has been your testimony that
    we need to create jobs for the Haitian people.
        We need to get money in their hands so they can provide for
    their families. We need to teach them how to sell that
    exclusive fishing rod to us in the United States, so they can
    participate in the global economy.
        With that also comes the human capacity building of a
    government so that the people can gain the confidence and have
    confidence in it as was beginning to happen prior to this
    earthquake.
        We are going to stay focused. This subcommittee will
    continue to stay focused on Haiti, even when the cameras are
    gone. We are already preparing our next hearing on Haiti, which
    will be dealing with microenterprises, so we can make sure that
    there is continuing progress.
        Congresswoman Clarke, for example, she has some ideas, and
    I believe she is working with you in trying to make sure we
    create a fund.
        We will be continuing to move forward for a marshal plan
    for Haiti because as I think Ms. Birdsall said and Ms. Waters,
    we need coordinating of all this, so we know what we are doing
    and it is not one hand working against the other. We are all
    pulling in the same direction and working in the same direction
    for making a difference with Haiti.
        Again, thank you for your testimony. Thank you for being
    here. I look forward to having conversations and dialogue with
    you in the near future.
        With that, the Chair notes that some members may have
    additional questions for this panel which they may wish to
    submit in writing, and without objection, the hearing record
    will remain open for 30 days for members to submit written
    questions to these witnesses and to place their responses in
    the record.
        This hearing is now adjourned.
        [Whereupon, at approximately 12:00 p.m., the hearing was
    adjourned.]

                                A P P E N D I X

                                 March 16, 2010

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