[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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