The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer (15 page)

The second and probably more important criticism is that Bachelet failed to quickly deploy the military to quell the crime that erupted in the southern towns.
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Although she had clear reports of criminal behavior, including television coverage that, like coverage of other similar situations worldwide, very likely exaggerated the severity of the situation, she did not deploy troops for 48 hours. There has been speculation that she was mistrustful of the military. She had been a political prisoner during the Pinochet military regime and had been tortured while in prison. She may have been reluctant to unleash the power of the army, which is quite strong in Chile and remains a largely independent institution even today. Perhaps she
hoped the situation would calm down and the local police response would be sufficient. She ended up sending 14,000 troops who helped keep order but also were engaged in rescue and other activities not related to law enforcement. That might sound like a lot of soldiers, but it's insignificant compared to the 70,000 soldiers sent to New Orleans just to restore order after Hurricane Katrina.
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People were said to have come from nearby villages that experienced little or no damage just to take part in the looting, to get something for themselves before the troops arrived.
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People in the towns where looting was reported were afraid, as their text messages and tweets reveal—they were pleading for help. Looted buildings were set on fire as a blatant act of aggression against store owners. Chileans outside the affected areas watched television, listened to news broadcasts, and read newspaper accounts in horror and dismay as their fellow citizens appeared to be plunging further and further into anarchy. There were, however, no reports of rape or murder.

The citizens of Concepción were slowly but inexorably descending into hunger and thirst as food ran out and the water supply failed, and into the cold and dark because there was no electricity. The city was essentially cut off from the outside, and it was difficult to get relief assistance in. The main road is the Pan-American Highway, which begins in Mexico, crosses through Central America, then stretches along the coasts of Ecuador, Peru, and Chile. In many regions it is the only road that can accept motor vehicle traffic. It had been made impassable by the earthquake. Anyone who did not have supplies of canned food and bottled water was in trouble.

Surely that is part of the reason that looting broke out in this region. Tired and worried residents of Concepción expressed relief when the troops finally arrived. But not everyone was pleased at the troop deployment, and many saw very different signals in it. Jose Aylwyn, codirector of a Chilean human rights group, said, “These
lootings, at least in some cases, are explained by the perception of injustice that exists in segments of the population that, in moments of emergency such as this one, consider it legitimate to empty the shelves of superstores and supermarkets that, with the backing of the State, have accumulated wealth at their expense, while they remain poor.”
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Andrés Schuschny, a blogger, posted an article that read, in part:

It is terrible how a natural catastrophe unmasks the face of inequality in a country whose officials refuse to acknowledge it. Because, for example, if 10% of copper revenues had been, long ago, destined to public education and social services (debts always outstanding in the region) and not to increase military budgets, the purchase of sophisticated weaponry, and a passport to a life of luxury for high-rank militiamen, maybe history would be different and the communicators of the system would not be referring to the LUMPEN (lowest social group) as a horde of loose aliens that surfaced with no reason.
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Another wrote: “Can we expect something different in a system that generates segregation and social exclusion? Is it a product of a society that forces competition and to fix things oneself?” And another: “Our bubble burst and the truth hurts. Now we ought to understand it, accept it and work for the reconstruction of our buildings and society.”
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These quotes suggest that the looters—not all of them, perhaps, but many—were marginalized people who had been left behind in the Chilean boom. When they got their chance to even the score, even just a bit, with the 3,000 to 4,000 families that Fernando Paulsen claims have “hijacked the country,” they took it. They took
luxury items—that is, items that
to them
are luxuries beyond their economic reach.
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But when looting goes beyond just taking things—necessities or luxuries—and includes acts of personal aggression against targeted groups or the property owned by those groups, the public mind views the actions as rioting, not looting, and that's very different. That pits one group squarely against another and threatens the established power structure.

The actions of those in authority and especially the statements they make publicly can have a profound influence on a volatile situation. Concepción's mayor, Jacqueline van Rysselberghe, appealed frequently for more military personnel, sending the strong message that the situation was out of control. She entreated the minister of the interior to take responsibility. Many Chileans felt her reaction was detrimental to both the relief efforts and security. One commented, “I feel that Jacqueline Van Rysselberghe scares people more than helps them.” Some leftist organizations, including the Chilean Communist Party, were blunt in criticizing the deployment of the army: “We reject the distortion encouraged by the media with regard to the prioritization of emergencies. [The media] has placed an emphasis on the protection of the right to private property of the supermarkets and the mobilization of the armed forces under the pretext to maintain public security, instead of pressuring for an effective and efficient response in the restitution of connectivity, public services, and nutrition of our affected fellow countrymen.”
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So, different as Chile and Haiti are in so many ways, in the immediate aftermath of the earthquakes, some dramatic and tragic events took place in both. Marginalized groups form majorities in Haiti and Chile. Because they believe they are held in poverty by a political and economic elite, they pounced on the opportunity to take
what they believed they deserve. They knew they might not have another chance. The elite panicked and overreacted, inflaming the situation and criminalizing the victims, transforming them from survivors to thieves.

The one extraordinary aspect of the Chilean earthquake is the outstanding positive way in which economic recovery was achieved. Using numerous on-site interviews and access to government documents, Michael Urseem, Howard Kunreuther and Erwan-Michael Kerjan explain clearly and in detail in
Leadership Dispatches
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how the incoming government of President Sebastián Piñera, which took office only ten days after the quake, acted without delay and set out an uncompromising, all-encompassing plan for recovery, involving all levels of government, the private sector, and the affected citizens. The fast recovery—just a year—can be attributed to strong leadership that understood delegation as well as strong institution that benefited from extremely sound fiscal management. For countries at the development level of Chile, the process of recovery is exemplary.

How has Haiti recovered, and who has benefited? First of all, it is extremely difficult to answer such a question based on standard figures like GDP for reasons already discussed. It also is difficult to come up with something like an average wage.

Before the earthquake, there was a plan for Haiti's economic revival. Its author was Paul Collier, professor of economics and public policy at Oxford, but after a time it might have been thought of as the Clinton plan because Bill Clinton embraced it so completely when he became the UN special envoy to Haiti. Collier is an expert on development issues in Africa (not the Caribbean) and has served as director of research development for the World Bank. He has written several books, the most popular being
The Bottom Billion.
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The title
is now an oft-repeated and very appropriate phrase to describe the poorest of all the world's people.

The core of Collier's 19-page report
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was fairly simple and not a new idea in developmental economics. It involved securing foreign investment to develop a vigorous garment industry that would produce export earnings and create tens of thousands of low-skill jobs. Inducements would include low taxes and a special economic zone. Haiti has a large, able, young workforce with low wage expectations. The formula had worked well elsewhere, particularly in Asia; in fact, it wasn't so very different from a plan crafted earlier by Papa Doc Duvalier with assistance from the US government. Haiti had about 30 garment factories already. It also had in place a special trade relationship with the United States under the HOPE II agreement (Haitian Hemisphere Opportunity through Partnership Encouragement Act), which allowed Haitian-made garments to enter the US duty free until 2018.

After the earthquake, the Collier/Clinton plan became the guiding light for rebuilding Haiti's economy. Clinton, appointed head of the recovery commission, spoke enthusiastically about prospects for recovery and overall economic revitalization rolled into one. The best thing about it was that so much money had been donated to Haitian relief that there was less need to encourage foreign investors; some of the aid money could be used for economic development instead. And used it was.

Not everyone was pleased about how these relief funds were used. A widely cited 2011 report from the Center for Economic Policy and Research (CEPR) showed that since December 2010, no contracts had been awarded to Haitian companies. Of the 1,490 contracts awarded prior to that time, only 23 had gone to Haitian companies. Their total share of the $195 million awarded was only 2.5 percent. A large fraction of these contracts were no-bid contracts, which were justified, as is typical, by the need for urgency.
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CEPR's analysis showed that all the other contracts went to US firms, half of which were so-called Beltway contractors (firms from Maryland, Virginia, or Washington, DC). USAID contracted with Beltway firms for 92 percent of its work; it contracted with no Haitian companies at all.

Of the Haitian companies that did get contracts, one, Sanco Enterprises, was initially awarded nine contracts, mostly for waste removal. Sanco is the largest waste removal company in the Port-au-Prince area. But soon after a cholera outbreak occurred in the north of Haiti, well away from the earthquake-affected areas, Sanco was found to be the contractor that provided waste removal services to the Nepalese UN peacekeepers believed to be the source of the outbreak. Sanco was suspected of being responsible for the outbreak, as improper human waste removal is a leading theory for the spread of cholera, but its culpability was never proven. Sanco improved its performance at the UN base, but by that time it was too late; the cholera epidemic had caught hold and was heading south.

Another contract went to a Haitian company, GDG Beton & Construction, the largest supplier of cement in the country. The leader of the reconstruction commission that awarded the contract is Haiti's minister for tourism, Patrick Delatour, who acknowledges he has a 5 percent share in the company, which he started with a cousin in 2000.
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A few members of the Haitian elite who owned contracted companies have benefited from the reconstruction, and many American companies close to the political elite in Washington have benefited also. It's hard to see how ordinary Haitians have benefited, if at all. The negs still suffer in poverty.

And things haven't gone very well. Initially, an industrial park was planned near Port-au-Prince, but it proved difficult for the government to obtain the necessary land. The new location is far away on the northern coast; you can't get any farther away from Port-au-Prince
and remain in Haiti.
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The cost of construction so far has been about $300,000. The Clinton Foundation says:

In collaboration with the Government of Haiti, the Inter-American Development Bank, and the U.S. State Department, the Clinton Foundation assisted with the development of the Caracol Industrial Park, which could ultimately create up to 60,000 jobs and help to decentralize the Haitian economy. In October 2012, President Bill Clinton joined Secretary of State Hillary Rodham Clinton, President Martelly, Prime Minister Lamothe, and President Moreno of the Inter-American Development Bank (IDB) for the opening of Caracol Northern Industrial Park. Today, the Korean apparel manufacturer Sae-A is the anchor tenant and will create 20,000 jobs alone.

Well, not quite. To date Sae-A is the only major tenant, and 2,000 jobs have been created. Other companies have pledged to join but have been slow to move. Most of the land was acquired from several hundred farmers at minimum compensation, and no alternative form of income has taken its place. Those who have jobs at Sae-A are not so thrilled with their working conditions, security, and pay. They get $4.56 a day. At that rate, a worker would have to work 29 days a month just to buy food.
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And there have always been critics of this sort of development who argue that it is too insecure, because companies can easily relocate if they find a country with even lower labor rates and greater tax and other incentives. These companies have no allegiance to the country. More important, the establishment of a garment factory does little for Haiti's drastic food insecurity. A few more people may be able to pay for imported food, but it will do little to reduce rural poverty.

But to be less critical, the project
is
going forward. A power plant was built on time and under budget and supplies power to the park
and to surrounding villages. And based on the celebrities who attended the opening in 2012 and are identified as supporters of the project—Hillary Clinton was master of ceremonies and Bill Clinton was prominent, and guests included Donna Karan; Brad Pitt; Ben Stiller and his wife, Christine; Haiti's current and former presidents; and Czech supermodel Petra Nemcova, who is ambassador at large to Haiti—then the project is a certain success. I certainly hope so.