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Why We Need a “Marshall Plan” for Haiti

Managing Director of the International Monetary Fund

The saddening and horrific pictures from Haiti after its devastating earthquake brought back vivid memories for me. I lived through an earthquake when I was a young boy in Morocco, and I know how harrowing it is. At that time, there were forty thousand casualties—nothing close to what has happened in Haiti—but I still recall the traumatic scenes of collapsed buildings and mourning families.

Haiti has now been devastated on a far larger scale. The earthquake—the worst in the region in more than 200 years—is the latest in a series of natural and manmade disasters that have, over the years, turned the Caribbean country into the poorest nation in the Western Hemisphere. Some 80 percent of its nine million people live below the poverty line.

The earthquake has flattened much of the capital, Port-au-Prince. According to the International Red Cross, three million people, nearly a third of Haiti's population, will need emergency food, water, and shelter for months to come.

[caption id="attachment_1128" align="alignleft" width="285"] Survivors of the earthquake in Haiti shelter in tents in the capital, Port-au-Prince (photo: AFP)[/caption]

Two hundred years ago, Haiti was the “Pearl of the Antilles.” Its amazingly rich soil then produced four crops a year. It is not unrealistic to imagine that the country can be rebuilt as a prosperous nation. But it needs help over a prolonged period.

That’s why I’m proposing a type of Marshall Plan—an international effort to support the Haitian authorities in rebuilding the country and back its democracy, much as the United States helped rebuild Europe after the destruction of World War II.

The IMF has the capacity to provide urgently needed cash resources very quickly, and we—along with separate contributions from other international agencies—aim to make $100 million available to Haiti in the next few days as a bridge that will get Haiti through from today’s humanitarian needs to tomorrow’s reconstruction. The Fund, in close coordination with other donors, is assisting the authorities in getting cash to circulate in the economy so people can buy food, and civil servants can be paid. Banks will reopen shortly but the payments system is not fully operational yet.

That will take care of short-term needs but we should also plan now for the future. A first donors’ conference is scheduled to take place in Montreal next week, in preparation for a larger conference in the spring that will mobilize financing for Haiti. I hope the contours of such a plan will start to take shape through the process begun in Montreal. In the coming weeks and months, the Fund will participate, by providing money and expertise, in the reconstruction plan that will be coordinated across the international community.

Part of the goal will be to restart private activity, rebuilding businesses and encouraging guarantees for the banking sector so that lending can get under way again. It is also critical to support the creation of jobs in rural areas, where large sectors of the population have moved because of the quake.

With victims still being dug out of the rubble, Haiti’s needs are massive and immediate: the international community is working together to mobilize all available resources and to deliver them as quickly as possible. Once again, in tragic circumstances, the rescue and reconstruction effort highlights that only the international community, acting in concert, can meet challenges that go beyond individual governments. And we must emphasize that the focus on Haiti must not result in the diversion of aid at the expense of other poor countries.

For now, and for at least the next couple of years, Haiti has no payments to make on its existing debts to the Fund, while the emergency loan we are providing is interest-free, with no repayments due for five years. Looking beyond the emergency phase, and as part of an international plan to rebuild the country, there will be a need to reassess Haiti’s debt situation in light of the catastrophic damage to its economy. At that stage, the international community needs to be ready to provide comprehensive debt relief.

Today, the urgent immediate priority is to save the people of Haiti. In a few weeks, it will be reconstruction. We must be prepared to think on as massive a scale as then U.S. Secretary of State George C. Marshall did after World War II. If we seize this chance, we can help the people of Haiti escape their cycle of poverty and deprivation fuelled by merciless natural disasters that plague the Caribbean nation. The international community owes it to them.

Watch video from the World Economic Forum on Haiti.

Also posted on the Huffington Post.