UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001311

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/CAR
EB/IFD
STATE PASS TO USAID FOR LAC/CAR
TREASURY FOR JEFFERY LEVINE
COMMERCE FOR SCOTT SMITH

E.O. 12958: N/A
TAGS: ECON EAID ENRG PGOV HA
SUBJECT: MINISTER REPORTS THREATS ON PUBLIC PROJECTS,
REQUESTS US BUSINESS ASSISTANCE


1. (U) This message is sensitive but unclassified: please
protect accordingly.


2. (SBU) Summary: Minister of Public Works, Transportation
and Communication, Frantz Verella, told Ambassador July 17
that his public works projects in Port-au-Prince are
threatened regularly by bandits demanding money from those
carrying out the projects. He cited the example of a power
struggle over projects to sell subsidized clean water to poor
neighborhoods in Port-au-Prince. Reportedly, bandits are
vying for control so that they can sell the water at an
inflated price. Verella said he has the cooperation of the
Haitian National Police (HNP) and plans to strengthen
security surrounding his projects. According to Verella, the
most important contribution the U.S. can make to Haiti's
development is technical and managerial expertise for the
business sector. He discussed the possibility of a tender
for various private sector suppliers to act as operators in
the telecom and electricity industries, both of which are
state-run and riddled with inefficiencies and corruption.
End summary.

Bandits Threaten Public Works Projects
- - - - - - - - - -


3. (SBU) Minister of Public Works, Transportation and
Communication, Frantz Verella, told Ambassador July 17 that
his public works projects in Port-au-Prince are threatened
regularly by bandits demanding money from those carrying out
the projects. He reported that some of his projects are held
for ransom by inhabitants of the target neighborhoods who
demand money, and in return, promise not to destroy the
projects' results. Projects include trash collection, road
rehabilitation and canal construction.


4. (SBU) Verella also cited the example of the power
struggle over the Clean Water Committees his ministry has
contracted throughout Port-au-Prince. These committees sell
subsidized five-gallon containers of clean water to

neighborhoods for one gourd (about one third of one cent).
He said certain individuals in the neighborhoods where the
water is sold want to have control over the committee so that
they can sell the water for an inflated price, re-pay the
ministry and make a profit off the top. The Minister said he
refuses to pay the bandits and will continue with the
projects. He said he has the full cooperation of the
Director General of the Haitian National Police (HNP) Mario
Andresol and has asked for more police protection surrounding
his projects.


5. (U) Verella said that his contractors are often badly
supervised and do not carry out the work they are paid to do.
He used the example of street cleaners, who clean only for
30 minutes, instead of four hours, and only in front of the
Ministry, instead of throughout the capital.


6. (SBU) Comment: It is not unusual in Haiti to see criminal
activities surrounding those projects which attempt to bring
order and stability to some of Haiti's most volatile
neighborhoods. The best solution is Verella's own:
developing a partnership with the HNP and pairing public
works projects with a stronger security presence, in addition
to ensuring broad-based community support for the programs.
End comment.

Haiti Needs U.S. Business "Savoir Faire.."
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7. (U) According to Verella, the most important contribution
the U.S. can make to Haiti's development is technical and
managerial expertise for the business sector. He recognized
the wealth of knowledge, particularly among the Haitian
diaspora, that the U.S. could offer Haiti's maturing small
and medium size enterprise sector, both through training
programs and joint-venture enterprises. He underscored how
difficult it is for his ministry to absorb international aid
because of a general lack of capacity to carry out
large-scale infrastructure projects. The Ambassador agreed
that this is a potential partnership worth exploring.

PORT AU PR 00001311 002 OF 002



..And Private Operators for State-Run Electricity and Telecom
Sectors
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8. (U) Verella discussed the possibility of introducing
private companies as operators for the state-owned
electricity and telecom companies. He suggested that the GOH
could put out a tender for various suppliers to serve as
operators. Specifically, he mentioned targeting Verizon,
Cingular and France Telecom for the national telecom company;
and Alstom and E-Power for Haiti's national electricity
company. He recognized that the ailing electricity company
(Electricity d'Haiti -- EDH) would need more than a private
operator to turn it into a reliable supplier of energy. He
told the Ambassador of plans to repair electricity equipment
throughout the country and discuss with the top energy
consumers how the state can better provide electricity
service. (Comment: Verella's enthusiasm for private
operators was clear, but Post has no illusions that this may
actually be GOH first steps to privatization. Given
bureaucratic inefficiencies and corruption, prospects,
particularly for EDH, still look dim.)
SANDERSON