The total cost of reconstructing areas devastated by the Asian tsunami could be as high as $12.5 billion, according to the first overall assessment by the United Nations. The estimate comes as charities around the world start closing their appeals because they believe enough has been raised. But so far promises for only $5.5 billion have been received. The U.N. Development Program, which is coordinating the next phase of the aid effort, fears it may yet suffer a shortfall in funds needed to pay for longer-term reconstruction.
In Britain, the Disasters Emergency Committee is due to announce Thursday that it will close its most successful appeal ever on Feb. 26, although it says that donations are still rolling in from sponsored runs and supermarket collections. It has collected more than 300 million pounds, and an additional 50 million pounds has been raised independently by other British charities.
Initial estimates place the bill for Indonesia at up to $5 billion and for Sri Lanka at $3.5 billion. Including India, the Maldives and Thailand, the total reconstruction costs are expected to be between $9.8 billion and $12.5 billion.
There is confusion, consequently, whether the extraordinary scale of the world’s generosity will be sufficient to deal with the unprecedented magnitude of the destruction inflicted by the disaster. The massive sums involved and the complexity of the operation have also raised fears that money could be siphoned off by corruption and that rival aid agencies might inadvertently duplicate aid projects.
The fluctuation in expectations is illustrated by the fact that British Foreign Secretary Jack Straw said on Jan. 3 that it was “almost certain” the government would match the donations made by the public. That plan now appears to have been quietly shelved. So far, the U.K. government has announced that it will give 75 million pounds directly, plus an additional 10 million pounds through the E.U. It has also promised 50 million pounds over the next decade in debt relief to affected nations.
The U.N., embarrassed by the shortcomings of its oil-for-food program in Iraq, is determined that the tsunami relief program should set new standards in transparency and accountability. Hafiz Pasha, the U.N. assistant secretary general in charge of the global tsunami task force, told the Guardian this week that U.N. agencies were still $270 million short of the funds requested in the first appeal for the recovery stage of the program. “Of that, $180 million has been promised but has not yet materialized,” Pasha, a former Pakistani finance minister, explained. “The remainder is not yet committed.”
In London on his way to visit the affected countries, Pasha hopes to persuade the Department for International Development and aid agencies to donate money raised but not yet allocated to specific projects. The priority now, he says, is repairing the basic infrastructure of roads, hospitals and schools. The difficult question, which has not yet been faced, is deciding how much should be rebuilt of communities that have been virtually eradicated. “In parts of Aceh [in Indonesia], it’s like ground zero. People will not necessarily go back to neighborhoods they lived in,” he said. “There are demographic issues which could lead to [different] resettlement patterns. Both Sri Lanka and Indonesia want to resettle people a significant way back from the sea.”
One recurrent criticism of aid work has been that cash is spent on foreign consultants’ fees. “We have had to take on 300 extra staff in Indonesia, the Maldives and Sri Lanka, but only 60 are expatriates,” Pasha said. “But our aim is that the cost of delivering the program should be not more than 5 percent of overall costs.
“We are worried about corruption. One of the things we have done is to strengthen our procurement processes in Bangkok to ensure that [our operation] is competitive and transparent. We are setting up accountancy systems with firms such as PriceWaterhouse, DeLoitte and Touche, and Accenture. A lot of it is pro bono work. We want to ensure the money really gets to the target.”
The other financial fear has been that the outpouring of generosity will divert funds from less dramatic disasters. Earlier this week the executive director of the U.N. World Food Program, James Morris, said: “We [must] ensure that the ‘tsunami effect’ does not ripple across Africa, drawing funds away from humanitarian operations there and adding Sudanese, Angolan and Liberian victims to its toll.”