CHILE: Cost of Rebuilding Still Unclear

By Daniela Estrada Reprint | | Print |

Daniela Estrada

SANTIAGO, Mar 3 2010 (IPS) - Chile has begun to think about the costs and challenges of rebuilding a large part of the areas hit by the Feb. 27 earthquake and tsunami, while rescue and aid operations continue.

The latest official figures are 799 people killed, 500 injured and two million left homeless or otherwise affected.

“The impact of the earthquake is going to have economic and social consequences, obviously, and we are offering the Chilean authorities a detailed evaluation,” the executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, told IPS.

The regional United Nations agency – whose headquarters are located on the east side of the Chilean capital – could have a preliminary assessment of the quake’s economic and social costs in two weeks, Bárcena said.

At 3:34 AM local time on Saturday Feb. 27, this South American country of 17 million people was struck by a quake measuring 8.8 on the Richter scale, which caused severe damages in six of the country’s 15 regions, although it was felt to some extent in 11.

It was the second strongest quake in Chilean history, after the 1960 tremor in the southern city of Valdivia, with a magnitude of 9.5 on the Richter scale – the most powerful earthquake ever recorded.

The hardest-hit regions were El Maule and Bío-Bío, between 200 and 500 km south of the capital, and especially coastal towns and villages like Cobquecura, Constitución, Dichato, Pelluhue, Talcahuano and others, some of which were virtually swept away by the tsunami triggered by the quake.

The emergency caused by the large number of dead, injured and missing was compounded by the collapse of houses and the lack of basic public services like water, electricity and telephone lines, and widespread looting by groups of hungry people as well as criminals who carried away all sorts of items from stores and even set some on fire.

In response, thousands of troops were deployed to impose public order, protect local populations, and oversee the orderly distribution of water and food, amidst wide criticism that the aid was taking too long to reach the most-affected areas.

“I think Chile is well-prepared for this kind of catastrophe; it has a National Emergency Office in the Interior Ministry, which has operated very efficiently in fact,” said Bárcena.

But “this was a catastrophe of truly enormous proportions, and any country, no matter how prepared it may be, would feel a very strong impact,” she stressed.

“Perhaps the tsunami warning was the most questionable aspect; apparently the navy was not fully informed, and believed the tsunami would occur along the coast of Asia,” said the head of ECLAC. “But the truth is that given the magnitude of the problem, the damages could have been much worse.”

Touted abroad as a Latin America success story and a model of development, Chile reduced the national poverty rate from 38.6 to 13.7 percent between 1990 and 2006 and was well on its way to meeting all eight of the Millennium Development Goals (MDGs), a series of anti-poverty and development targets agreed by the international community in 2000, by the 2015 deadline.

This country has some of the best health and sanitation indicators in the region, and had set itself the target of completely eradicating slums, still home to some 20,000 families, this year.

But the quake destroyed housing, hospitals, schools, public buildings and roads, and had a heavy impact on the forestry, fishing, steel, petrochemical and grape and wine growing industries in the regions of El Maule and Bío-Bío.

Chile’s insurance association, ASACH, estimated insured losses at 2.6 billion dollars, more than half of the industry’s usual annual payout in recent years. But only six percent of housing and 30 percent of vehicles are insured against earthquake damages.

“Hundreds of thousands of Chileans are suffering the accumulated effects of inequality and poverty in this disaster,” Álvaro Ramis, president of Chile’s association of non-governmental organisations, Acción, which groups 70 NGOs, told IPS.

“The hardest-hit were working-class, poor or middle-class families, which reveals the inequality in the design of public policies, the lack of protection of their rights, and the lack of oversight and regulatory enforcement of basic services on the part of the state,” he said.

The activist said he was “concerned about the state’s inadequate capacity to act in situations of social crisis, because despite the ample public funds available, it did not invest them preventively with a view to preparing for this kind of tragedy.”

Outgoing socialist President Michelle Bachelet, who will hand over to her successor, right-wing President-elect Sebastián Piñera, on Mar. 11, said her government does not yet have a clear estimate of the financial resources needed to deal with the effects of the disaster, but said the reconstruction “will clearly cost a lot of money and will take a long time.”

Although Chile is an international creditor and has a rainy-day fiscal savings fund containing 14.7 billion dollars in windfall copper profits, the president said international loans “on good terms” would be needed.

“It’s hard to estimate at this time,” said Bárcena. “There are areas of Chile that have not been affected, the whole northern part of the country, for example, that can continue producing copper, the main export product.

“Logically, agricultural areas are going to have to be reassessed: the FAO (U.N. Food and Agriculture Organisation) team is working on that. There will also be problems getting around by road,” the ECLAC chief added.

“But it’s difficult to make an evaluation without assessing the situation on the ground. That’s why it worries me that figures (of costs) are being put out in the international community when a proper, thorough evaluation has not yet been carried out, with the right methodology and clarity, to avoid confusion.”

On Monday, the U.S.-based catastrophe modeling firm EQECAT estimated economic damages at up to 30 billion dollars. By comparison, the Inter-American Development Bank (IDB) calculated that rebuilding in Haiti would amount to around 14 billion dollars.

According to Bárcena, Chile “has not been knocked out.

“That’s what I would like to get across to the international community. There are regions that have been heavily affected, but this country has institutions, it has a government, it has a strong dynamic economy where the private sector, the armed forces, and we (the U.N.) are acting,” she added.

Bachelet said “we have to be aware of the extent of the damages. The next government is going to face an enormous challenge.

“Analyses of all kinds can be made, but this is not the time for analysis, it’s time for action. This was an earthquake with an intensity that has never been seen, and we are asking for comprehension,” said the president.

On Tuesday, Bachelet met briefly with U.S. Secretary of State Hillary Rodham Clinton and Peruvian President Alan García, who expressed their condolences and offered aid. Brazilian President Luiz Inácio Lula da Silva also made a short visit to the country Monday, where he met for a few minutes with the Chilean leader.

Many other countries have sent material assistance in response to the government’s urgent requests, such as field hospitals, satellite phones and electric power generators, as well as financial aid.

“We will ask the new government to implement a reconstruction plan that takes into account citizen participation, mainly in the affected areas. That way, an accurate appraisal of the needs and demands of the population will be guaranteed,” said Ramis.

“Social policies must be reinforced with respect to human rights and social guarantees,” he said.

In the activist’s view, the earthquake should contribute to a shift in “the focus of the debate on the model of development to be followed, to strengthen and expand social protection policies that ensure certain standards of living for the entire population, even in the case of catastrophes.”