Reconstruction in Venezuela: UNDP puts the earthquake bill at US$21 billion

Twenty-one billion dollars. It is the first reconstruction bill anyone is prepared to stand behind: UNDP calculated it by the method Caracas asked to activate in July, and its regional director, Michelle Muschett, handed it to acting president Delcy Rodríguez in mid-month. Before it there were estimates with different scopes, and none belonged to anyone.

The handover was on September 15, at Miraflores. The number matters less for its size than for what it contains: three dollars in every ten are not damage.

What the bill is

A post-disaster needs assessment — PDNA — is the procedure by which the UN, the European Union and the World Bank quantify what a disaster destroyed and what recovery will cost. The government requests it. The government leads it. Mixed teams carry it out, and in Venezuela more than a hundred officials took part alongside delegates from UNDP, the World Bank, the IDB, CAF and the European Union, with field surveys in health, education, water, energy, industry, governance and, above all, housing.

What they measured: about US$14.8 billion in damage and losses across the seven states hit by the two June earthquakes; more than eleven thousand homes severely damaged and some fourteen thousand moderately; two million tonnes of debris; more than six and a half thousand dead in August's official count. And one figure that does not fit in dollars: in La Guaira state, a third of public staff died in the collapses. UNDP Venezuela's inclusive development officer said so on Unión Radio this week, to explain why rebuilding is also rebuilding the capacity to administer.

How it grew

The bill was not born at twenty-one billion. Two days after the earthquakes UNDP itself estimated direct physical damage at some US$6.7 billion, about 6% of output. That number measured one thing: what broke. September's measures three — what broke, what stopped being produced while it was broken, and what it costs to put it back up to a better standard — and so it does not correct the first: it contains it.

Six point seven was the damage. Fourteen point eight is damage plus loss. Twenty-one is what it costs to get out.

The six billion that are not damage

Between the measured damage and the calculated need lie some six billion. The difference is not rounding: it is the decision to build back better. The PDNA calculates need including "measures to build back better, ensure resilience and reduce risk conditions," and UNDP's office gave the example of power and drinking-water networks. Every dollar of those six billion is a choice of standard — building to a higher code, moving what sits in a risk zone, replacing a network instead of patching it — and a choice can be cut. It is the part of the bill that depends on who pays it.

How housing is going

Housing is the heaviest sector in the bill and the only one with deliveries counted in an official source. By September 9 the Government had delivered five hundred and twenty-eight new homes to families affected by the earthquakes under Plan Venezuela Renace; on the 17th it delivered three hundred and thirty-nine more, rehabilitated. Against more than eleven thousand severely damaged homes, the new ones delivered in eleven weeks are fewer than one in twenty. The Government has announced four thousand before December. What finances a new home in Venezuela — and who puts up the down payment — is in the piece on the housing law.

Eleven weeks, five hundred and twenty-eight new homes. The bill counts eleven thousand severe.

What there is to pay it with

The bill has been delivered. The question it opens is where the money comes from, and today it has three partial answers. The humanitarian appeal, which is emergency money rather than reconstruction money, was asking for a little over nine hundred million at the end of July and had under 40% of it. The IDB has Venezuela more than two billion in arrears and does not approve operations for a country that owes it; the loan file for two and a half billion has five steps ahead of it, all undated.

And the only Venezuelan money on the scale of the bill is not in Venezuela: it is the oil revenue that since January has been deposited with the U.S. Treasury, which Transparencia Venezuela estimates at between US$12.5 and 13.6 billion in the first half alone, of which a State Department witness told Congress some US$3 billion had been authorized to leave. The order that created those accounts leaves the disposition of the money with the State Department, acting for Venezuela. What is known and not known about that balance is in the piece on the oil fund.

None is assigned.

The two clocks

Anyone moving reconstruction money through a U.S. bank has, in addition, two dates that do not depend on Caracas. OFAC's General License 60, issued on June 25, authorizes transactions related to earthquake relief through 12:01 a.m. on October 23. And FinCEN, the Treasury's anti-money-laundering unit, committed on July 27 not to open supervisory or enforcement action against a U.S. bank for Bank Secrecy Act violations arising from authorized services in Venezuela, from that date through January 29, 2027, provided the bank has its compliance program in order, carries no final enforcement action in the prior two years, and remains compliant with OFAC's licenses. The commitment waives no obligation: it rests on the transaction being authorized. How that shield works is in the piece on FinCEN and correspondent banking.

The recovery framework has no date. The two permissions that would let it move do.

What a signed figure changes

For the builder, the signed number is what turns an emergency into a pipeline: twenty-one billion is a market in cement, steel, networks and housing that until mid-September did not exist as a figure defensible before a credit committee. For the financier it is the reverse: the number says how much is missing, not who puts it up.

The first line of the recovery framework that carries a source of funds and an amount will be the datum separating the reconstruction from its diagnosis. Until then, what exists is a bill with a signature, two permissions with expiry dates, and three dollars in every ten waiting for someone to decide whether they get paid.