Most Katrina Aid From Overseas Went Unclaimed - Out of $854 Million Offered, Only $40 Million Spent

By John Solomon and Spencer S. Hsu;
Washington Post Staff Writers

As the winds and water of Hurricane Katrina were receding, presidential confidante Karen Hughes sent a cable from her State Department office to U.S. ambassadors worldwide.

Titled "Echo-Chamber Message" -- a public relations term for talking points designed to be repeated again and again -- the Sept. 7, 2005, directive was unmistakable: Assure the scores of countries that had pledged or donated aid at the height of the disaster that their largesse had provided Americans "practical help and moral support" and "highlight the concrete benefits hurricane victims are receiving."

Many of the U.S. diplomats who received the message, however, were beginning to witness a more embarrassing reality. They knew the U.S. government was turning down many allies' offers of manpower, supplies and expertise worth untold millions of dollars. Eventually the United States also would fail to collect most of the unprecedented outpouring of international cash assistance for Katrina's victims.

Allies offered $854 million in cash and in oil that was to be sold for cash. But only $40 million has been used so far for disaster victims or reconstruction, according to U.S. officials and contractors. Most of the aid went uncollected, including $400 million worth of oil. Some offers were withdrawn or redirected to private groups such as the Red Cross. The rest has been delayed by red tape and bureaucratic limits on how it can be spent.

In addition, valuable supplies and services -- such as cellphone systems, medicine and cruise ships -- were delayed or declined because the government could not handle them. In some cases, supplies were wasted.

The struggle to apply foreign aid in the aftermath of the hurricane, which has cost U.S. taxpayers more than $125 billion so far, is another reminder of the federal government's difficulty leading the recovery. Reports of government waste and delays or denials of assistance have surfaced repeatedly since hurricanes Katrina and Rita struck in 2005.

Administration officials acknowledged in February 2006 that they were ill prepared to coordinate and distribute foreign aid and that only about half the $126 million received had been put to use. Now, 20 months after Katrina,

More than 10,000 pages of cables, telegraphs and e-mails from U.S. diplomats around the globe -- released piecemeal since last fall under the Freedom of Information Act -- provide a fuller account of problems that, at times, mystified generous allies and left U.S. representatives at a loss for an explanation. The documents were obtained by Citizens for Responsibility and Ethics in Washington, a public interest group, which provided them to The Washington Post.

In one exchange, State Department officials anguished over whether to tell Italy that its shipments of medicine, gauze and other medical supplies spoiled in the elements for weeks after newly released documents and interviews make clear the magnitude of the troubles.Katrina's landfall on Aug. 29, 2005, and were destroyed. "Tell them we blew it," one disgusted official wrote. But she hedged: "The flip side is just to dispose of it and not come clean. I could be persuaded."

In another instance, the Department of Homeland Security accepted an offer from Greece on Sept. 3, 2005, to dispatch two cruise ships that could be used free as hotels or hospitals for displaced residents. The deal was rescinded Sept. 15 after it became clear a ship would not arrive before Oct. 10. The U.S. eventually paid $249 million to use Carnival Cruise Lines vessels.

And while television sets worldwide showed images of New Orleans residents begging to be rescued from rooftops as floodwaters rose, U.S. officials turned down countless offers of allied troops and search-and-rescue teams. The most common responses: "sent letter of thanks" and "will keep offer on hand," the new documents show.

Overall, the United States declined 54 of 77 recorded aid offers from three of its staunchest allies: Canada, Britain and Israel, according to a 40-page State Department table of the offers that had been received as of January 2006.

"There is a lack of accountability in where the money comes in and where it goes," said Melanie Sloan, executive director of the public interest group, which called for an investigation into the fate of foreign aid offers. She added: "It's clear that they're trying to hide their ineptitude, incompetence and malfeasance."

In a statement, State Department spokesman Tom Casey said that the U.S. government sincerely appreciated support from around the world and that Katrina had proved to be "a unique event in many ways."

"As we continue our planning for the future, we will draw on the lessons learned from this experience to ensure that we make the best use of any possible foreign assistance that might be offered," Casey said.

Representatives of foreign countries declined to criticize the U.S. response to their aid offers, though some redirected their gifts.

Of $454 million in cash that was pledged by more than 150 countries and foreign organizations, only $126 million from 40 donors was actually received. The biggest gifts were from the United Arab Emirates, $100 million; China and Bahrain, $5 million each; South Korea, $3.8 million; and Taiwan, $2 million.

Bader Bin Saeed, spokesman for the Emirates Embassy in Washington, said that in future disasters, "the UAE would not hesitate to help other countries, whether the U.S. or any other state, in humanitarian efforts."

Kuwait, which made the largest offer, pledged $100 million in cash and $400 million in oil. But the Kuwaitis eventually gave their money to two private groups: $25 million to the Bush-Clinton Katrina Fund, a project of the former presidents, and another $25 million to the American Red Cross in February 2006. They still plan to contribute another $50 million, said the Kuwaiti ambassador to the United States, Salem Abdullah al-Jaber al-Sabah.

"It was based on my government's assessment of the fastest way to get money to the people that needed it," he said. "The Red Cross was on the ground and action-oriented."

In the White House's February 2006 Katrina report, U.S. officials said Kuwait's $400 million oil donation was to be sold for cash. Sabah said it was an in-kind pledge made when it appeared that U.S. refining capacity was devastated and that the American public would need fuel.

"We have to see what we have to do with that. When you pledge something in-kind, your intention is to give it in-kind. I do not think now the American people are in need of $400 million of fuel and fuel products," he said.

Of the $126 million in cash that has been received, most has not yet been used. More than $60 million was set aside in March 2006 to rebuild schools, colleges and universities, but so far, only $10.4 million has been taken by schools.

Half the $60 million was awarded last fall to 14 Louisiana and Mississippi colleges, but five have not started to claim the money. Only Dillard University in Louisiana and Mississippi Gulf Coast Community College have tapped their full awards, worth $6 million, U.S. Education Department officials said Friday.

Another $30 million was sent to Orleans, St. Bernard and Plaquemines parishes in Louisiana and to the state-run Recovery School District in New Orleans to build libraries, laboratories and other facilities for 130 public schools.

But none of that money has been used yet, said Meg Casper, spokeswoman for the Louisiana Department of Education. Allocations were just approved by the state board last week, she said, "so the money should start to flow."

The first concrete program officials announced in October 2005 -- a $66 million contract to a consortium of 10 faith-based and charity groups to provide social services to displaced families -- so far has assisted less than half the 100,000 victims it promised to help, the project director said.

The group, led by the United Methodist Committee on Relief, has spent $30 million of the money it was given to aid about 45,000 evacuees. Senate investigators are questioning some terms in the contract proposal, including a provision to pay consultants for 450 days to train volunteers for the work the committee was paid to do.

Jim Cox, the program director, said that the project is "right on track" but that its strategy of relying on volunteers foundered because of burnout and high turnover. He acknowledged that more people need help than are receiving it and said the program will be extended to March to use available funds.

"The resources aren't there, but these resources certainly are coming," Cox said.