UNITED NATIONS, July 11 -- The question is not "if" but "how much"
money Burma's military government has taken from the UN aid that has
come into the country since Cyclone Nargis hit, it emerged Friday at
the UN. John Holmes, the UN Humanitarian Coordinator, told Inner City
Press that some level of loss would be acceptable in exchanging
dollars for government-issued Foreign Exchange Certificates, which are
in turn converted into the local currency, Kyat. "One percent would
probably be okay," he said.
But Inner City Press is informed by multiple sources, both UN
personnel and from non-governmental organizations which try to avoid
siphoning or "seigniorage" by the military junta, that at least 20% of
aid money is lost in converting into Foreign Exchange Certificates.
Holmes acknowledged that while the FECs are supposed to be one-to-one
with the U.S. dollar, they are often lower. He declined to say how
much lower, but sources on the ground but it at 20% or more, with
further losses in the FEC to kyat conversion process.
To work around this, some NGOs have taken to using the informal money
transfer system known as hawala. While this traditional system, in
which money is deposited in one country and paid out in local currency
in another with no paper trail, was attacked by the U.S. government
after its supposed use to fund the September 11, 2001 plane bombings
of the World Trade Towers in New York, in this case it is being used
to deny "seigniorage" by a military government the United States
condemns.
Inner City Press first reported on June 26 that its "sources say UNDP
paid dollars to Burma's government, and got local currency back at an
artificially low official exchange rate." The spokesman for UNDP said
he would look into it, but then provided no information for two weeks.
Finally, after Inner City Press published its next article on the
topic, UNDP acknowledged it converts dollars into FEC:
"UNDP Funds are remitted into the UNDP US dollar account at Myanmar
Foreign Trade Bank. UNDP Myanmar exchanges US dollars for Foreign
Exchange Certificates at the Bank, and then converts these into local
currency (Kyat). The exchange rate is based on the prevailing [most
competitive] rate in the market, which can fluctuate."
NGOs active in Burma to whom Inner City Press showed this statement
called it ludicrous, the implication that the exchanges are made at
"competitive" rates. "The government is the one which creates and
determines the value of the FECs," one said. "The UN and UNDP are
gettin ripped off by the government, they've known about it but just
stayed quiet."
Inner City Press is informed that the UN is now belatedly pushing for
some changes to how business has been being done in Burma. But future,
present and past practices by the UN and UNDP should all now be
disclosed. John Holmes said one percent would be OK. His July 10
Revised Appeal for Myanmar states that "$313,704,035 in total has been
committed for Myanmar relief operations as of 9 July."
One percent of that is over three million dollars, pure profit to the
Burmese military government. A twenty percent loss would amount to
over $62 million. The UN should be required now to disclose what
exchange rates it has been accepting, and how much has been lost.
Future, present and past currency exchange practices by the UN and
UNDP should all now be disclosed, and not only in Burma.