x Abu Dhabi, UAEWednesday 17 January 2018

UN fears Myanmar pocketing aid money

Aid chiefs fear Myanmar's leaders are pocketing one fifth of the cash earmarked for victims of Cyclone Nargis.

John Holmes, right, the UN humanitarian chief, and Kyaw Thu, the deputy foreign affairs minister for Mynamar, inspect the Irrawaddy Delta.
John Holmes, right, the UN humanitarian chief, and Kyaw Thu, the deputy foreign affairs minister for Mynamar, inspect the Irrawaddy Delta.

UNITED NATIONS // UN officials are concerned that Myanmar's military leaders are pocketing at least one-fifth of the cash earmarked for victims of Cyclone Nargis by requiring international aid agencies to use an expensive system of changing currency. Sir John Holmes, the United Nations' top humanitarian official, expressed "serious concern" over missing money after it emerged that as much as 20 per cent of relief funds were being lost through a costly exchange rate mechanism.

The undersecretary general for humanitarian affairs broached the subject with top junta officials in the capital, Naypyidaw, during his visit this week to assess the effect of relief efforts after the catastrophe, which killed 140,000 in May. "At the moment, we don't have a figure for how much money has been lost," said Dawn Blalock, an official in Mr Holmes's Office for the Coordination of Humanitarian Affairs (Ocha).

"All the aid agencies that are working within Myanmar operate within the same system. We have to work within the foreign exchange rules and regulations of a sovereign country," she said. Foreign currency brought in to Myanmar by aid agencies must first be changed into government-issued foreign exchange certificates (FECs) before it can then be converted into the local currency, kyat. Officially, one FEC is worth the same as US$1 (Dh3.67). But, in reality, they trade for only about 80 cents of every dollar they represent, meaning conversion costs for the aid agencies run at about 20 per cent - massively higher than in conventional exchange systems.

Tourists also were required to change their money first into FECs, but that requirement was scrapped in 2005. It is not yet clear who profits from the exchange, but political exiles claim the junta, which has ruled the country with an iron fist since taking power in a 1962 military coup, is reaping the benefits. The United Nations requested a total of $481 million to assist the more than two million survivors of Nargis, the most devastating cyclone in Myanmar's recorded history. So far only $190m has been provided by donor governments.

Ms Blalock said the "vast majority" of aid provided to Myanmar has been "in kind", or through direct supplies of food, medicine and shelter, and therefore not affected by exchange rates. But the United Nations has acknowledged that an unstated amount of money has been changed into kyats to buy supplies and pay the wages of locally hired staff. The proportion of cash passing through the currency exchange system is expected to increase as the United Nations focuses more heavily on reconstruction efforts and follow an established pattern of acquiring supplies locally to assist economic recovery.

Mr Holmes has estimated that relief work will continue in the affected Irrawaddy Delta region for at least six more months, while recovery and reconstruction efforts will not be completed until April next year. A joint report from the United Nations, Asean and the Myanmar government made public last week confirmed earlier fears of a drastic reduction in household food stocks after the cyclone struck the country's southern coast on May 2.

"The situation in Myanmar remains dire," said Chris Kaye, the World Food Programme's director for Myanmar. "The vast majority of families simply don't have enough to eat. Hunger remains a very real threat, and if people are hungry, they can't focus on rebuilding their livelihoods." The report found that more than 40 per cent of households lost all food stocks during the storm, which washed away entire villages and flooded farmland with seawater. Currently, 45 per cent of households reported having only enough food supplies to last less than one week.

The recent discovery of losses through Myanmar's currency exchange system comes following widespread outrage over the junta's refusal to grant visas to foreign aid workers immediately after the catastrophe struck, hampering relief efforts. The missing money also comes at a time when Mr Holmes has been encouraging the UAE and other oil-rich Gulf countries to provide more aid and assistance through Ocha and other such aid systems.

UN aid chiefs have criticised Gulf philanthropists for providing aid on a country-to-country basis, while many Arabian aid-givers express concern over whether agencies like Ocha lose too much relief cash in unnecessary overheads. @Email:jreinl@thenational.ae