Sunday, 27 July 2008

Myanmar Tweaks Its Theft of UN Aid Funds from 25% to 17%, Donor Anger Grows at "Burma Shave"

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis
FEC/Burma Shave series - 1st (June 26), 2nd, 3rd, 4th, last

UNITED NATIONS, July 26 -- Under fire for taking a 25% cut of UN aid money, Myanmar's government has implemented a temporary fix or cover-up. It has announced that certain taxes and fees can be paid with the Foreign Exchange Certificates it requires that the UN convert dollars into. Last week, this temporarily raised to street value of FECs from 880 kyats, the local currency, to 980 kyats, limiting exchange losses from 25% back to 17%. But now the spread is back to 21%, with the FEC to kyat exchange rate sliding back to 950 to 1, compared to 1180 kyats per dollar.

The temporary fix or cover-up did not work. Even at its best, is a 17% loss of aid funds to the Myanmar government acceptable to donors? Why were these losses never disclosed while funds were being raised, including in UN appeals for $200 million and then, earlier this month, $300 million more?

Inner City Press raised the issue in print and to the UN Development Program on June 26, then to UN humanitarian chief John Holmes at the Security Council stakeout on July 9 and at two subsequent briefings. On July 10, the UN's Humanitarian Coordinator for Myanmar Dan Baker denied there were losses to the government. The next day Holmes said losses were "relatively small and transitory," but when asked by Inner City Press about internal UN documents indicating otherwise, he committed to look into the issue while visiting Myanmar. On July 24 he admitted serious losses, said he'd raised them to the government, and that "they did not say exactly how but they said they would try to find ways by which we could get round the problem."

Temporarily allowing more things to be paid for in FECs, thereby slightly (and only temporarily) bringing FECs' value closer to that of the dollar, is not getting round the problem -- it is covering the problem up so that the siphoning of aid money, which Inner City Press first pegged as the "Burma Shave," can continue in the future, including as reconstruction money flows in. The UN, given that it knew of but covered up this problem, cannot be relied on to solve it, many donors are saying. Demands for repayment of losses to Than Shwe's Burma Shave are growing.

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