Byline: Matthew Russell Lee of Inner City Press at UN
www.innercitypress.com/un13myanmar072408.html
UNITED NATIONS, July 24, updated July 25 -- The UN on Thursday acknowledged serious "exchange losses" to the government of Myanmar's requirement that each dollar of aid be converted into a Foreign Exchange Certificate and only then to local currency, Kyat. Four weeks after Inner City Press first exclusively reported on the issue, and one week after UN Under Secretary General John Holmes told Inner City Press he would look into the issue during this trip this week to Myanmar, Holmes in Yangon said "this is an extraordinary exchange loss, and where that gain goes I'm not sure."
In New York, Inner City Press asked Secretary-General Ban Ki-moon's spokesperson Michele Montas to confirm Holmes' quote, and to state just how much money the UN has converted and lost. Ms. Montas replied that "the Under Secretary General acknowledged losses, saying that donors are concerned, because the losses mean that less services can be purchased. She said Holmes has raised the issue to the government, which said it will "find a way to resolve" but that there is "no further information given by the government at this time." Video here
The Germany press agency DPA, which correctly cited Inner City Press for the story (but incorrectly called it "Inter" City Press), noted that despite the formation by the UN, the Myanmar government and the Association of South-East Asian Nations, ASEAN, of a tri-partite mechanism which most recently put amount needed for post Cyclone Nargis reconstruction at $1 billion, "the exchange problem was not revealed." Worse, the UN's humanitarian coordinator Daniel B. Baker, when asked on-camera by Inner City Press on July 10 if the Un was losing money on currency exchange, said "we buy kyats at the market rate using dollars" and that "the government has not benefited." Video here, from Minute 46:20.
But now that the dollars that the UN has been exchanging for Foreign Exchange Certificates with the Myanmar Foreign Trade Bank are worth 1180 kyats, while the Foreign Exchange Certificates yield only 880, it is clear that the hard currency dollars the Myanmar government is received are worth 25% more than what the UN can buy with the FECs the UN receives in return.
While Holmes said "where that gain goes I'm not sure," it seems clear that the gain goes to the government, through the dollars they receive in exchange for lesser-valued kyat. It is also hard to accept that the UN cannot state how much it has converted in Myanmar in this way since the cyclone. Ms. Montas told Inner City Press to "ask Mr. Holmes on Monday when he will be back" at UN Headquarters.
Footnotes: Inner City Press asked the Ambassadors to the UN of both the U.S. and Vietnam, because they were the two Ambassadors to address the media at the Security Council stakeout on Thursday afternoon, to comment on the UN's currency exchange losses in Myanmar. Le Luong Minh, the Ambassador of Vietnam which is also an ASEAN member, said that only those "on the ground" could answer about this. Video here
"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."
Despite promises of further answers about how much value is lost comparing the kyat value of dollars to the FECs the government gives to UNDP, no further answer has been received from UNDP. Its spokesman went on leave, it's true, but no other UNDP staffer, as was promised, has provided any information. If this is not stonewalling, what is it? In light of John Holmes acknowledgement of losses, UNDP should be required to provide the value of its conversions and how much was lost.
With U.S. Amb. Khalilzad at the stakeout at five o'clock, video here --
Inner City Press: On Myanmar, John Holmes the Humanitarian Coordinator today has acknowledged that the UN in exchanging funds, money, dollars, with the Myanmar government was losing, he called it a serious amount of funds and it turns out to be about 25% in terms of currency exchange that went straight to the government. One, what does the US think about this use of funds and two, is that one of the things that the US government or others would ask the government to waive during a time of humanitarian crisis?
Ambassador Khalilzad: Well we want obviously for the government in any of these circumstances, you've heard us speak about Zimbabwe earlier, to do nothing that depletes the supply of humanitarian assistance whether it is a natural or man made humanitarian crisis. So that will be my generic response. But with regard to your specific reference to what Mr. Holmes has said, I have not seen he has said and I will have get back to you on that.
Five hours earlier at the UN's noon briefing, the following from the transcript --
Inner City Press: Michele, you gave this readout of John Holmes from Myanmar. But he’s given, apparently, an interview there -- the German News Agency DPA quotes John Holmes as acknowledging losses of millions of dollars on foreign exchange to the Myanmar Government and saying this is an "extraordinary loss and where that gain goes, I am not sure." Since it's an interview in another media, that one, to get confirmation that that's what he said, and two, to find out how much, now that he has acknowledged this, how much money since Cyclone Nargis did the UN convert through foreign exchange certificates in Myanmar and how much is all this, acknowledging the loss, worth?
Spokesperson Montas: I don't have the exact number, but the Under Secretary General acknowledged that this is a serious issue. There are losses which are implicit in the gap between the street rate and the official foreign exchange certificate rate. Aid agencies and donors alike are concerned about this issue, because fewer services then can be purchased. The issue was raised by Mr. Holmes at a meeting with the Government. They understood the problem and they will find a way to resolve it, though no further details have been given by the Government at this time. So this is what I have in terms of the foreign exchange rate. As you know, any international agency has to abide by the foreign exchange rules that exist in a specific country.
Inner City Press: I think you were here when Dan Baker was here and they did the flash appeal. At that time they said they were unaware of any losses and that they thought it fluctuated, they would not even be losing anything. So, I am wondering, maybe it’s clearly a question for Mr. Baker, but if this has been going on since the cyclone, how could they either not know or not acknowledge then that they knew? See what I mean?
Spokesperson Montas: Actually, you will get a chance to ask Mr. Holmes when he comes in. He will be in on Monday.
And see, www.innercitypress.com/un13myanmar072408.html
