UN acknowledges foreign exchange loss in Myanmar relief (Roundup)

Jul 24, 2008, 16:42 GMT

Yangon - United Nations humanitarian chief John Holmes acknowledged Thursday that the international community's relief effort for the victims of Cyclone Nargis in Myanmar was losing millions of dollars to the regime's foreign exchange controls.

'This is an extraordinary exchange loss, and where that gain goes I'm not sure,' Holmes said in an interview before leaving Myanmar after a three-day assessment tour of the areas affected by the cyclone that slammed into Myanmar's central coast on May 2-3 leaving about 140,000 people dead or missing.

Inter City Press disclosed earlier Thursday that the UN, which has issued a flash appeal for 480 millions from the international donors for ongoing cyclone relief efforts in Myanmar, has been losing more than 20 per cent of the incoming funds to the government's unique foreign exchange requirements.

Under Myanmar's foreign exchange rules, dollars brought in by foreign agencies must be converting into Foreign Exchange Currency (FEC) at government banks, and then converted into the kyat currency.

Between May and July, FECs have devalued significantly against the dollar, resulting in a kyat loss of up to 25 per cent, said the Inter City Press, siting an internal UN memo it had seen.

FECs are controlled by Myanmar's state banks, so the gain presumably goes to the government.

'It is a significant problem, because the donors will be rightfully concerned about it,' Holmes told a press conference in Bangkok late Thursday night.

Myanmar, also known as Burma, is under economic sanctions by the US and Europe because of its atrocious human rights record and refusal to introduce democratic reforms.

Humanitarian aid to the country is often given on the condition that it bypasses government agencies.

'I think they (the government) understand the problem and they are working with us to find some kind of a solution,' said Holmes.

He said he had raised the issue with the government during talks with the junta held in their capital of Naypyitaw earlier Thursday.

The UN has appealed for 482 million dollars in emergency relief for an estimated two million people still suffering the affects of Cyclone Nargis, especially in the Irrawaddy delta.

Holmes estimated that the relief work would continue for at least another six months, while recovery and reconstruction efforts would go on until April next year.

International efforts to extend aid to victims of the cyclone were initially hampered by the ruling military regime, which imposed bureaucratic obstacles to the inflow of emergency relief and aid workers to the country in the immediate aftermath of the catastrophe.

The aid flow was speeded up considerably after the establishment of a tri-partite mechanism including representatives from the Association of South-East Asian Nations (ASEAN), the UN and Myanmar government in early June.

Holmes expressed satisfaction with the functioning of the tri- partite mechanism in coping with the access problem and getting relief to the vast majority of the needy in the past two months but acknowledged that the operation still faces challenges ahead.

It is unclear to what extent the international community will commit to providing 480 million dollars in aid for Myanmar given ongoing concerns that the assistance may be used to bolster the regime.

The UN has insisted that all of its relief goes directly to the communities in need and is handled by UN staff or the non- governmental organizations it cooperates with.