- The Washington Times - Tuesday, July 29, 2008

UNITED NATIONS | Burma is forcing U.N. aid agencies to convert cash to local currency at below-market rates, costing the world body $10 million so far and drawing comparisons to the scandal-plagued U.N. oil-for-food program in Iraq.

Unlike with Iraq, however, U.N. officials disclosed the problem with aid to Burma pre-emptively, just days after top humanitarian official John Holmes returned from a visit to the stricken nation.

Mr. Holmes put U.N. losses at about $10 million on currency exchanges and said he raised the issue with Burmese officials last week.

“They understood this was a problem. But we haven’t got a solution yet,” he told reporters at U.N. headquarters in New York on Monday.

The U.N. is required to purchase Foreign Exchange Certificates issued by the Burmese government, with a nominal value of $1. The certificates then are exchanged for the local currency, the kyat, at rates set by the government.

Mr. Holmes, the U.N. undersecretary-general for the Coordination of Humanitarian Affairs, said he did not know why the value of the certificates had fallen, nor would he say that the government is profiting by the system.

On the open market, a dollar is worth about 1,100 kyat, but the rate available to the United Nations had recently fallen to about 880 cents, according to Inner City Press, an Internet-based news agency that covers the United Nations and first disclosed the problem.

About 140,000 people were dead or missing after Cyclone Nargis struck Burma’s fertile and populated Irrawaddy Delta on May 2.

Suzanne DiMaggio, an official with the Asia Society, said the currency issue would damage efforts to raise additional relief.

“The trust issue is serious, and until it’s rectified, I don’t see any rush to donate to this cause,” Miss DiMaggio said.

“This is also a big test for the United Nations,” she said. After the investigations of the oil-for-food program in Iraq, “the international community is questioning whether the U.N. can be a trusted partner in the delivery of humanitarian assistance.”

The $10 million in losses - a tiny fraction of the $10 billion unaccounted for from the Iraq oil-for-food program - was not disclosed to potential donors in a revised U.N. appeal for emergency funds issued earlier this month.

The revised request was for $428 million to provide food, health services, agricultural support, logistics, infrastructure repair, water and sanitation and emergency shelter. The appeal is less than half funded, with just $200 million pledged thus far.

The fluctuating value of the currency exchange certificates affects purchases made in kyat, not relief supplies such as food and medicine imported into Burma.

There are number of dollar-kyat exchange rates, including those paid by tourists, relief agencies and the “market rate” of about 1180 to the dollar, U.N. officials said.

Asked why the United Nations does not demand to be exempted from the currency exchange system, Mr. Holmes indicated a reluctance to push the unpredictable junta too hard.

A threat to cut aid would harm the people of the Irrawaddy Delta, he said, not the government.

About 800,000 people were displaced, although Mr. Holmes said that all but a few thousand are thought to have returned to their own land, not all voluntarily.

Mr. Holmes said storm damage was evident throughout Burma’s agricultural coastland, as well as in Rangoon, Burma’s former capital and largest city.

As many as 4,000 schools as well as 75 percent of the country’s health care facilities are thought to have been destroyed.

The delta is Burma’s food basket, and aid workers said this week that farmers were scrambling to return to plant rice before the season ends.

“There has been quite a lot of progress,” said Mr. Holmes, who toured parts of the afflicted countryside by helicopter.

Relief organizations continue to bring in supplies by air and boat, and houses, schools, clinics are being rebuilt, he said. “There is a degree of normality in some places.”

The government of Burma, also known as Myanmar, has continued to issue visas to aid workers from all over the world, not just Asians from neighboring countries, who were allowed into the country during the crucial first weeks after the cyclone.

Mr. Holmes said the process is still more “bureaucratic” than he would like, but praised the government for upholding its promise to let in aid workers.

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