UN Admits Losses to Myanmar Junta Through Currency Exchange, NGOs Skirt with Hawala
By Matthew Russell Lee
Inner City Press
July 11, 2008
UNITED NATIONS, July 11 -- The question is not "if" but "how much" money Myanmar's military government has taken from the UN aid that has come into the country since Cyclone Nargis hit, it emerged Friday at the UN. John Holmes, the UN Humanitarian Coordinator, told Inner City Press that some level of loss would be acceptable in exchanging dollars for government-issued Foreign Exchange Certificates, which are in turn converted into the local currency, Kyat. "One percent would probably be okay," he said. Video here, from Minute 37:50.
But Inner City Press is informed by multiple sources, both UN personnel and from non-governmental organizations which try to avoid siphoning or "seigniorage" by the military junta, that at least 20% of aid money is lost in converting into Foreign Exchange Certificates. Holmes acknowledged that while the FECs are supposed to be one-to-one with the U.S. dollar, they are often lower. He declined to say how much lower, but sources on the ground but it at 20% or more, with further losses in the FEC to kyat conversion process.
To work around this, some NGOs have taken to using the informal money transfer system known as hawala. While this traditional system, in which money is deposited in one country and paid out in local currency in another with no paper trail, was attacked by the U.S. government after its supposed use to fund the September 11, 2001 plane bombings of the World Trade Towers in New York, in this case it is being used to deny "seigniorage" by a military government the United States condemns.
