Why Does UNDP Continue to Aid Repressive Regimes?

AUTHOR:Brett Schaefer

A recent story by Fox News provides yet another example of the United Nations Development Program’s refusal to accede to an unfortunate reality: that the organization’s efforts to work with, and through, the world’s most despotic regimes are regularly twisted to serve the goals of the regime rather than the people suffering under their rule. According to the story:

An independent assessment of a $100 million United Nations Development Program aid effort in Burma calls it ‘disappointing,’ and ‘unsatisfactory,’ and suggests that major portions of the program be discontinued next year. Nonetheless, the director of UNDP intends to keep it alive with as-yet unspecified fixes.

The assessment of the UNDP’s Human Development Initiative suggested there were ‘modest or only limited differences’ between the Burmese villages that got UNDP support and those that didn’t.

Among the areas of negligible impact: health care, education and ‘food security,’ meaning the vital business of whether the poorest were producing and saving enough food to eat in the military-controlled country also known as Myanmar….

Even while admitting that Burma is a ‘difficult and unpredictable’ environment for HDI, however, the assessors state firmly that UNDP’s own problems with community development programs are the most significant. Among them: lack of clear focus; inability to show that it has accomplished much beyond the delivery of tangible goods, such as fertilizer; lack of staff training; and perhaps most importantly of all, lack of any clear strategy to wean the people they are helping off continued outside assistance.

Aid to Burma—whose government has been accused of war crimes and crimes against humanity by the Obama Administration, is suspected of pursuing a clandestine nuclear program, and has imprisoned opposition politician and Nobel Peace Prize winner Aung San Suu Kyi 15 out of the last 21 years—has come under increasing scrutiny.

As reported in the FoxNews story, UNDP is under instructions from its Executive Board to ensure that its funds stay out of government hands. However, a 2007 report by a Burmese human rights group asserted that U.N. funding, including UNDP funding, supports state-controlled programs that employ extortion and forced recruitment to “expand military control over the population while divesting itself of the cost of operating programmes and simultaneously legitimizing its policies in the name of development.” In 2008, news storiesrevealed that the “United Nations discovered ‘very serious losses’ of at least $10 million on foreign exchange transactions involving relief money sent to cyclone-battered Burma.”

This is hardly surprising. A number of allegations have been made in recent years concerning improper activities funded by, or linked to, UNDP staff or projects in authoritarian states, including North Korea,Venezuela, and Zimbabwe. In some repressive states, the U.N. and NGOs can work around the government to help the people directly. In these cases, there is some justification for continuing U.N. humanitarian activities. In cases like Burma and North Korea, however, government interference and assertion of authority over humanitarian activities in country is so extensive that humanitarian efforts are crippled. Despite the best efforts of the U.N. and other providers of humanitarian assistance, aid is permitted only if it benefits the regime. In such cases, UNDP programs—and those of other U.N. agencies like WFP and UNICEF—end up inadvertently rewarding the government.

Many argue that the U.N.’s humanitarian work should continue regardless of whether the government benefits because some portion will aid the suffering population. There is little doubt about the suffering in places like North Korean and Burma. However, it is the repressive policies of the government that have most directly contributed to that suffering. Aiding the government, even inadvertently, perpetuates that suffering.

The Fox News story reports that internal assessments have assured the Executive Board that UNDP has not allowed its funds to be used by the government. At the very least, however, considering the “difficult and unpredictable” environment in Burma, UNDP assistance merits closer scrutiny to see if it is inadvertently benefiting the regime.

At August 30 meeting of the UNDP Executive Board—of which the U.S. is a member—the U.S. Mission to the United Nations should closely question all UNDP activities in repressive regimes like Burma, North Korea, Iran, Venezuela, and others countries and demand full and complete access to all UNDP documents and assessments to inform their examination. At a bare minimum, the U.S. should call for all such programs to be suspended unless the governments: (1) allow the U.N. and NGOs to hire and use local and international staff without government interference; (2) grant complete and free access to projects, distribution centers, and aid recipients to ensure that aid is not being diverted by the government; and (3) not impede non-governmental organizations helping to deliver aid and assess need.

EXCLUSIVE: Report Slams $100M Aid Effort in Burma, But U.N. Plans to Keep Program Alive

George Russell

- FoxNews.com

- August 24, 2010

Despite an independent assessment of a $100 million United Nations Development Program aid effort in Burma that calls it “disappointing” and suggests that major portions be discontinued, the director of UNDP intends to keep it alive with as-yet unspecified fixes.

An independent assessment of a $100 million United Nations Development Program aid effort in Burma calls it “disappointing,” and “unsatisfactory,” and suggests that major portions of the program be discontinued next year. Nonetheless, the director of UNDP intends to keep it alive with as-yet unspecified fixes.

The assessment of the UNDP’s Human Development Initiative suggested there were “modest or only limited differences” between the Burmese villages that got UNDP support and those that didn’t.

Among the areas of negligible impact: health care, education and “food security,” meaning the vital business of whether the poorest were producing and saving enough food to eat in the military-controlled country also known as Myanmar.

CLICK HERE FOR THE ASSESSMENT REPORT

There will be no mention, however, of the wind-down suggestion in a condensed version of the assessment report that will be presented to UNDP’s 36-nation supervisory executive board when it holds a regularly scheduled session in New York City starting Aug. 30. (The U.S. is a board member.)

Instead, the head of UNDP, Helen Clark, suggests in her note to the board that the most criticized parts of the aid effort require a “revision of the program concept and design in order to enhance the impact on poverty.” Clark also holds out the possibility that the “strategic framework” of the programs might require only “modest changes” -- including closer cooperation with local elements of the brutal Burmese regime.

Clark recommends that the board give her the widest latitude to implement changes to the Human Development Initiative “as appropriate.”

CLICK HERE FOR THE ADMINISTRATOR’S NOTE

The issue of aid assistance to Burma -- which has largely cut itself off from the outside world -- is a hot-button issue, especially after the Obama Administration last week announced that it would support an international commission of inquiry to investigate alleged war crimes and crimes against humanity committed by the Burmese regime. (Among other things, the regime has kept its chief critic, opposition political leader and Nobel Peace Prize winner Aung San Suu Kyi, under house arrest since 2003.)

At the same time, international concern has been growing about whether the regime has been developing a clandestine nuclear program along the lines of its ally, North Korea, even as international aid agencies of all kinds commit hundreds of millions of dollars worth of aid to the country.

Making sure that UNDP’s funds stay out of government hands in military-dominated Burma was one of the strings attached from the virtual outset to the Human Development Initiative by UNDP’s executive board. Testifying to whether the arms-length distance has been kept is one of the annual tasks assigned to the independent assessors, who also take the opportunity to examine the effectiveness of UNDP efforts in the country.

For years, the assessors have given the program a clean bill of health on the issue of government involvement -- but they have also grown increasingly critical of the effectiveness of much of UNDP’s grass-roots “community development” programming, now under way in some 60 of Burma’s 325 townships -- in part precisely because it lacks greater government involvement.

Last year, the assessors told UNDP that it should be examining the relationship between the length of time the organization had been handing out aid and the impact of the assistance -- which led to this year’s unsettling conclusions that in many cases the impact had been less than significant.

The main focus of assessor skepticism is a double-barreled UNDP program known as the Integrated Community Development Project (ICDP) and a sister program, Community Development in Remote Townships (CDRT), which are administratively joined at the hip.

Ostensibly self-help programs, the community development initiatives have instead, the assessors say, become studies in mission-creep, in which aid-givers have grown their focus of assistance into primary health care, environmental concerns, HIV/AIDS relief, training and education and food security. The assessors quote one senior UNDP official as admitting that the Human Development Initiative is trying to do “everything under the sun.”

UNDP made matters worse, the report says, by expanding the program dramatically, adding to the resource stretch. Yet another complication was 2008’s Cyclone Nargis, which devastated coastal regions of Burma and further diverted aid efforts (though the report notes that with 500 people on the ground in its HDI programs, UNDP was in a good position to pitch in and help with Nargis). Finally, voluntary funding for the HDI effort has been tiling off, largely as a result of the increasingly hard-line behavior of the Burmese regime.

Even while admitting that Burma is a “difficult and unpredictable” environment for HDI, however, the assessors state firmly that UNDP’s own problems with community development programs are the most significant. Among them: lack of clear focus; inability to show that it has accomplished much beyond the delivery of tangible goods, such as fertilizer; lack of staff training; and perhaps most importantly of all, lack of any clear strategy to wean the people they are helping off continued outside assistance.

The U.N.’s fabled bureaucracy also takes a toll: the assessors note that an “inexplicable number” of reports are prepared by UNDP aid-givers each month at the local level, with some technical specialists estimating they spent 20 percent to 30 percent of their time creating paperwork.

Not much of it apparently has to do with how the aid beneficiaries themselves view things: as the assessors delicately put it, “There is presently no adequate mechanism for feedback from beneficiaries within any of the HDI structures.” UNDP, however, told the assessors it is currently working on a pilot project to do that.

Not all of the UNDP efforts in Burma are viewed as critically by the assessors as the organization’s community development work. Its micro-finance projects in Burma get good marks, though the assessors note that the country’s poorest residents are not benefiting.

The assessors also admitted that the UNDP “impact study” upon which its conclusions were based might itself be flawed, through lack of baseline data and other possible failings. But their report underlined that the survey methodology was considered “robust” by a specialist brought in to design the investigation.

In concluding, the independent experts acknowledge that UNDP itself is unlikely to make any changes before its current authorization for the aid program expires next year. But then it says, a “major revision” of the program is called for “to enhance impact on poverty.”

The experts also note, perhaps in tacit acknowledgment of a previous decade of unimpressive results, that UNDP itself “may come to a different conclusion.”

George Russell is executive editor of Fox News.

Official: U.N. Lost $10M in Burma

By BENNY AVNI, Staff Reporter of the Sun July 29, 2008

UNITED NATIONS — The United Nations lost at least $10 million as it carried out humanitarian relief efforts in Burma because it complied with a plan allowing the country's ruling junta to control foreign currency, according to the top U.N. humanitarian coordinator.

Storm victims stand outside their shacks after they rebuilt them with tarpaulin and leftover pieces from the river after Nargis cyclone at Ohnpinsu village near Labutta town at the Irrawaddy delta on July 10, 2008.

John Holmes's disclosure yesterday raises questions about how funds donated by well-meaning governments and private entities are spent by the United Nations in countries such as Burma, where a dictatorial regime controls every aspect of life, and whether the international effort unwittingly helps such regimes further tighten their grip on power, Burma watchers say.

U.N. officials had downplayed the scope of the losses accrued as a result of the junta's distorted exchange rate. But Mr. Holmes acknowledged yesterday that the amount was "significant," calling it "unacceptable." He promised to raise the issue with Burma's government to ensure that losses could be cut down in the future. But evidence emerged yesterday that the U.N. Office for the Coordination of Humanitarian Affairs, which he heads, was aware of the problem even as it was appealing worldwide for additional funds for Burma.

An economic professor at Macquarie University in Sydney, Australia, Sean Turnell, said yesterday that the figure of $10 million in Burma losses is "not inconsistent" with his own estimate. "But why is the U.N. handing any foreign currency to the Burmese regime anyway?" the economist, who was one of the first to expose the loss, said, adding that such handouts only strengthen the ruling junta.

International organizations were quick to offer assistance and donations to the victims of Cyclone Nargis after it hit the Burmese coast on May 2, killing 140,000 people. OCHA appealed internationally for $200 million, of which $180 million was quickly raised, Mr. Holmes said. A third of those funds was spent inside the country in kyat, the local currency, he told reporters yesterday.

The conversion from dollars to kyat is done through Foreign Exchange Certificates, which are issued by government-licensed local vendors according to what the government claims are market rates. The difference between the official conversion rate and the FEC rate has fluctuated between 10% and 25%, Mr. Holmes said. According to his office's calculation, $10 million of the initial $200 million appeal funds was lost through such conversions.

Although OCHA has said conditions on the ground have improved significantly, on July 10 it appealed for additional international funds — up to $480 million — to aid Burma. OCHA has already received $200 million of this second flash appeal, Mr. Holmes said.

Inner City Press, a Web site focusing on U.N. reporting that has investigated the foreign exchange losses extensively, yesterday published a internal memorandum from June 26 that showed OCHA was aware at that time that the foreign exchange conversions had caused losses of 20%. None of the losses, however, were disclosed to potential donors when OCHA launched its additional appeal in July.

"Presumably the government is benefitting somehow" from the exchange rate, Mr. Holmes said yesterday, though he acknowledged that he could not calculate how much of the $10 million that had already been lost went directly to top generals or their associates. A similar foreign exchange plan led to losses of U.N. funds in North Korea.

A sudden influx of funds to dictatorial countries such as Burma creates the potential for an inflationary effect, Mr. Turnell said. Such an effect "increases the power of anyone who controls the country," he said. Meanwhile, he added, the junta has enough resources to handle the relief efforts, if it cared to do so, without foreign funds.

The Bush administration has spent $47.2 million so far on assistance to Burma, according to government documents. "We're against any waste of resources that taxpayers around the world and member states provide to meet the needs of people around the world," the American ambassador to the United Nations, Zalmay Khalilzad, said. "We also do not want any diversion of it to unintended goals, and that applies to this case."

UN aid disappearing in Burma cash scam

By Thomas Bell, South East Asia Correspondent
Last Updated: 1:48PM BST 29 Jul 2008

The missing money is likely to have lined the pockets of the ruling generals and their business cronies.

The scam, which is still occurring, involves forcing the UN to buy the local currency, the Kyat, at above the market rate by changing money through government backed Foreign Exchange Certificates (FEC).

A dollar currently buys around K1,100 while a "one dollar" FEC only buys K880.

In New York on Monday, Sir John Holmes, the under-secretary-general for humanitarian affairs, said: "We were arguably a bit slow to recognise... how serious a problem this has become for us."

He estimated that 15 per cent, or £5 million, of aid transferred in this way had been lost. "It is not acceptable," he added.

A UN spokesman in Rangoon told The Daily Telegraph that the exact losses are still being calculated. Observers believe the final figure could be higher, because for much of the period since the cyclone the discrepancy in exchange rates has been around 25 per cent.

The scandal was exposed in an investigation by Inter City Press, a New York blog, which began reporting the story on 26 June, after receiving a leak of purported minutes from a teleconference in which officials registered alarm at a "very serious 20 per cent loss on foreign exchange".

Yet top officials denied that such losses were occurring, even as they launched an appeal for another £150 million in cyclone aid on 10 July.

"We buy kyats at the market rate using dollars," Daniel Baker, the humanitarian co-ordinator for Burma said that day. "The government has not benefited."

On Monday Sir John insisted: "We were not aware of the extent of the loss."

A spokesman for the UN Development Programme in Rangoon explained yesterday: "I don't think people expected, given the past, this divergence to be as much as it was or to go on as long as it has."

Urgent steps were being taken to address the problem, he said.

Discrepancies between the official and market exchange rates are well known to visitors to Burma. The International Monetary Fund highlighted the issue in a report last year.

Aung Naing Oo, a Burmese academic at Chiang Mai University in Thailand, said that identifying the beneficiaries of the process would be difficult in Burma's corrupt financial system.

"Who is handling the money, who is doing the trade?" he asked. "Sure the military is profiting, but other shady people may also be profiting who the UN can not clearly pinpoint."

See the leaked minutes: http://www.innercitypress.com/ETFT26June08.pdf

UN’s Lost Aid May Be Tip of the Iceberg

BANGKOK—The loss of United Nations aid money via “unacceptable” exchange rates orchestrated by the Burmese regime was going on long before this week’s disclosures about Cyclone Nargis cash losses, a US nongovernmental organization says.

“There are indications that [the United Nations Development Program], even prior to Cyclone Nargis, provided larger cuts to Myanmar’s Than Shwe government than the [up to] 25 percent now admitted to by the UN’s humanitarian operations,” said Matthew Russell Lee of the New York-based NGO Inner City Press.

The NGO investigates issues such as transparency, corporate accountability and predatory lending. It was instrumental in forcing the UN this week to admit to losses to the junta of at least US$10 million on cyclone cash aid transmitted into Burma.

The “very serious loss” was disclosed by the UN’s humanitarian chief, John Holmes, when he returned to New York this week after a post-cyclone assessment visit to Burma.

“Now that Holmes has admitted the losses, putting the figure at $10 million, it’s important to note that is only for the period from the cyclone until now,” Lee told The Irrawaddy on Wednesday.

“Inner City Press has asked the UN Development Program (UNDP), which has accepted the Myanmar government’s currency exchange rules for 14 years, how much it has converted during that time, and at what rates. For now, UNDP says it doesn’t know, which is also troubling,” Lee said.

The UN usually expects to lose small amounts through exchange of dollars into local currency, but the enforced conversion into Burmese kyat via Foreign Exchange Certificates (FECs) at a government-controlled bank has led to a loss of at least 15 percent, Holmes said.

“The amount of money the UN system has turned over to the Than Shwe government goes back far before the cyclone,” said Lee, who was the first to obtain a secret internal UN memo outlining the losses on cyclone funds.

“Why were these losses never disclosed while [new cyclone] funds were being raised?” Lee asks.

Sizable losses were first disclosed after the UN’s second appeal on July 10 for additional aid of several hundred million dollars to tackle the aftermath of Cyclone Nargis. A secret internal accounting memo outlining the problem was obtained by Inner City Press.

However, it was only after Holmes’ visit to Burma last week that a firm figure was announced. The UN had been “a bit slow to recognize” the size of the losses, Holmes said in New York on Monday this week.

Holmes’ disclosure follows a meeting he had in Naypyidaw with Burma’s ruling generals last week, at which he said, “We must make sure that humanitarian efforts continue to be separate from politics.” Back in New York, Holmes said the extent of the loss through junta-dictated exchange rates was “unacceptable.”

At one point earlier this month, the exchange rate was only 880 kyat for each FEC, compared with 1,180 previously.

It appears that after the UN was jolted into public acknowledgement of the losses, the agency pressured the junta to prevent further skimming of funds by the Myanmar Foreign Trade Bank, where the UNDP holds a US dollar account.

According to Inner City Press, this led to losses dropping to 17 percent, giving the UN 980 kyat per dollar. The UN has already raised $200 million for cyclone relief work in Burma and is seeking an additional $300 million.

About $66 million has so far been used for local purchases within Burma, requiring its conversion into kyat—hence the estimated $10 million loss, based on an average deflated conversion at 15 percent.

Inner City Press, as part of its campaign for financial transparency at the UN, asked a former UNICEF official in Burma, Eric Laroche, who is now with the World Health Organization, whether he thought it was legitimate to accept a low exchange rate from a government in order to have access.

Laroche told Inner City Press: “It’s a very difficult question, and a more difficult answer. It has to do with principles.”

Evidence has emerged that the UN knew in June that it was losing what Holmes now calls “significant” sums of aid money to the junta.

The loss on each cyclone dollar has ranged from 15 percent to as much as 25 percent, peaking in June—before the UN made its second appeal for further donations from member countries.

“We were arguably a bit slow to recognize how serious a problem this has become for us,” Holmes said on Monday. “It’s not acceptable.”

Holmes insisted it was “unclear” who is benefiting from the UN’s losses, although he conceded the “likelihood” that the Burmese government gained.