A child dies, a child lives: why Somalia drought is not another famine

A Somali girl is seen at a internally displaced camp in the northern Somali town of Dollow, Somalia, February 25, 2018. Picture taken February 25, 2018. REUTERS/Baz Ratner

By Maggie Fick and Katharine Houreld

DOLLOW, Somalia (Reuters) – At the height of Somalia’s 2011 famine, Madow Mohamed had to leave her crippled five-year-old son Abdirahman by the side of the road to lead her eight other starving children toward help.

When she returned to search for him, she found only a grave. He was among the 260,000 Somalis who perished.

“You can never forget leaving your child to die,” she says, wiping away tears at the memory seven years later. “It is a hell that does not end.”

This time, the drought has been harsher. Three seasons of rains have failed, instead of two. But none of Mohamed’s other children have died – and the overall death toll, although unknown, is far lower. The United Nations has documented just over 1,000 deaths, mostly from drinking dirty water.

Why?

Earlier donor intervention, less interference by a weakened Islamist insurgency, a stronger Somali government and greater access for aid workers have been crucial.

Somali women stand in line to receive infants food aid in the northern Somali town of Dollow, Somalia, February 26, 2018. Picture taken February 26, 2018.REUTERS/Baz Ratner

Somali women stand in line to receive infants food aid in the northern Somali town of Dollow, Somalia, February 26, 2018. Picture taken February 26, 2018.REUTERS/Baz Ratner

Another reason is that aid agencies are shifting from giving out food to cash – a less wasteful form of aid that donors such as Canada, Europe and Australia have embraced, although the United States still has restrictions on food aid.

The U.S. Congress will debate a move toward cash-based aid this year when lawmakers vote on a new Farm Bill. Christopher Barrett, an expert on food aid at Cornell University, is one of many scholars, politicians and aid agencies demanding reform.

“A conservative estimate is that we sacrifice roughly 40,000 children’s lives annually because of antiquated food aid policies,” he told Congress in November.

 

FROM FOOD TO CASH

In 2011, a few donors gave out cash in Somalia, but the World Food Programme only gave out food. It was often hijacked by warlords or pirates, or rotted under tarpaulins as trucks sat at roadblocks.

Starving families had to trek for days through the desert to reach distribution points. Their route became so littered with children’s corpses it was called “the Road of Death”.

Now, more than 70 percent of WFP aid in Somalia is cash, much of it distributed via mobile phones. More than 50 other charities are also giving out cash: each month Mohamed receives $65 from the Italian aid group Coopi to spend as she wants: milk, medicine, food or school fees.

Cash has many advantages over food aid if markets are functioning. It’s invisible, so less likely to be stolen. It’s mobile so families can move or stay put.

WFP said it gave out $134 million directly to Somali families to spend at local shops last year.

A woman walks past thw makeshift shelters at the new Kabasa Internally displaced camp in the northern Somali town of Dollow, Somalia, February 25, 2018. Picture taken February 25, 2018. REUTERS/Baz Ratner

A woman walks past thw makeshift shelters at the new Kabasa Internally displaced camp in the northern Somali town of Dollow, Somalia, February 25, 2018. Picture taken February 25, 2018. REUTERS/Baz Ratner

“We … basically gave confidence to the market to stay active,” said Laurent Bukera, head of WFP Somalia.

And money is more efficient than bags of food: in Somalia, cash aid means 80 cents in every $1 goes directly to the family, rather than 60 cents from food aid, said Calum McLean, the cash expert at the European Union’s humanitarian aid department.

Cash might have saved little Abdirahman.

“I could have stayed in my village if I had had cash. There was some food in the markets. It was expensive, but if you had money, there was food to buy,” Mohamed said sadly.

GLOBAL SHIFT

Aid groups have been experimenting with cash for two decades but McLean says the idea took off five years ago as the Syrian civil war propelled millions of refugees into countries with solid banking systems.

Donors have adapted. Six years ago, five percent of the EU’s humanitarian aid budget was cash distributions. Today, it is more than a third.

Most of the initial cost lies in setting up the database and the distribution system. After that, adding more recipients is cheap, McLean said. Amounts can be easily adjusted depending on the level of need or funding.

“Cash distributions also becomes cheaper the larger scale you do it,” he said.

Most U.S. international food assistance is delivered by USAID’s Food for Peace Office, which had a budget of $3.6 billion in 2017.

Just under half those funds came through U.S. Farm Bill Title II appropriations, which stipulate that most food must be bought from American farmers. The U.S. Cargo Preference Act requires that half of this be shipped on U.S.-flagged vessels.

Despite these restrictions, Food for Peace increased cash and voucher programs from 3 percent of the budget in 2011 to 20 percent last year.

But sourcing food aid in the United States is expensive and wasteful, said Barrett, who oversaw a study that found buying grain close to an emergency was half the price and 14 weeks faster. Arguments that food aid supported U.S. farmers or mariners were largely false, he said.

HOW IT WORKS

Aid groups use different systems to distribute cash, but most assess families, then register them in a biometric database, usually via fingerprints. Cash is distributed using bank cards or mobile phones or as vouchers.

Some charities place no restrictions on the cash; others, like WFP, stipulate it can only be spent at certain shops with registered shopkeepers.

In Dollow, the dusty town on the Ethiopian border where Mohamed lives with her surviving children, families say the cash has transformed their lives.

Gacalo Aden Hashi, a young mother whose name means “sweetheart”, remembers trudging past two dead children in 2011 on her way to get help. A third was alive but dying, she said, and her weakened family had to press on.

When she arrived at the camp, men were stealing food aid to give to their families, she said.

“Men were punching each other in line every time at food distributions,” she said. “Sometimes you would be sitting and suddenly your food would be taken by some strong young man.”

Now, she says, no one can steal her money – Coopi uses a system that requires a PIN to withdraw money. Most of her cash goes on food but with a group of other women she saved enough to open a small stall.

“The cash may end, but this business will not,” she said.

PROBLEMS PERSIST

Cash won’t work everywhere. In South Sudan, where famine briefly hit two counties last year, the civil war shut markets, forcing aid agencies to bring in food by plane and truck.

Sending cash to areas hit by earthquakes would drive up prices. But in a drought, where livelihoods have collapsed but infrastructure is intact, cash transfers are ideal, experts say.

Some problems remain. There’s often little co-ordination among donors – for instance, there are seven separate databases in Somalia, said McLean, and monthly stipends can vary widely.

In Uganda, authorities are investigating reports of fraud after the government used its own biometric registration system for refugees.

And if there’s no clean water or health service available, then refugees can’t spend money buying water or medicine.

But most scholars agree that switching to more cash aid would save more lives, a 2016 briefing paper by the Congressional Research Service concluded.

(Additional reporting by George Obulutsa; Writing by Katharine Houreld; Editing by Giles Elgood)

‘Jackpotting’ hackers steal over $1 million from ATM machines across U.S.: Secret Service

A hooded man holds a laptop computer as blue screen with an exclamation mark is projected on him in this illustration picture taken on May 13, 2017.

By Dustin Volz

WASHINGTON (Reuters) – A coordinated group of hackers likely tied to international criminal syndicates has pilfered more than $1 million by hijacking ATM machines across the United States and forcing them to spit out bills like slot machines dispensing a jackpot, a senior U.S. Secret Service official said on Monday.

Within the past few days there have been about a half-dozen successful “jackpotting” attacks, the official said.

The heists, which involve hacking ATMs to rapidly shoot out torrents of cash, have been observed across the United States spanning from the Gulf Coast in the southern part of the country to the New England region in the northeast, Matthew O’Neill, a special agent in the criminal investigations division, told Reuters in an interview.

The spate of attacks represented the first widespread jackpotting activity in the United States, O’Neill said. Previous campaigns have been spotted in parts of Europe and Latin America in recent years.

“It was just a matter of time until it hit our shores,” O’Neill said.

Diebold Nixdorf Inc and NCR Corp, two of the world’s largest ATM makers, warned last week that cyber criminals are targeting ATMs with tools needed to carry out jackpotting schemes.

The Diebold Nixdorf alert described steps that criminals had used to compromise ATMs. They include gaining physical access, replacing the hard drive and using an industrial endoscope to depress an internal button required to reset the device.

A confidential U.S. Secret Service alert seen by Reuters and sent to banks on Friday said machines running XP were more vulnerable and encouraged ATM operators to update to Windows 7 to protect against the attack, which appeared to be targeting ATMs typically located in pharmacies, big box retailers and drive-thrus.

While initial intelligence suggested only ATMs running on outdated Windows XP software were being targeted, the Secret Service has seen successful attacks within the past 48 hours on machines running updated Windows 7, O’Neil said.

“There isn’t one magic solution to solve the problem,” he said.

A local electronic crimes task force in the Washington, D.C., metropolitan area first reported an unsuccessful jackpotting attempt last week, O’Neill said.

A few days later another local partner witnessed similar activity and “developed intelligence” that indicated a sustained, coordinated attack was likely to occur over the next two weeks, O’Neill said. He declined to say where that partner was located.

Jackpotting has been rising worldwide in recent years, though it is unclear how much cash has been stolen because victims and police often do not disclose details.

(Reporting by Dustin Volz in Washington, D.C.; Editing by David Gregorio)

Exclusive: Looted cash, gold helps Islamic State recruit in Philippines

A view of the facade, of the battered Landbank building, looted by militants, in the early days of the Marawi siege, Philippines January 13, 2018.

By Tom Allard

MARAWI CITY, Philippines (Reuters) – Islamist insurgents looted cash, gold and jewelry worth tens of millions of dollars when they occupied a southern Philippines town last year, treasure one of their leaders has used to recruit around 250 fighters for fresh attacks.

The military said Humam Abdul Najib escaped from Marawi City, which the militants had hoped to establish as a stronghold for Islamic State in Southeast Asia, before it was recaptured by the military in October after five months of ferocious battles and aerial bombardment.

Since then, Najib, also known as Abu Dar, has used the booty looted from bank vaults, shops and homes in Marawi to win over boys and young men in the impoverished southern province of Lanao del Sur, military officers in the area said. Hardened mercenaries are also joining, lured by the promise of money.

As a result, Islamic State followers remain a potent threat in Southeast Asia even though hundreds of militants were killed in the battle for Marawi, the officers said.

“Definitely they haven’t abandoned their intent to create a caliphate in Southeast Asia,” Colonel Romeo Brawner, the deputy commander of Joint Task Force Marawi, told Reuters.

“That’s the overall objective, but in the meantime while they are still trying to recover and build up again – fighters and weapons – our estimate is they are going to launch terrorist attacks.”

On Saturday, militants wounded eight soldiers in two attacks in Lanao del Sur, Brawner said, the first such violence since the recapture of Marawi.

In the early days of the occupation of Marawi last May, as black-clad fighters burned churches, released prisoners and cut the power supply, other militants targeted banks and the homes of wealthy citizens, commandeering hostages to help with the plunder.

“It was in the first week. They divided us into three groups with seven people each,” said J.R. Montesa, a Christian construction worker who was captured by the militants.

Using explosives, the militants blew open the vaults of the city’s three main banks, Landbank, the Philippine National Bank and the Al Amanah Islamic Bank, Montesa told Reuters in a town near Marawi. They trucked away the booty, easily slipping out of Marawi because a security cordon was not fully in place.

They also raided jewellery stores, pawnshops and businesses.

Landbank and Al Amanah did not respond to requests for comment. Philippine National said recovering losses because of the Marawi fighting was a concern, but did not give details.

The Islamic celebration of Ramadan was looming at the time the militants struck and banks, businesses and homes had more money than usual, said Marawi City police chief Ebra Moxsir. The Maranaos, the ethnic group that dominates the area around Marawi, are mostly Muslims.

“There was a lot of money inside the battle area,” he told Reuters. “Maranaos keep millions of pesos in safety vaults in their homes. Gold, also. It is a tradition of the Maranao to give gifts of money (during Ramadan).”

Montesa said vans they loaded with the spoils of the raids were “overflowing”, with money, gold and other valuables stuffed into every crevice of the vehicles.

“They were saying it was a gift from Allah. They would say ‘Allahu Akbar’ (God is greatest) while we were stealing.”

DANGEROUS REGROUPING

The military and police have also been accused by rights groups and by Marawi residents of looting during the conflict.

Brawner said a small number of soldiers had been disciplined for looting but the practice was not widespread.

However, the centre of Marawi – home to its major banks, main market and grandest residences – was under the control of militants for months.

Brawner said authorities were unclear exactly how much was taken by the militants.

“It’s hard for us to say. We have heard about 2 billion pesos ($39.4 million) but that’s just an estimate.”

“In the first days, when we were not able to establish that security cordon around the main battle area, that was the time when they were able to slip out with their war booty.”

The government also said the regrouping of militants in Mindanao, the southern region of the Philippines that has been marred by Islamic and Communist uprisings for decades, was dangerous.

Presidential spokesman Harry Roque told Reuters: “There is always the danger of these groups regaining strength enough to mount another Marawi-like operation.”

Najib is believed to have fled Marawi early in the battle. There are conflicting reports about whether he had a dispute with other leaders or left as part of a preconceived plan.

He attempted to return in August with 50-100 more fighters to reinforce the militants, who by then were losing ground, but he was prevented by an improved security cordon, said Brawner.

“According to reports, they were able to recruit another 100 to 150. So the estimate is 250 all in all, and this includes children,” Brawner said. “They are trying to recruit orphans, relatives of the fighters who died and sympathisers.”

Parents of children are offered as much as 70,000 pesos ($1,380) plus a monthly salary of as much as 30,000 pesos ($590) to hand over their sons to the group, according to security sources and community leaders briefed on the recruitment.

The average family income in the Philippines is 22,000 pesos per month, according to a 2015 government survey. It was about half that in the Autonomous Region of Muslim Mindanao, where Marawi and surrounding areas lie.

Brawner said local residents had told the military that the militant group was also offering bonuses of up to 10,000 pesos ($200) for killing a soldier.

Rommel Banlaoi, a Manila-based security expert, said more experienced fighters had also been recruited. These were “mercenaries” attracted by the payouts, he said, but Najib has also tapped into disaffection among Maranao angered by the destruction of large parts of Marawi by the Philippine military’s bombing campaign.

“That kind of narrative is being used by ISIS to lure people to continue the fight,” Banlaoi said, using an acronym for Islamic State.

NEXT EMIR?

With the looted funds and a loyal following, Najib, could become the new “emir” of Islamic State in Southeast Asia following the death of Isnilon Hapilon in the battle for Marawi, security analysts say.

Najib is a hardened fighter and cleric who studied in the Middle East and reportedly trained with militants in Afghanistan, they say.

He co-founded Khalifa Islamiyah Mindanao, an insurgent group formed in about 2012 that launched a series of bombings in Mindanao.

“He is a very, very important person because he has been there from the start,” said Banlaoi.

Najib had links to Al Qaeda, which earned him the nickname “al Zarqawi of the Philippines”, a reference to the slain leader of Al Qaeda in Iraq (AQI), Abu Musab al Zarqawi. AQI morphed into Islamic State, to which Najib pledged allegiance in 2014.

According to Banlaoi, Najib worked closely with Mahmud Ahmad, a Malaysian militant believed to have died in Marawi who was the key conduit between the Philippines fighters and the Islamic State leadership in Syria and Iraq.

Banlaoi said the recruitment effort by the pro-Islamic State remnants led by Najib was “massive and systematic”.

“If you are well funded, you can do a lot of things.”

(Additional reporting by Martin Petty, Neil Jerome Morales and Manuel Mogato; Editing by John Chalmers and Raju Gopalakrishnan)

Chinese investors find their cash is losing its cachet

logo of yuan

By John Ruwitch and Dasha Afanasieva

SHANGHAI/LONDON (Reuters) – For years, cash-rich Chinese investors have been highly sought after the world over. Now, their cash is losing its cachet.

China’s increasing efforts to prevent capital from leaving the country are eroding the confidence of domestic and foreign investors about getting deals done inside and outside of the world’s second-biggest economy.

Chinese bidders had become ubiquitous in deals in the past two years and were welcomed, said Severin Brizay, head of Europe, the Middle East and Africa mergers and acquisitions for the investment bank UBS.

“Clients were asking if it would be possible to make sure they are involved. Now, we are seeing the reverse: some clients are asking if we can do it without Chinese bidders because of the domestic challenges they face,” he said.

Dealmakers said many Chinese firms are unable to close deals because they can not secure official permission to transfer yuan into foreign exchange.

This follows a series of measures by authorities since late last year to tighten restrictions on capital outflows and rein in what officials have called “irrational” outbound investment. The Institute of International Finance estimated capital outflows surged to a record $725 billion last year and it expects even higher outflows this year.

The yuan fell more than 6.5 percent last year against the dollar, its steepest decline since 1994, prompting the central bank to spend hundreds of billions of dollars in reserves to prevent the slide from turning into a slump.

China’s foreign exchange regulator, the State Administration of Foreign Exchange, did not respond to requests for comment.

IMPACT

The measures by authorities have had a dramatic impact.

Overseas direct investment (ODI) by Chinese in December fell almost 40 percent from a year earlier to $8.41 billion, the lowest monthly level in 2016. In January, overseas property purchases by Chinese corporations plunged.

Global stock index provider MSCI expressed concern about the capital outflow measures and China shelved plans for a new crude futures contract because potential foreign participants were worried they would not be able to take yuan profits out of the country.

Chinese conglomerate and cinema chain operator Dalian Wanda’s proposed $1 billion purchase of U.S. entertainment group Dick Clark Productions Inc collapsed over problems getting currency out of China and regulatory approval, online website The Wrap said on Monday.

In another case, a Chinese investor was unable to get permission from authorities to exchange yuan into $30 million to close a U.S. deal, a consultant involved in the project said. The planned $100 million investment in a U.S. residential property portfolio fell through.

“Sellers nowadays will request certain proof,” said Jeffrey Sun, a Shanghai-based partner at the legal practice of Orrick, Herrington and Sutcliffe. “From the sellers’ side, the worry is justified.”

Still, while Chinese regulators are putting proposed deals under greater scrutiny, it does not mean they are shutting the door on outbound investment, lawyers said.

Regulators will approve deals if they make economic sense, Sun said. For example, a steel manufacturer buying a soccer club “is unlikely” to be approved, he said.

“FREAKED OUT”

Fund managers that help Chinese invest abroad, such as China Orient Summit Capital, are changing tack. The firm had been raising money in China for funds to target U.S. and European real estate. It is now looking to raise money in offshore markets, an executive at the company said.

China Orient Summit Capital declined a request for a formal interview.

Companies are also looking to avoid the approval process for buying foreign exchange if they have access to funds outside of China, lawyers and bankers said.

“Every deal at this point is looking for some way to identify offshore funds rather than deal with the capital controls,” said an M&A lawyer in Shanghai, who declined to be identified.

Chinese companies raised a record $111 billion in offshore dollar bonds in 2016, according to data from Dealogic, up from $88 billion in 2015. Some of those funds would have been earmarked for overseas investments, said Ivan Chung, associate managing director at Moody’s ratings service.

Chinese conglomerate HNA Group <0521.HK> announced about $20 billion in outbound deals last year. Thomson Reuters data shows it raised at least $17.05 billion in loans abroad in 2016.

Overall, China’s outbound investment hit a record last year but could have been much higher, said the Rhodium Group, a consultancy that tracks direct investment from China. It said a record 30 deals worth $74 billion and involving Chinese companies were canceled in the United States and Europe in 2016.

“Right now everybody is thoroughly freaked out by capital controls,” Daniel Rosen, a Rhodium partner and adjunct professor at Columbia University, said.

Still, on Vancouver’s upscale West Side, a neighborhood popular with foreign buyers where the price of homes runs in the millions of dollars, realtor Tom Gradecak was less worried about Chinese demand.

In the past, Chinese investors have tended to find ways around capital controls, he said.

“It won’t take them long,” he said. “The people that really want to come here, I don’t think it’s going to stop them.”

(Reporting by John Ruwitch and Samuel Shen in SHANGHAI, Matt Miller in BEIJING, Dasha Afanasieva in LONDON, and Nicole Mordant in VANCOUVER; Editing by Neil Fullick)