CAMBODIAN VIEW OF ASEAN-CHINA COMMEMORATIVE SUMMIT

C O N F I D E N T I A L SECTION 01 OF 02 PHNOM PENH 002096 SIPDIS SIPDIS STATE FOR EAP/MLS E.O. 12958: DECL: 11/20/2016 TAGS: PREL ASEAN EAID CB CH SUBJECT: CAMBODIAN VIEW OF ASEAN-CHINA COMMEMORATIVE SUMMIT Classified By: Pol/Econ Chief Margaret McKean; Reason 1.4 (b) (d) ¶1. (C) Summary. According to a senior MFA official, the ASEAN-China Commemorative Summit held in Nanning, China on October 30 underscored ASEAN's desire for greater Chinese trade and development assistance. However, ASEAN reportedly remains unimpressed with the level of assistance/loans offered by the Chinese, and considers Japan a more generous partner. During the PM's bilateral visit, the PM reportedly received a Chinese commitment for an additional USD 100 million in loans to finish a number of infrastructure projects. The MFA official noted that non-APEC participation by ASEAN members Cambodia and Laos in an ASEAN meeting on the margins of the recent APEC Summit in Hanoi was discussed in Nanning, but there had been no ASEAN consensus so Cambodia was left out. FM Hor Namhong plans to raise the issue of Cambodia being held hostage to Burma among the ASEAN FMs during their February 2007 retreat. End Summary. Fifteen Years of China-ASEAN Cooperation -------------- ¶2. (C) During a November 22 meeting with MFA Secretary of State for ASEAN affairs Kao Kim Hourn, the MFA official described the ASEAN-China Commemorative Summit as useful but not entirely satisfactory. The meeting on October 30 yielded little in the way of new results and new financial initiatives from the Chinese. The Chinese agreed to a USD 1 million contribution to the ASEAN Development Fund (ADF),and USD 1 million for Initiative for ASEAN Integration (IAI) projects, which will provide training opportunities in China. Kao Kim Hourn noted that USD 1 million will not train that many people, and compared the small amount donated by the Chinese with their more generous announcement in subsequent days at the China-Africa Cooperation Forum, where the Chinese promised to double their assistance to the Continent. The MFA Secretary of State offered that ASEAN views Japan as a more generous partner than the Chinese, and dismissed the oft-heard claim that China offers its assistance without strings attached. "The Chinese always expect something in return," he observed. ¶3. (C) ASEAN would like to see more trade and investment from the Chinese within ASEAN, particularly the newer members of ASEAN such as Cambodia, said Kao Kim Hourn. At present, there is a strong trade and investment imbalance between China and ASEAN, he pointed out. China expects ASEAN to provide ready markets for its goods, but does little to help promote export industries within Cambodia so that the country can export goods to China. Nor is the Chinese market easy to penetrate, he noted, although China wants free access to Cambodian consumers to buy Chinese goods. In addition, Chinese loans to Cambodia are simply low-cost, preferential loans to Chinese companies so that China can extract resources for export to Chinese manufacturers, he added. On the plus side, the MFA official said that the ASEAN-China Expo in Nanning is to be a permanent trade exhibition, and a number of prominent Cambodian business officials participated in the trade show. ¶4. (C) One area of concern to Cambodia is the future work of those groups (Mekong River Basin development, Greater Mekong Subsystem) collaborating on Mekong River issues, and focusing more on water availability. Kao Kim Hourn mentioned the need for a computer modeling project that would analyze water flow rates depending on varying levels of rainfall as well as the impact of China's dams on water levels. He asked if the USG could provide assistance through the Asian Development Bank (ADB) or USAID to assist in a computer modeling study. The MFA official offered that no one wants to confront China on the realities of its upstream dam projects on downstream countries like Cambodia, but an independent project might provide the basis for constructive engagement. Burma -------------- ¶5. (C) When asked if Cambodian and Laotian participation in the ASEAN meeting on the margins of the APEC Summit in Hanoi had come up, Kao Kim Hourn replied affirmatively. He noted that although the meeting only lasted one day, the subject was raised "informally," and China, Burma, and Laos opposed any ASEAN meeting that did not include Burma. Absent clear ASEAN consensus and not wishing to go against their ASEAN dialogue partner (China),he continued, Vietnam and Singapore supported confining the meeting to those ASEAN leaders who PHNOM PENH 00002096 002 OF 002 are already members of APEC. The PM was not happy at the outcome, said the MFA official, and FM Hor Namhong will raise the issue during the ASEAN FM's retreat in February 2007. The PM does not want Cambodia to be held hostage to Burma; Laos can opt not to participate but it should not preclude Cambodia from attending meetings, said Kao Kim Hourn. The MFA official underscored the PM's continued strong interest in seeing ASEAN take a tougher stance against Burmese intransigence towards democratic reforms. Bilateral Discussions -------------- ¶6. (C) Following the ASEAN-China meetings, PM Hun Sen and the Cambodian delegation held bilateral talks, and the Chinese reportedly acceded to the PM's request for an additional USD 100 million in loans to finish a number of infrastructure projects, which have run out of money and will be incomplete without a further infusion of funds. The Cambodian side also discussed with the Chinese and received tentative support for a rail line project linking Phnom Penh with Sihanoukville. The Cambodian government also agreed to open two other consulates in China. Comment -------------- ¶7. (C) Kao Kim Hourn is a strong advocate for ASEAN, having developed expertise in the organization through his own academic research on ASEAN. He is a Chinese realist and recognizes that Cambodia has much to gain from China, but also believes that Japan and the United States are useful counterweights to Chinese influence in Southeast Asia. In describing the decision to exclude Cambodia from the ASEAN meeting in Hanoi, he indicated that ASEAN unwillingness to exclude Burma (nudged along by China) was the culprit. End Comment. MUSSOMELI