MFA ON USG-PROPOSED AGREEMENTS

UNCLAS SECTION 01 OF 02 PHNOM PENH 002112

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/MLS, EB, ISN/CPI

E.O. 12958: N/A
TAGS: EFIN PREL KTIA CB
SUBJECT: MFA ON USG-PROPOSED AGREEMENTS



1. (SBU) Summary. The MFA has told us that both the
USG-proposed bilateral shipboarding and debt agreements
remain under RGC consideration. The MFA has circulated among
other concerned Ministries the shipboarding agreement and is
awaiting comment. The bilateral debt agreement also remains
under discussion, but the MFA told the Ambassador that the
time "may not yet be right" to reach a settlement.
Separately, the Japanese Ambassador conveyed to the
Ambassador that the debt agreement was very difficult for the
Cambodian government to accept. End Summary.

MFA on PSI Shipboarding Agreement, Debt
--------------


2. (SBU) On November 29, MFA Secretary of State Ouch Borith
met with the Ambassador at the former's request to respond to
the USG-proposed bilateral shipboarding agreement, which was
provided to the MFA via diplomatic note earlier in November.
Borith noted that his Ministry would need to consult with
other RGC Ministries given the nature of the agreement, which
cross-cuts a number of Cambodian authorities. He indicated
that the MFA has sent the text to the Ministries of Defense
and Transportation; others may also need to be consulted. He
said the Cambodian government understands the proposed USG
agreement is linked to the Proliferation Security Initiative,
as well as UNSCR 1718, passed on October 14 five days after
North Korea's nuclear test. Borith noted that the RGC
condemned the test and would abide by its UN obligations
under UNSCR 1718. He affirmed that nuclear proliferation was
a cause for concern for all countries, and Cambodia -- with
its limited resources -- would do what it could to assist the
international community.


3. (SBU) Borith said the MFA had a number of questions
regarding the text of the draft shipboarding agreement, but
would await comments from other Ministries before providing a
response. He asked about other East Asian countries (e.g.,
South Korea) and which ones were members of the PSI. Among
those, Borith asked if any had already signed a similar
shipboarding agreement. The MFA underscored RGC willingness
to cooperate on illegal shipments related to WMD. The
Ambassador noted that Cambodia's cooperation on
counterterrorism issues has been laudable, as has RGC
responsiveness to USG requests to board Cambodian-flagged
vessels for counternarcotics purposes.


4. (SBU) Turning to the bilateral debt issue, the
Ambassador asked Borith if the RGC were nearing a decision on
the draft MOU submitted to the Cambodian government in late
July for which the USG has yet to receive a response. Borith
responded that he was not directly working on that issue, and
had heard that the IMF had consulted with the RGC and urged
the Cambodian government to resolve the outstanding debt to
the USG. However, Borith was also aware that some (NFI)
within the government felt that Cambodia's financial
situation was not yet strong enough to support debt
repayment, and opined that the RGC might have to wait until
after the oil and gas revenues are available. He urged the
USG to be patient and underscored RGC willingness to solve
the problem.


5. (SBU) In a separate conversation with the Ambassador the
same day, the Japanese Ambassador raised the debt issue, and
noted that the RGC found it politically difficult to accept
responsibility for a debt incurred during the Lon Nol regime
of the early 1970s. He inquired if there was not another way
for the matter to be resolved, perhaps along the lines of the
HIPC debt forgiveness initiative. The Ambassador responded
that Cambodia, while poor, is not eligible for HIPC relief,
and that the Cambodian government is legally responsible for
the debts incurred by preceding governments. The USG has
tried to work with the RGC on the most reasonable arrangement
for resolving the debt, eliminating from consideration a
proportion of the accrued debt based on poor documentation.
The Japanese Ambassador observed that the Cambodians were
trying to negotiate their outstanding debt to the Russian
government, which was also proving challenging.

Comment
--------------


6. (SBU) We would appreciate any information Washington can
provide regarding the number of Asian countries (particularly
in East Asia) with whom the USG has signed similar
shipboarding agreements to the one provided to the RGC for
consideration. Concerning the bilateral debt, we had heard
that the RGC might be dragging its feet due to ongoing
negotiations with the Russians, but did not anticipate that

PHNOM PENH 00002112 002 OF 002


the RGC might think to delay finalizing a debt agreement with
the USG until 2009-10, when the country may begin to accrue
oil/gas revenues. Post will confer with the desk on possible
next steps regarding the debt issue. End Comment.
MUSSOMELI