SCENESETTER FOR DAS ERIC JOHN'S APRIL 30-MAY 2

UNCLAS SECTION 01 OF 02 PHNOM PENH 000742

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP DAS ERIC JOHN FROM CHARGE MARK STORELLA,
STATE ALSO FOR EAP/MLS; GENEVA FOR RMA

E.O. 12958: N/A
TAGS: PGOV PREL KDEM CB
SUBJECT: SCENESETTER FOR DAS ERIC JOHN'S APRIL 30-MAY 2
VISIT TO CAMBODIA



1. (SBU) Your visit will come at a time when things are
looking better for Cambodia than they have in a long time and
at a time when Prime Minister Hun Sen and his party are
feeling comfortable about their performance. The political
environment has turned around dramatically, the economy is up
and our bilateral relationship is on the strongest upswing in
a decade. The Cambodians clearly want to see bilateral
relations improve further and will see your visit as an
opportunity to support the positive trend begun during A/S
Hill's January visit. You will be able to reinforce our
strong areas of cooperation and press for further progress on
democratic institution building.


2. (SBU) Your meeting with PM Hun Sen will be the
centerpiece of the visit. Uppermost in his mind will be the
prospect of an eventual official visit to Washington and the
legitimacy such a visit would confer. He will also have in
mind the need for the U.S. to balance China and Vietnam, both
of whose premiers visited Cambodia in the last month.
Foreign Ministry interlocutors will likely push Cambodia's
APEC bid, even though we have reminded them of the moratorium
until 2007. Opposition leader Sam Rainsy will brief on his
reconciliation with Hun Sen and future plans. Human rights
advocates, including Kem Sokha, deeply appreciate our
support, but remain cautious after the setbacks of 2005. The
press will seek your assessment of political developments and
ask about reports that the U.S. has requested Cambodian
participation in Iraqi reconstruction. In all your meetings,
you will have the opportunity to stress the need to
institutionalize democratic and good governance reforms,
including anti-corruption legislation, further support for
the role of the opposition, and possible legislation on use
of future oil/gas revenues for poverty reduction.


3. (SBU) The Cambodian government (RGC) has delivered on
everything promised A/S Hill and more. The RGC released all
political prisoners; Sam Rainsy has returned, been pardoned
and resumed his role in the National Assembly; opposition
members have joined all National Assembly Commissions and
been awarded two chairmanships; the PM and Sam Rainsy have
launched a land authority to review land disputes; the
Council of Ministers approved decriminalization of defamation
April 21; and the PM has agreed to revise the National
Electoral Commission to include the opposition. Cambodia
continues to provides us excellent cooperation on health
(avian influenza and HIV/AIDS),POW/MIA, CT, law enforcement,
deportees, counternarcotics, and criminal cases under the
Protect Act. We expect the RGC's 2006 anti-trafficking in
persons record to result in an upgrade from Tier 3 to the
Tier 2 Watchlist. Cambodians enjoy unfettered religious
freedom and a relatively open press. The RGC recently
accepted our final offer on Cambodia's Vietnam War era
bilateral to debt to us, although repayment terms have yet to
be worked out. Nevertheless, Cambodia's democratic
infrastructure remains weak and reforms continue to depend on
PM Hun Sen personally.


4. (U) Cambodia's economy is on a roll, with 10% growth in
2005 and signs of strong growth in 2006. The garment sector
is the engine of the economy, providing over 270,000 jobs,
and has survived in the post-Multi-Fiber Agreement era thanks
to Cambodia's reputation for respect for labor standards and
rights. The U.S. is Cambodia's leading trading partner,
buying roughly 60% of all exports. (The GAP alone buys about
8% of Cambodia's entire GDP.) Tourism, centered on Angkor
Wat, is up. Western donors and Japan pledged roughly $600
million in aid for 2006. (The Chinese premier responded by
announcing China's own flashy, if mathematically dubious,
$600 million pledge.) A recent World Bank study showed a
steady decline in poverty over the past decade, and health
indices for the country are positive. Chevron has struck oil
in Cambodian territorial waters and commercial production is
expected to come on line in 2009. All agree that the twin
roadblocks to greater foreign investment and diversification
of Cambodia's economy are corruption and lack of a competent,
independent judiciary.


5. (SBU) We have responded to the government's positive
steps by reinforcing and expanding the bilateral relationship
in small increments: the proposed opening of a Legatt
office; the announcement of a Peace Corps Mission; USD
200,000 to the Ministry of Justice for anti-trafficking
training; and an increase in AI assistance through USAID and
CDC. We are in the process of putting into place additional

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CT assistance, a new INL counternarcotics program for 2008,
and renewed TIFA talks with the RGC. The RGC may announce
judges for the Khmer Rouge Tribunal (KRT) before your visit;
we should express our strong desire that the Tribunal's
operations meet international standards of justice. A
possible deliverable for your visit might be announcement
that we would agree for U.S. funds in an old UN trust fund to
be used by the KRT as proposed by the UN -- if Washington
could disgorge a decision by the time of your trip. The U.S.
bureaucracy has been chewing on this for over a month.


6. (SBU) You will have an opportunity to engage the MFA on
the recent ASEAN Foreign Ministers meeting in Bali, and how
ASEAN intends to proceed on Burma. We believe the RGC would
like to be helpful in so far as ASEAN consensus will allow.
The National Assembly may be prepared to pass a resolution on
Burma, which would break new ground for the legislative body.
The new chairman of the Foreign Affairs Commission, Son
Chhay, is an SRP MP and would support a resolution, but
recognizes the need for agreement from the ruling Cambodian
People's Party. We believe such a step is doable.


7. (SBU) You may also discuss the next steps the USG is
prepared to take to assist Cambodia: assuming TIP sanctions
are removed, an expanded military-to-military relationship
with restored IMET and FMF funding; further CT training; a
possible ship visit to symbolize expanded military
cooperation; debt initiatives including support for a new
Paris Club deal and USG willingness to consider rechanneling
debt payments into education initiatives and the environment;
and prospects for high-level contacts.


8. (SBU) In sum, while we do not expect any dramatic
breakthroughs, your visit can reinforce a positive trend both
in terms of democratization and improved bilateral
cooperation. And we look forward to taking you for a tour of
EAP's newest embassy building. It remains the talk of the
town.
STORELLA