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 PHNOM PENH 00000742 002 OF 002 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