SECOND ANNUAL U.S.-CAMBODIA BILATERAL DIALOGUE

UNCLAS SECTION 01 OF 05 PHNOM PENH 000146

SENSITIVE
SIPDIS

STATE FOR D, P, EAP/MLS, EAP/RSP, DRL, S/WCI, AND DRL/ILCSR FOR
MITTELHAUSER, EEB/IFD/OMA FOR FREUDENWALD, EEP/TPP/BTA,
EEB/TPP/MTAA, EEB/ESC/IEC/ENR FOR KOPP
STATE PLEASE PASS TO USTR FOR BISBEE AND WEISEL
STATE ALSO PASS TO USAID FOR ASIA BUREAU
BANGKOK FOR USAID, FCS FOR GRIFFITH GREENE
HO CHI MINH CITY FOR FAS FOR RIEDEL
COMMERCE FOR ITA/OTEXA AND ITA/MAC
LABOR FOR ILAB FOR RIGBY

E.O. 12958: N/A
TAGS: PREL EAID PGOV KJUS PHUM PTER KWMN BM CB
SUBJECT: SECOND ANNUAL U.S.-CAMBODIA BILATERAL DIALOGUE

REF: 08 PHNOM PENH 95

SENSITIVE BUT UNCLASSIFIED


1. (SBU) SUMMARY. EAP Deputy Assistant Secretary (DAS) and U.S.
Ambassador for ASEAN Affairs Scot Marciel participated in a
senior-level U.S.-Cambodia bilateral dialogue hosted by the Royal
Government of Cambodia (RGC) Ministry of Foreign Affairs (MFA) March

3. The second annual bilateral dialogue highlights the progress
made in normalizing U.S.-Cambodian relations over the past few years
and demonstrates a commitment to further broaden and strengthen
bilateral cooperation in the years to come. The Cambodian
delegation highlighted its concern about the global financial crisis
and the worsening Cambodian economy, and expressed its hopes for
continued and increased U.S. assistance.


2. (SBU) The wide-ranging discussion highlighted the increasing
depth and breadth of the U.S.-Cambodia relationship, including:
increasing bilateral assistance; law-enforcement cooperation; rule
of law and judicial reform; administrative reform; anti-trafficking
in persons efforts; mil-mil relations; counter-terrorism
cooperation; maritime security; U.S.-ASEAN relations; the ASEAN
Human Rights Body; engagement on Burma; bilateral trade and economic
issues; debt negotiations; and oil and gas development.


3. (SBU) MFA Secretary of State Ouch Borith headed the Cambodian
delegation, which included representatives of the Ministries of
Foreign Affairs, Interior, Defense, Economy and Finance, Commerce,
and Justice, as well as representatives of the Cambodian National
Petroleum Authority, Council for Administration Reform and Council
for Legal and Judicial Reform. The Ambassador, Acting Deputy Chief
of Mission, USAID Mission Director, Defense Attache, Legal Attache,
and Regional Agriculture Attache also represented the U.S. side in
the dialogue. END SUMMARY.

BILATERAL ASSISTANCE: MCC, THE FINANCIAL CRISIS, AND OIL
-------------- --------------


4. (SBU) USAID Mission Director provided an overview of U.S.
assistance, highlighting programs in education, governance and rule
of law, health, the environment and biodiversity, and economic
growth. MFA Secretary of State Ouch Borith thanked the U.S. for its
generous assistance to Cambodia and expressed the hope that it would
be increased in the next few years. He inquired about the MCC's
country scorecard for Cambodia and what the RGC might do to improve
their performance further. He stated that in 2008, Cambodia had met
four of the seventeen requirements, and in 2009, they had met five
of the seventeen. USAID Mission Director explained that in 2009,
Cambodia failed to meet any of the indicators in the Ruling Justly
category, including controlling corruption. She stated that the
controlling corruption indicator in particular is key to improving
Cambodia's country scorecard. Ambassador Marciel added that the
U.S. would facilitate a meeting in Washington for a Cambodian
delegation if they would like to learn more about the MCC scorecard
and steps necessary to meet the requirements.


5. (SBU) The Cambodian delegation expressed concerns about the
possible impact of the global financial crisis on U.S. assistance,
and inquired whether further assistance might be forthcoming for
their nascent petroleum sector. Ambassador Rodley explained that
while the U.S. budget picture was still unclear, the new
administration had expressed its strong commitment to foreign
assistance and that she expected the level of assistance to Cambodia
to be similar to its current level and focused in the same sectors
(health, governance, economic development and productivity, and
education.)


6. (SBU) Secretary General of the Cambodian National Petroleum
Authority Te Duong Tara expressed his appreciation for recent USTDA
capacity building assistance for RGC officials involved in the oil
and gas sector. He referred to ongoing negotiations with Chevron
over oil/gas exploitation in the Gulf of Thailand. He requested
additional assistance to help build capacity in this sector,
possibly including some legal assistance in implementing regulations
for the draft Petroleum Law. He noted that U.S. private sector
involvement far exceeded U.S. public sector assistance to the oil
and gas sector. Ambassador Marciel responded that the USG did not
insert itself in negotiations between U.S. companies and third
parties and stated that the Petroleum Law should benefit Cambodia
and treat all oil companies equally. He stated that the USG would
explore the possibility of providing additional assistance to the
sector.

PHNOM PENH 00000146 002 OF 005



RULE OF LAW, JUDICIAL REFORM: DIRECT ENGAGEMENT
-------------- --


7. (SBU) Ministry of Justice Secretary of State Sam Sophal explained
that the RGC was in the second phase of its Strategic Action Plan
for judicial reform and emphasized the importance of training
Cambodia's next generation of judges and prosecutors. Sam Sophal
thanked USAID for its indirect support for judicial reform through
the NGO community and requested direct U.S. engagement with the
Ministry of Justice and the Cambodian Bar Association. USAID
Mission Director explained that the mission was currently
negotiating agreements to support the Ministry and the Bar
Association and pledged to continue working with the Royal
University of Law and Economics. Ambassador Marciel commended the
Strategic Action Plan, noting that rule of law and judicial reform
were important for Cambodia's success.

ADMINISTRATIVE REFORM EFFORTS
--------------


8. (SBU) Chhoun Chham, Deputy Secretary General of the Council for
Administrative Reform, said that the RGC was currently focused on
improving the delivery of public services and boosting public
confidence in the civil service. He explained that the current
phase of the RGC's administrative reform program included efforts
to: 1) improve the transparency of public services; 2) improve the
accountability and efficiency of public services; 3) develop the
civil service's human and institutional capacity; and 4) improve
civil service human resources management. He emphasized that
administrative reform was a significant component of the RGC's
"rectangular strategy", which included anti-corruption efforts,
legal and judicial reform, administrative reform, and armed forces
reform. He requested that the USG consider administrative reform
support in its development assistance package. Ambassador Marciel
applauded the RGC for undertaking an ambitious administrative reform
agenda and stressed the importance of anti-corruption efforts.

TRAFFICKING IN PERSONS (TIP) PROGRESS REPORT
--------------


9. (SBU) Chhou Kim Eng, Secretary of State for the Ministry of
Interior, described the RGC's national mechanism to combat
trafficking in persons, which involves all levels of government,
communities, civil society, and international stakeholders such as
the UN and development partners. She said the Ministry had drafted
a new five-year Anti-TIP Action Plan, which she expected the Council
of Ministers to adopt soon. She called for closer coordination on
trafficking cases, stressing that partners should share information
on cases with Cambodian law enforcement as soon as it is known in
order to ensure effective operations. She also expressed her thanks
for U.S. assistance in the area of law enforcement cooperation,
particularly in investigating terrorist acts and trafficking of both
persons and drugs. Ambassador Marciel welcomed the progress on
anti-TIP initiatives and expressed hope that the RGC would continue
to intensify efforts to prosecute offenders and those who aid them.
Ambassador Rodley commended the Ministry of Interior and law
enforcement for working with civil society on TIP programs, noting
that Cambodia could serve as a model of effective cooperation in the
region.

EXPANSION OF PEACEKEEPING ACTIVITIES IN AFRICA
-------------- -


10. (SBU) Ambassador Marciel began the discussion of security
cooperation by expressing appreciation for Cambodian peacekeeping
efforts in the Sudan, adding that Cambodia's willingness to host the
2010 CAPSTONE exercise was a significant step toward a greater
Cambodian role in the ASEAN region. Defense Attache said that
military-military relations with Cambodia were very positive, and
that while there may be some shifts in the type or focus of military
aid, he had every hope that assistance for training and grants of
new and used equipment would increase. Ambassador Rodley asked the
Ministry of Defense to consider whether it would welcome additional
technical assistance in the area of force management. Under
Secretary of State for the Ministry of Defense, Lt. General Chum
Sambath requested further military-military assistance, particularly
in the area of training, explaining that much of the success of
Cambodian peacekeeping efforts was the result of U.S. assistance.
He stated that U.S.-sponsored training was an important part of the
Cambodian government's armed forces reform program. He also
mentioned that the government of Sudan had recently approached

PHNOM PENH 00000146 003 OF 005


Cambodia concerning expanding its demining activities into central
and western Africa. He said that additional U.S. training of its
demining teams would enable Cambodia to take on additional
peacekeeping responsibilities.

MARITIME SECURITY
--------------


11. (SBU) Under Secretary of State Chum Sambath, RCAF BG Lay Chenda,
and Defense Attache also discussed enhancing U.S.-Cambodia maritime
security cooperation. Defense Attache expressed U.S. interest in
assisting Cambodia to finalize a legal framework necessary to
support a maritime security program, followed by technical and
tactical assistance of up to $377,000 in FMF funds. The Under
Secretary of State and BG Chenda responded by saying that Cambodia
is currently working with both Australia and the U.S. on maritime
security, and that it would review its programs with both countries
to enhance cooperation.

RGC WELCOMES INCREASED USG ENGAGEMENT WITH ASEAN
-------------- ---


12. (SBU) Ambassador Marciel opened discussions on regional issues
by emphasizing U.S. support for a strong, prosperous Southeast Asia
and the ASEAN agenda. He outlined USG assistance to ASEAN,
including the Technical Assistance and Training Facility at the
ASEAN Secretariat in Jakarta. He said that Secretary Clinton's
early visit to the Secretariat sent a signal that the U.S.
considered ASEAN important, and he confirmed that she would attend
the ASEAN Post-Ministerial Meeting in July and would begin the
process for U.S. accession to the ASEAN Treaty of Amity and
Cooperation.


13. (SBU) MFA Secretary of State Kao Kim Hourn concurred that
Secretary Clinton's visit was significant and welcomed increased
U.S. engagement with ASEAN. He expressed hope that there could be a
U.S.-ASEAN Summit next year. He outlined the organization's recent
progress, including the ratification of the ASEAN Charter, the plan
to assign country representatives to a permanent ASEAN committee in
Jakarta by next year, and an increase in the ASEAN Secretariat's
resources through a larger budget of $14 million and four Deputy
Secretary Generals instead of two. He highlighted that the Charter
marked a departure from past ASEAN documents, in that all of the
ASEAN members, not just the original six members, had produced it.
He added that the RGC was finalizing a sub-decree to establish a
Cambodian ASEAN National Secretariat to ensure RGC compliance with
the Charter.

HUMAN RIGHTS AT THE REGIONAL AND BILATERAL LEVELS
-------------- --------------


14. (SBU) Kao Kim Hourn praised the first draft of the terms of
reference for the ASEAN Human Rights Body (HRB) and said that the
second draft was on schedule for the July Ministerial Meeting.
Ambassador Marciel noted that although the strength and enforcement
of the Charter and the HRB was up to ASEAN, the world would be
watching and would judge ASEAN's will to make difficult political
decisions. He said he hoped that given its unique experience and
record for working with civil society, Cambodia would push for a
more ambitious ASEAN agenda on human rights. Kao Kim Hourn felt
that there was genuine political will behind the HRB, noting that
the fact that it had been formed in the first place marked a step
forward for the organization.


15. (SBU) When asked about the reports that Prime Minister Hun Sen
had barred a Cambodian civil society representative from
participating in the recent ASEAN Summit talks, Kao Kim Hourn blamed
the incident on the Summit organizers and called it a case of "bad
press". He said that the process for selecting and including civil
society representatives in the Summit had not been transparent and
claimed that the member countries were only informed at the last
minute that NGOs would participate. He said that the proposed
Cambodian NGO was not registered in the ASEAN Charter and that it
was unfair for the NGO to try to skip the registration process,
adding that leaders should know with whom they would be meeting.
(NOTE: The Cambodian representative and his NGO are not known to
anyone at this Embassy, and his selection is something of a mystery.
END NOTE.) Kao Kim Hourn suggested that the ASEAN members would
take steps to ensure that civil society representation would be open
and transparent in the future and that the RGC would try to more
effectively highlight its strong relationship with civil society.


PHNOM PENH 00000146 004 OF 005


CREATIVE SOLUTIONS NEEDED TO ADDRESS THE BURMA ISSUE
-------------- --------------


16. (SBU) Ambassador Marciel repeated Secretary Clinton's remarks
that U.S. sanctions against Burma had not worked and said that both
the U.S. and ASEAN had to be open to new ideas for engaging the
Burmese government. He stressed that the U.S. was not against
Burma's success. Rather, the U.S. wanted Burma to be strong, open
and unified, which would begin with the Burmese government releasing
and engaging in a dialogue with opposition leaders. Kao Kim Hourn
said that the Burma issue was a subject of conversation in ASEAN
meetings at all levels and that all the ASEAN members pushed Burma
to make more positive contributions to the organization. He said
that ASEAN would continue to support UN Special Envoy Ibrahim
Gambari's mission and push for the Tripartite Core Group to
facilitate cooperation between the Burmese government and
international community.

ECONOMIC ISSUES
--------------


17. (SBU) Vongsey Vissoth, Deputy Secretary General for the Ministry
of Economy and Finance, affirmed the RGC's recognition of its
responsibilities regarding Cambodia's debt owed to the U.S. and
expressed the RGC's desire to seek a "fair and mutually beneficial"
resolution to this outstanding issue. Ambassador Marciel explained
that while the Department of State would work enthusiastically to
implement any kind of debt for assistance program, only Congress,
not the Administration, had the legal authority to offer such a
recycling program. He encouraged the RGC to sign a bilateral debt
repayment agreement and begin making payments, explaining that a
proposal for a debt recycling program might not be rejected once
Cambodia is making repayments. Additionally, Ambassador Marciel
emphasized that given the uncertainty surrounding the likelihood
that Congress will pass such legislation anytime soon, the longer
the RGC delays, the larger the amount owed. Vissoth explained that
the RGC was "quite encouraged" by previous interactions with the
Hill on this issue and announced that following a lull due to the
Cambodian and U.S. elections, the RGC planned to reengage Congress
on this issue "very soon." (NOTE: Vongsey later averred the RGC was
busy and not likely to go to Washington in the next few months. END
NOTE.)


18. (SBU) Ministry of Commerce Secretary of State Pan Sorasak sought
U.S. assistance in encouraging U.S. buyers to source more from
Cambodia, explaining that following years of steady growth,
Cambodian garment exports to the U.S. fell by 1.5 percent in 2008.
In response, Ambassador Marciel suggested that Cambodia increase
efforts to market Cambodia as an attractive source of exports, given
the garment industry's favorable reputation for upholding
international labor standards. He also highlighted the importance
of reform in maintaining Cambodia's competitiveness and to make
Cambodia a more attractive destination for foreign investment.
Ambassador Marciel warned that proposed changes to the Labor Law, in
particular an amendment which would allow for an unlimited number of
fixed-duration contracts, could, if not properly explained to U.S.
buyers, undermine Cambodia's competitive edge in the industry.


19. (SBU) Sorasak highlighted the progress achieved in implementing
Cambodia's WTO commitments, explaining that as of February, 34 of
the 111 WTO-related tasks have been completed. Additionally, he
stated that the Trade and Investment Framework Agreement (TIFA)
dialogue is a useful mechanism in assisting Cambodia to comply with
its WTO obligations and inquired as to when the next TIFA meeting
might take place. Recognizing the enormous undertaking required,
Ambassador Marciel expressed his appreciation of the RGC's efforts
to fully integrate Cambodia into the world economy and applauded the
positive approach taken by the RGC to the TIFA.


20. (SBU) Sorasak welcomed Agriculture Attache's request for greater
cooperation to promote agriculture and food trade between the two
countries, and stated that Cambodia is particularly interested in
increasing its rice exports to the U.S. Sorasak also applauded
USAID's new economic growth program and stated that the RGC looks
forward to cooperating with USAID to promote greater economic
growth.

COMMENT
--------------


21. (SBU) The breadth of topics under discussion illustrates the
expanding U.S.-Cambodia relations. As our bilateral relationship

PHNOM PENH 00000146 005 OF 005


continues to mature, the annual bilateral dialogue provides a unique
opportunity for both sides to highlight areas of cooperation,
identify potential areas for enhanced engagement, and to affirm our
commitment to supporting Cambodia's political and economic
development.

RODLEY