SCENESETTER FOR SENATOR JIM WEBB VISIT TO PHNOM

UNCLAS SECTION 01 OF 04 PHNOM PENH 000577

SENSITIVE
SIPDIS

DEPARTMENT FOR EAP/MLS

E.O. 12958: N/A
TAGS: PGOV PHUM KDEM KJUS PREF CB
SUBJECT: SCENESETTER FOR SENATOR JIM WEBB VISIT TO PHNOM
PENH

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SENSITIVE BUT UNCLASSIFIED


1. (SBU) Senator Webb: We warmly welcome your August 18
visit to Cambodia. Your visit comes as the tempo quickens in
the conduct of U.S.-Cambodian bilateral relations, which
exemplifies a broader and growing USG interest in Cambodia.
There have been positive developments in several key areas:
peaceful national elections in July 2008; active Cambodian
participation in the Global Peace Operations Initiative
(GPOI); continued cooperation in the fight against
trafficking in persons; and cooperation on sensitive refugee
issues. Cambodia remains a solid partner on counterterrorism
and POW/MIA matters. Thirty years after the Khmer Rouge
atrocities, the first of five cases is in trial before a
mixed international-domestic tribunal. Our
military-to-military relationship continues to strengthen:
ship visits and medical readiness and engineering
capabilities exercises are all being utilized to improve
cooperation in civil-military operations. Our bilateral
trade relationship continues to grow with a rapidly expanding
U.S. commercial presence, including Microsoft, DuPont, GE,
and others, though bilateral debt remains a continuing
sticking point in our economic relationship. While our
development work still faces significant challenges, we are
seeing a new level of engagement on the part of the Royal
Government of Cambodia (RGC) in health (HIV/AIDS and avian
influenza),education, and environmental issues. Even so,
problems remain: Cambodia is one of the world's poorest
countries, and economic growth is expected to decrease
considerably in 2009; week rule of law, corruption, and weak
institutions continue to hamper Cambodia's development;
incidents of land disputes and forced evictions, sometimes
accompanied by violence, continue to be a high-profile
concern; and recent attacks on freedom of expression are
constricting political space.


2. (SBU) Your visit is an opportunity to discuss strong
cooperation in counterterrorism, counternarcotics, and
anti-trafficking in persons, and to raise concerns
highlighted in Washington about the recent constriction of
political space through a spate of defamation and
disinformation lawsuits. It's also an opportunity to prompt
the RGC to reconsider its position on the bilateral debt and
help move that issue forward. Moreover, the U.S. will likely
soon be exploring the possibility of future assistance to the
Khmer Rouge Tribunal with the expected resolution by the UN
and Cambodian government of an anti-corruption mechanism for
the court; you will have an opportunity to observe some of
the gripping testimony there, engage with court officials on
how this hybrid international criminal court can be a model
elsewhere, and inform future discussions in Washington about
additional U.S. funding.

Domestic Political Stability
--------------


3. (SBU) The domestic political situation is stable.
According to an International Republican Institute public
opinion poll in February, 82 percent of the population
believes that the country is headed in the right direction,
compared to 77 percent a year ago. The improving
infrastructure -- roads, bridges, schools, clinics -- is the
main reason for this outlook. Corruption, high prices, and
poverty top concerns cited by those worried about the
country's direction and other poll data show an increasing
anxiety about crime-related issues (corruption, drugs, gangs,
land grabbing, and environmental abuse). Cambodia's 2008
national elections were peaceful and allowed the Cambodian
people to express their preferences in an open and fair
manner. Despite these improvements, the elections fell short
of international standards on several counts, including
equitable access to media. U.S. foreign assistance aims to
encourage expanded political participation by youth and women
in elections and political processes.

Expanding Military Relations
--------------


4. (SBU) U.S.-Cambodian security cooperation is expanding at
a sustained rate. As our military-to-military relationship
matures beyond the traditional and still-active areas of MIA
recovery and demining, we are looking to focus on areas such
as defense reform and professionalization, regional
cooperation and international peacekeeping, border and
maritime security, counterterrorism, and civil-military
operations. Ship visits, medical readiness exercises and
engineering capabilities exercises are all being utilized to
improve cooperation in civil-military operations within
Cambodia. Through security cooperation we are helping to

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develop centralized logistics and transportation functions
within the Armed Forces, a central coordinating authority for
maritime security and building capacity to secure Cambodia's
maritime domain, a credible peacekeeping and counterterrorism
capacity, and greater regional and multilateral cooperation.
Members of the PACOM Augmentation Team provide counsel and
training to the Royal Cambodian Armed Forces in its continued
effort to build a credible counterterrorism unit.

Cambodia as an International Actor:
Global Deployments and the Khmer Rouge Tribunal
-------------- --


5. (SBU) Cambodia has begun looking outward and seeks a more
visible role in international and regional affairs that is
consistent with the country's limited resources and capacity.
Cambodia is an active participant in the Global Peace
Operations Initiative (GPOI) and participated in its second
Capstone exercise in Indonesia in June. The GPOI program has
assisted Cambodia in increasing peacekeeping operations (PKO)
capacities to support continued UN PKO rotations to Sudan,
where Cambodia has deployed demining companies since 2006.
Cambodia will host the GPOI Capstone exercise in 2010 and is
preparing to expand its PKO deployments to Chad and the
Central African Republic early next year.


6. (SBU) Cambodia has engaged the international community in
its pursuit of justice for the Khmer Rouge genocide.
Although the establishment of the Extraordinary Chambers in
the Courts of Cambodia (ECCC) took seven years to negotiate
with the UN, the Khmer Rouge Tribunal (KRT) has since
arrested and detained five Khmer Rouge leaders and charged
them with some 25 separate crimes, including crimes against
humanity, war crimes and genocide. The current hearing for
Kaing Guek Eav, known as Duch, former head of the Tuol Sleng
torture center, is the most tangible step to date in the
hybrid tribunal's efforts to try those individuals most
responsible for the 1.7 million people killed under the
brutal Khmer Rouge regime. Successful trials in the KRT have
the potential to strengthen rule of law and judicial
independence in Cambodia and address questions of impunity
and accountability for the crimes of the Khmer Rouge regime.
Past allegations of mismanagement and corruption within the
Cambodian court administration had threatened its integrity,
although judicial proceedings are going well and there are no
allegations linking corruption to any of the judges.
Ambassador at Large for War Crimes Clint Williamson visited
Cambodia earlier this month in an effort to facilitate
negotiations on a new anti-corruption mechanism for the KRT,
and we remain hopeful that the UN and Cambodian government
will announce an agreement soon. The court will require more
financial support, and the Secretary continues to review
whether the KRT is capable of providing justice at an
international standard.

Cambodian Economy Hard Hit by the Global Economic Crisis
-------------- --------------


7. (SBU) Cambodia's heady days of double digit economic
growth are over. The adverse impacts of the global economic
crisis have brought Cambodia's growth to a screeching halt,
from 10.2 percent in 2007 to low single digits, if not the
World Bank's estimated negative 1 percent in 2009. Nearly
all of the pillars of Cambodia's economy - garments, tourism,
and construction - have been adversely affected; only the
agriculture sector has thus far been unaffected. The
economic crisis poses significant challenges to sustaining
the country's progress toward its development goals and
meeting the needs of the country's most vulnerable affected
by the crisis. To date the government's efforts to mitigate
the adverse impacts have failed to address the fundamental
challenges of sustaining economic growth and a more
comprehensive, coordinated response is urgently needed to
prevent greater numbers of the population from falling into
poverty. The garment industry represents roughly 30 percent
of the country's overall GDP. The U.S. market for Cambodian
textile exports is still a crucial part of Cambodia's
economy, representing over 70 percent of the country's
exports in this key sector and the U.S. is Cambodia's chief
trading partner. The Cambodian government, garment industry,
and unions are strong supporters of proposed legislation by
Senator Feinstein that would allow duty-free access for
garments from Cambodia and other less developed countries.
Chevron is involved in Cambodia's offshore oil/gas
exploration efforts, with 2011 foreseen as the earliest
possible date for exploitation of these resources. While
American investors have been slower than their Asian
counterparts to seize Cambodia's business opportunities, the
U.S. commercial presence is rapidly expanding with a

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multi-million dollar investment by U.S. manufacturer Crown
Holdings and the establishment of representative offices by
GE, DuPont, Microsoft, and Otis Elevators.

Bilateral Debt
--------------


8. (SBU) Cambodia's bilateral debt to the U.S. totals USD162
million, but with arrears factored in could reach
approximately USD352 million. The debt stems from shipments
of agricultural commodities, such as rice and wheat flour,
financed with low-interest rate loans by the U.S. Department
of Agriculture, to the Lon Nol regime in the early 1970s.
Interest accumulated over three decades, following the
country's fall to the Khmer Rouge. In 1995, Cambodia and
Paris Club creditors (including the U.S.) agreed to a debt
restructuring package, and Cambodia signed bilateral
agreements with and began repaying most creditors. Bilateral
negotiations with the U.S. stalled over the amount of debt
owed, until 2006 when an agreement in principle was reached
on the exact amount of principal owed.


9. (SBU) Since then, the RGC has been reluctant to sign a
bilateral repayment agreement. This is partly due to the
fact that, while the RGC accepts responsibility for debts
incurred by former governments, there are domestic political
obstacles to the debt of a regime that deposed King Sihanouk.
The RGC is seeking concessions beyond the terms of the 1995
Paris Club accords and wants to link repayment directly to a
debt-swap program similar to debt-for-assistance measures
enacted for Vietnam to make a repayment agreement more
palatable to Cambodians and the members of the National
Assembly. In 2007 key Senate Foreign Relations Committee and
House Foreign Relations Committee staffers expressed interest
in a debt-for-aid mechanism to support education or other
programs. Other staffers have suggested eliminating the debt
entirely. Cambodia has been given the final best offer on
debt rescheduling that the USG is able to make under the
Paris Club principles and existing legal and budgetary rules,
and Cambodia's economic and financial situation does not
merit debt reduction. The USG continues to urge the RGC to
accept the already concessional interest rate of 3 percent
and sign the repayment agreement first, arguing that Congress
might view more favorably a debt-swap or other agreement if
Cambodia is already making payments and in good financial
standing with the U.S. However, the RGC still seeks to
directly link the signing of a repayment agreement with a
guarantee of a debt recycling program.

Human Rights: Glass Half Empty or Half Full?
--------------


10. (SBU) The RGC allowed significantly greater freedom to
the political opposition during the 2008 elections than was
the case in prior votes, and had shown some willingness to
engage on civil liberties and human rights issues. However,
Cambodia's overall human rights record remains poor. Prime
Minister Hun Sen and the Cambodian People's Party continue to
dominate all three branches of the government as well as
other national institutions. Cambodia's leaders recently
revived a tactic last seen in 2005 to use Cambodia's weak and
easily-influenced judiciary to pursue legal cases against
critics and the political opposition. Defamation,
disinformation, and incitement cases against members of the
political opposition, journalists, and private citizens is a
worrying trend, and one that is eroding recent gains for
political space in Cambodia. Land disputes and forced
evictions, sometimes accompanied by violence, continue to be
a high-profile problem. U.S. foreign assistance aims to
reduce corruption, improve political rights and selected
civil liberties, and improve the justice system in support of
these aims by supporting reform-minded institutions and
individuals; engaging civil society as a voice for reform;
and building capacity of public and private institutions.

Progress on Trafficking in Persons Hits a Snag
-------------- -


11. (SBU) In past years, Cambodia made significant progress
in combating trafficking in persons as reflected in their
movement from Tier 3 in 2005 to Tier 2 in 2008. A new law on
Suppression of Human Trafficking and Commercial Sexual
Exploitation came into effect in February 2008. Also in
2008, the RGC's anti-trafficking National Task Force
established anti-TIP working groups in 24 provinces and
municipalities, and launched a nationwide campaign to
persuade Cambodians to take action against human trafficking.
Despite this progress, Cambodia was downgraded to Tier Two
Watch List in 2009. Cambodia's anti-trafficking efforts

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remain hampered by corruption at all levels of government and
an ineffectual judicial system. An increase in police
crackdowns on brothels, credited by some to the passage of
the new law, may have resulted in many prostitutes selling
sex on the streets, increasing their vulnerability to
violence and HIV infection. In October 2008, DPM Sar Kheng
implemented new guidelines in an attempt to address concerns
about human rights abuses of prostitutes and other victims
rescued during brothel raids. However, as a result of the
confusion over the law, there has been a decrease in arrests
(approximately 30-40%) and convictions of traffickers during
last year's TIP Report rating period (April 2008-March 2009).
Although its commitment is significant, Cambodia is far from
solving its own TIP problems, including overcoming widespread
corruption and challenges arising in implementing the 2008
anti-TIP law.

Corruption Remains Endemic
--------------


12. (SBU) The RGC has consistently failed to finalize and
pass much-needed anti-corruption legislation. While a solid
Anti-Terrorism Law, Money Laundering Law, and Criminal
Procedures Code have moved at a brisk pace to passage, other
key pieces of legislation (most notably the anti-corruption
legislation but also wholesale revision of the penal code)
that have been repeatedly promised to the donors and
Cambodian public have seen another year of continued RGC foot
dragging. In 2008, Transparency International ranked
Cambodia 166 out of 180 countries in its corruption
perceptions index; Burma was the only country in Asia ranked
lower than Cambodia. There has been continued and widespread
land-grabbing by government officials and the politically
well-connected. Uprooted communities from outside Phnom Penh
seek government redress by traveling to the city to draw
media and public attention to their plight. Cambodia's
competitiveness ranking (109 out of 134 in 2008) is also one
of the lowest in the world, again due largely to perceived
systemic corruption. Rather than embrace the reforms that
would garner increased investment and the new jobs that would
be created, the RGC appears to be banking on the future
income from its as-yet-untapped oil and gas reserves, which
should come on stream by 2011 at the earliest. The current
corrupt political environment flows into the top-heavy and
anachronistic military as well, and this will be another
challenge for our mil-to-mil relationship.


13. (SBU) Given where Cambodia was a decade ago, it has come
a long way. Given where Cambodia needs to be, it still has
much to do to establish transparency, accountability, and
general good governance. The United States is perceived as a
trusted partner in these efforts but, at the same time, our
efforts are not always successful. Although Cambodia's
tragic history should be no excuse for not resolving its
current problems, that history does largely set the
parameters for how far and how fast it can evolve into the
kind of nation and society we all hope it will someday
become. Continual U.S. engagement at all levels and in all
fields will remain crucial for effecting these changes
needed, and your visit will be key to that effort. We stand
ready to help make it a success.
RODLEY