VZCZCXRO0345
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH
DE RUEHPF #1174/01 1771102
ZNR UUUUU ZZH
P 261102Z JUN 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 6914
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1491
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 PHNOM PENH 001174 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, EB/TPP/ABT--THOMAS LERSTEN, DRL/IL--MARK 
MITTELHAUSER 
GENEVA FOR RMA 
LABOR FOR ILAB--JIM SHEA, JONA LAI 
COMMERCE FOR ITA/OTEXA MARIA D'ANDREA 
 
E.O. 12958: N/A 
TAGS: ELAB KTEX ECON CB
SUBJECT: CAMBODIA:  AMBASSADOR URGES RESTRAINT IN GARMENT 
SECTOR; JULY 3 GENERAL STRIKE LOOMS 
 
REF: A. PHNOM PENH 1124 
 
     ¶B. PHNOM PENH 1165 
 
¶1.  (SBU) SUMMARY:  In a June 22 meeting, the Ambassador 
praised the role of labor unions, but also urged eleven union 
leaders to exercise restraint in conducting strikes, noting 
that a recent spike in garment sector strikes is threatening 
Cambodia's economic development.  While strikes are valid as 
a last resort, unions should first engage in good faith 
negotiations and should conduct their strikes legally and not 
use them as a pretext for collecting bribes.  Union leaders 
responded by acknowledging corruption within the union 
movement, but saying that government corruption and factory 
management impunity were far bigger issues.  Union leaders 
Rong Chhun and Chea Mony, who have threatened to hold a 
general strike on July 3, were frustrated by the government's 
lack of response to their demands, but differed in whether a 
strike could be avoided.  END SUMMARY. 
 
¶2.  (U) On June 22, Ambassador hosted a roundtable discussion 
for 11 union federation leaders to discuss the recent rise in 
garment sector strikes and the general strike threatened to 
start on July 3 (Ref A).  The leaders of the two unions 
threatening to lead the general strike--Chea Mony of the Free 
Trade Union (FTU) and Rong Chhun of the Cambodian Independent 
Teachers Association (CITA)--were present for the three-hour 
discussion.  Ath Thorn, president of the Cambodian Coalition 
of Apparel Workers Democratic Union (CCAWDU), and Yun Rithy, 
president of the Khmer Youth Federation Trade Union (KYFTU), 
leaders of the two unions responsible for many of the recent 
garment strikes, also attended along with seven other union 
leaders. 
 
Ambassador:  Don't Kill the Goose that Lays the Golden Egg 
--------------------------------------------- ------------- 
 
¶3.  (U) The Ambassador began by praising the unions' role in 
creating a vibrant economy and particularly in helping 
Cambodia to survive the post-Multifiber Agreement era. 
Cambodia's garment factories can't beat Vietnam or China on 
price or efficiency, he remarked, but they succeed because of 
their reputation for workers' rights. 
 
¶4.  (SBU) However, garment buyers have become increasingly 
wary of Cambodia's unstable labor situation, the Ambassador 
warned.  Some have already started canceling orders because 
they are concerned that labor disputes at garment factories 
could lead to late shipments and/or hurt their reputations 
for social responsibility.  If there is a general strike on 
July 3 that increases garment buyers' anxiety, it will be 
disastrous for Cambodia.  The Ambassador acknowledged that 
strikes are sometimes valid, but he exhorted unions to use 
them only as a last resort, and criticized unions who use 
strikes as an extortion tactic. 
 
Chea Mony:  Government Needs to Respond 
--------------------------------------- 
 
¶5.  (SBU) FTU leader Chea Mony expressed disappointment with 
what he characterized as US pressure not to strike, and said 
that in a democracy, there must be discussions among 
different groups.  FTU is frustrated, he said, because 
despite sending three letters to the government expressing 
its demands for higher wages, a shorter workweek, and lower 
gasoline prices, the government has never responded directly 
to the union, only indirectly through the press.  Chea Mony 
declared that a July 3 strike would be inevitable if the 
government took no action to resolve the issue, and asked for 
US Embassy help in getting the government engaged.  In 
contrast to Chea Mony's firm stance, several other union 
leaders said that they had no plans to participate in the 
July 3 strike and encouraged FTU and CITA to negotiate with 
the garment sector. 
 
Union Leaders:  Government Corruption, Intimidating Factory 
Behavior at Play 
--------------------------------------------- --------------- 
 
¶6.  (SBU) A wide variety of union leaders acknowledged that 
there was some corruption within the union movement, but 
blamed the government for large-scale corruption that raises 
 
PHNOM PENH 00001174  002 OF 003 
 
 
production costs and hurts the industry.  Garment factory 
owners could raise wages to USD 100 per month if they didn't 
have to pay bribes to government officials, tourism sector 
union leader Ly Korm claimed.  Several labor leaders claimed 
that while some factory-level union leaders have solicited 
bribes in return for resigning, others have been pressured or 
intimidated into accepting pay-off packages for leaving their 
jobs.  Moreover, when employers commit illegal activities, 
they are never held responsible.  Garment union federation 
president Morm Nhim said that any complaints sent by unions 
to the government are "put in the ashtray."  Several leaders 
alleged that factory owners and managers are never held 
responsible by the court system because they have powerful 
friends. 
 
¶7.  (U) Unions leaders were also clearly frustrated by what 
they had seen on the televised Private Sector Forum the day 
before (Ref B), when Garment Manufacturers Association of 
Cambodia (GMAC) Chairman Van Sou Ieng expressed his concern 
over the increase in garment sector strikes and asked the 
Prime Minister to unilaterally set a 130% pay rate for 
nightshift work, after failure to make progress on the issue 
over several years.  Unionists resented business' 
comparatively good access to the Prime Minister that the 
event highlighted.  Moreover, they regretted that they had 
not been allowed to attend the event, much less comment on 
the proceedings. 
 
¶8.  (SBU) The Ambassador responded by acknowledging that 
corruption was a serious issue within the government, but 
reminded union leaders that corruption has many different 
forms.  Within a labor context, he noted, being motivated by 
personal financial gain or political power--or for any reason 
other than to fight for workers--is corruption.  While 
American garment buyers are partially motivated by Cambodia's 
worker rights record, they are also businesspeople who are 
interested in profit and stability.  If American garment 
buyers leave Cambodia, this will punish not only corrupt 
government officials, but factory owners, union leaders, and 
workers as well.  The Ambassador pledged to continue working 
on the issue and to meet with the GMAC, the Minister of 
Labor, and the Minister of Commerce. 
 
Emboffs:  Don't Cry Wolf 
------------------------ 
 
¶9.  (U) When the Ambassador left for another commitment after 
more than 1 1/2 hours of discussion with union leaders, 
Poleconoff, USAID Economic Growth Officer, and Labor 
Assistant stayed to continue talking with labor leaders. 
They encouraged union leaders to be selective in their use of 
internet and email campaigns.  Like the boy who cried wolf, 
unions' excessive messages about labor disputes will hurt 
their credibility and will also create an overly negative 
image of the Cambodian garment industry.  They also 
encouraged the unions to work informally with GMAC in 
ILO-facilitated negotiations and underlined the importance of 
complying with Arbitration Council return to work orders. 
 
Is a Strike Inevitable? 
----------------------- 
 
¶10.  (SBU) As they were leaving, Poleconoff talked separately 
to Rong Chhun and Chea Mony and received remarkably different 
answers about the prospects for avoiding a general strike. 
Chea Mony stated without hesitation that a strike was 
"inevitable," while Rong Chhun said that there was still 
enough time for fruitful negotiations. 
 
¶11.  (SBU) COMMENT:  While acknowledging some of their own 
shortcomings, unions largely used this meeting as an 
opportunity to point fingers at government and factory 
failings.  In truth, there is plenty of blame to share. 
Corruption within unions is more common than leaders want to 
admit, and union leaders often find holding illegal strikes 
to be a successful way to gain the attention of factory 
management, obtain some gains for workers, and increase their 
own standing in workers' eyes.  Moreover, Chea Mony clearly 
harbors both labor and political ambitions, and sees holding 
a strike as a way to demonstrate his ability to put large 
numbers of workers in the streets.  The Ambassador's message 
 
PHNOM PENH 00001174  003 OF 003 
 
 
of restraint certainly reached many of the union leaders, 
though whether it had an impact on general strike leaders 
Chea Mony and Rong Chhun, or on the rather rash and 
unpredictable Ath Thorn, is hard to gauge.  It almost 
certainly failed to persuade Yun Rithy, whom many see as an 
extortionist in unionist clothing who will be convinced only 
by CPP pressure or violence. 
MUSSOMELI