VZCZCXRO0043
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #2096/01 3321106
ZNY CCCCC ZZH
O 281106Z NOV 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7648
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2417
RUEHBS/AMEMBASSY BRUSSELS PRIORITY 0055
RUEHKO/AMEMBASSY TOKYO PRIORITY 3108
RUCNDT/USMISSION USUN NEW YORK PRIORITY 2202

C O N F I D E N T I A L SECTION 01 OF 02 PHNOM PENH 002096 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/MLS 
 
E.O. 12958: DECL: 11/20/2016 
TAGS: PREL ASEAN EAID CB CH
SUBJECT: CAMBODIAN VIEW OF ASEAN-CHINA COMMEMORATIVE SUMMIT 
 
 
Classified By: Pol/Econ Chief Margaret McKean; Reason 1.4 (b) (d) 
 
 ¶1.  (C)  Summary.  According to a senior MFA official, the 
ASEAN-China Commemorative Summit held in Nanning, China on 
October 30 underscored ASEAN's desire for greater Chinese 
trade and development assistance.  However, ASEAN reportedly 
remains unimpressed with the level of assistance/loans 
offered by the Chinese, and considers Japan a more generous 
partner.  During the PM's bilateral visit, the PM reportedly 
received a Chinese commitment for an additional USD 100 
million in loans to finish a number of infrastructure 
projects.  The MFA official noted that non-APEC participation 
by ASEAN members Cambodia and Laos in an ASEAN meeting on the 
margins of the recent APEC Summit in Hanoi was discussed in 
Nanning, but there had been no ASEAN consensus so Cambodia 
was left out.  FM Hor Namhong plans to raise the issue of 
Cambodia being held hostage to Burma among the ASEAN FMs 
during their February 2007 retreat.  End Summary. 
 
Fifteen Years of China-ASEAN Cooperation 
---------------------------------------- 
 
¶2.  (C)  During a November 22 meeting with MFA Secretary of 
State for ASEAN affairs Kao Kim Hourn, the MFA official 
described the ASEAN-China Commemorative Summit as useful but 
not entirely satisfactory.  The meeting on October 30 yielded 
little in the way of new results and new financial 
initiatives from the Chinese.  The Chinese agreed to a USD 1 
million contribution to the ASEAN Development Fund (ADF), and 
USD 1 million for Initiative for ASEAN Integration (IAI) 
projects, which will provide training opportunities in China. 
 Kao Kim Hourn noted that USD 1 million will not train that 
many people, and compared the small amount donated by the 
Chinese with their more generous announcement in subsequent 
days at the China-Africa Cooperation Forum, where the Chinese 
promised to double their assistance to the Continent.  The 
MFA Secretary of State offered that ASEAN views Japan as a 
more generous partner than the Chinese, and dismissed the 
oft-heard claim that China offers its assistance without 
strings attached.  "The Chinese always expect something in 
return," he observed. 
 
¶3.  (C)  ASEAN would like to see more trade and investment 
from the Chinese within ASEAN, particularly the newer members 
of ASEAN such as Cambodia, said Kao Kim Hourn.  At present, 
there is a strong trade and investment imbalance between 
China and ASEAN, he pointed out.  China expects ASEAN to 
provide ready markets for its goods, but does little to help 
promote export industries within Cambodia so that the country 
can export goods to China.  Nor is the Chinese market easy to 
penetrate, he noted, although China wants free access to 
Cambodian consumers to buy Chinese goods.  In addition, 
Chinese loans to Cambodia are simply low-cost, preferential 
loans to Chinese companies so that China can extract 
resources for export to Chinese manufacturers, he added.  On 
the plus side, the MFA official said that the ASEAN-China 
Expo in Nanning is to be a permanent trade exhibition, and a 
number of prominent Cambodian business officials participated 
in the trade show. 
 
¶4.  (C)  One area of concern to Cambodia is the future work 
of those groups (Mekong River Basin development, Greater 
Mekong Subsystem) collaborating on Mekong River issues, and 
focusing more on water availability.  Kao Kim Hourn mentioned 
the need for a computer modeling project that would analyze 
water flow rates depending on varying levels of rainfall as 
well as the impact of China's dams on water levels.  He asked 
if the USG could provide assistance through the Asian 
Development Bank (ADB) or USAID to assist in a computer 
modeling study.  The MFA official offered that no one wants 
to confront China on the realities of its upstream dam 
projects on downstream countries like Cambodia, but an 
independent project might provide the basis for constructive 
engagement. 
 
Burma 
----- 
 
¶5.  (C)  When asked if Cambodian and Laotian participation in 
the ASEAN meeting on the margins of the APEC Summit in Hanoi 
had come up, Kao Kim Hourn replied affirmatively.  He noted 
that although the meeting only lasted one day, the subject 
was raised "informally," and China, Burma, and Laos opposed 
any ASEAN meeting that did not include Burma.  Absent clear 
ASEAN consensus and not wishing to go against their ASEAN 
dialogue partner (China), he continued, Vietnam and Singapore 
supported confining the meeting to those ASEAN leaders who 
 
PHNOM PENH 00002096  002 OF 002 
 
 
are already members of APEC.  The PM was not happy at the 
outcome, said the MFA official, and FM Hor Namhong will raise 
the issue during the ASEAN FM's retreat in February 2007. 
The PM does not want Cambodia to be held hostage to Burma; 
Laos can opt not to participate but it should not preclude 
Cambodia from attending meetings, said Kao Kim Hourn.  The 
MFA official underscored the PM's continued strong interest 
in seeing ASEAN take a tougher stance against Burmese 
intransigence towards democratic reforms. 
 
Bilateral Discussions 
--------------------- 
 
¶6.  (C)  Following the ASEAN-China meetings, PM Hun Sen and 
the Cambodian delegation held bilateral talks, and the 
Chinese reportedly acceded to the PM's request for an 
additional USD 100 million in loans to finish a number of 
infrastructure projects, which have run out of money and will 
be incomplete without a further infusion of funds.  The 
Cambodian side also discussed with the Chinese and received 
tentative support for a rail line project linking Phnom Penh 
with Sihanoukville.  The Cambodian government also agreed to 
open two other consulates in China. 
 
Comment 
------- 
 
¶7.  (C)  Kao Kim Hourn is a strong advocate for ASEAN, having 
developed expertise in the organization through his own 
academic research on ASEAN.  He is a Chinese realist and 
recognizes that Cambodia has much to gain from China, but 
also believes that Japan and the United States are useful 
counterweights to Chinese influence in Southeast Asia.  In 
describing the decision to exclude Cambodia from the ASEAN 
meeting in Hanoi, he indicated that ASEAN unwillingness to 
exclude Burma (nudged along by China) was the culprit.  End 
Comment. 
MUSSOMELI