VZCZCXRO2424
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #2112/01 3341021
ZNR UUUUU ZZH
O 301021Z NOV 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7664
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHUL/AMEMBASSY SEOUL PRIORITY 0600
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY 0623

UNCLAS SECTION 01 OF 02 PHNOM PENH 002112 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, EB, ISN/CPI 
 
E.O. 12958: N/A 
TAGS: EFIN PREL KTIA CB
SUBJECT: MFA ON USG-PROPOSED AGREEMENTS 
 
 
 ¶1.  (SBU)  Summary.  The MFA has told us that both the 
USG-proposed bilateral shipboarding and debt agreements 
remain under RGC consideration.  The MFA has circulated among 
other concerned Ministries the shipboarding agreement and is 
awaiting comment.  The bilateral debt agreement also remains 
under discussion, but the MFA told the Ambassador that the 
time "may not yet be right" to reach a settlement. 
Separately, the Japanese Ambassador conveyed to the 
Ambassador that the debt agreement was very difficult for the 
Cambodian government to accept.  End Summary. 
 
MFA on PSI Shipboarding Agreement, Debt 
--------------------------------------- 
 
¶2.  (SBU)  On November 29, MFA Secretary of State Ouch Borith 
met with the Ambassador at the former's request to respond to 
the USG-proposed bilateral shipboarding agreement, which was 
provided to the MFA via diplomatic note earlier in November. 
Borith noted that his Ministry would need to consult with 
other RGC Ministries given the nature of the agreement, which 
cross-cuts a number of Cambodian authorities.  He indicated 
that the MFA has sent the text to the Ministries of Defense 
and Transportation; others may also need to be consulted.  He 
said the Cambodian government understands the proposed USG 
agreement is linked to the Proliferation Security Initiative, 
as well as UNSCR 1718, passed on October 14 five days after 
North Korea's nuclear test.  Borith noted that the RGC 
condemned the test and would abide by its UN obligations 
under UNSCR 1718.  He affirmed that nuclear proliferation was 
a cause for concern for all countries, and Cambodia -- with 
its limited resources -- would do what it could to assist the 
international community. 
 
¶3.  (SBU)  Borith said the MFA had a number of questions 
regarding the text of the draft shipboarding agreement, but 
would await comments from other Ministries before providing a 
response.  He asked about other East Asian countries (e.g., 
South Korea) and which ones were members of the PSI.  Among 
those, Borith asked if any had already signed a similar 
shipboarding agreement.  The MFA underscored RGC willingness 
to cooperate on illegal shipments related to WMD.  The 
Ambassador noted that Cambodia's cooperation on 
counterterrorism issues has been laudable, as has RGC 
responsiveness to USG requests to board Cambodian-flagged 
vessels for counternarcotics purposes. 
 
¶4.  (SBU)  Turning to the bilateral debt issue, the 
Ambassador asked Borith if the RGC were nearing a decision on 
the draft MOU submitted to the Cambodian government in late 
July for which the USG has yet to receive a response.  Borith 
responded that he was not directly working on that issue, and 
had heard that the IMF had consulted with the RGC and urged 
the Cambodian government to resolve the outstanding debt to 
the USG.  However, Borith was also aware that some (NFI) 
within the government felt that Cambodia's financial 
situation was not yet strong enough to support debt 
repayment, and opined that the RGC might have to wait until 
after the oil and gas revenues are available.  He urged the 
USG to be patient and underscored RGC willingness to solve 
the problem. 
 
¶5.  (SBU)  In a separate conversation with the Ambassador the 
same day, the Japanese Ambassador raised the debt issue, and 
noted that the RGC found it politically difficult to accept 
responsibility for a debt incurred during the Lon Nol regime 
of the early 1970s.  He inquired if there was not another way 
for the matter to be resolved, perhaps along the lines of the 
HIPC debt forgiveness initiative.  The Ambassador responded 
that Cambodia, while poor, is not eligible for HIPC relief, 
and that the Cambodian government is legally responsible for 
the debts incurred by preceding governments.  The USG has 
tried to work with the RGC on the most reasonable arrangement 
for resolving the debt, eliminating from consideration a 
proportion of the accrued debt based on poor documentation. 
The Japanese Ambassador observed that the Cambodians were 
trying to negotiate their outstanding debt to the Russian 
government, which was also proving challenging. 
 
Comment 
------- 
 
¶6.  (SBU)  We would appreciate any information Washington can 
provide regarding the number of Asian countries (particularly 
in East Asia) with whom the USG has signed similar 
shipboarding agreements to the one provided to the RGC for 
consideration.  Concerning the bilateral debt, we had heard 
that the RGC might be dragging its feet due to ongoing 
negotiations with the Russians, but did not anticipate that 
 
PHNOM PENH 00002112  002 OF 002 
 
 
the RGC might think to delay finalizing a debt agreement with 
the USG until 2009-10, when the country may begin to accrue 
oil/gas revenues.  Post will confer with the desk on possible 
next steps regarding the debt issue.  End Comment. 
MUSSOMELI