VZCZCXRO5154
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0109/01 0230245
ZNR UUUUU ZZH
O 230245Z JAN 07
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7879
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0379
RHHMUNA/HQ USPACOM HONOLULU HI PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY 0629

UNCLAS SECTION 01 OF 02 PHNOM PENH 000109 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP FO, EAP/MLS, EB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: PREL EFIN PHUM CB BM
SUBJECT: CAMBODIAN PM LAUDS US-CAMBODIAN TIES; WILL VISIT 
BURMA IN MAY 
 
REF: PHNOM PENH 42 
 
 ¶1. (SBU)  Summary.  In a January 22 meeting with visiting 
PDAS Stephens, PM Hun Sen praised improvements in 
US-Cambodian ties over the past year.  He spoke at length 
about RGC reform efforts, saying that economic growth and 
political development can move forward together.  On 
Cambodia's bilateral debt with the U.S., Hun Sen 
characterized the two sides as being close to an agreement, 
and urged further discussions.  The PM informed Stephens that 
he will visit Burma in May at Rangoon's invitation, and 
promised to meet with the Ambassador at a future time to 
discuss the visit.  End Summary. 
 
Cambodia's Economic Picture Rosy; Reform Efforts Less So 
--------------------------------------------- ----------- 
 
¶2.  (SBU)  PM Hun Sen thanked PDAS Stephens for visiting 
Cambodia and agreed that bilateral relations on are an 
upswing and greatly improved with the opening of the NEC. 
The PM thanked the USG for all assistance provided, 
particularly counterterrorism support, and stressed that CT 
cooperation should remain strong over the long term.  His 
government, the PM continued, is committed to continuing 
reforms to generate economic growth and a higher living 
standard for the population.  Growth estimates for 2006 
remain preliminary but are likely to be approach 10 percent 
once agricultural data are available and factored in.  Hun 
Sen said that Cambodia needs to continue double-digit growth 
figures for the next five years, and acknowledged that 
continued growth at that level will depend on RGC commitment 
to reforms, especially combatting corruption.  Elections for 
commune councils in April 2007 and general elections in July 
2008 are on track and will not be delayed, he added, although 
the costs of managing elections are high.  If another party 
wins the election, the PM promised a smooth transition as the 
only way to avoid the problems Cambodia's neighbors have 
suffered, he quipped.  Over the past 500 years of Cambodian 
history, said Hun Sen, the country's instability centered on 
the lack of an outlet for popular discontent or criticism of 
the government.  That is why his government is committed to 
democracy and the freedoms it supports, as the Cambodian 
people have suffered enough in recent times. 
 
¶3.  (SBU)  PDAS Stephens thanked the PM for his overview of 
the bilateral relationship and expressed appreciation for RGC 
help on CT issues; she applauded the PM's recognition that 
economic growth and political development can go 
hand-in-hand, and economic growth does not have to precede 
political development.  She urged the PM to not be satisfied 
with elections that simply meet the standard of previous 
elections but to meet even greater expectations among the 
Cambodian electorate and the international community.  She 
further urged the Cambodian government to conclude an 
agreement on its bilateral debt with the United States.  PDAS 
Stephens encouraged the PM to consider the Millennium 
Challenge Corporation (MCC) as a platform for future USG-RGC 
cooperation, and stressed the importance of a strong 
anti-corruption law and good governance program. 
 
¶4.  (SBU)  On the debt issue, the PM responded that Cambodia 
and the United States are "very close," but encouraged 
further talks with the USG before concluding an agreement. 
He said that the Ministry of Economics and Finance has 
reported that the RGC and the USG have narrowed their 
respective positions while Cambodia and Russia remain "far 
away."  Hun Sen mused that he must pay for the sins of his 
predecessors by assuming the Lon Nol era debt, but 
acknowledged that it is his government's responsibility -- as 
are all debts incurred under previous Cambodian governments. 
He noted that Cambodia has resolved its prior debts with many 
countries and will try hard on the debt owed the USG. 
Stephens underscored again that the RGC consider favorably 
the pending draft agreement provided to the RGC, noting that 
normalization of financial relations between the two 
countries would reinforce the positive attitude towards 
Cambodia among U.S. policymakers.  The Ambassador reiterated 
the favorable impression held by USG visitors to Cambodia 
over the past year, and urged the RGC to take advantage of 
this goodwill and resolve long-standing issues like the debt 
to lay the basis for a stronger relationship in the future. 
 
¶5.  (SBU)  On anti-corruption legislation, the PM stressed 
that the RGC is not ignoring the draft law, but must wait for 
legislative action on the draft penal and civil codes. 
Despite the absence of legislation, the PM said his 
 
PHNOM PENH 00000109  002 OF 002 
 
 
government is trying to narrow the opportunities where 
corruption may occur -- whether in the forestry, fisheries, 
or business/commercial sectors.  Ongoing reforms in each of 
these sectors will minimize corruption, but the PM 
underscored that fighting corruption can only be successfully 
addressed over the long term through passage of legislation. 
He added that good governance is the backbone of the 
government's Rectangular Strategy for development.  Stephens 
agreed that addressing corruption goes beyond simple passage 
of a law, and that what a country does on corruption early on 
in its development can form the basis for continued strong 
economic performance and mitigation of the plague of 
corruption. 
 
¶6.  (SBU)  The PM promised continued RGC support on regional 
issues, and cited his government's backing of the 
Japanese-sponsored human rights resolution on North Korea, as 
well as for continuation of the Six-Party talks.  PDAS 
Stephens thanked the PM for his support on North Korea, and 
urged RGC help on the situation in Burma.  The PM informed 
Stephens that Rangoon had invited him to visit Burma in May; 
Hun Sen promised to follow up with the Ambassador regarding 
the trip to Rangoon and ASEAN treatment of Burma.  (Note: 
While the RGC did back the North Korean human rights 
resolution in the Third Committee, they voted against the 
Burma resolution.  End Note.) 
 
Comment 
------- 
 
¶7.  (SBU)   Despite the PM's insistence that his commitment 
to reform remains as strong going into an election cycle as 
it did at the beginning of his mandate in 2003, we (as well 
as many others in the donor community) are unconvinced of RGC 
reform efforts.  Both the Bank and the IMF have noted a 
slowing in RGC enthusiasm for reforms in public 
administration; anti-corruption efforts have stalled and 
there has been little RGC movement to stem land 
confiscations.  Some contacts within the RGC stress that the 
international community must be patient; that following the 
2008 elections, the PM will make personnel changes and there 
will renewed focus on reform programs.  Others say that such 
reassurances precede every election, and that the RGC always 
moves slowly on reforms that impinge on the CPP's hold on 
power.  We look forward to further discussions with the PM 
regarding his trip to Burma, and would welcome Washington and 
Embassy Rangoon suggestions as to how best the PM can promote 
democratic progress during his visit.  End Comment. 
 
¶8.  (U)  PDAS Stephens cleared this message. 
MUSSOMELI