VZCZCXYZ0010
OO RUEHWEB

DE RUEHPF #0042/01 0110946
ZNR UUUUU ZZH
O 110946Z JAN 07
FM AMEMBASSY PHNOM PENH
TO SECSTATE WASHDC IMMEDIATE 7810

UNCLAS PHNOM PENH 000042 
 
SIPDIS 
 
STATE FOR EAP/MLS, EB, H, SWCI 
STATE PASS USAID FOR ANE 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KTEX ETRD EAID CB
SUBJECT: AMBASSADOR AND DPM SOK AN REVIEW BILATERAL RELATIONS 
 
REFTEL:  06 Phnom Penh 2095 
 
¶1.  (SBU) Summary. In a two-hour meeting on December 28, 2006, the 
Ambassador called on Deputy Prime Minister Sok An to review the 
advances in bilateral relations in 2006 and outline the new USG 
Operational Plan Framework for foreign assistance.  The Ambassador 
stated that the current projections for USG foreign assistance 
funding to Cambodia in FY07 will remain approximately the same as 
FY06; however, FY08 funding will likely decrease $10 to $15 million. 
  The Ambassador urged the RGC to pursue the Millennium Challenge 
Corporation (MCC) Threshold program in the future. DPM Sok An 
outlined a three-point plan to address corruption. The Ambassador 
expressed hope that the ongoing Khmer Rouge Tribunal issues could be 
worked out. The DPM requested specific assistance and agreed to a 
follow-up meeting with USAID. End Summary. 
 
------------------------------------------ 
YEAR OF CONSTRUCTIVE ADVANCES IN RELATIONS 
------------------------------------------ 
 
¶2.  (SBU) Deputy Prime Minister (DPM) Sok An accompanied by 14 
senior staff members, met with the Ambassador, USAID Mission 
Director, USAID Senior Democracy Officer (notetaker) and Consular 
Officer for two hours to review the advances in bilateral relations 
in 2006 and outline the new USG Operational Plan Framework for 
foreign assistance. The DPM stated that the new OP Framework was 
rational and concrete. 
 
¶3. (SBU) Ambassador opened the meeting by citing the progress in 
bilateral relations that had occurred over the course of 2006.  He 
mentioned the lifting of Tier Three sanctions, beginning of stronger 
mil-to-mil assistance, the visit of former President Clinton, and 
increasing Congressional willingness to lift the remaining 
assistance prohibitions on direct support to the Cambodian 
Government.  Ambassador invited DPM Sok An to attend the planned 
February 2007 Naval ship visit in Sihanoukville. 
 
------------------------- 
CHALLENGES FOR RELATIONS 
------------------------- 
 
¶4.  (SBU) The Ambassador stated that the current projections for USG 
foreign assistance funding to Cambodia in FY07 will remain 
approximately the same as FY06, however, due to demands on the USG 
budget, FY08 funding is likely to decrease $10 to $15 million.  The 
possible reduction is not directly related to the existing 
relationship between the Royal Government of Cambodia (RGC) and USG, 
but due to competing USG budget demands. The Ambassador also cited 
lack of sufficient progress in combating corruption as another 
possible obstacle to more assistance. 
 
¶5. (SBU) The Ambassador explained that one option for offsetting the 
possible reduction in assistance in FY08 is for Cambodia to pursue 
MCC Threshold Country status.  If achieved, Cambodia could become 
eligible to receive additional MCC funding.  He reviewed the MCC 
criteria with emphasis placed on improved political rights and 
significant progress to address corruption. (Note: Embassy provided 
MCC criteria to the Ministry of Economics and Finance Secretary 
General Hang Navon in December 2006. End Note) 
 
¶6. (SBU) In the fight against corruption, the Ambassador highlighted 
the need for passage of the draft Anti-Corruption Law (ACL) as an 
important step.  The transparent management of revenues from 
extractive industries, particularly oil and gas, was discussed as 
another critical area requiring greater RGC focus.  Finally, the 
Ambassador stressed the importance of a functioning independent 
judicial system. The Ambassador stated that all countries face 
corruption, including America, however, the true test is if the 
legal system can fairly prosecute corrupt officials regardless of 
political affiliation. Ambassador proposed that DPM Sok An assign a 
chief point-person for USAID to liaise with on the efforts to 
address corruption. 
 
¶7. (SBU) DPM Sok An stated that "corruption and land disputes are 
the top two triggers for destabilization within Cambodia."  The DPM 
explained the current Government Action Plan places judicial reform 
as the third priority. DPM Sok An added that the ACL was delayed in 
2006 in order for the draft law to be harmonized with the draft 
Criminal Procedures Code.  He stated that the Criminal Procedures 
Code was recently sent to the National Assembly for debate in 
January 2007. It was not stated but implied that once the Criminal 
Procedures Code is enacted the ACL will move forward. The DPM added 
that he has assigned a Secretary of State to study different 
countries' (Hong Kong, Singapore) efforts to fight corruption and 
referred to advice provided by UNDP Consultant Bertrand de Speville, 
Former Commissioner of the Independent Commission Against Corruption 
of Hong Kong. 
 
¶8. (SBU) Sok An outlined a three-point plan to address corruption: 
1)  Prevent corruption through greater public education; 2) Improve 
enforcement of existing laws; and 3) Build mass support for fighting 
corruption to protect against reaction of those who are punished. 
He provided several examples of RGC efforts to address corruption: 
The creation of the Council of Ministers Anti-Corruption Unit led by 
PM Advisor Om Yienteng; administrative action (six-month suspension 
without pay) of 38 customs officials and one chief of police in 
Banteay Meanchey Province for illegal importation of 800 right-hand 
drive vehicles (The DPM reported that 38 of the officials were CPP 
members and one was FUNCINPEC); administrative action against land 
titling officials and court action for land grabbing against two 
Department Chiefs in Koh Kong Province; and Court action for land 
grabbing against the former Governor of Kampot Province. DPM Sok An 
also added that from 2002 to 2006 civil service salaries have 
increased 135%, from $20 per month to $45. 
 
¶9. (SBU) Agreement on the Lon Nol Regime debt repayment was 
discussed. It was urged that progress be made on the debt payment 
negotiations between Ministry of Finance, Ministry of Foreign 
Affairs and USG. 
 
¶10. (SBU) The Ambassador raised the status of the Khmer Rouge 
Tribunal (KRT) and discussions over the internal rules (REFTEL).  He 
expressed hope that the ongoing issues could be worked out and said 
there were good arguments on both sides.  The Ambassador stated that 
we continue to work to obtain authority to directly support a well 
functioning tribunal.  Sok An recounted his involvement over a 
five-year period to negotiate the final agreement, including active 
negotiations with USG senior representatives.  The DPM stated that 
"it is normal for lawyers to quarrel, so let them, but then provide 
a compromise." 
 
--------------------------------------------- ------- 
USG OPERATIONAL PLAN FRAMEWORK RATIONAL AND CONCRETE 
--------------------------------------------- ------- 
 
¶11.  (SBU) DPM Sok An stated that the new USG Operational Plan (OP) 
Framework was rational and concrete.  He commented that the OP 
objectives of Peace and Security, Governing Justly and 
Democratically, Economic Growth, and Investing in People are exactly 
in line with the RGC's previous Triangular Strategy (1998-2003) and 
ongoing Rectangular Strategy (2004-2008).  He provided a historic 
account of RGC efforts from 1998 to the present to bring improved 
peace and security, democratic, economic and financial reform. 
 
¶12.  (SBU) DPM Sok An requested specific USG assistance for the 
newly created Chamber of Jobs and Micro-Enterprise; the National 
Commission for Translation of Legal Vocabulary; the Greenbelt 
Agricultural Project in Siem Reap; and equipment for health 
facilities.  Sok An stated that the World Tourism Organization 
recently reported that 40% of the $1.5 billion in Cambodian tourism 
revenue last year was lost to the purchase of imported non-Cambodian 
products (e.g., restaurant food, tourism merchandise, etc.).  He 
stated government support for the "One Village One Product" model 
successfully used in Thailand and Japan, rural credit, and support 
for small and medium enterprises. 
 
¶13. (SBU) The USAID Mission Director offered to provide a thorough 
briefing to DPM Sok An and his staff about the new Operational Plan, 
MCC Threshold Country criteria, and also to discuss possible USAID 
support for the DPM's requests. DPM Sok An replied that this would 
be helpful and suggested that a joint team be established.  It was 
agreed that a follow-up meeting will be arranged to discuss the 
team. 
 
MUSSOMELI