VZCZCXRO6677
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0515/01 2080030
ZNR UUUUU ZZH
R 270030Z JUL 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC 0979
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEATRS/TREASURY DEPT WASHDC 0043

UNCLAS SECTION 01 OF 02 PHNOM PENH 000515 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, DRL, and EEB/IFD/ODF/RLEATHEM 
USAID FOR ASIA BUREAU 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM ECON KDEM CB
SUBJECT: WORLD BANK DISCUSSES GOVERNANCE, LAND ISSUES WITH 
AMBASSADOR 
 
REF: PHNOM PENH 60 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) SUMMARY.  World Bank Country Director for Cambodia Annette 
Dixon met with the Ambassador July 17 to discuss her meetings with 
Royal Government of Cambodia (RGC) officials on anti-corruption, 
governance and land issues.  She reported that the RGC plans to 
present the draft anti-corruption law to the National Assembly 
within three months, although she speculated that reaching consensus 
on contentious portions of the draft law could delay consideration. 
She described the difficulty that the Bank had encountered in 
implementing programs in Cambodia because of governance issues and 
the collusive nature of the private sector in the country.  She 
explained that the Bank had recently conducted an enhanced review of 
its land registration program and hoped to continue the project, 
although she expected that the RGC would end the program after the 
current contract expires at the end of the year. 
 
¶2. (SBU) COMMENT.  Despite the challenges it has faced in the 
implementation its programs, the World Bank has played an important 
role in building the institutional capacity of the RGC.  END COMMENT 
AND SUMMARY. 
 
ANTI-CORRUPTION EFFORTS 
----------------------- 
 
¶3. (SBU) Ms. Dixon said that Deputy Prime Minister Sok An estimated 
that the anti-corruption law would be presented to the National 
Assembly within three months.  (NOTE:  RGC officials have told the 
Ambassador that anti-corruption legislation would be completed by 
the end of the year.  END NOTE.)  She added that World Bank senior 
management was skeptical about the RGC's commitment to passing and 
enforcing the anti-corruption law.  She speculated that the law has 
been delayed because various stakeholders have been unable to reach 
a consensus on more contentious portions of the draft law, such as 
rules for declarations of assets or reporting lines.  When asked who 
she thought these "stakeholders" were, Ms. Dixon replied that she 
was not sure, as the drafting process had not been transparent.  She 
also noted that it would be important to monitor the implementation 
of the law, as she had seen anti-corruption laws used to punish or 
silence opponents of the ruling elite in other countries with 
governance issues, similar to the current mode in Cambodia of using 
defamation charges to challenge perceived opposition or criticism. 
 
 
GOVERNANCE 
---------- 
 
¶4. (SBU) Ms. Dixon explained that the World Bank has had difficulty 
implementing programs in Cambodia because of governance issues and 
the collusive nature of the private sector in the country.  She said 
that many of the Bank's investment projects had not moved forward, 
because they had to be re-bid repeatedly due to corruption concerns. 
 She described Cambodia as an increasingly corporatist state, where 
the RGC had become an alternative mechanism for redistributing 
private sector investment.  She said that given the decreasing 
influence of donors and the increasing influence of private sector 
interests on the RGC, attracting the "right kind" of investment is 
important for donors to promote. 
 
LAND ISSUES 
----------- 
 
¶5. (SBU) Ms. Dixon acknowledged the issues faced by the World 
Bank-funded Land Management and Administration (LMAP) project, which 
have been raised by Cambodian civil society groups (reftel).  She 
noted that one of the larger issues was that while LMAP focused on 
issuing land titles in rural, undisputed areas, urban communities 
have become more at-risk of forced eviction without access to the 
dispute resolution mechanisms that LMAP was supposed to help create. 
 She also observed that the RGC has been setting aside land from the 
LMAP systematic titling process (reftel) in an effort to classify it 
as state land through non-transparent processes. 
 
¶6. (SBU) Ms. Dixon said that the World Bank recently concluded an 
enhanced review of the project, which highlights these and other 
issues and offers recommendations for future LMAP activities.  She 
delivered the results of the review to the RGC the week of July 13 
and is waiting for a response.  She predicted that the RGC would 
likely find the report's recommendations too burdensome and would 
choose not to renew the World Bank's contract to support the LMAP 
project when it expires at the end of the year, although the Bank 
hoped to continue its support.  The Ambassador offered to help in 
any way to encourage the RGC to continue cooperating with the World 
Bank on the project. 
 
 
PHNOM PENH 00000515  002 OF 002 
 
 
COMMENT 
------- 
 
¶7. (SBU) Despite the challenges it has faced in the implementation 
of its programs, the World Bank has played an important role in 
building the institutional capacity of the RGC, especially as the 
U.S. and other bilateral donors have steered away from direct budget 
support for RGC ministries.  This is evident in the superior 
competence and abilities of organizations such as the Ministry of 
Economy and Finance, which the Bank has actively supported over the 
past several years.  The notion that government should provide 
services beyond basic security is still a new concept for RGC 
leaders; the World Bank's programs help ensure that as the RGC's 
will to become a more service-oriented institution increases, it 
will have the abilities to implement new policies to better serve 
the Cambodian people.  However, governance issues remain a 
significant concern, and any direct budget support to RGC Ministries 
needs to provide for significant governance risk mitigation 
mechanisms. 
 
RODLEY