VZCZCXRO9568
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0577/01 2231211
ZNR UUUUU ZZH
P 111211Z AUG 09 ZDK
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 1049
INFO RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 04 PHNOM PENH 000577 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EAP/MLS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KDEM KJUS PREF CB
SUBJECT: SCENESETTER FOR SENATOR JIM WEBB VISIT TO PHNOM 
PENH 
 
PHNOM PENH 00000577  001.2 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) Senator Webb:  We warmly welcome your August 18 
visit to Cambodia.  Your visit comes as the tempo quickens in 
the conduct of U.S.-Cambodian bilateral relations, which 
exemplifies a broader and growing USG interest in Cambodia. 
There have been positive developments in several key areas: 
peaceful national elections in July 2008; active Cambodian 
participation in the Global Peace Operations Initiative 
(GPOI); continued cooperation in the fight against 
trafficking in persons; and cooperation on sensitive refugee 
issues.  Cambodia remains a solid partner on counterterrorism 
and POW/MIA matters.  Thirty years after the Khmer Rouge 
atrocities, the first of five cases is in trial before a 
mixed international-domestic tribunal.  Our 
military-to-military relationship continues to strengthen: 
ship visits and medical readiness and engineering 
capabilities exercises are all being utilized to improve 
cooperation in civil-military operations.  Our bilateral 
trade relationship continues to grow with a rapidly expanding 
U.S. commercial presence, including Microsoft, DuPont, GE, 
and others, though bilateral debt remains a continuing 
sticking point in our economic relationship.  While our 
development work still faces significant challenges, we are 
seeing a new level of engagement on the part of the Royal 
Government of Cambodia (RGC) in health (HIV/AIDS and avian 
influenza), education, and environmental issues.  Even so, 
problems remain:  Cambodia is one of the world's poorest 
countries, and economic growth is expected to decrease 
considerably in 2009; week rule of law, corruption, and weak 
institutions continue to hamper Cambodia's development; 
incidents of land disputes and forced evictions, sometimes 
accompanied by violence, continue to be a high-profile 
concern; and recent attacks on freedom of expression are 
constricting political space. 
 
¶2.  (SBU) Your visit is an opportunity to discuss strong 
cooperation in counterterrorism, counternarcotics, and 
anti-trafficking in persons, and to raise concerns 
highlighted in Washington about the recent constriction of 
political space through a spate of defamation and 
disinformation lawsuits.  It's also an opportunity to prompt 
the RGC to reconsider its position on the bilateral debt and 
help move that issue forward.  Moreover, the U.S. will likely 
soon be exploring the possibility of future assistance to the 
Khmer Rouge Tribunal with the expected resolution by the UN 
and Cambodian government of an anti-corruption mechanism for 
the court; you will have an opportunity to observe some of 
the gripping testimony there, engage with court officials on 
how this hybrid international criminal court can be a model 
elsewhere, and inform future discussions in Washington about 
additional U.S. funding. 
 
Domestic Political Stability 
---------------------------- 
 
¶3.  (SBU) The domestic political situation is stable. 
According to an International Republican Institute public 
opinion poll in February, 82 percent of the population 
believes that the country is headed in the right direction, 
compared to 77 percent a year ago.  The improving 
infrastructure -- roads, bridges, schools, clinics -- is the 
main reason for this outlook.  Corruption, high prices, and 
poverty top concerns cited by those worried about the 
country's direction and other poll data show an increasing 
anxiety about crime-related issues (corruption, drugs, gangs, 
land grabbing, and environmental abuse).  Cambodia's 2008 
national elections were peaceful and allowed the Cambodian 
people to express their preferences in an open and fair 
manner.  Despite these improvements, the elections fell short 
of international standards on several counts, including 
equitable access to media.  U.S. foreign assistance aims to 
encourage expanded political participation by youth and women 
in elections and political processes. 
 
Expanding Military Relations 
---------------------------- 
 
¶4.  (SBU) U.S.-Cambodian security cooperation is expanding at 
a sustained rate.  As our military-to-military relationship 
matures beyond the traditional and still-active areas of MIA 
recovery and demining, we are looking to focus on areas such 
as defense reform and professionalization, regional 
cooperation and international peacekeeping, border and 
maritime security, counterterrorism, and civil-military 
operations.  Ship visits, medical readiness exercises and 
engineering capabilities exercises are all being utilized to 
improve cooperation in civil-military operations within 
Cambodia.  Through security cooperation we are helping to 
 
PHNOM PENH 00000577  002 OF 004 
 
 
develop centralized logistics and transportation functions 
within the Armed Forces, a central coordinating authority for 
maritime security and building capacity to secure Cambodia's 
maritime domain, a credible peacekeeping and counterterrorism 
capacity, and greater regional and multilateral cooperation. 
Members of the PACOM Augmentation Team provide counsel and 
training to the Royal Cambodian Armed Forces in its continued 
effort to build a credible counterterrorism unit. 
 
Cambodia as an International Actor: 
Global Deployments and the Khmer Rouge Tribunal 
--------------------------------------------- -- 
 
¶5.  (SBU) Cambodia has begun looking outward and seeks a more 
visible role in international and regional affairs that is 
consistent with the country's limited resources and capacity. 
 Cambodia is an active participant in the Global Peace 
Operations Initiative (GPOI) and participated in its second 
Capstone exercise in Indonesia in June.  The GPOI program has 
assisted Cambodia in increasing peacekeeping operations (PKO) 
capacities to support continued UN PKO rotations to Sudan, 
where Cambodia has deployed demining companies since 2006. 
Cambodia will host the GPOI Capstone exercise in 2010 and is 
preparing to expand its PKO deployments to Chad and the 
Central African Republic early next year. 
 
¶6.  (SBU) Cambodia has engaged the international community in 
its pursuit of justice for the Khmer Rouge genocide. 
Although the establishment of the Extraordinary Chambers in 
the Courts of Cambodia (ECCC) took seven years to negotiate 
with the UN, the Khmer Rouge Tribunal (KRT) has since 
arrested and detained five Khmer Rouge leaders and charged 
them with some 25 separate crimes, including crimes against 
humanity, war crimes and genocide.  The current hearing for 
Kaing Guek Eav, known as Duch, former head of the Tuol Sleng 
torture center, is the most tangible step to date in the 
hybrid tribunal's efforts to try those individuals most 
responsible for the 1.7 million people killed under the 
brutal Khmer Rouge regime.  Successful trials in the KRT have 
the potential to strengthen rule of law and judicial 
independence in Cambodia and address questions of impunity 
and accountability for the crimes of the Khmer Rouge regime. 
Past allegations of mismanagement and corruption within the 
Cambodian court administration had threatened its integrity, 
although judicial proceedings are going well and there are no 
allegations linking corruption to any of the judges. 
Ambassador at Large for War Crimes Clint Williamson visited 
Cambodia earlier this month in an effort to facilitate 
negotiations on a new anti-corruption mechanism for the KRT, 
and we remain hopeful that the UN and Cambodian government 
will announce an agreement soon.  The court will require more 
financial support, and the Secretary continues to review 
whether the KRT is capable of providing justice at an 
international standard. 
 
Cambodian Economy Hard Hit by the Global Economic Crisis 
--------------------------------------------- ----------- 
 
¶7.  (SBU) Cambodia's heady days of double digit economic 
growth are over.  The adverse impacts of the global economic 
crisis have brought Cambodia's growth to a screeching halt, 
from 10.2 percent in 2007 to low single digits, if not the 
World Bank's estimated negative 1 percent in 2009.  Nearly 
all of the pillars of Cambodia's economy - garments, tourism, 
and construction - have been adversely affected; only the 
agriculture sector has thus far been unaffected.  The 
economic crisis poses significant challenges to sustaining 
the country's progress toward its development goals and 
meeting the needs of the country's most vulnerable affected 
by the crisis.  To date the government's efforts to mitigate 
the adverse impacts have failed to address the fundamental 
challenges of sustaining economic growth and a more 
comprehensive, coordinated response is urgently needed to 
prevent greater numbers of the population from falling into 
poverty.  The garment industry represents roughly 30 percent 
of the country's overall GDP.  The U.S. market for Cambodian 
textile exports is still a crucial part of Cambodia's 
economy, representing over 70 percent of the country's 
exports in this key sector and the U.S. is Cambodia's chief 
trading partner.  The Cambodian government, garment industry, 
and unions are strong supporters of proposed legislation by 
Senator Feinstein that would allow duty-free access for 
garments from Cambodia and other less developed countries. 
Chevron is involved in Cambodia's offshore oil/gas 
exploration efforts, with 2011 foreseen as the earliest 
possible date for exploitation of these resources.  While 
American investors have been slower than their Asian 
counterparts to seize Cambodia's business opportunities, the 
U.S. commercial presence is rapidly expanding with a 
 
PHNOM PENH 00000577  003 OF 004 
 
 
multi-million dollar investment by U.S. manufacturer Crown 
Holdings and the establishment of representative offices by 
GE, DuPont, Microsoft, and Otis Elevators. 
 
Bilateral Debt 
-------------- 
 
¶8. (SBU) Cambodia's bilateral debt to the U.S. totals USD162 
million, but with arrears factored in could reach 
approximately USD352 million.  The debt stems from shipments 
of agricultural commodities, such as rice and wheat flour, 
financed with low-interest rate loans by the U.S. Department 
of Agriculture, to the Lon Nol regime in the early 1970s. 
Interest accumulated over three decades, following the 
country's fall to the Khmer Rouge.  In 1995, Cambodia and 
Paris Club creditors (including the U.S.) agreed to a debt 
restructuring package, and Cambodia signed bilateral 
agreements with and began repaying most creditors.  Bilateral 
negotiations with the U.S. stalled over the amount of debt 
owed, until 2006 when an agreement in principle was reached 
on the exact amount of principal owed. 
 
¶9.  (SBU) Since then, the RGC has been reluctant to sign a 
bilateral repayment agreement.  This is partly due to the 
fact that, while the RGC accepts responsibility for debts 
incurred by former governments, there are domestic political 
obstacles to the debt of a regime that deposed King Sihanouk. 
 The RGC is seeking concessions beyond the terms of the 1995 
Paris Club accords and wants to link repayment directly to a 
debt-swap program similar to debt-for-assistance measures 
enacted for Vietnam to make a repayment agreement more 
palatable to Cambodians and the members of the National 
Assembly.  In 2007 key Senate Foreign Relations Committee and 
House Foreign Relations Committee staffers expressed interest 
in a debt-for-aid mechanism to support education or other 
programs.  Other staffers have suggested eliminating the debt 
entirely.  Cambodia has been given the final best offer on 
debt rescheduling that the USG is able to make under the 
Paris Club principles and existing legal and budgetary rules, 
and Cambodia's economic and financial situation does not 
merit debt reduction.  The USG continues to urge the RGC to 
accept the already concessional interest rate of 3 percent 
and sign the repayment agreement first, arguing that Congress 
might view more favorably a debt-swap or other agreement if 
Cambodia is already making payments and in good financial 
standing with the U.S.  However, the RGC still seeks to 
directly link the signing of a repayment agreement with a 
guarantee of a debt recycling program. 
 
Human Rights:  Glass Half Empty or Half Full? 
--------------------------------------------- 
 
¶10.  (SBU) The RGC allowed significantly greater freedom to 
the political opposition during the 2008 elections than was 
the case in prior votes, and had shown some willingness to 
engage on civil liberties and human rights issues.  However, 
Cambodia's overall human rights record remains poor.  Prime 
Minister Hun Sen and the Cambodian People's Party continue to 
dominate all three branches of the government as well as 
other national institutions.  Cambodia's leaders recently 
revived a tactic last seen in 2005 to use Cambodia's weak and 
easily-influenced judiciary to pursue legal cases against 
critics and the political opposition.  Defamation, 
disinformation, and incitement cases against members of the 
political opposition, journalists, and private citizens is a 
worrying trend, and one that is eroding recent gains for 
political space in Cambodia.  Land disputes and forced 
evictions, sometimes accompanied by violence, continue to be 
a high-profile problem.  U.S. foreign assistance aims to 
reduce corruption, improve political rights and selected 
civil liberties, and improve the justice system in support of 
these aims by supporting reform-minded institutions and 
individuals; engaging civil society as a voice for reform; 
and building capacity of public and private institutions. 
 
Progress on Trafficking in Persons Hits a Snag 
--------------------------------------------- - 
 
¶11. (SBU) In past years, Cambodia made significant progress 
in combating trafficking in persons as reflected in their 
movement from Tier 3 in 2005 to Tier 2 in 2008.  A new law on 
Suppression of Human Trafficking and Commercial Sexual 
Exploitation came into effect in February 2008.  Also in 
2008, the RGC's anti-trafficking National Task Force 
established anti-TIP working groups in 24 provinces and 
municipalities, and launched a nationwide campaign to 
persuade Cambodians to take action against human trafficking. 
 Despite this progress, Cambodia was downgraded to Tier Two 
Watch List in 2009.  Cambodia's anti-trafficking efforts 
 
PHNOM PENH 00000577  004 OF 004 
 
 
remain hampered by corruption at all levels of government and 
an ineffectual judicial system.  An increase in police 
crackdowns on brothels, credited by some to the passage of 
the new law, may have resulted in many prostitutes selling 
sex on the streets, increasing their vulnerability to 
violence and HIV infection.  In October 2008, DPM Sar Kheng 
implemented new guidelines in an attempt to address concerns 
about human rights abuses of prostitutes and other victims 
rescued during brothel raids.  However, as a result of the 
confusion over the law, there has been a decrease in arrests 
(approximately 30-40%) and convictions of traffickers during 
last year's TIP Report rating period (April 2008-March 2009). 
 Although its commitment is significant, Cambodia is far from 
solving its own TIP problems, including overcoming widespread 
corruption and challenges arising in implementing the 2008 
anti-TIP law. 
 
Corruption Remains Endemic 
-------------------------- 
 
¶12.  (SBU) The RGC has consistently failed to finalize and 
pass much-needed anti-corruption legislation.  While a solid 
Anti-Terrorism Law, Money Laundering Law, and Criminal 
Procedures Code have moved at a brisk pace to passage, other 
key pieces of legislation (most notably the anti-corruption 
legislation but also wholesale revision of the penal code) 
that have been repeatedly promised to the donors and 
Cambodian public have seen another year of continued RGC foot 
dragging.  In 2008, Transparency International ranked 
Cambodia 166 out of 180 countries in its corruption 
perceptions index; Burma was the only country in Asia ranked 
lower than Cambodia.  There has been continued and widespread 
land-grabbing by government officials and the politically 
well-connected.  Uprooted communities from outside Phnom Penh 
seek government redress by traveling to the city to draw 
media and public attention to their plight.  Cambodia's 
competitiveness ranking (109 out of 134 in 2008) is also one 
of the lowest in the world, again due largely to perceived 
systemic corruption.  Rather than embrace the reforms that 
would garner increased investment and the new jobs that would 
be created, the RGC appears to be banking on the future 
income from its as-yet-untapped oil and gas reserves, which 
should come on stream by 2011 at the earliest.  The current 
corrupt political environment flows into the top-heavy and 
anachronistic military as well, and this will be another 
challenge for our mil-to-mil relationship. 
 
¶13.  (SBU) Given where Cambodia was a decade ago, it has come 
a long way.  Given where Cambodia needs to be, it still has 
much to do to establish transparency, accountability, and 
general good governance.  The United States is perceived as a 
trusted partner in these efforts but, at the same time, our 
efforts are not always successful.  Although Cambodia's 
tragic history should be no excuse for not resolving its 
current problems, that history does largely set the 
parameters for how far and how fast it can evolve into the 
kind of nation and society we all hope it will someday 
become.  Continual U.S. engagement at all levels and in all 
fields will remain crucial for effecting these changes 
needed, and your visit will be key to that effort.  We stand 
ready to help make it a success. 
RODLEY