VZCZCXRO8817
OO RUEHHM
DE RUEHPF #0969/01 3650833
ZNR UUUUU ZZH
O 310833Z DEC 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1515
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 4112
RUEHKO/AMEMBASSY TOKYO PRIORITY 3325
RUEHVN/AMEMBASSY VIENTIANE PRIORITY 2892
RUEHHM/AMCONSUL HO CHI MINH PRIORITY 0158
RUCNDT/USMISSION USUN NEW YORK PRIORITY 2420
RUEHGV/USMISSION GENEVA PRIORITY 1723

UNCLAS SECTION 01 OF 05 PHNOM PENH 000969 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EAP/MLS, H 
 
E.O. 12958: N/A 
TAGS: PREL PGOV KJUS ECON MARR CB
SUBJECT: SCENESETTER FOR THE VISIT OF CODEL FALEOMAVAEGA TO 
CAMBODIA 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) Embassy Phnom Penh warmly welcomes CODEL 
Faleomavaega's visit to Cambodia.  Yours is the first 
Congressional visit since Senator Jim Webb's in mid-August, 
and you will find a Cambodia seeking to take full advantage 
of its first real period of stability in more than a 
generation.  Although the tempo has quickened in the conduct 
of U.S.-Cambodian bilateral relations, exemplifying a broader 
and growing USG interest in Cambodia and the region, the pace 
is likely to slow somewhat since Cambodia deported 20 Uighur 
asylum-seekers on December 19 under strong Chinese pressure 
and in contravention of its international obligations and 
long-standing cooperation with the UN High Commissioner for 
Refugees (UNHCR).  Nonetheless, there have been positive 
developments in several areas:  peaceful national elections 
in July 2008; active Cambodian participation in the Global 
Peace Operations Initiative (GPOI); and continued cooperation 
to combat trafficking in persons.  Cambodia remains a solid 
partner on counterterrorism and POW/MIA matters.  Thirty 
years after the Khmer Rouge atrocities, a mixed 
international-domestic tribunal just concluded the trial of 
the first of several cases to wide acclaim both in Cambodia 
and internationally for the justice that has long been denied 
the victims of those atrocities.  Our military-to-military 
relationship continues to strengthen: ship visits and medical 
readiness and engineering exercises are 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 economic relations.  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 decreased considerably in 2009 
as Cambodia lost over 12 % of its U.S. garments market share; 
weak 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 a spate of 
defamation and disinformation lawsuits are constricting 
political space. 
 
¶2.  (SBU) Potential topics for discussion during your visit 
are strong cooperation in counterterrorism, counternarcotics, 
and anti-trafficking in persons which are also reflected in 
renewed U.S.-ASEAN efforts such as the Lower Mekong 
Initiative.  In the regional context, you may wish to discuss 
the need for harmonious Cambodian-Thai relations and the 
peaceful settlement of the Preah Vihear border dispute.  Your 
visit may afford the opportunity to raise concerns 
highlighted in Washington about the recent deportation of the 
Uighurs and the constriction of political space.  The U.S. 
will soon consider providing future assistance to the Khmer 
Rouge Tribunal with the recent resolution by the UN and RGC 
of an anti-corruption mechanism for the court; the CODEL will 
hear Cambodian reactions to the KRT as it visits sites 
commemorating the Khmer Rouge genocide.  Your visit is also 
an opportunity to evaluate the issue of the bilateral debt 
and to hear Cambodian perspectives on the proposed TRADE Act 
in Congress, which provides duty free access for garments to 
those qualifying nations with good labor practices. 
 
Domestic Political Stability 
---------------------------- 
 
¶3.  (SBU) The domestic political situation remains stable. 
According to an International Republican Institute public 
opinion poll in August, 79 percent of the population believes 
that the country is headed in the right direction, compared 
to 77 percent in early 2008.  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 a desire for more security from 
crime and improved transportation and health care systems. 
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, 
 
PHNOM PENH 00000969  002 OF 005 
 
 
including equitable access to media.  U.S. foreign assistance 
aims to encourage expanded political participation by youth 
and women in elections and political processes and also to 
emphasize greater transparency and accountability by the 
government. 
 
Expanding Military Relations 
---------------------------- 
 
¶4.  (SBU) As demonstrated by the September meeting between 
Secretary Gates and Minister of Defense Tea Banh and the 
annual Bilateral Defense Dialogue, 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, and 
we expect the USNS Mercy to arrive in June for a ten-day 
visit.  Through security cooperation we are helping to 
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) With renewed confidence borne of stability, 
Cambodia has begun looking outward and seeks a more visible 
role in international and regional affairs 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) capacity 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 -- an extraordinary 
undertaking for such a nascent peacekeeping force -- and is 
preparing to expand its PKO deployments to Chad and the 
Central African Republic early in the new 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 just-completed 
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, 
but the appointment of an Independent Counselor function in 
August was deemed by donors as a key step toward a credible 
watchdog and preventative mechanism; no additional 
allegations have surfaced for nearly two years.  In addition, 
judicial proceedings are going well and there are no 
allegations linking corruption to any of the judges.  The 
court will require more financial support;  the Secretary has 
concurred that the KRT is capable of providing justice at an 
international standard, and we believe that implementation of 
an Independent Counselor function provides the KRT with a 
credible anti-corruption mechanism, paving the way for 
additional USG contributions in FY2010 and beyond. 
 
 
PHNOM PENH 00000969  003 OF 005 
 
 
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.  However, Cambodia's garment market share in 
the U.S. reportedly dropped from 3.2 percent to 2.8 percent 
in the past year, more than a 12 percent decline.  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 2012 
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 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 over USD360 
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 link 
 
PHNOM PENH 00000969  004 OF 005 
 
 
directly the signing of a repayment agreement with a 
guarantee of a debt recycling program. 
 
Human Rights:  Political Space, Treatment of Asylum Seekers 
--------------------------------------------- -------------- 
 
¶10.  (SBU) The RGC allowed significantly greater freedom to 
the political opposition during the 2008 election than in 
previous elections, 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 
brought through the mid-year was a worrying trend, and one 
that eroded some of the recent gains for political space in 
Cambodia.  Land disputes and forced evictions, sometimes 
accompanied by violence, continue to be a high-profile 
problem.  When an opposition publicity stunt spotlighted 
non-transparent border demarcation with Vietnam -- 
potentially disenfranchising farmers of tens of thousands of 
hectares of farm land -- the courts were again employed and 
some human rights observers are concerned charges will be 
exaggerated to punish the opposition for a minor infraction 
that challenged the ruling party's credibility.  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. 
 
¶11.  (SBU) Perhaps the most significant event on Cambodia's 
political stage since the 2008 election was the Prime 
Minister's decision to deport 20 Uighur asylum seekers back 
to China on December 19, just a day before the arrival of the 
Chinese Vice President and the signing of $1.2 billion in 
bilateral assistance and loan agreements.  All 20 had "Person 
of Concern" letters jointly administered by the UNHCR and a 
recently-established RGC Refugee Office.  In the days leading 
up to the deportation on immigration grounds, all Cambodian 
interlocutors signaled that the RGC would honor its 
international commitments as a party to the 1951 UN 
Convention on Refugees and the 1967 protocol, and vet the 
asylum seekers through a credible process for refugee 
determination, which had indeed been its practice in previous 
sensitive refugee matters, such as the Vietnamese 
Montagnards.  But at the eleventh hour, the RGC abruptly 
changed course amid persistent pressure by China in advance 
of its high-level visit.  The UNHCR and many in the 
international community branded the deportation a "serious 
breach of international refugee law."  When high-level 
telephone representations opposing the deportation went 
unheeded, the U.S. expressed its displeasure with the 
involuntary return of these asylum seekers and, in a 
statement issued on December 21, noted that the incident 
would affect Cambodia's relationship with the United States 
and its international standing. 
 
Progress on Trafficking in Persons Hits a Snag 
--------------------------------------------- - 
 
¶12. (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 and the RGC 
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 remain hampered by 
corruption at all levels of government and an ineffectual 
judicial system.  An initial 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. 
 New guidelines implemented by DPM Sar Kheng and increased 
training for police officers have improved this situation, 
 
PHNOM PENH 00000969  005 OF 005 
 
 
though police in some areas continue to target prostitutes 
for arrest.  As a result of the confusion over the law, there 
was a decrease in arrests (approximately 30-40%) and 
convictions of traffickers during last year's TIP Report 
rating period (April 2008-March 2009).  Some of this is 
attributable to a lack of training.  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. 
Observers are hopeful that a new National Committee to combat 
TIP launched in November and stronger central review of 
ongoing prosecutions, will turn the tide in the battle 
against trafficking. 
 
Corruption Remains Endemic 
-------------------------- 
 
¶13.  (SBU) The RGC has failed to finalize and pass 
much-needed anti-corruption legislation, though that appears 
likely to change soon.  While a solid Anti-Terrorism Law, 
Money Laundering Law, and Criminal Procedures Code moved at a 
brisk pace to passage, other key pieces of legislation have 
only recently made headway.  The massive, revised Penal Code 
just passed the Senate and a third of the law has been 
promulgated.  The remainder of the Penal Code will be enacted 
by the end of 2010.  Hun Sen lived up to his public promise 
that a December 11 Council of Ministers would approve the 
Anti-Corruption Law.  The draft law is now with the National 
Assembly and may well be passed in the first part of 2010. 
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 2012 at the earliest.  The current corrupt 
political environment flows into the top-heavy and 
anachronistic military as well, providing another challenge 
to developing our mil-to-mil relationship. 
 
¶14.  (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 and the allure and largesse 
of China continues to increase.  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 Cambodia 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 needed changes.  Your 
visit is a welcome addition to the range of our engagement 
efforts and the Embassy stands ready to help make the visit a 
success. 
ALLEGRA