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Cablegate: Civil Society Leaders Tout Measured Progress, Highlight

VZCZCXRO8577
PP RUEHCHI RUEHCN RUEHDT RUEHGH RUEHHM RUEHNH RUEHVC
DE RUEHPF #0103/01 0230740
ZNR UUUUU ZZH
P 230740Z JAN 08
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 9299
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 04 PHNOM PENH 000103

SIPDIS

SENSITIVE
SIPDIS

STATE FOR D, P, EAP/MLS, S/WCI, DRL, DRL/ILCSR--MITTELHAUSER,
EEB/TPP/ABT--CLEMENTS
STATE PLEASE PASS TO USTR FOR BISBEE AND WEISEL
BANGKOK FOR USAID--KISSINGER, FCS--BACHER
HANOI FOR FCS--NAY
HO CHI MINH CITY FOR FCS--MARCHAK AND LE
COMMERCE FOR ITA/OTEXA--D'ANDREA, ITA/MAC--MIKALIS
LABOR FOR LI

E.O. 12958: N/A
TAGS: PHUM PGOV ECON ELAB CB CM VN
SUBJECT: CIVIL SOCIETY LEADERS TOUT MEASURED PROGRESS, HIGHLIGHT
CONCERNS IN MEETINGS WITH DAS MARCIEL

REF: A. PHNOM PENH 74

B. PHNOM PENH 95
C. PHNOM PENH 97

1. (U) Sensitive but unclassified. Not for internet distribution.

2. (SBU) Summary: Civil society leaders presented a "glass half
full" picture of Cambodian progress on a variety of political,
economic, and human rights issues to Deputy Assistant Secretary Scot
Marciel during his January 16-18 trip to Cambodia. Political
violence and voter intimidation have declined over previous years,
but election-watchers fear new, more sophisticated forms of
tampering. (Apparently they haven't told opposition leader Sam
Rainsy, who remarked on growing political openness and described his
party as having good prospects in the July national elections during
a separate meeting.) Khmer Rouge Tribunal (KRT) prosecutor Robert
Petit declared the KRT is capable of delivering a "pretty good
measure of justice," while economic and business leaders predicted
that Cambodia's economic growth would continue--though perhaps at
six to seven percent per year rather than its current breakneck
double digit rate. Human rights leaders were the most downbeat,
highlighting land disputes, the growing gap between rich and poor,
and NGO self-censorship as continuing, serious human rights
concerns. End Summary.

Elections: Overt Intimidation Declines, but Concerns about New
Forms of Electoral Fraud
--------------------------------------------- ----------

3. (SBU) The DCM hosted a dinner of civil society and NGO groups
focused on the elections, including the directors of the Neutral and
Impartial Committee for Free and Fair Elections (NICFEC) and the
Committee for Free and Fair Elections in Cambodia (COMFREL). The
group acknowledged that violence and intimidation had decreased and
the political climate for elections seemed to have improved;
however, they expressed concerns about new, more sophisticated forms
of electoral fraud such as a "white finger campaign" to pay voters
not to vote. (NOTE: Since such non-voters would not have dipped
their fingers in the India ink used to avoid duplicate voting, the
party paying for the favor would know with certainty that they had
lived up to their agreement, versus uncertain knowledge associated
with vote-buying which cannot be verified in a secret ballot. END
NOTE.)

4. (SBU) Two systemic electoral problems mentioned were lack of
equal access to resources and media and the need for an independent
institution to deal with complaints. National Election Committee
(NEC) member Em Sopath defended his institution, saying new draft
regulations were being circulated to NGOs for comment. But UNDP
election project manager Aamir Arain noted that even with the legal
right to manage the election, the NEC had no effective control over
certain aspects. He gave as an example the role given to village
and commune chiefs to submit names for the Form 1025 voter roll
deletion list, now standing at about 580,000 (after some 70,000
names were restored to full voting rights through a complaints
mechanism). The local officials, largely from the CPP, appeared to
be able to act regardless of NEC regulations stipulating the need
for evidence to delete a name. Others such as NICFEC's Koul Panha
cited close observation by the CPP at the grassroots as a form of
quiet intimidation, but could cite no more evidence than stories of
village-based CPP groups who keep watch on the political activities
of local residents. When asked by DAS Marciel to identify a clear
set of benchmarks that would make for a free and fair election, the
group began to name a few--such as media access--but did not provide
a full or comprehensive list.

Sam Rainsy: Upbeat on Election Prospects, US-Cambodia Relationship
--------------------------------------------- ----------

5. (SBU) In a luncheon meeting January 18 hosted by the
Ambassador, opposition party leader Sam Rainsy was joined by MPs
Tioulong Saumura and Son Chhay in giving DAS Marciel an upbeat
assessment of the political climate, noting Sam Rainsy Party's good
prospects in the July elections. Cambodia is moving in the right
direction, said Rainsy. Three interconnected factors were part of a
more positive situation: stronger relations between the United
States and Cambodia; less violence; and the deterioration of other
political parties, leaving the field to the CPP and SRP. "FUNCINPEC
is finished," he said. Rainsy urged the U.S. to use its new

PHNOM PENH 00000103 002 OF 004


influence to help ensure free and fair elections without violence.
He did not see much benefit in forming a coalition with the Human
Rights Party at this time but saw some possibilities of joining with
the CPP in a new government after the election: it depends on what
changes CPP will make and is willing to make, he said, and on what
it offers to SRP to fulfill its election platform.

6. (SBU) On the SRP "message" he noted jobs, high prices, and free
health care were at the core of the platform. Health care would be
paid for with money returned to the government coffers that had
previously been mis-spent. Rainsy also recounted a speech he gave
that morning praising Hun Sen for his willingness to recognize the
legitimate winner of the July elections, and the efforts he would
make to be a good caretaker during a turnover. This was evidence
that the CPP was beginning to understand what a liberal democratic
environment was, Rainsy noted. While problems remained--from the
need for more open debate in parliament to intolerance for protests
and free speech-- the SRP leader exuded confidence in his party's
chances in the July elections and general approval of the U.S.
bilateral relationship as it affected the political climate.

Human Rights Leaders Highlight Land Disputes, Growing Income Gap,
Political Freedoms, and Prison Labor
--------------------------------------------- ----------

7. (SBU) DAS Marciel, in a meeting with human rights leaders in
Cambodia, had a wide-ranging discussion that touched on the topics
of land, poverty, political freedom and labor. Participants
stressed that land conflict cases were one of the most pressing
issues facing Cambodia today. They asserted that the current land
law was good but that implementation of it was poor, resulting in
few opportunities for just resolution in the courts. While
discussing the historic and legal causes of today's contentious land
issues, human rights leaders emphasized the sensitive role that
foreign companies, particularly Chinese and Vietnamese, play in
fueling the conflict due to the economic land concessions that they
receive, which also have a serious impact on the environment. DAS
Marciel acknowledged the significance of the land issues and
emphasized that he had already raised the subject a number of times
during his visit.

8. (SBU) Yeng Virak of Community Legal Education Center voiced his
concern over the current attitude of growth at all costs in which he
sees the poor becoming poorer and vulnerable people losing, which
could have an impact on stability. When asked about statistics that
indicate economic growth is pulling more Cambodians out of poverty,
human rights leaders admitted that it was difficult to know with
certainty the overall impact but they felt confident that those who
were already poor were becoming more impoverished. One participant
noted that the chasm was becoming wider between the rich and poor.
Another felt that the looming oil and gas profits could also have a
negative impact on poverty levels as the possible "resource curse"
could lead to greater corruption.

9. (SBU) DAS Marciel's question about the political space in which
human rights organizations have to operate touched off an
interesting discussion. Theary Seng of Center for Social
Development underscored the chilling effect that events of two years
ago continue to have on human rights organizations, with most still
uncomfortable testing to see if political space has, in fact, opened
up. Naly Pilorge of LICADHO opined that the RGC only tolerated
human rights organizations because of the need for international
recognition.

10. (SBU) Pilorge also raised reports of incarcerated individuals
in two prisons being used to cut fabric for garment factories.
(Note: Licadho monitors 18 prisons. Pilorge did not name the two
prisons where these alleged abuses are occurring. End Note.) While
LICADHO is still investigating the allegations, there is information
to indicate that this is occurring and that there is neither consent
from the prisoners, nor any benefits being provided to them for
their labor. Pilorge assured DAS Marciel that she would keep the
USG informed of any further findings.

Khmer Rouge Principals: KRT Can Deliver "A Pretty Good Measure of
Justice"
--------------------------------------------- ----------
11. (SBU) Khmer Rouge Tribunal (KRT) Co-Investigating Prosecutor
Robert Petit and Defense Unit Head Rupert Skilbeck briefed DAS

PHNOM PENH 00000103 003 OF 004


Marciel and the Ambassador on developments in the KRT, covering many
of the same topics they reviewed with Staffdel Grove earlier in the
week (Ref A). They noted in context that the Cambodian system of
justice was problematic but that systems in the KRT had been
established to deliver what Petit called a "pretty good measure of
justice." Petit added that there may be more persons prosecuted
than the initial five KR leaders now in custody. Skilbeck said that
the KRT structures so far seemed to be working and there would
possibly be a vigorous defense, but the "crunch time" had not yet
come to fully test the court's internal rules. Skilbeck said that
corruption seemed to have stopped in the form of kickbacks, but in
some cases, voluntary payments might still be made. Petit noted the
work of this court, like that of other war crimes tribunals, was not
easy, never pretty, but they could get the job done. Petit said the
court could only accomplish its goals with sufficient financial
support.

12. (SBU) Both Petit and Skilbeck supported the appointment of a
Special Advisor to the UNSYG who would focus on court management and
administrative issues (including corruption) over the next nine
months. That person would need to have a leadership role and be
physically located in Phnom Penh for some time, they noted.

Strong Economic Growth, but Many Obstacles to Sustainability
--------------------------------------------- ----------

13. (U) In a roundtable discussion with a diverse group of industry
and economic development representatives, participants agreed that
the current growth rate, averaging nine percent per year since 2000,
is the result of renewed political stability and regional economic
growth. Representatives from the banking, legal, and garment
sectors said that investors are now starting to perceive less risk,
resulting in dramatic increases in foreign direct investment. Dr.
Hang Chuon Naron, Secretary General the Supreme National Economic
Council, noted that the National Bank's dollar reserves are higher
than ever, increasing more during the last year than the previous
ten years. Furthermore, savings deposits are growing at 70 percent
per year. IMF Resident Representative John Nelmes pointed out that
current macro-economic conditions, including inflation rates and
balance of payments, are also favorable.

14. (SBU) However, all eight participants agreed that growth is
unlikely to continue at the same high rate, with the IMF predicting
six to seven percent growth in the years to come. Cambodia is
starting from a very low base, which makes high growth easier to
achieve in the early years, Nelmes noted. Michael Stephen, a banker
and American-Cambodian Business Association board member, explained
that the lack of diversification makes Cambodia's economy fragile.
Garments and tourism, the foremost economic drivers, are susceptible
to international markets and global economic trends. Dr. Naron
projected that it would take another ten years for the economy to
diversify away from these two economic mainstays. He also noted
that new investors are fueling a real estate bubble. Double and
triple digit returns from fast appreciating properties are
attracting investment away from sectors that will support long-term
growth, such as agriculture.

15. (SBU) In response to DAS Marciel's question about the factors
inhibiting future economic growth, the representatives responded
with a number of challenges. In the immediate future, the falling
dollar will hurt Cambodia's dollarized economy and the impact will
be further aggravated by rising fuel and food prices. The
representatives also listed a number of challenges to long-term
growth: growing inequity, an inadequate education system, unreliable
infrastructure, corruption, and the lack of an independent
judiciary. Brett Scarioni, lawyer and American-Cambodian Business
Association President, described how companies must seek dispute
resolution in Singapore or Hong Kong, where there is less corruption
and systems are more transparent and impartial. Van Sou Ieng,
Executive Director of the Garment Manufacturers Association of
Cambodia, explained that the garment sector is currently restricted
to low value cut-and-sew operations because electricity costs are
too high. With utility rates two to three times higher than its
neighbors, Cambodia is unable to advance into more capital intensive
manufacturing, like textiles and electronics. The economics and
business leaders gathered increasingly view Vietnam as Cambodia's
biggest competitor. Vietnam's entrance into the WTO is likely to
result in many investors passing over Cambodia for Vietnam's more
highly educated workforce, lower electricity costs and more reliable

PHNOM PENH 00000103 004 OF 004


infrastructure.

Comment
-------

16. (SBU) Cambodia's civil society presented a largely upbeat, but
not unflawed, picture of Cambodian political and economic progress.
Just as the KRT Prosecutor said that the institution could deliver
"a pretty good measure of justice," in other arenas, Marciel heard
that Cambodia is achieving "pretty good development." Voter
intimidation and political violence have declined, the leading
opposition party feels confident about the future and is
complimenting the Prime Minister, and economic leaders predict that
while Cambodia's growth may slow, it will remain at an enviable six
to seven percent. Nonetheless, real concerns exist and should be
taken seriously: new forms of electoral fraud; land disputes and
NGO self-censorship; growing income disparity; and poor
infrastructure, low human capacity, and corruption hampering
Cambodia's future economic growth. End comment.

17. (U) DAS Marciel did not have the opportunity to clear this
cable.

MUSSOMELI

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