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Cablegate: Codel Faleomavaega Discusses Debt, Trade And

VZCZCXRO1607
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0031/01 0190915
ZNY CCCCC ZZH
P 190915Z JAN 10
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHINGTON DC PRIORITY
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2602
RUEATRS/TREASURY DEPT WASHDC PRIORITY 0045

C O N F I D E N T I A L SECTION 01 OF 03 PHNOM PENH 000031

SIPDIS

STATE FOR EAP/MLS AND EEB/IFD/OMA

E.O. 12958: DECL: 01/15/2020
TAGS: PREL EFIN ETRD PHUM SCUL KJUS KDEM EAID CH CB
SUBJECT: CODEL FALEOMAVAEGA DISCUSSES DEBT, TRADE AND
FUTURE RELATIONS WITH CAMBODIAN LEADERSHIP

Classified By: DCM Theodore Allegra for Reasons 1.4 (b) and (d).

1. (C) Summary: Following a day in Siem Reap and after
attending festivities to mark the 31st anniversary of the
January 7 Khmer Rouge "victory" commemoration, Congressman
Eni Faleomavaega met with Cambodian Prime Minister Hun Sen
and later with Deputy Prime Ministers Hor Namhong and Keat
Chhon to discuss U.S.-Cambodia relations. Affirming that
relations have strengthened over the years, both sides
acknowledged that challenges and misunderstandings remain.
PM Hun Sen described Cambodia's USD 162 million debt to the
U.S. (approximately USD 352 million with arrears) as a
sensitive political topic in Cambodia, and urged the United
States to "take a humanitarian view of the issue." Both
Deputy Prime Ministers reiterated the request on debt
recycling, with DPM Keat Chhon noting public opinion favored
debt forgiveness. Commerce Minister Cham Prasidh made a
pitch for duty-free access to the U.S. for Cambodian garments
made under a good labor regime. Faleomavaega stated that he
is committed to looking into the debt further, and indicated
that he would emphasize to his colleagues in Washington the
need to reinvest the debt into areas such as education and
child welfare. The CODEL also acknowledged that there is
merit to Cambodia being considered on the same footing as
AGOA countries on garments. PM Hun Sen stated that President
Obama's participation at the ASEAN summit was positive for
regional relations. Bilaterally, Hun Sen expressed
appreciation for American assistance in the areas of health,
demining, the Khmer Rouge Tribunal (KRT), and education,
specifically praising the Peace Corps program. Noting that
there is no stopping China, DPM Hor Namhong stressed the
importance of the U.S. presence in Asia and praised President
Obama's new vision and enhanced engagement in the region.
End Summary.

PM Hun Sen Requests Debt Assistance
-----------------------------------

2. (C) Acknowledging that the debt to the U.S. is a "state
inheritance which we have to recognize," PM Hun Sen indicated
that the debt incurred by the Lon Nol regime in the 1970's is
not only about money, but is also a sensitive political
issue. PM Hun Sen compared the Cambodian government's
predicament to that of being "squeezed by pliers - on the one
side is the U.S. (the owner of the debt), and on the other
side are the victims of a coup supported by the U.S." Had
the money been used to build bridges, PM Hun Sen stated he
could rationalize to the people the need to repay it.
However, since it was used to "support a regime with
disastrous results," asking approval from the National
Assembly and the people to repay it would be a "real
political risk." Instead, he requested that the U.S.
consider the debt repayment be returned to Cambodia through
development aid as "medicine to heal the wound rather than a
stick to stir it." Congressmen Faleomavaega and accompanying
Representatives Mike Honda and Joseph Cao agreed to discuss
the issue with their colleagues in Washington and stated that
they believe the best outcome would be one in which the money
is used to benefit Cambodians, especially the youth, in areas
such as education and global warming.

Challenges and Successes
------------------------

3. (C) Indicating that he intended to "not speak
diplomatically" but to "speak the truth," PM Hun Sen asked,
"Why is it so hard to be a friend to America?" He stated
that it is not Cambodians who misunderstand the U.S., but
that some politicians in America wear "glasses that distort
the picture" of Cambodia. Although America previously
dropped bombs on Cambodia, PM Hun Sen pointed out that
Cambodia has provided assistance to the U.S. in the area of
accounting for MIA soldiers since 1983, before diplomatic
relations were established. Congressman Honda agreed that
the U.S. has an obligation to clear explosive remnants of
war, and indicated he will push for and support programs
which will leave the land free from danger.

4. (C) PM Hun Sen praised the recent improvement in SE
Asia-U.S. relations, indicating that President Obama's first
participation in ASEAN was a "very positive sign" for the
region. He stated that he respects the new policy toward
Burma, which previously had been an obstacle to improved
relations. PM Hun Sen then expressed his pleasure at the
growth in relations between the U.S. and Cambodia over the
past decade in the areas of health, education, support for
the Khmer Rouge Tribunal (KRT), and demining. He highlighted
the good work of the Peace Corps volunteers, a program which

PHNOM PENH 00000031 002 OF 003


both Congressman Faleomavaega and Honda stated they would
like to see increased. PM Hun Sen relayed that five of his
children (including spouses), and five of his grandchildren
have been educated in the U.S. and believed relations could
be strengthened even further if more Cambodians could be
educated in the United States. The meeting ended on a high
note, with PM Hun Sen and the Congressmen agreeing that the
focus should be on the youth - to rely on the younger
generation of Americans and Cambodians to study together and
know one another so they are "not conservative like us."

Hor Namhong Hosts Lunch with Commerce, Finance Ministers
--------------------------------------------- -----------

5. (SBU) Chairman Faleomavaega summarized the delegation's
discussion of the bilateral debt with the Prime Minister
during a luncheon hosted by Deputy Prime Minister and
Minister of Foreign Affairs and International Cooperation Hor
Namhong, which also included Deputy Prime Minister and
Minister of Economy and Finance Keat Chhon, and Senior
Minister and Minister of Commerce Cham Prasidh among others.
DPM Keat Chhon explained that Cambodian public opinion used
to support the idea of recycling debt payments for assistance
programs in Cambodia but had changed recently in favor of
debt forgiveness. DPM Hor Namhong informed the delegation
that Cambodia's other creditors, including China and the IMF,
have written off its debts -- only the U.S. and Russia have
yet to do so. All three officials stressed that Cambodia has
not made an issue of the millions of tons of U.S. bombs
dropped on Cambodian during the U.S. war with Vietnam nor
ever requested war repatriations from any country. The
delegation noted the need to think of comprehensive and
complex solutions to resolve the long-standing debt issue and
reiterated their willingness to work with their colleagues in
Congress and with the administration to take measures to find
a solution.

6. (SBU) Senior Minister Cham Prasidh highlighted the
importance of trade with the U.S., particularly garment
exports, to the growth of the country's economy and appealed
to the delegation to support the TRADE Act to place Asian
Least Developed Counties (LDCs) on the same footing as their
African counterparts. (NOTE: The TRADE ACT would extend
preferential market access enjoyed by the African Growth and
Opportunity Act (AGOA) countries to 14 non-African LDCs by
eliminating tariffs on a range of products, including
garments and apparel. End Note.) Cham Prasidh complained
about the disproportionate tax burden on Cambodian exports to
the U.S., explaining that the roughly USD 450 million per
year in duty assessed on USD 2.5 billion in garment exports
is the equivalent amount paid by both the UK and France (the
latter enjoys USD 6 billion in trade volume). He noted that
despite his years of lobbying to gain support for the bill
and for expansion of the Generalized System of Preferences
(GSP) to include garments and textiles, strong opposition to
the bill came from the AGOA countries -- which he averred
lobbied the Black Caucus in Congress -- together which, he
surmised, fear that duty free access for additional LDCs
might erode AGOA countries' market share, and from the unions
in the U.S. who fear such preferential treatment would affect
U.S. jobs. Chairman Faleomavaega suggested that the Asia
Pacific Caucus in Congress could engage the Black Caucus to
educate its members on the limited impact on the AGOA
beneficiaries of extending duty free access to other LDC's.
Representative Honda suggested that in addition to lobbying
members of Congress on the bill, the RGC should engage the
unions in the U.S. to educate them on the improbability of
the bill's impact on U.S. jobs.

7. (C) When asked by Chairmen Faleomavaega about the rising
influence of China in the region, DPM Hor Namhong replied
that China's rise is inevitable and that the best way to cope
with this future is to cooperate with China. He noted that
China benefits from a large population, a robust economy, a
strong army, and significant foreign reserves. He stated
that once China acquires superior technology, particularly in
the area of advanced military technology, it could become the
first superpower; "no one can stop China" he concluded.
Senior Minister Cham Prasidh said not to blame Cambodia if
they accept assistance from China, "if there is only one big
guy offering support, we'll take it," and quipped that if
China provides Cambodia with USD 200 million, the U.S. should
match funds. But Hor Namhong also stressed the need for the
presence of the U.S. in the Asia region to balance China's
growing influence and expressed his appreciation of President
Obama's new vision and enhanced engagement in the region.
The Chairman replied that the U.S. views China as a partner,
not a threat, with whom we share common issues that require

PHNOM PENH 00000031 003 OF 003


joint cooperation to resolve. Representative Cao stressed
the need for the U.S. to be more involved in Asia.

Treatment of Uighur Deportees
-----------------------------

8. (C) Congressman Faleomavaega raised with DPM Hor Namhong
the summary deportation of 20 Uighur asylum seekers to China
under apparent Chinese pressure, including what appeared to
some to be the possible withholding of $1.2 billion in
assistance. Noting the potential for some of these deportees
to be tortured or executed in China, he urged the Royal
Cambodian Government take steps to ensure with China the
deported Uighurs would be treated humanely. During this
brief aside near the conclusion of the meeting there was no
Cambodian response.

Meeting with Opposition Party Leaders
-------------------------------------

9. (SBU) In a brief meeting with opposition leaders, all
three members of the CODEL expressed their desire to see the
Human Rights Party and the Sam Rainsy Party join together in
a unified opposition coalition. Chairman Faleomavaega
asserted that if the combined opposition controlled 30
percent of the vote it was detrimental to "splinter" because
that made it difficult for the people to know what the
opposition stood for. HRP President Kem Sokha welcomed the
delegation to Cambodia noting that they could now see for
themselves the challenges in Cambodia with "power in the
hands of one group." The CODEL reminded the veteran
opposition politicians that in any competitive democratic
environment the party in power always had advantages, which
the minority party tried to overcome. MP's Tioulong Saumura
and Yim Sovann spoke for the SRP, noting Cambodia's heavy
corruption and violations of human rights. Noting lack of
media access, Representative Honda said that challengers
often had the same complaint in the U.S. system but they
still went out to educate the electorate, to "get in touch,"
and ultimately to increase their electoral share and triumph.
While the CODEL members recognized Cambodia's political
flaws and the challenges faced by opposition parties, they
agreed with Representative Cao's earnest appeal to the
opposition to formulate a coherent plan and act on it with
the goal of increasing the electoral base and representing
their constituents in the government.

U.S. Presence in Siem Reap Projects
-----------------------------------

10. (SBU) During their first stop in Siem Reap, the CODEL
visited the Phnom Bakheng preservation project which is
funded by a $1.5 million grant through the Ambassador's Fund
for Cultural Preservation. The World Monuments Fund is
managing the project, a complex stone-by-stone waterproofing
and rebuilding exercise, and its local representatives
briefed the Congressmen on the status of these efforts, the
history of the temple and its significance to Khmer history.
The delegation dined with Siem Reap Governor Sou Phirin and
MFA Secretary of State Ouch Borith and discussed Siem Reap's
tourism based economy. The governor noted the strongly
cyclical nature of the tourism economy and presented the
challenges he faced in raising one of Cambodia's most
impoverished provinces to a higher level. The group also
toured other U.S. funded initiatives at the Angkor Wat
complex before departing for Phnom Penh.

11. (C) COMMENT: The CODEL's candid and engaging style and
its composition, according to Chairman Faleomavaega, as "the
first CODEL composed entirely of Asian American congressmen,"
reflected its very personal approach to the Cambodian
leadership. The fact that Chairman Faleomavaega had
previously visited Cambodia was a plus in this context, as
many of his interlocutors warmly welcomed his return. The
CODEL was also open to candid and compelling discussions on
debt and trade, two core issues for the Cambodians which
require U.S. Congressional consideration. The CODEL left
with more concrete ideas about the desires of the Cambodian
leadership on both debt and trade, and how the Congress might
work with the Department to meet those needs while serving
U.S. national interests. And the Cambodians were left with
high expectations that the CODEL would seek to deliver on
debt in 2010.

12. (U) CODEL Faleomavaega did not have the opportunity to
clear this cable.
RODLEY

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