Cablegate: Cambodian View of Asean-China Commemorative Summit

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DE RUEHPF #2096/01 3321106
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FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7648
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2417
RUEHBS/AMEMBASSY BRUSSELS PRIORITY 0055
RUEHKO/AMEMBASSY TOKYO PRIORITY 3108
RUCNDT/USMISSION USUN NEW YORK PRIORITY 2202

C O N F I D E N T I A L SECTION 01 OF 02 PHNOM PENH 002096

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STATE FOR EAP/MLS

E.O. 12958: DECL: 11/20/2016
TAGS: PREL ASEAN EAID CB CH
SUBJECT: CAMBODIAN VIEW OF ASEAN-CHINA COMMEMORATIVE SUMMIT

Classified By: Pol/Econ Chief Margaret McKean; Reason 1.4 (b) (d)

1. (C) Summary. According to a senior MFA official, the
ASEAN-China Commemorative Summit held in Nanning, China on
October 30 underscored ASEAN's desire for greater Chinese
trade and development assistance. However, ASEAN reportedly
remains unimpressed with the level of assistance/loans
offered by the Chinese, and considers Japan a more generous
partner. During the PM's bilateral visit, the PM reportedly
received a Chinese commitment for an additional USD 100
million in loans to finish a number of infrastructure
projects. The MFA official noted that non-APEC participation
by ASEAN members Cambodia and Laos in an ASEAN meeting on the
margins of the recent APEC Summit in Hanoi was discussed in
Nanning, but there had been no ASEAN consensus so Cambodia
was left out. FM Hor Namhong plans to raise the issue of
Cambodia being held hostage to Burma among the ASEAN FMs
during their February 2007 retreat. End Summary.

Fifteen Years of China-ASEAN Cooperation
----------------------------------------

2. (C) During a November 22 meeting with MFA Secretary of
State for ASEAN affairs Kao Kim Hourn, the MFA official
described the ASEAN-China Commemorative Summit as useful but
not entirely satisfactory. The meeting on October 30 yielded
little in the way of new results and new financial
initiatives from the Chinese. The Chinese agreed to a USD 1
million contribution to the ASEAN Development Fund (ADF), and
USD 1 million for Initiative for ASEAN Integration (IAI)
projects, which will provide training opportunities in China.
Kao Kim Hourn noted that USD 1 million will not train that
many people, and compared the small amount donated by the
Chinese with their more generous announcement in subsequent
days at the China-Africa Cooperation Forum, where the Chinese
promised to double their assistance to the Continent. The
MFA Secretary of State offered that ASEAN views Japan as a
more generous partner than the Chinese, and dismissed the
oft-heard claim that China offers its assistance without
strings attached. "The Chinese always expect something in
return," he observed.

3. (C) ASEAN would like to see more trade and investment
from the Chinese within ASEAN, particularly the newer members
of ASEAN such as Cambodia, said Kao Kim Hourn. At present,
there is a strong trade and investment imbalance between
China and ASEAN, he pointed out. China expects ASEAN to
provide ready markets for its goods, but does little to help
promote export industries within Cambodia so that the country
can export goods to China. Nor is the Chinese market easy to
penetrate, he noted, although China wants free access to
Cambodian consumers to buy Chinese goods. In addition,
Chinese loans to Cambodia are simply low-cost, preferential
loans to Chinese companies so that China can extract
resources for export to Chinese manufacturers, he added. On
the plus side, the MFA official said that the ASEAN-China
Expo in Nanning is to be a permanent trade exhibition, and a
number of prominent Cambodian business officials participated
in the trade show.

4. (C) One area of concern to Cambodia is the future work
of those groups (Mekong River Basin development, Greater
Mekong Subsystem) collaborating on Mekong River issues, and
focusing more on water availability. Kao Kim Hourn mentioned
the need for a computer modeling project that would analyze
water flow rates depending on varying levels of rainfall as
well as the impact of China's dams on water levels. He asked
if the USG could provide assistance through the Asian
Development Bank (ADB) or USAID to assist in a computer
modeling study. The MFA official offered that no one wants
to confront China on the realities of its upstream dam
projects on downstream countries like Cambodia, but an
independent project might provide the basis for constructive
engagement.

Burma
-----

5. (C) When asked if Cambodian and Laotian participation in
the ASEAN meeting on the margins of the APEC Summit in Hanoi
had come up, Kao Kim Hourn replied affirmatively. He noted
that although the meeting only lasted one day, the subject
was raised "informally," and China, Burma, and Laos opposed
any ASEAN meeting that did not include Burma. Absent clear
ASEAN consensus and not wishing to go against their ASEAN
dialogue partner (China), he continued, Vietnam and Singapore
supported confining the meeting to those ASEAN leaders who

PHNOM PENH 00002096 002 OF 002

are already members of APEC. The PM was not happy at the
outcome, said the MFA official, and FM Hor Namhong will raise
the issue during the ASEAN FM's retreat in February 2007.
The PM does not want Cambodia to be held hostage to Burma;
Laos can opt not to participate but it should not preclude
Cambodia from attending meetings, said Kao Kim Hourn. The
MFA official underscored the PM's continued strong interest
in seeing ASEAN take a tougher stance against Burmese
intransigence towards democratic reforms.

Bilateral Discussions
---------------------

6. (C) Following the ASEAN-China meetings, PM Hun Sen and
the Cambodian delegation held bilateral talks, and the
Chinese reportedly acceded to the PM's request for an
additional USD 100 million in loans to finish a number of
infrastructure projects, which have run out of money and will
be incomplete without a further infusion of funds. The
Cambodian side also discussed with the Chinese and received
tentative support for a rail line project linking Phnom Penh
with Sihanoukville. The Cambodian government also agreed to
open two other consulates in China.

Comment
-------

7. (C) Kao Kim Hourn is a strong advocate for ASEAN, having
developed expertise in the organization through his own
academic research on ASEAN. He is a Chinese realist and
recognizes that Cambodia has much to gain from China, but
also believes that Japan and the United States are useful
counterweights to Chinese influence in Southeast Asia. In
describing the decision to exclude Cambodia from the ASEAN
meeting in Hanoi, he indicated that ASEAN unwillingness to
exclude Burma (nudged along by China) was the culprit. End
Comment.
MUSSOMELI

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