Cablegate: Scenesetter for the Visit of Codel Faleomavaega To

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INFO RUEHHI/AMEMBASSY HANOI PRIORITY 4112
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RUEHHM/AMCONSUL HO CHI MINH PRIORITY 0158
RUCNDT/USMISSION USUN NEW YORK PRIORITY 2420
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UNCLAS SECTION 01 OF 05 PHNOM PENH 000969

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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

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