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10PHNOMPENH103 DAS MARCIEL REVIEWS U.S. POLICY WITH GOVERNMENT, OPPOSITION, CIVIL SOCIETY

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“248568”,”2/12/2010 10:19″,”10PHNOMPENH103″,

“Embassy Phnom Penh”,”CONFIDENTIAL”,

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RHHMUNA/USPACOM HONOLULU HI PRIORITY”,

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PHNOM PENH 000103

 

SIPDIS

 

STATE FOR EAP/MLS

 

E.O. 12958: DECL: 02/10/2020

TAGS: PREL, PGOV, PBTS, MARR, TH, CB

SUBJECT: DAS MARCIEL REVIEWS U.S. POLICY WITH GOVERNMENT,

OPPOSITION, CIVIL SOCIETY

 

REF: A. PHNOM PENH 89 (ICC)

B. 09 PHNOM PENH 960 (UIGHURS)

 

Classified By: AMBASSADOR CAROL A. RODLEY FOR REASONS 1.4 (B, D)

 

1. (SBU) SUMMARY. In a wide range of meetings with Cambodian

officials, opposition party members, NGOs and civil society,

Deputy Assistant Secretary for East Asian and Pacific Affairs

Scot Marciel spotlighted stepped-up engagement by the United

States in Cambodia while highlighting specific issues such as

the Uighur deportation, bilateral debt, Preah Vihear, the

Anti-Corruption Law, and resolution of the Cambodian-Thai

border dispute. Both DPM Sok An and FM Hor Namhong renewed

the Cambodian commitment to settle the dispute with Thailand

peacefully. Sok An detailed Cambodian claims to the Preah

Vihear temple area, and Hor Namhong expressed appreciation

for increased U.S. participation in the region, including the

Lower Mekong Initiative. He also extended an invitation for

the Secretary to visit on the occasion of the 60th

anniversary of diplomatic relations in July. Economic

experts highlighted concerns about sustainable economic

growth and macroeconomic stability, particularly in light of

the expected closure of the IMF office in Cambodia this year.

Opposition parliamentarians were less downbeat about

identified deficiencies in Cambodia\’s tighter political

space, and more deliberate in identifying actions they could

take to improve the situation. In meetings with civil

society, the Uighurs, Sam Rainsy\’s conviction, and a proposed

NGO law figured prominently. DAS Marciel spoke on U.S.

foreign policy in the region to 400 university students, who,

in a spirited exchange, demonstrated that Cambodia\’s youth is

a vibrant reminder of the promise of Cambodia\’s future. END

SUMMARY.

 

Debt and Impact of Uighur Decision

———————————-

 

2. (C) Deputy Prime Minister and Minister of Foreign Affairs

Hor Namhong reiterated his request to Secretary Clinton to

reschedule bilateral debt, suggesting now that 70% of the

debt be diverted to development assistance and that 30% would

be repaid. DAS Marciel outlined the legal obstacles to debt

forgiveness, and indicated that the process was complicated

further by Cambodia\’s recent decision to deport 20 Uighur

asylum seekers to China (Ref B). Stating that there was

great concern in the administration and Congress regarding

the decision, DAS Marciel maintained that the question of

debt relief for Cambodia had become much more difficult as a

result, since the deportation raised questions about how

Cambodia will handle future asylum seekers. Hor Namhong

responded by stating that \”many factors\” were considered

prior to returning the Uighurs, but in the end, it was

determined that they were \”not refugees because there is no

war in China.\” Additionally, he claimed that the Uighurs\’

passage from China to Cambodia was orchestrated by an

organization in the U.S. and that if they were allowed to

stay, more would follow, creating a situation that Cambodia

is not equipped to handle.

 

ASEAN and the UN

—————-

 

3. (SBU) Stating that the U.S. is committed to building a

strong relationship with ASEAN, DAS Marciel noted that a

Resident Representative of the U.S. Ambassador for ASEAN

Affairs recently arrived in Jakarta to establish a Permanent

Mission. Hor Namhong stated that ASEAN is pleased about the

United State\’s increased interest in the region and declared

that there are only two alternatives for the next ASEAN-U.S.

summit – Vietnam or the United States. Noting that Asia is

moving in the right direction with closer cooperation,

increased trade, and enhanced security, Hor Namhong expressed

frustration that initiatives such as Australia\’s Asia Pacific

Community (APC) result in duplication of existing frameworks

such as that of APEC, ARF, EAS, and ASEAN. Hor Namhong

stated that Cambodia is supportive of U.S. participation in

existing communities, such as EAS, but indicated the timing

of the APC is not right nor is its role in the region clear.

(NOTE: Hor Namhong\’s comments on the APC echo similar public

statements made by Prime Minister Hun Sen in January. END

NOTE.)

 

4. (SBU) Hor Namhong then appealed to the U.S. for support of

Cambodia\’s 2012 bid to become a non-permanent member of the

UN Security Council in 2013, which has ASEAN\’s support.

Given its history of UN involvement, Cambodia is well placed

to sit on the Council and share knowledge with other members,

he urged. DAS Marciel responded that Cambodia\’s experiences

 

PHNOM PENH 00000103 002 OF 004

 

would certainly bring an important perspective to UNSC

deliberations.

 

Burma Elections in May?

———————–

 

5. (C) Expressing his appreciation of the new U.S. policy on

Burma, Hor Namhong indicated that Burma is interested in

working with the United States. and would like to join the

Lower Mekong Initiative. He stated that the Burmese FM told

the Cambodian Ambassador recently that elections will be held

in May 2010, and that ten political parties, including Aung

San Suu Kyi\’s, would be allowed to participate.

Additionally, the Burmese government has requested that ASEAN

send election observers. According to Hor Namhong, during a

closed-door meeting at the ASEAN summit, member nations urged

Burmese officials to hold credible and democratic elections.

Agreeing that the election would indeed be an opportunity for

progress, DAS Marciel expressed concern that opposition

leaders are unable to campaign and much work is required

before a truly free and fair election can be held.

 

Thailand and Image

——————–

 

6. (C) Given the recent verbal exchanges between Prime

Minister Hun Sen and Thai Prime Minister Abhist Vejjajiva,

DAS Marciel expressed concern that in addition to raising

tensions in the region, such combative public comments are

hurting both countries\’ international images and could

negatively impact tourism and investment. Hor Namhong stated

that Cambodia is committed to normalizing relations with

Thailand, that the \”Thaksin issue\” should be set aside, and

focus should instead be on solving the border dispute. He

further stated that \”Cambodia cannot accept Thailand\’s claim

to Cambodian territory, and Thailand won\’t withdraw the

claim, so the only way to settle is through legal means.\”

(Note: In recent speeches, PM Hun Sen has indicated a desire

to take the issue to the ICJ and the UNSC. End Note.)

 

Improved Bilateral Relations

—————————–

 

7. (SBU) The FM expressed appreciation for improved

U.S.-Cambodian relations during the last few years. He

specifically thanked the U.S. for support in the areas of

health, education, demining, economic development, and local

administration reforms. Hor Namhong also discussed the work

of a joint commission which is planning events to commemorate

the 60th anniversary of diplomatic relations between the U.S.

and Cambodia to include bilateral agreements, MOUs and

cultural programs. In that context, he extended an

invitation to Secretary of State Clinton to visit Cambodia in

July, when a series of bilateral agreements could be signed.

DAS Marciel credited the Cambodian government for increased

development of the country, thanked Cambodia for its support

in recent UNGA votes which were appreciated by the United

States, and congratulated the FM on his initiative to

position Cambodia as one of the first countries to associate

itself with the Copenhagen Accord.

 

Sok An: Up on Preah Vihear, Down on Thai \”Invasion\”

——————————————— ——

 

8. (SBU) Deputy Prime Minister and Minister of the Council

of Ministers Sok An highlighted recent successes with the

Khmer Rouge Tribunal (septel) and the extension of a Chevron

agreement to exploit oil and gas resources in the offshore

Block A in Cambodian territorial waters. On the

Cambodian-Vietnamese border demarcation process, Sok An noted

that it is possible the border line that is being drawn in

principle according to maps and agreed rules may cut through

the rice fields of both Cambodians and Vietnamese, who then

find themselves theoretically on the wrong side of the

border. \”We are seeking an appropriate solution,\” he stated.

Turning to the Thai border and drawing on a six-inch pile of

maps, documents, and brochures, Sok An gave a blow-by-blow

account of the inviolability of Cambodian claims to Preah

Vihear and the surrounding territory based on the 1962 ICJ

decision, the irreversibility of the 2008 UNESCO inscription

of Preah Vihear as a World Heritage Site, and the

indisputably uncooperative attitudes of the Thai by, among

other acts of arrogance and slights to Cambodia, invading

Cambodian sovereign territory on July 15, 2008.

 

9. (SBU) Sok An reviewed recent Cambodian achievements with

the Preah Vihear world heritage site development plan, noting

the construction of new access roads and an East-facing

 

PHNOM PENH 00000103 003 OF 004

 

staircase up the escarpment to the mountain temple. An

eco-village for 300 families who had been re-located was

already far along and a market at the foot of the temple

entrance re-designed. The RGC had already spent $99 million

in the area of Preah Vihear and around the border, he stated.

As an International Coordinating Committee (ICC) is formed

(Ref A), Cambodia is inviting the United States to join and

perhaps even co-chair the ICC, he said. When asked about the

UNESCO requirement that Thailand be invited to join the Preah

Vihear ICC, Sok An said that he was \”very reluctant\” to

include them. He noted first that this condition had been

imposed in early July, before the \”Thai invasion\” and,

secondly, the Thai behavior at a recent Angkor Wat ICC —

when a delegation packed with Thai MFA members did not want

to join in the technical preservation discussion but wanted

to raise political issues — had shown that the Thai could

not be trusted to make a positive contribution. DAS Marciel

said that the U.S. would look seriously at playing a role in

the Preah Vihear ICC, but urged the RGC to continue to work

together with Thailand to ease bilateral tensions.

 

Anti-Corruption Law

——————-

 

10. (SBU) DPM Sok An confirmed that the Council of Ministers

had recently transmitted to the National Assembly the draft

Anti-Corruption Law (ACL) for its consideration. Now that

the four basic laws related to civil and penal codes and

procedures were in place, and given an influx of a younger

cadre of judges capable of understanding these

inter-dependent laws, Sok An was confident that the

government was ready to work on an Anti-Corruption Law. He

said the RGC would build three pillars of support for a new

law: education, law enforcement, and mass support. The RGC

now realized the importance of mass support because, when a

case of corruption is brought against individuals, they \”do

everything to fight\” it, he said. He cited Hong Kong and

Singapore as the best models for Cambodia and noted that the

former RCAF headquarters compound would be transformed into

an Anti-Corruption Institute. Noting continued U.S. support

for an ACL, and remarking that any effort to tackle the

difficult issue of corruption must have the strong support of

the leadership, DAS Marciel noted the United States looked

forward to its passage.

 

Opposition Politics

——————-

 

11. (SBU) In a meeting with Sam Rainsy Party parliamentarians

Mu Sochua and Son Chhay and Human Rights Party MP Ou

Chanrith, DAS Marciel emphasized U.S. commitment to stepping

up its engagement with the Cambodian government to support

democracy, good governance, and the rule of law. While

initially predicting a dire future for democracy and a

diminished role for the opposition, the MPs still held out a

vision for their own role to reform institutions in Cambodia.

All three had clear proposals for future activities funded

by U.S. assistance: organize more voter forums at the local

level; assist with reform measures such as implementation of

an impending Anti-Corruption Law; support fair coverage of

the opposition in the mainstream media; and strengthen USG

support for \”alternative media\” such as RFA and VOA, which

give the opposition more balanced radio air time. Son Chhay

urged the USG to use its position of influence not just to

\”sweet talk\” the RGC but to advocate that it take more

seriously its human rights obligations. SRP Mu Sochua urged

the U.S. to review the \”quality of assistance\” in the

maternal health area so that aid dollars resulted in the

desired reduction of maternal mortality. (NOTE: At about 470

per 100,000 live births, Cambodia\’s maternal mortality rate

is among the highest in the region. END NOTE.) DAS Marciel

assured the opposition leaders that, in addition to paying

attention to issues they raised, the U.S. was concerned about

the political space in Cambodia and had bluntly raised those

concerns with the government.

 

The NGO Perspective

——————-

 

12. (SBU) Speculation about a proposed NGO Law dominated DAS

Marciel\’s discussion with civil society representatives about

the overall health of civil society in Cambodia. One

representative captured attention with his claim that \”there

is no civil society in Cambodia anymore,\” predicting that

Cambodia will soon become like Vietnam, where he believed the

government allowed NGOs to work on economic and development

issues, but prohibited advocacy. Most agreed that while

there are many NGOs providing services in Cambodia, the other

 

PHNOM PENH 00000103 004 OF 004

 

elements of civil society, particularly those that advocate

for government change — such as unions, journalists,

opposition parties, and advocacy organizations — are

operating in an increasingly challenging environment. They

voiced deep concern about a proposed NGO Law, and speculated

that the new law will require all NGOs currently operating in

Cambodia to re-register, presenting an opportunity for the

RGC to disapprove particular organizations it dislikes. The

independence and credibility of the judiciary also came under

attack when DAS Marciel raised the issue of Sam Rainsy\’s

conviction for incitement and property destruction.

Representatives criticized the government for using the

courts to settle its political scores, with once noting that

independent of the politics and legal questions involved, he

believed the court acted \”inappropriately\” in intervening in

the situation, and that courts \”should not be used as a tool

for silencing debate.\”

 

13. (SBU) Civil society representatives were also sharply

critical of the government\’s decision to deport 20 Uighurs in

December. Christophe Peschoux, the Representative of the UN

Office of the High Commissioner for Human Rights (UNOHCHR),

stated that mid-level officials in the RGC wanted to and were

prepared to adhere to Cambodia\’s commitments under the 1951

Refugee Convention, but were overruled by officials at the

highest level at the last minute. Peschoux noted that the

past system of refugee protection in Cambodia had been

effective, albeit with its \”ups and downs,\” but that the

Uighur deportation \”shattered\” this perception of efficacy

and credibility. He remarked that the Ministry of Interior

will have to take specific corrective actions in order to

regain the confidence of civil society. Other

representatives expressed disappointment in the role played

by the UN High Commission for Refugees (UNHCR), and agreed

that the presence and capability of UNHCR also needed review

and augmentation.

 

Cambodian Youth Inquisitive of U.S. Policy

——————————————

 

14. (SBU) DAS Marciel summarized U.S. foreign policy in the

ASEAN region and in Cambodia to a packed auditorium of 400

students at Pannasastra University. His remarks prompted a

slew of questions, with students curious to learn more about

the U.S. government\’s decision to enhance its engagement with

ASEAN and the U.S. role in addressing the challenges of

climate change. Several students sought DAS Marciel\’s candid

assessment of politics and democracy in Cambodia, revealing a

sophisticated understanding of the challenges to

strengthening democratic institutions in Cambodia and a

proactive style in addressing the issues of the day.

 

Economic Challenges Ahead

————————-

 

15. (SBU) Economic experts, including country directors from

the World Bank, IMF, and Asia Development Bank, explained

that Cambodia\’s narrowly-based economy contracted by

approximately 2 percent in 2009 as a result of the global

economic crisis, declining significantly from the remarkable

near 10 percent growth of the past decade. They described

Cambodia at a crossroads, with the path leading to

sustainable growth dependent on the leadership\’s ability to

make the right decisions on key policies affecting public

financial management and responsible use of its natural

resources. While acknowledging that investment in

infrastructure development and the agriculture sector is

necessary to diversify the economic base, they expressed

concern about the long-term cost of some development

assistance in these sectors. In particular, the IMF

representative stated that the terms of financing for the USD

1.3 billion in loans provided by China in 2008 and 2009,

primary for infrastructure development, are unclear, raising

significant concerns about Cambodia\’s debt sustainability.

The experts all agreed that the timing of the closure of the

IMF office in Cambodia (expected in April of this year) is

unfortunate, coinciding with significant macroeconomic

challenges facing the country, such as balance of payments

and sustainability of the debt, and urged the U.S. to

encourage the IMF to review its decision.

 

16. DAS Marciel did not have an opportunity to clear this

cable.

RODLEY

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Written by thaicables

July 22, 2011 at 9:47 am

10BANGKOK344 “LET THE MAGIC AMULET BREAK YOUR NECK” – THAILAND ABUZZ OVER HUN SEN’S LATEST HARSH RHETORIC

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“247938”,”2/9/2010 11:44″,”10BANGKOK344″,

“Embassy Bangkok”,”CONFIDENTIAL”,””,

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SIPDIS

 

STATE FOR EAP/MLS, NSC FOR WALTON

 

E.O. 12958: DECL: 02/09/2020

TAGS: PGOV, PREL, PREF, PHUM, SMIG, TH

SUBJECT: THAILAND: \”LET THE MAGIC AMULET BREAK YOUR NECK\” –

THAILAND ABUZZ OVER HUN SEN\’S LATEST HARSH RHETORIC

 

BANGKOK 00000344 001.2 OF 002

 

Classified By: Political Counselor George Kent, reason 1.4 (b,d)

 

1. (C) Summary. Thai refusal to allow Cambodia\’s Prime

Minister Hun Sen to bring armed soldiers to visit Ta Muen

Thom, border temple ruins long under Thai control, February 8

apparently led to Hun Sen\’s most recent scathing denunciation

of Thai PM Abhisit, with the colorful insults dominating Thai

media headlines February 9. Thai officials sought to avoid

escalating the rhetoric publicly. However, with Thai

attention increasingly on the potential for street unrest in

the lead-up to an expected February 26 Supreme Court decision

on fugitive former PM Thaksin\’s frozen assets, some contacts

told us that they suspected Hun Sen may have picked the

timing of the visit as a favor to Thaksin, whom he has

appointed as adviser to his government, to put additional

pressure on Abhisit. End summary.

 

Thai scramble in advance of Hun Sen\’s border traverse

——————————————— ——

 

2. (SBU) Thai officials went into crisis planning mode

starting February 4, in advance of Cambodian Prime Minister

Hun Sen\’s planned toured of hot spots along the Thai-Cambodia

border on February 6-8. PM Abhisit convened a rare night

executive session of the Thai National Security Council to

consider two issues: domestic security arrangements in

advance of expected red-shirt protests, and how to handle Hun

Sen\’s border traverse, in particular his request to visit

contested temple ruins at Ta Muen Thom, long under Thai

control accompanied by up to 20 armed military escorts.

Abhisit and the NSC directed an interagency team of military

commanders, local governors, and MFA officials to meet Hun

Sen February 6 and 7 near Preah Vihear temple and in the

so-called \”Emerald Triangle\” between Thailand, Laos, and

Cambodia. Royal Thai Armed Forces Border Division Commander

LTG Nipat Thonglek told us February 5 that Thailand would

reinforce the expected border visits locations with

additional troops to prevent any potential mischief-making.

 

3. (C) In the aftermath of the Preah Vihear visit, Si Sa Ket

Governor Rapi Phongbuphakit told us February 8 that he had

talked with Hun Sen for five minutes as a member of the Thai

delegation led by Second Area army Commander LTG Veerawit

Jornsumrit. Rapi said that Hun Sen had expressed his desire

to see the border situation return to normal and that he had

showed no interest in visiting the 4.6 square kilometers of

disputed territory adjacent to the temple. (Note: The

International Court of Justice ruled that Preah Vihear is

located in Cambodian territory in 1962; the decision did not

address the contested area adjacent to the temple, which is

claimed by both countries. End Note.)

 

Final leg canceled, Hun Sen blasts Abhisit, Thai media

——————————————— ———-

 

4. (SBU) Thai officials announced publicly that Hun Sen would

be welcome to visit the Ta Muen Thom ruins February 8, but

only as a tourist; he would not be allowed to bring 20 armed

military escorts. Colonel Thanet Wongcha-um, Chief of Staff

for the Suranaree Task Force that oversees the Thai side of

the disputed border, told us February 9 that Thai officials

had also advised Hun Sen not to visit the ruins due to the

presence of approximately 150 protesters from the People\’s

Alliance for Democracy, who were opposing Hun Sen\’s visit.

Hun Sen chose not to visit on those terms, Thai FM Kasit\’s

Secretary Chavanond Intarakomalyasut told the Thai media,

which reported that Hun Sen instead went to a village four

kilometers away to rename it after Ta Muen Thom. (note: Ta

Muen Thom temple is claimed by both nations but, unlike Preah

Vihear, the Thai military has maintained control over the

area around the temple for decades.)

 

5. (SBU) Thai headlines February 9 focused on Hun Sen\’s

subsequent harsh denunciation of the Abhisit government, with

DPM Suthep, also a target of Hun Sen\’s rhetoric, suggesting

to the Thai media that the outburst came as a result of Hun

Sen\’s aborted attempt to visit the runs. The speech as

reported in the media included a variety of insults and

curses directed towards Abhisit, with Hun Sen calling on

 

BANGKOK 00000344 002.2 OF 002

 

Abhisit to tell the truth about Thai troops in the area

around Preah Vihear or risk letting \”magic amulets break your

neck; may you be shot, be hit by a car, may you be shocked by

electricity, or shot by misfired guns.\”

 

6. (SBU) According to reports, Hun Sen also referred to

Abhisit as a \”power thief,\” \”crazy,\” and without \”family

honor\” for denying the Cambodian accusation that Thai troops

had invaded Cambodian territory in July 2008. Hun Sen also

lashed out at Thailand\’s two English language newspapers

distributed throughout mainland Southeast Asia, the Bangkok

Post and the Nation, for presenting what he claimed was false

information about his visit to the border areas and for

describing his visit as inappropriate.

 

Thai reaction cautious, with some private suspicions

——————————————— ——-

 

7. (SBU) RTG officials were quick to respond to Hun Sen\’s

reported statements, though they sought to calm the waters

February 9. FM Secretary Chavanond initially condemned Hun

Sen\’s comments, suggesting they would make it difficult for

Thailand to restore normal diplomatic relations with

Cambodia. However, Chavanond insisted that Thailand would

make every effort to avoid a conflict between the two

nations. Government Acting Spokesman Panitan told the media

February 9 that Thailand would not respond in kind to Hun

Sen\’s rhetoric, and that the international community could

draw its own conclusions. For his part, DPM Suthep said

Thailand would decline to respond to Hun Sen\’s allegation of

a Thai \”invasion\” of Cambodian territory, and told the media

he would not speculate about links between Hun Sen and

red-shirts calling for the downfall of the Abhisit government.

 

8. (C) Private commentary to us also downplayed the

possibility for an escalation of border tensions, though some

suspicions remained about potential links between Hun Sen,

Thaksin, and the upcoming red-shirt protests. XXXXXXXXXX

XXXXXX, a retired professor at Thammasat University, told

us that he believed that Thailand would not allow the dispute

to lead to a military conflict. Both XXXXXXXXXXX and

Senator Prasong shared their suspicion with us, however, that

former PM Thaksin had pushed Hun Sen to make this border

traverse with the hopes of further instigating the

Thai-Cambodian conflict, open another front in Thaksin\’s

effort to bring down the Abhisit government, and thus open

the door for Thaksin\’s return. DPM Suthep publicly tried to

put a more positive spin on the matter, voicing hope to the

media that Thai-Cambodian relations would improve once

problems related to Thaksin were resolved.

JOHN

Written by thaicables

July 22, 2011 at 9:46 am

10PHNOMPENH89 CAMBODIA SEEKS SUPPORT FOR PREAH VIHEAR INTERNATIONAL COORDINATING COMMITTEE, AGREES TO INVITE THAILAND

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“247402”,”2/5/2010 9:42″,”10PHNOMPENH89″,

“Embassy Phnom Penh”,”UNCLASSIFIED”,””,”VZCZCXRO7371

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RUEHFR/AMEMBASSY PARIS 0735″,

“UNCLAS SECTION 01 OF 02 PHNOM PENH 000089

 

SIPDIS

 

DEPT FRO EAP/MLS, IO

PARIS PLEASE PASS TO US MISSION TO UNESCO –

AMBASSADOR KILLION

 

E.O. 12958: N/A

TAGS: PREL, KTIA, SCUL, UNESCO, DB

SUBJECT: CAMBODIA SEEKS SUPPORT FOR PREAH VIHEAR INTERNATIONAL

COORDINATING COMMITTEE, AGREES TO INVITE THAILAND

 

1. ACTION REQUEST IN PARA 9.

 

2. SUMMARY: During a meeting designed to brief Ambassadors from

seven nations on the status of the World Heritage site of Preah

Vihear, Deputy Prime Minister Sok An welcomed their participation in

an International Coordinating Committee (ICC) to help guide the

planning for the restoration and management of the site. The DPM

noted that Thailand would also be invited, as required by UNESCO in

the World Heritage inscription documents. He expects the

discussions to be \”peaceful and friendly\” and said that Cambodia is

\”seeking cooperation.\” END SUMMARY

 

3. In a meeting that included Ambassadors and representatives from

the United States, India, Australia, France, China, Belgium, Japan,

and UNESCO, Deputy Prime Minister Sok An proposed to convene an ICC

for the recently inscribed World Heritage site of Preah Vihear, and

advised that all countries present plus Thailand would be invited to

participate. The Belgian Ambassador (resident in Bangkok) welcomed

the proposal and stated his desire to see the ICC convened before

the next World Heritage Committee meeting scheduled for July of this

year in Brasilia. The UNESCO representative advised that the UNESCO

SYG is informed on this issue and hoped to attend the first session

of the Preah Vihear ICC.

 

4. The invitation to participate in an ICC came after an extensive

briefing by Cambodian and UNESCO representatives on developments at

the site since the UNESCO listing by Chuch Poeurn, head of the newly

established Preah Vihear authority and dean of the faculty of

archeology at the Royal University of Fine Arts and Philippe

deLonghe, an archeologist working for UNESCO. DeLonghe\’s briefing

emphasized uniqueness of Preah Vihear as a site that was largely

\”untouched\” at the time of its listing, and touched on the fact that

work done since 2006 at the site had \”completely changed\” the

experts\’ understanding of the site. A professional site management

plan has been developed and submitted to UNESCO, fulfilling a

requirement of the World Heritage listing. The site management plan

was written by Divay Gupta, an Indian specialist in architectural

conservation and heritage management; the team that developed it

included archeologists, engineers and architects from France,

Belgium, and Cambodia, as well as a former US Park Service senior

park planner.

 

5. The establishment of an ICC was the second UNESCO requirement

after the inscription of the site in July of 2008. The original

text of the document required that the ICC be convened by February

of 2010 and that the committee include no more than seven countries.

UNESCO also specified that Thailand should be invited to

participate. The formation of the ICC has been delayed due to the

ongoing border dispute between Thailand and Cambodia on the area

surrounding the Preah Vihear temple. Another ICC which focuses on

the management of the Angkor Wat temple complex has been highly

successful and Cambodia and UNESCO seek to model the Preah Vihear

version on the Angkor Wat example.

 

6. After the briefing and informal invitation to join the ICC,

several Ambassadors inquired about security at the site. DPM Sok An

assured the group that any recent violence in the border area has

been in isolated areas far from the site of the temple and that

increasing numbers of tourists are already visiting the site from

the Cambodian side. He advised that he would issue a formal

invitation to form the ICC as soon as possible.

 

7. DPM Sok An stated that he had approached the seven countries

present at the meeting as they had contributed experts to the team

which made formal recommendations on the site or had long histories

of collaboration with Cambodia through the Angkor Wat ICC. It is

expected that they would provide similar support for a Preah Vihear

ICC.

 

8. COMMENT: In several previous discussions about the Preah Vihear

ICC with the Ambassdor, DPM Sok An had resisted the idea of inviting

Thailand to participate, citing the 2008 \”incursion\” of Thai troops

along the disputed border and pointing to \”uncooperative\” behavior

on the part of the Thai during their participation in the Angkor Wat

ICC. However, during this briefing he reiterated many times the

government\’s decision to invite Thailand. Several Ambassadors

probed on this point and he appeared resolute. There was

considerable enthusiasm on the part of the attendees for

participation, although all indicated a need to seek formal

instructions once the actual invitations had been issued. END

COMMENT.

 

9. ACTION REQUEST: Although a formal request has not yet been

prepared, DPM Sok An would like an indication of US willingness to

participate in the Preah Vihear ICC. When DPM Sok An has raised

this in previous discussions, Ambassador has always responded that

the US would probably look favorably on a request to join the Preah

 

PHNOM PENH 00000089 002 OF 002

 

Vihear ICC as long as Thailand was also invited to join. Post

requests guidance on responding to Cambodia\’s request for our

participation in the ICC.

 

RODLEY

Written by thaicables

July 22, 2011 at 9:45 am

10BANGKOK298 SCENESETTER FOR THE CSA-HOSTED VISIT OF THAI ARMY COMMANDER GENERAL ANUPONG

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“247126”,”2/4/2010 5:35″,”10BANGKOK298″,

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SIPDIS

 

E.O. 12958: DECL: 02/04/2020

TAGS: PGOV, PTER, MARR, MOPS, PINS, PHUM, TH

SUBJECT: SCENESETTER FOR THE CSA-HOSTED VISIT OF THAI ARMY

COMMANDER GENERAL ANUPONG

 

Classified By: Ambassador Eric G. John, reasons 1.4 (b) and (d).

 

1. (C) General Casey, the upcoming visit of Thai Army

Commander General Anupong Paojinda will be an important

occasion to demonstrate our appreciation for the U.S.-Thai

relationship. Despite ongoing domestic political challenges,

Thailand\’s adherence to democratic values should not go

unrecognized. General Anupong has been invaluable the past

two years as he has resisted pressures from all sides for

military intervention into politics; as a result, a full

range of actors on the Thai political scene are able to

openly and vigorously debate policies and the state of

democracy. This visit is a prime opportunity to demonstrate

clearly to our close ally that we intend to engage fully in

the partnership, at a time when many in Thailand question

U.S. commitment to the region in comparison to a sustained

Chinese charm offensive. As examples of benefits from the

relationship, the U.S.-Thai partnership has yielded a

promising new lead in the drive to develop an HIV vaccination

and the seizure of more than 35 tons of North Korean weapons

in just the last three months alone, two examples that serve

to illustrate the depth and breadth of a relationship.

Furthermore, the Thai Cabinet in December approved a

supplemental budget to facilitate a peacekeeping deployment

to Darfur.

 

2. (C) General Anupong is the preeminent military leader in

our steadfast ally and has been a strong advocate of not

staging a coup and permitting the democratic process to play

out, although with the Army ensuring security. Indeed, if

you look back at the political turbulence of the past two

years, he has been one of the more admirable figures in

Thailand, and this counterpart visit is one way to express

our appreciation for his actions. Anupong has had to make an

extraordinary series of tough decisions over the past

eighteen months, and his intellect and disposition have been

key ingredients that have enabled him to make the choice to

come down on the side of democracy, even as his troops wage a

counterinsurgency campaign in Thailand\’s troubled

southernmost provinces. We will also want to use this visit

to send a signal to the rest of the Royal Thai Army that the

United States values its relationship with the Thai military

and Thailand. Anupong will likely be interested in pursuing

discussions on regional security challenges, and how the

U.S.-Thai alliance can be focused to assist as Thailand

prepares for changing threats. Anupong will also look to

discuss areas of cooperation, such as bilateral exercises and

training, whereby we can assist the Thai military modernize.

Thai government officials and military leaders have also

expressed strong interest in receiving excess defense

articles by way of Thailand\’s status as a Major Non-NATO

Ally, as Foreign Minister Kasit Piromya raised in 2009 with

Secretary Clinton and other senior USG officials.

 

POLITICAL ENVIRONMENT

———————

 

3. (SBU) The past eighteen months were turbulent for

Thailand. Court decisions forced two Prime Ministers from

office in 2008, and twice the normal patterns of political

life took a back seat to disruptive protests in the streets.

The yellow-shirted People\’s Alliance for Democracy (PAD)

occupied Government House from August to December 2008 and

shut down Bangkok\’s airports for eight days, to protest

governments affiliated with ex-Prime Minister Thaksin

Shinawatra. The red-shirted United Front for Democracy

against Dictatorship (UDD), followers of Thaksin, disrupted a

regional Asian Summit and sparked riots in Bangkok in

mid-April 2009 after Thaksin, now a fugitive abroad in the

wake of an abuse of power conviction, called for a revolution

to bring him home.

 

4. (C) 2010 promises to be contentious as well, with Thaksin

and the red-shirts having vowed to redouble their efforts to

topple the government. In recent weeks, the red-shirts have

steadily increased a campaign to discredit and undermine the

government, with promises of a \”final battle\” in late

February that has many worried that violence could again

return to the streets of Bangkok. Among their activities has

 

BANGKOK 00000298 002 OF 005

 

been an operation to spread rumors of an impending coup, a

rumor for which we have seen no basis.

 

5. (C) Prime Minister Abhisit Vejjajiva is a photogenic,

eloquent 45-year old Oxford graduate who generally has

progressive instincts and says the right things about basic

freedoms, social inequities, policy towards Burma, and how to

address the troubled deep South, afflicted by a grinding

ethno-nationalist Muslim-Malay separatist insurgency.

Delivering results has proved more elusive, though the Thai

economy is growing again, driven by expanding exports.

 

6. (C) While both yellow and red try to lay exclusive claim

to the mantle of democracy, both have ulterior motives in

doing so. Both movements reflect deep social concerns

stemming from widespread perceptions of a lack of social and

economic justice, but both seek to triumph in competing for

traditional Thai hierarchical power relationships. New

elections would not appear to be a viable solution to

political divide, and political discord could persist for

years. We continue to stress to Thai interlocutors the need

for all parties to avoid violence and respect democratic

norms within the framework of the constitution and rule of

law, as well as our support for long-time friend Thailand to

work through its current difficulties and emerge as a more

participatory democracy.

 

RECEDING MONARCHY

—————–

 

7. (C) Underlying the political tension in Bangkok is the

future of the monarchy. On the throne for 62 years,

U.S.-born King Bhumibol is Thailand\’s most prestigious

figure, with influence far beyond his constitutional mandate.

Many actors, including in the military, are jockeying for

position to shape the expected transition period in Thailand

during royal succession after the eventual passing of the

King. Few observers believe that the deep political and

social divides can be bridged until after King Bhumibol

passes and Thailand\’s tectonic plates shift. Crown Prince

Vajiralongkorn neither commands the respect nor displays the

charisma of his beloved father, who has greatly expanded the

prestige and influence of the monarchy during his reign.

Nearly everyone expects the monarchy to shrink and change in

function after succession. How much will change is open to

question, with many institutions, figures, and political

forces positioning for influence, not only over redefining

the institution of monarchy but, equally fundamentally, what

it means to be Thai.

 

SOUTHERN THAILAND – SEPARATIST INSURGENCY

—————————————–

 

8. (C) An ethno-nationalist Malay Muslim insurgency in

southern Thailand has claimed an estimated 3,500 lives since

2004. Fundamental issues of justice and ethnic identity

drive the violence as many Malay Muslims feel that they are

second-class citizens in Thailand, and ending the insurgency

will require the government to deal with these issues on a

national level. The insurgents use IEDs, assassinations, and

beheadings to challenge the control of the Thai state in the

deep South; the government has responded through special

security laws that give security forces expanded power to

search and detain people. The Thai military is now deeply

involved in counter-insurgency efforts; in contrast, from the

late 1990s-2004, the military viewed the top national

security threat to be the flow of illegal narcotics from

neighboring Burma.

 

9. (C) The insurgents direct their anger at the government in

Bangkok, not at the United States. Since a U.S. presence or

perception of U.S. involvement in the South could redirect

that anger towards us and link it to the international

jihadist movement — a link that is currently absent – we

ensure that any offers of assistance or training pass the

\”location and label\” test. Put simply, we keep U.S. military

personnel away from the far South and we make sure that we do

not label any assistance or training as directly linked to

the southern situation. This approach dovetails with the

 

BANGKOK 00000298 003 OF 005

 

Thai interest in keeping outside influences and actors away

from the internal conflict.

 

10. (C) General Anupong has dedicated more of his time to

overseeing RTA counter-insurgency efforts in South than past

Army Commanders, who often were more focused on politics in

Bangkok. Anupong makes almost weekly trips to the South, and

he and his senior staff have engaged the Embassy and USARPAC

in an effort to learn counter-insurgency and counter-IED best

practices.

 

ENDURING BILATERAL RELATIONSHIP

——————————-

 

11. (C) Despite the political divide, Thailand\’s unparalleled

strategic importance to the U.S. should not be understated.

The U.S.-Thai military relationship, which began during World

War II when the U.S. trained Thais to covertly conduct

special operations against the Japanese forces occupying

Thailand has evolved into a partnership that provides the

U.S. with unique benefits. Our military engagement affords

us unique training venues, the opportunity to conduct

exercises that are nearly impossible to match elsewhere, a

willing participant in international peacekeeping operations,

essential access to facilities amid vital sea and air lanes

that support contingency and humanitarian missions, and a

partner that is a key ASEAN nation in which we continue to

promote democratic ideals.

 

12. (C) Thailand\’s willingness to allow the United States to

use Utapao Naval Air Station as the hub for our regional

assistance program was key to making the 2004 tsunami and the

2008 Cyclone Nargis relief operations a success. While those

high-profile relief operations highlighted publicly the value

of access to Utapao, the air base is used regularly for

military flights. A prime example was the critical support

Utapao provided during OEF by providing an air bridge in

support of refueling missions en route to Afghanistan.

Approximately 1,000 flights transit Utapao every year in

support of critical U.S. military operations both regionally

and to strategic areas of the world. Thailand also provides

valued port access with U.S. naval vessels making calls,

primarily at Laem Chabang and Sattahip, over sixty times per

year for exercises and visits.

 

13. (SBU) Beyond traditional military activities, our

bilateral military relationship provides benefits in other

important areas. One example is the Armed Forces Research

Institute of Medical Sciences\’ (AFRIMS) collaboration with

Thai counterparts on basic research and trial vaccines. The

sophistication of the Thai scientific and public health

community makes collaboration as useful to the USG as it is

to the Thais. A number of important breakthroughs, such as

in the prevention of HIV/AIDS transmission from mothers to

children, were developed here, and the first partially

successful phase III, double blind trial for a potential HIV

vaccine occurred in 2009; a second such trial run by CDC is

currently ongoing.

 

COBRA GOLD AND THE MILITARY EXERCISE PROGRAM

——————————————–

 

14. (C) By means of access to good military base

infrastructure and large areas to conduct unrestricted

operations, Thailand gives the U.S. military a platform for

exercises unique in Asia. Thai leaders are far more willing

to host multinational and bilateral exercises than are other

countries in Asia. This has allowed us to use exercises in

Thailand to further key U.S. objectives, such as supporting

Japan\’s growing military role in Asia and engaging the

Indonesian and Singaporean militaries.

 

15. (C) Cobra Gold, the capstone event of our exercise

program and being held during the visit, is the largest

annual multi-lateral exercise in the Pacific region and for

29 years has served to strengthen our relations with

Thailand, highlight our commitment to Southeast Asia, and

provide exceptional training opportunities for our troops.

The event has evolved over the years and now facilitates

 

BANGKOK 00000298 004 OF 005

 

important objectives such as promoting a greater role in the

Asian Pacific region for Japan, Singapore, and South Korea

and re-establishing a partner role with Indonesia. As an

example of the tangible benefits of the exercise, USARPAC is

using this year\’s Cobra Gold to test a deployable command

post for crisis situations such as HA/DR incidents. Cope

Tiger, a leading air exercise with the Thailand and

Singapore, and CARAT, a bilateral naval event, are key

mechanisms for engagement of the Royal Thai Air Force and

Navy. The Thai military continues to highlight to us the

significance of these events for training and for

relationship building.

 

PEACEKEEPING EFFORTS AND DARFUR DEPLOYMENT

——————————————

 

16. (C) Thailand has historically been a strong supporter of

UN peacekeeping missions and was an early contributing nation

to operations in Afghanistan and Iraq. In addition, Thai

generals very effectively led UN forces in East Timor, to

which Thailand contributed 1,500 troops, and in Aceh where a

Thai general served as the principal deputy of the Aceh

Monitoring Mission. Thailand is preparing for deploying a

battalion of troops for a difficult UNAMID mission in Darfur

and has asked for USG assistance. State recently identified

$2.4 million to be used to support equipment needed by the

Thai for the deployment, and we have used various funding

sources to increase overall Thai peacekeeping capabilities,

both as a contributing nation and as a trainer of neighboring

nations.

 

BORDER CONFLICT WITH CAMBODIA

—————————–

 

17. (C) Bilateral relations with Cambodia remain volatile,

primarily due to a border dispute centered on 4.6 square

kilometers of overlapping territorial claims adjacent to the

11th century Hindu Preah Vihear temple. Minor skirmishes

have erupted four times since mid-2008, leading to the deaths

of seven soldiers. Cambodian Prime Hun Sen\’s November 2009

decision to appoint Thaksin as an economic advisor further

stoked cross-border tensions. Furthermore, there have been

at least six reports of small-scale conflicts resulting from

cross-border illegal logging activities in recent months.

 

18. (C) The roots of the border dispute lie in the

Siam-France agreements of 1904-8 and a 1962 International

Court of Justice ruling that granted Cambodia the temple but

left the rest of disputed land unresolved. Tensions spiked

in 2008 when the Thai government in power at that time

supported Cambodia\’s application to UNESCO for a joint

listing of the temple as a world heritage site, only to face

opposition in parliament and an adverse court ruling. Thorny

internal political considerations and historical rancor

between Thailand and Cambodia make progress difficult. We

urge both sides to resolve their differences peacefully

through bilateral negotiations, border demarcation, and a

reduction of troops deployed along the border.

 

ONGOING REFUGEE CONCERNS: HMONG AND BURMA

—————————————–

 

19. (C) Due to inherent institutional capabilities, the Thai

military plays a prominent role in the management of the many

refugees that enter Thailand from neighboring countries.

Thailand continues to host more than 140,000 Burmese and

facilitate resettlement of more than 14,000 refugees to the

U.S. annually, but the recent forced repatriation of two

groups of Lao Hmong in late December provoked international

outcry. The USG and Congress are also focused on 4,000

ethnic Karen in a Thai army-run camp along the Thai-Burma

border who came into Thailand last June fleeing an offensive

and who may be sent back in the near future. (Note: 140,000

Karen and Karenni have lived in RTG-sanctioned camps along

the border since 1990. End Note.) We underscore to the RTG

our disappointment with the Hmong deportation decision and

our continuing concern over access to the Hmong now that they

have been returned to Laos, as well as our concerns on the

Thai-Burma border.

 

BANGKOK 00000298 005 OF 005

 

THE INCREASING ROLE OF CHINA

—————————-

 

20. (C) As the shape of Southeast Asia, Asia writ large, and

the world has changed, so have Thai attitudes. The Chinese

have been making a major push to upgrade all aspects of

relations, including mil-mil. Thailand is not interested in

making a choice between the U.S. and China (nor do we see

closer Chinese-Thai relations as automatically threatening to

our interests here), but we will need to work harder to

maintain the preferred status we have enjoyed. While Thai

military links with the United States are deeper and far more

apparent than Sino-Thai links, China\’s growing influence in

Thailand is readily evident.

 

21. (C) The Chinese have made a strong effort to court the

Thai. The Thai military has a range of Chinese weapons

systems in its arsenal; the PLA Navy is interested in closer

links with the Thai navy, and China has worked with Thailand

to improve air defense equipment provided to Thailand in the

late 1980\’s. In 2007 and 2008, Thai and Chinese Special

Forces conducted joint exercises, and other mil-to-mil

exchanges have expanded in recent years, as has the number of

bilateral military VIP visits.

 

22. (C) During a visit to Thailand by Chinese Minister of

National Defense Liang Guanglie for the King\’s birthday

celebrations in early December 2009, the Thai and Chinese

militaries agreed to expand bilateral exercises to include

the two nations\’ navies, marines, and air forces. The

initial exercise will be conducted early this year, with the

PLA engaging Thai sailors and marines through an amphibious

landing event and a naval rescue and humanitarian relief

exercise. While some entities within the RTG resisted the

expanded engagement, reportedly the MFA and the Marine

Commandant, the Thai tell us that the Chinese pushed hard for

a rapid expansion of bilateral exercises. The Thai Marines

suggested to us that the exercise would be held at the

platoon or company level; it is unclear how many Navy

personnel may participate. While there are those in the Thai

military who have resisted expanding ties with the Chinese,

Foreign Minister Kasit during an early November meeting with

EAP Deputy Assistant Secretary Scot Marciel warned that

Thailand could not continue to say no, and that the U.S.

military needed to more seriously re-engage with their Thai

counterparts.

 

23. (C) The expansion of joint exercises follows China

providing Thailand with $49 million in military assistance

following the 2006 coup. Beyond exercises and assistance,

the number of exchanges by Thai and Chinese officers studying

at military institutes has increased significantly in recent

years, particularly since the coup. The PLA has also

actively courted Thai military leaders, including Defense

Minister Prawit Wongsuwan, Chief of Defense Forces General

Songkitti Jaggabatra, and General Anupong, through multiple

hosted-visits to China.

JOHN

Written by thaicables

July 22, 2011 at 9:41 am

10BANGKOK226 SCENESETTER FOR THE VISIT OF ADMIRAL WILLARD

leave a comment »

“245714”,”1/27/2010 10:07″,”10BANGKOK226″,

“Embassy Bangkok”,”CONFIDENTIAL”,””,”VZCZCXRO9110

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RUEKDIA/DIA WASHINGTON DC IMMEDIATE”,”C O N F I D E N T I A L SECTION 01 OF 05 BANGKOK 000226

 

SIPDIS

 

E.O. 12958: DECL: 01/27/2020

TAGS: PGOV, PTER, MARR, MOPS, PINS, PHUM, TH

SUBJECT: SCENESETTER FOR THE VISIT OF ADMIRAL WILLARD

 

Classified By: Ambassador Eric G. John, reasons 1.4 (b) and (d).

 

1. (C) Admiral Willard, Embassy Bangkok welcomes you to

Thailand. Despite ongoing domestic political challenges,

Thailand\’s adherence to democratic values should not go

unrecognized. That a full range of actors in the Thai

political scene can openly and vigorously debate policies and

the state of democracy is indeed evidence that Thailand is a

positive role model for other nations in the region. In

addition, Thailand, while chairing ASEAN last year, was a

leading proponent of democracy and human rights within ASEAN.

As such, now is a prime opportunity to demonstrate clearly

to our close ally that we intend to engage fully in the

partnership. Your visit will provide such an opportunity as

it will signal the United States\’ appreciation for the

long-standing bilateral relationship, which has facilitated

shared benefits in the fields of security, law enforcement,

and intelligence efforts, as well as groundbreaking

health/research collaboration and long-standing refugee

support. In just the last three months alone, the U.S.-Thai

partnership has yielded a promising new lead in the drive to

develop an HIV vaccination and the seizure of more than 35

tons of North Korean weapons, two examples that serve to

illustrate the depth and breadth of a relationship.

Furthermore, the Thai Cabinet in December approved a

supplemental budget to facilitate a peacekeeping deployment

to Darfur.

 

2. (C) Thai interlocutors will likely be interested in

pursuing discussions on strategic views of regional security

challenges, and how the U.S.-Thai alliance can be focused to

assist as Thailand prepare for threats. The Thai will also

look to discuss areas of cooperation, such as bilateral

exercises and training, whereby we can assist the Thai

military modernize. The Thai have also expressed strong

interest in receiving excess defense articles by way of

Thailand\’s status as a Major Non-NATO Ally, as Foreign

Minister Kasit Piromya raised in 2009 with Secretary Clinton

and other senior USG officials.

 

POLITICAL ENVIRONMENT

———————

 

3. (SBU) The past eighteen months were turbulent for

Thailand. Court decisions forced two Prime Ministers from

office, and twice the normal patterns of political life took

a back seat to disruptive protests in the streets. The

yellow-shirted People\’s Alliance for Democracy (PAD) occupied

Government House from August to December 2008 and shut down

Bangkok\’s airports for eight days, to protest governments

affiliated with ex-Prime Minister Thaksin Shinawatra. The

red-shirted United Front for Democracy against Dictatorship

(UDD), followers of Thaksin, disrupted a regional Asian

Summit and sparked riots in Bangkok in mid-April 2009 after

Thaksin, now a fugitive abroad in the wake of an abuse of

power conviction, called for a revolution to bring him home.

This year promises to be contentious as well, with Thaksin

and the red shirts having vowed to redouble their efforts to

topple the government. All sides hopefully learned a

valuable lesson against the use of violence, however, by

seeing their support plummet when such tactics were used.

 

4. (C) Prime Minister Abhisit Vejjajiva is a photogenic,

eloquent 45-year old Oxford graduate who generally has

progressive instincts and says the right things about basic

freedoms, social inequities, policy towards Burma, and how to

address the troubled deep South, afflicted by a grinding

ethno-nationalist Muslim-Malay separatist insurgency.

 

5. (C) While both yellow and red try to lay exclusive claim

to the mantle of democracy, both have ulterior motives in

doing so. Both movements reflect deep social concerns

stemming from widespread perceptions of a lack of social and

economic justice, but both seek to triumph in competing for

traditional Thai hierarchical power relationships. New

elections would not appear to be a viable solution to

political divide, and political discord could persist for

years. We continue to stress to Thai interlocutors the need

for all parties to avoid violence and respect democratic

norms within the framework of the constitution and rule of

law, as well as our support for long-time friend Thailand to

 

BANGKOK 00000226 002 OF 005

 

work through its current difficulties and emerge as a more

participatory democracy.

 

RECEDING MONARCHY

—————–

 

6. (C) Underlying the political tension in Bangkok is the

future of the monarchy. On the throne for 62 years,

U.S.-born King Bhumibol is Thailand\’s most prestigious

figure, with influence far beyond his constitutional mandate.

Many actors are jockeying for position to shape the expected

transition period in Thailand during royal succession after

the eventual passing of the King. Few observers believe that

the deep political and social divides can be bridged until

after King Bhumibol passes and Thailand\’s tectonic plates

shift. Crown Prince Vajiralongkorn neither commands the

respect nor displays the charisma of his beloved father, who

greatly expanded the prestige and influence of the monarchy

during his 62-year reign. Nearly everyone expects the

monarchy to shrink and change in function after succession.

How much will change is open to question, with many

institutions, figures, and political forces positioning for

influence, not only over redefining the institution of

monarchy but, equally fundamentally, what it means to be Thai.

 

SOUTHERN THAILAND – SEPARATIST INSURGENCY

—————————————–

 

7. (C) An ethno-nationalist Malay Muslim insurgency in

southern Thailand has claimed an estimated 3,500 lives since

2004. Fundamental issues of justice and ethnic identity

drive the violence as many Malay Muslims feel that they are

second-class citizens in Thailand, and ending the insurgency

will require the government to deal with these issues on a

national level. The insurgents use IEDs, assassinations, and

beheadings to challenge the control of the Thai state in the

deep South; the government has responded through special

security laws that give security forces expanded power to

search and detain people. The Thai military is now deeply

involved in counter-insurgency efforts; in the late

1990s-2004, the military viewed the top national security

threat to be the flow of illegal narcotics from neighboring

Burma.

 

8. (C) The insurgents direct their anger at the government in

Bangkok, not at the United States. Since a U.S. presence or

perception of U.S. involvement in the South could redirect

that anger towards us and link it to the international

jihadist movement — a link that is currently absent — we

ensure that any offers of assistance or training pass the

\”location and label\” test. Put simply, we keep U.S. military

personnel away from the far South and we make sure that we do

not label any assistance or training as directly linked to

the southern situation.

 

ENDURING BILATERAL RELATIONSHIP

——————————-

 

9. (C) Despite the political divide, Thailand\’s unparalleled

strategic importance to the U.S. should not be understated.

The U.S.-Thai military relationship, which began during World

War II when the U.S. trained Thais to covertly conduct

special operations against the Japanese forces occupying

Thailand has evolved into a partnership that provides the

U.S. with unique benefits. Our military engagement affords

us unique training venues, the opportunity to conduct

exercises that are nearly impossible to match elsewhere, a

willing participant in international peacekeeping operations,

essential access to facilities amid vital sea and air lanes

that support contingency and humanitarian missions, and a

partner that is a key ASEAN nation in which we continue to

promote democratic ideals.

 

10. (C) Thailand\’s willingness to allow the United States to

use Utapao Naval Air Station as the hub for our regional

assistance program was key to making the 2004 tsunami and the

2008 Cyclone Nargis relief operations a success. While those

high-profile relief operations highlighted publicly the value

of access to Utapao, the air base is used regularly for

military flights. A prime example was the critical support

Utapao provided during OEF by providing an air bridge in

 

BANGKOK 00000226 003 OF 005

 

support of refueling missions en route to Afghanistan.

Approximately 1,000 flights transit Utapao every year in

support of critical U.S. military operations both regionally

and to strategic areas of the world. Thailand also provides

valued port access with U.S. naval vessels making calls,

primarily at Laem Chabang and Sattahip, over sixty times per

year for exercises and visits.

 

11. (SBU) Beyond traditional military activities, our

bilateral military relationship provides benefits in other

important areas. One example it the Armed Forces Research

Institute of Medical Sciences\’ (AFRIMS) collaboration with

Thai counterparts on basic research and trial vaccines. The

sophistication of the Thai scientific and public health

community makes collaboration as useful to the USG as it is

to the Thais. A number of important breakthroughs, such as

in the prevention of HIV/AIDS transmission from mothers to

children, were developed here, and the first partially

successful phase III, double blind trial for a potential HIV

vaccine occurred in 2009; a second such trial run by CDC is

currently ongoing.

 

COBRA GOLD AND THE MILITARY EXERCISE PROGRAM

——————————————–

 

12 (C) By means of access to good military base

infrastructure and large areas to conduct unrestricted

operations, Thailand gives the U.S. military a platform for

exercises unique in Asia. Thai leaders are far more willing

to host multinational and bilateral exercises than are other

countries in Asia. This has allowed us to use exercises in

Thailand to further key U.S. objectives, such as supporting

Japan\’s growing military role in Asia and engaging the

Indonesian and Singaporean militaries.

 

13. (C) Cobra Gold, the capstone event of our exercise

program, is the largest annual multi-lateral exercise in the

Pacific region and for 29 years has served to strengthen our

relations with Thailand, highlight our commitment to

Southeast Asia, and provide exceptional training

opportunities for our troops. The event has evolved over the

years and now facilitates important objectives such as

promoting a greater role in the Asian Pacific region for

Japan, Singapore, and South Korea and re-establishing a

partner role with Indonesia. Cope Tiger, a leading air

exercise with the Thailand and Singapore, and CARAT, a

bilateral naval event, are key mechanisms for engagement of

the Thai air force and navy. The Thai military continues to

highlight to us the significance of these events for training

and for relationship building.

 

PEACEKEEPING EFFORTS AND DARFUR DEPLOYMENT

——————————————

 

14. (C) Thailand has historically been a strong supporter of

UN peacekeeping missions and was an early contributing nation

to operations in Afghanistan and Iraq. In addition, Thai

generals very effectively led UN forces in East Timor, to

which Thailand contributed 1,500 troops, and in Aceh where a

Thai general served as the principal deputy of the Aceh

Monitoring Mission. Thailand is preparing for deploying a

battalion of troops for a difficult UNAMID mission in Darfur

and has asked for USG assistance. Using various funding

sources, we are working to support the request and to

increase overall Thai peacekeeping capabilities, both as a

contributing nation and as a trainer of neighboring nations.

 

BORDER CONFLICT WITH CAMBODIA

—————————–

 

15. (C) Bilateral relations with Cambodia remain volatile,

primarily due to a border dispute centered on 4.6 square

kilometers of overlapping territorial claims adjacent to the

11th century Hindu Preah Vihear temple. Minor skirmishes

have erupted four times since mid-2008, leading to the deaths

of seven soldiers. Furthermore, there have been at least

five reports of Thai rangers firing upon illegal Cambodian

loggers in Thai territory in recent months. Cambodian Prime

Hun Sen\’s November 2009 decision to appoint Thaksin as an

economic advisor further stoked cross-border tensions.

 

BANGKOK 00000226 004 OF 005

 

16. (C) The roots of the border dispute lie in the

Siam-France agreements of 1904-8 and a 1962 International

Court of Justice ruling that granted Cambodia the temple but

left the rest of disputed land unresolved. Tensions spiked

in 2008 when the Thai government in power at that time

supported Cambodia\’s application to UNESCO for a joint

listing of the temple as a world heritage site, only to face

opposition in parliament and an adverse court ruling. Thorny

internal political considerations and historical rancor

between Thailand and Cambodia make progress difficult. We

urge both sides to resolve their differences peacefully

through bilateral negotiations, border demarcation, and a

reduction of troops deployed along the border.

 

ONGOING REFUGEE CONCERNS

————————

 

17. (C) Due to inherent institutional capabilities, the Thai

military plays a prominent role in the management of the many

refugees that enter Thailand from neighboring countries.

Thailand continues to host more than 140,000 Burmese and

facilitate resettlement of more than 14,000 refugees to the

U.S. annually, but the recent forced repatriation of two

groups of Lao Hmong in late December provoked international

outcry. We underscore to the RTG our disappointment with the

deportation decision and our continuing concern over access

to the Hmong now that they have been returned to Laos. The

Thai have asked privately about possible Congressional

repercussions due to the deportation.

 

THE INCREASING ROLE OF CHINA

—————————-

 

18. (C) As the shape of Southeast Asia, Asia writ large, and

the world has changed, so have Thai attitudes. The Chinese

have been making a major push to upgrade all aspects of

relations, including mil-mil. Thailand is not interested in

making a choice between the U.S. and China (nor do we see

closer Chinese-Thai relations as automatically threatening to

our interests here), but we will need to work harder to

maintain the preferred status we have enjoyed. While Thai

military links with the United States are deeper and far more

apparent than Sino-Thai links, China\’s growing influence in

Thailand is readily evident.

 

19. (C) The Chinese have made a strong effort to court the

Thai. The Thai military has a range of Chinese weapons

systems in its arsenal; the PLA Navy is interested in closer

links with the Thai navy, and China has worked with Thailand

to improve air defense equipment provided to Thailand in the

late 1980\’s. In 2007 and 2008, Thai and Chinese Special

Forces conducted joint exercises, and other mil-to-mil

exchanges have expanded in recent years, as has the number of

bilateral military VIP visits.

 

20. (C) During a visit to Thailand by Chinese Minister of

National Defense Liang Guanglie for the King\’s birthday

celebrations in early December 2009, the Thai and Chinese

militaries agreed to expand bilateral exercises to include

the two nations\’ navies, marines, and air forces. The

initial exercise will be conducted early this year, with the

PLA engaging Thai sailors and marines through an amphibious

landing event and a naval rescue and humanitarian relief

exercise. While some entities within the RTG resisted the

expanded engagement, reportedly the MFA and the Marine

Commandant, the Thai tell us that the Chinese pushed hard for

a rapid expansion of bilateral exercises. The Thai Marines

suggested to us that the exercise would be held at the

platoon or company level; it is unclear how many Navy

personnel may participate. While there are those in the Thai

military who have resisted expanding ties with the Chinese,

Foreign Minister Kasit during an early November meeting with

EAP Deputy Assistant Secretary Scot Marciel warned that

Thailand could not continue to say no, and that the U.S.

military needed to more seriously re-engage with their Thai

counterparts.

 

21. (C) The expansion of joint exercises follows China

providing Thailand with $49 million in military assistance

following the 2006 coup. Beyond exercises and assistance,

the number of exchanges by Thai and Chinese officers studying

 

BANGKOK 00000226 005 OF 005

 

at military institutes has increased significantly in recent

years, particularly since the coup. The PLA has also

actively courted Thai military leaders, including Defense

Minister Prawit Wongsuwan, Chief of Defense Forces General

Songkitti Jaggabatra, and Army Commander General Anupong

Paojinda, through multiple hosted-visits to China.

JOHN

Written by thaicables

July 22, 2011 at 9:39 am

10PHNOMPENH29 2010 INVESTMENT CLIMATE STATEMENT – CAMBODIA

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“244036”,”1/19/2010 0:41″,”10PHNOMPENH29″,

“Embassy Phnom Penh”,”UNCLASSIFIED”,

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RUEATRS/DEPT OF TREASURY WASHINGTON DC 0822

RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC”,”UNCLAS SECTION 01 OF 17 PHNOM PENH 000029

 

STATE FOR EAP/MLS, EB/IFD/OIA, EB/TPP/ABT, EEB/TPP/MTA, EEB/TPP/BTA

STATE PASS TO USTR/KLEIN AND WEISEL

STATE PASS TO USTDA/ROSSITER

BANGKOK FOR USAID/CARDUNER, FCS/GRIFFIN

HANOI FOR FAS/BAILEY

HO CHI MINH CITY FOR FAS/ REIDEL

 

SIPDIS

 

E.O. 12958:N/A

TAGS: ECON, EFIN, EINV, ELAB, ETRD, KIPR, OPIC, KTDB, USTR, CB

SUBJECT: 2010 INVESTMENT CLIMATE STATEMENT – CAMBODIA

 

REF: 09 STATE 124006

 

PHNOM PENH 00000029 001.12 OF 017

 

1. Cambodia, a developing country, began the transformation from a

command economy to the free market in the late 1980s. It is now

integrating into the regional and world trading framework. In 1999,

Cambodia joined the Association of Southeast Asian Nations (ASEAN)

and in September 2004, became a member of the World Trade

Organization (WTO). On December 15, 2008 the entry into force of

the ASEAN Charter brought Cambodia and other member states into a

new regional legal framework. Cambodia has shown interest in

participating in other international trading arrangements, including

the Asia-Pacific Economic Cooperation forum (APEC).

 

2. As part of its WTO commitments to strengthen the investment

climate for both foreign and domestic businesses, Cambodia committed

to enact 47 laws or regulations to address areas where existing law

did not meet WTO requirements. Cambodia has been behind schedule in

fulfilling its WTO commitments to pass necessary business

legislation concerning the general business environment, trade in

goods, trade in services, and the protection of intellectual

property rights. However, the country has made progress recently,

passing several significant laws in 2008, including a Law on Plant

Breeder Rights and Law on Civil Aviation, and in 2009, the

government promulgated a Law on Tourism, a Law on Insolvency, and a

sub-decree establishing a national commercial arbitration body. The

government has either completed drafts of most of the remaining

required laws or is waiting for their approval by the legislature.

 

3. Since the re-establishment of a constitutional monarchy in 1993,

the economy has grown steadily. From 2004 to 2008, the economy grew

at an average of approximately 10 percent per year, driven largely

by an expansion in the garment, construction, agriculture, and

tourism sectors. In 2005, exploitable oil and natural gas deposits

were found beneath Cambodia\’s territorial waters, representing a new

revenue stream for the government if commercial extraction begins.

Mining also is attracting significant investor interest,

particularly in the northern parts of the country. However, the

global economic crisis has adversely affected the economy\’s key

pillars and economic growth was expected to contract in 2009.

 

4. Inflation decreased from its sharp rise in 2008, which peaked at

25.7 percent in May 2008 driven largely by the global surge in oil

and food prices. Because the economy is heavily dollarized, a

depreciation of the Cambodian riel and the U.S. dollar against

trading partner currencies contributed to imported inflation, while

rising domestic demand contributed to domestically generated

pressures. However, these pressures lessened in 2009 and Cambodia

recorded an average inflation rate of an estimated 4.5 percent and a

7.5 percent year-on-year inflation rate.

 

5. Foreign Direct Investment (FDI) approved by the Council for the

Development of Cambodia (CDC), Cambodia\’s investment approval body,

has dramatically increased in recent years, with approved proposals

peaking at nearly USD 11 billion in 2008, compared with USD 201

million in 2004. However, figures for the first 10 months of 2009

reveal that investment has slowed significantly to only USD 1.6

billion, an 82 percent decrease compared to total investments in

2008. The CDC does not have a functional mechanism to monitor

implementation of projects, so it is not clear how many proposed

projects are fully implemented. Corruption has been singled out as

one of the most serious deterrents to private investment.

 

6. Since early 1999, the Cambodian government has intensified its

economic reform program, a process the international financial

institutions and donors encourage, participate in, and monitor

closely. In recent years the government has publicly committed

itself on numerous occasions to fighting corruption, pursuing good

governance, and increasing transparency and predictability. This

strategy is set out in phase II of the government\’s latest public

reform effort called the \”Rectangular Strategy for Growth,

Employment, Equity, and Efficiency.\”

 

7. The government has initiated specific measures to promote

business, especially small and medium-sized businesses, by reducing

costs and the time required for business registration and by

establishing a number of committees for business promotion and trade

facilitation.

 

PHNOM PENH 00000029 002.8 OF 017

 

Openness to Foreign Investment

——————————

 

8. Cambodia officially welcomes foreign direct investment.

Cambodia\’s 1994 Law on Investment established an open and liberal

foreign investment regime. All sectors of the economy are open to

foreign investment and 100 percent foreign ownership is permitted in

most sectors. Article 44 of the Constitution provides that only

Cambodian citizens and legal entities have the right to own land.

However, a new law allowing foreign ownership of properties located

above the ground floor is expected to be passed in 2010. Aside from

this, there is little or no discrimination against foreign investors

either at the time of initial investment or after investment.

However, some foreign businesses have reported that they are at a

disadvantage vis-a-vis Cambodian or other foreign rivals, who engage

in acts of corruption or tax evasion, or take advantage of

Cambodia\’s poor enforcement of legal regulations.

 

9. In addition, there are a few sectors open to foreign investors

which are subject to conditions, local equity participation, or

prior authorization from relevant authorities. These sectors

include manufacture of cigarettes, movie production, rice milling,

exploitation of gemstones, publishing and printing, radio and

television, manufacturing wood and stone carvings, and silk weaving.

The government has issued a sub-decree restricting foreign

ownership of hospitals and clinics and forbidding the employment of

non-Cambodian doctors in any specialty in which the Ministry of

Health considers there to be an adequate number of Cambodian

practitioners.

 

10. Under a sub-decree dated September 2005, Cambodia prohibits

certain investment activities, including investment in production or

processing of psychotropic and narcotic substances, poisonous

chemicals, agricultural pesticides and insecticides, and other goods

that use chemical substances prohibited by international regulations

or the World Health Organization that affect public health and the

environment. Production of electric power by using waste imported

from foreign countries is prohibited, as is forestry exploitation.

 

11. The privatization of state enterprises and transactions

involving state property has not always been carried out in a

transparent manner. In several instances, the public learned that

enterprises were for sale or swap only after the government

announced a sale or deal to a particular buyer.

 

12. Investor rights (investment guarantees) provided for in the Law

on Investment include:

— Foreign investors shall not be treated in a discriminatory

manner by reason of being a foreign entity, except in respect to

land ownership as provided for in the Constitution of the Kingdom of

Cambodia.

— The Royal Government of Cambodia shall not undertake a

nationalization policy that adversely affects the private property

of investors.

— The Royal Government of Cambodia shall not fix the price of

products or fees for services.

— The Royal Government of Cambodia, in accordance with relevant

laws and regulations, shall permit investors to purchase foreign

currencies through the banking system and to remit abroad those

currencies as payments for imports, repayments on loans, payments of

royalties and management fees, profit remittances and repatriation

of capital.

 

13. The following is a summary of Cambodia\’s rankings in

international indexes and the Millennium Challenge Corporation score

card.

 

Measure Year Index/Ranking

TI Corruption Index 2009 2/158

Heritage Economic Freedom 2009 56.6/106

World Bank Doing Business 2010 145/145

MCC Govnt Effectiveness 2009 0.00/05 percent

MCC Rule of Law 2009 -0.20/33 percent

MCC Control Corruption 2009 -0.30/12

MCC Fiscal Policy 2009 -2.4/35 percent

MCC Trade Policy 2009 63.4/36 percent

MCC Regulatory Quality 2009 0.21/65 percent

 

PHNOM PENH 00000029 003.8 OF 017

 

MCC Business Start Up 2009 0.765/16 percent

MCC Land Rights Access 2009 0.769/88 percent

MCC Natural Resource Mgmt 2009 68.75/61 percent

 

Conversion and Transfer Policies

——————————–

 

14. There are no restrictions on the conversion of capital for

investors. The Foreign Exchange Law allows the National Bank of

Cambodia (the central bank) to implement exchange controls in the

event of a crisis; the law does not define what would constitute a

crisis. The U.S. Embassy is not aware of any cases in which

investors have encountered obstacles in converting local to foreign

currency or in sending capital out of the country.

 

15. The U.S. dollar is widely used and circulated in the economy.

The 2009 exchange rate was stable, although slightly depreciated

compared to 2008. As of December 2009, the exchange rate was USD 1

= 4,164 riel. The government is committed to maintaining exchange

rate stability.

 

Expropriation and Compensation

——————————

 

16. Article 44 of the Cambodian Constitution, which restricts land

ownership to Cambodian nationals, also states that \”the (state\’s)

right to confiscate properties from any person shall be exercised

only in the public interest as provided for under the law and shall

require fair and just compensation in advance.\” Article 58 states

that \”the control and use of state properties shall be determined by

law.\” The Law on Investment provides that \”the Royal Government of

Cambodia shall not undertake a nationalization policy which

adversely affects the private property of investors.\”

 

17. In late 2009, the National Assembly approved the Law on

Expropriation which sets broad guidelines on land-taking procedures

for public interest purposes and defines public interest activities

such as construction of infrastructure projects, development of

buildings for national protection and civil security, construction

of facilities for research and exploitation of natural resources,

and construction of oil pipeline and gas networks.

 

18. In spite of various legal protections, protection of immovable

property rights is complicated by the fact that most property

holders do not have legal documentation of their ownership rights.

Numerous cases have been reported of influential individuals or

groups acquiring property through means not entirely in keeping with

the Constitution or laws. This murky property holding environment

may adversely affect long-term leases and /or corporate social

responsibility goals unless proper due diligence is conducted. Cases

of inhabitants being forced to relocate continued to occur when

officials or businesspersons colluded with local authorities,

although the numbers reported dropped significantly from the

previous year. Human rights NGO ADHOC reported receiving 186 land

related cases during the year. During the same period, another NGO

received 115 land related cases in Phnom Penh and 14 provinces,

affecting a total of 8,806 families. Some of those expelled

successfully contested these actions in court, but the majority of

the cases in the courts were still being processed.

 

19. To date, there are no known investment disputes involving

government expropriation of property belonging to U.S. citizens. Up

to 17 Thai businesses sustained varying degrees of damage during

anti-Thai rioting in Phnom Penh on January 29, 2003. The Cambodian

government pledged to compensate Thai business owners, and all of

claims have been resolved.

 

Dispute Settlement

——————

 

20. Cambodia\’s legal system is a mosaic of pre-1975 statutes

modeled on French law, communist-era legislation dating from

1979-1991, statutes put in place by the UN Transitional Authority in

Cambodia (UNTAC) during the period 1991-93, and legislation passed

by the Royal Government of Cambodia since 1993.

 

21. Cambodian culture and its legal system have traditionally

favored negotiation and conciliation over adversarial conflict and

 

PHNOM PENH 00000029 004.10 OF 017

 

adjudication. Thus, compromise solutions are the norm, even in

cases where the law clearly favors one party in a dispute. In civil

cases, courts will often try conciliation before proceeding with a

trial.

 

22. Cambodia\’s court system is generally seen as non-transparent

and subject to outside influence. Judges, who have been trained

either for a short period in Cambodia or under other systems of law,

have little access to published Cambodian statutes. Judges can be

inexperienced and courts are often understaffed with little

experience, particularly in adjudicating commercial disputes. The

local and foreign business community reports frequent problems with

inconsistent judicial rulings as well as outright corruption, and

difficulty enforcing judgments. For these reasons, U.S. investors

are reluctant to resort to the courts to resolve commercial

disputes.

 

23. The Cambodian judiciary system is beginning to undergo reform.

To provide the necessary background knowledge, judges and court

staff from around the country are being trained by the Royal Academy

for Judges and Prosecutors, which was created in 2002. In an effort

to clean up the court system, the Prime Minister has announced ad

hoc anti-corruption measures, including the dismissal, replacement,

and transfer of judges and prosecutors. The Supreme Council of

Magistracy, comprised of a president (the King) and eight other

members, is responsible for the appointment and conduct of judges

and prosecutors.

 

24. To address the perception of many Cambodian and foreign

business representatives that the court system is unreliable and

susceptible to external political and commercial influence, the

Cambodian government is finalizing draft legislation to create a

Commercial Court. In July 2009, the government passed a sub-decree

creating a commercial arbitration body, the National Arbitration

Center in the Ministry of Commerce. When the National Arbitration

Center is operational, parties involved in a commercial dispute that

have a written arbitration agreement will be able to settle

commercial disputes by means of quasi-judicial methods without

involvement of the Cambodian courts. Parties will be able to select

arbitrators without direct government interference. The Law on

Commercial Arbitration also allows the Cambodia Chamber of Commerce

to establish its own arbitration center for disputes between members

or between members and third parties. The law also mandates

recognition of arbitral awards made outside of Cambodia.

Arbitration awards can be appealed to the Appellate and Supreme

Court of Cambodia based on limited grounds.

 

25. To handle specific disputes with regard to labor, the Ministry

of Labor and Vocational Training established an Arbitration Council

in May 2003. Basing its decision on the provisions of the Labor

Law, the Council has 30 arbitrators. The Council is an independent

body whose function is to resolve collective labor disputes that the

Ministry is unable to solve by conciliation. The Council\’s

decisions are non-binding but it has been very successful in

reducing the number of industrial actions in the garment sector.

The Council plays a vital role in contributing to the development of

healthy industrial relations in Cambodia. The Council\’s success in

the garment industry has prompted unions in other sectors, e.g., the

hospitality and tourism sectors, to seek the Council\’s arbitration

and mediation services.

 

26. Cambodia became a party to the Convention for the Settlement of

Investment Disputes between States and Nationals of Other States in

2005. In 2009, the International Center for the Settlement of

Investment Disputes (ICSID) approved a U.S. investor\’s Request for

Arbitration in a case against the Kingdom of Cambodia.

 

Performance Requirements and Incentives

—————————————

 

27. The Council for the Development of Cambodia (CDC), Cambodia\’s

foreign investment approval body, administers a package of

investment incentives. The CDC was created as a one-stop shop to

facilitate foreign direct investment.

 

28. Seeking to increase government revenue, the international

financial institutions recommended that the Cambodian government

scale back its investment incentives. Consequently, the Cambodian

 

PHNOM PENH 00000029 005.8 OF 017

 

government amended the Law on Investment in 2003. The law creates

regimes for profit (20 percent), salary (5 to 20 percent),

withholding (4 to 15 percent), value-added (10 percent) and excise

taxes (rates vary). While some incentives have been eliminated, the

law provides a simplified, more transparent, and faster mechanism

for investment approval.

 

29. Under the amended Law on Investment, the profit tax exemption

is allocated automatically on the basis of activity and minimum

investment amounts as set out in the sub-decree. To maintain the

incentives under the law, qualified investment projects (QIP) are

required to obtain an annual Certificate of Compliance from the CDC

and file this with the annual tax return.

 

30. The amended Law on Investment includes the following

provisions, which include the exemption, in whole or in part, of

customs duties and taxes, for QIPs:

— An exemption from the tax on profit imposed under the Law on

Taxation for a set period. The tax exemption period is composed of

a trigger period + three years + n years (a number of years

determined according to the Financial Management Law and depending

on the economic sector). The maximum allowable trigger period is to

be the first year of profit or three years after the QIP earns its

first revenue, whichever is sooner.

— 100 percent exemption from import duties for construction

material, production equipment and production input materials for

export QIPs and supporting industry QIPs in accordance with the

provisions of the sub-decree on the Implementation of the Amendment

to the Law on Investment

— Transfer of incentives by merger or acquisition.

— Renewable land leases of up to 99 years on concession land for

agricultural purposes and land ownership permitted to joint ventures

with over 50 percent equity owned by Cambodians.

— No price controls on goods produced or services rendered by

investors.

— No discrimination between foreign and local investors.

— 100 percent exemption from export tax or duty, except for

activities specifically mentioned in the Law on Customs.

— Employment of foreign expatriates where no qualified Cambodians

are available. QIPs are entitled to obtain visas and work permits.

— A QIP that is located in a designated special economic zone

(SEZ) is entitled to the same incentives and privileges as other

QIPs as stipulated in the law.

 

31. The September 2005 sub-decree on the Implementation of the

Amendment to the Law on Investment also details investment

activities that are excluded from incentives, although investment is

permitted. They include the following sectors: retail, wholesale,

and duty-free stores; entertainment (including restaurants, bars,

nightclubs, massage parlors, and casinos); tourism service

providers; currency and financial services; press and media related

activities; professional services; and production and processing of

tobacco and wood products.

 

32. Incentives are also excluded in the production of certain

products with an investment of less than USD 500,000 such as food

and beverages; textiles, garments and footwear; and plastic, rubber,

and paper products. Investors are encouraged to refer to the

sub-decree for details of other investment activities that are

excluded from incentives.

 

33. Investment activities that are eligible for customs duty

exemption, but not eligible for the profit tax exemption, are

telecommunication basic services; exploration of gas and oil,

including supply bases for gas and oil activities; and mining.

 

34. Cambodia allows foreign lawyers to supply legal services with

regard to foreign law and international law, and allows them to

supply certain legal services with regard to Cambodian law in

\”commercial association\” with Cambodian law firms. Cambodia\’s WTO

General Agreement on Trade in Services (GATS) commitment defines

\”commercial association\” as any type of commercial arrangement,

without any requirement as to corporate form. Thus, there are no

equity limitations on the practice of foreign and international law

by foreign enterprises and there are no equity limitations on the

formation of \”commercial associations\” under which foreigners may

practice certain legal services with regard to Cambodian law.

 

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35. Investors who wish to take advantage of investment incentives

must submit an application to the Cambodian Investment Board (CIB),

the division of the CDC charged with reviewing investment

applications. Investors not wishing to apply for investment

incentives, or who are ineligible, may establish their company

simply by registering corporate documents with the Department of

Legal Affairs of the Ministry of Commerce. Once an investor\’s

application is submitted, the CDC will issue to the applicant either

a Conditional Registration Certificate or a Letter of Non-Compliance

within three workdays. The Conditional Registration Certificate

will set out the terms, such as approvals, authorization,

clearances, permits or registrations required. If the CDC fails to

issue the Conditional Registration Certificate or Letter of

Non-Compliance within three workdays, then the Conditional

Registration Certificate will be considered approved.

 

36. The CDC has the responsibility to obtain all of the licenses

from relevant government agencies on behalf of investor applicants.

The relevant government agencies must issue the required documents

no later than 28 workdays from the date of the Conditional

Registration Certificate. At the end of the 28 days, the CDC will

issue a Final Registration Certificate.

 

37. The Sub-decree on the Implementation of the Amendment of the

Law on Investment adopted on September 27, 2005 does not require

investors to place a deposit guaranteeing their investment except in

cases in which the deposit is required in a concession contract or

real estate development project. Investors who wish to apply are

required to pay an application fee of seven million riel (approx.

USD 1,750) representing the administration fees for securing the

approvals, authorizations, licenses, or registrations from all

relevant ministries and entities including stamp duty.

 

38. Under a 2008 sub-decree, the CDC is required to submit to the

Council of Ministers for approval investment proposals with an

investment capital of USD 50 million or more; involve politically

sensitive issues; involve the exploration and the exploitation of

mineral or natural resources; may have a negative impact on the

environment; have long-term strategy; or, involve infrastructure

concessions.

 

Right to Private Ownership and Establishment

——————————————–

 

39. There are no limits on the rights of foreign and domestic

entities to establish and own business enterprises or to compete

with public enterprises. However, the Constitution provides that

only Cambodian citizens or legal entities have the right to own

land. A legal entity is considered to be Cambodian when at least 51

percent of its shares are owned by Cambodian citizen(s) or by

Cambodian legal entities. A new law allowing foreign ownership of

properties, such as apartments and condominiums is expected to be

passed in 2010. The current draft stipulates that only properties

located above the ground floor can be foreign-owned, and foreigners

would not be able to own property within 30 kilometers of a national

border.

 

40. Under the 2001 Land Law, foreign investors may secure control

over land through concessions, long-term leases, or renewable

short-term leases. If investors intend to take a long-term lease

interest in land or ownership interest through a 51 percent

Cambodian company, it is essential that caution be exercised to

ensure that clear and unencumbered ownership of the land is

verified.

 

41. The Land Law establishes a comprehensive legal framework for

long-term leasing. The leaseholder has a contractual interest in

the land, which means the lease can be sold or transferred through

succession and can be pledged as security in order to raise

financing. It is also important to make sure that the land

ownership is clearly and legally established before entering into

any leasing agreement.

 

42. Qualified investors approved by the Council for the Development

of Cambodia have the right to own buildings built on leased

property. However the law is unclear as to whether buildings from

qualified projects can be transferred between foreign investors or

whether foreign investors can own buildings built through projects

 

PHNOM PENH 00000029 007.8 OF 017

 

not approved by the CDC.

 

Protection of Property Rights

—————————–

 

43. Cambodia has adopted legislation concerning the protection of

property rights, including the Land Law and the Law on Copyrights

and Law on Patent and Industrial Design. Cambodia is a member of

the World Intellectual Property Organization (WIPO) and the Paris

Convention for the Protection of Industrial Property.

 

44. Chattel and real property: The 2001 Land Law provides a

framework for real property security and a system for recording

titles and ownership. Land titles issued prior to the end of the

Khmer Rouge regime in 1979 are not recognized due to the severe

dislocations that occurred during the Khmer Rouge period. The

government is making efforts to accelerate the issuance of land

titles, but in practice, the titling system is cumbersome,

expensive, and subject to corruption. The majority of property

owners lack documentation proving ownership. Even where title

records exist, recognition of legal title to land has been a problem

in some court cases where judges have sought additional proof of

ownership. Although foreigners are constitutionally forbidden to

own land, the 2001 law allows long or short-term leases to

foreigners.

 

45. Intellectual property rights (IPR): Cambodia\’s IPR regime is

in compliance with its WTO member commitments; however,

comprehensive enforcement remains problematic. The 1996

U.S.-Cambodia Trade Agreement contained a broad range of IPR

protections, but given Cambodia\’s very limited experience with IPR,

the WTO agreement granted phase-in periods for the Cambodian

government to fully implement IPR protections. On November 9, 2005,

the WTO granted a deadline extension until 2013 for Cambodia and

other least developed countries to enforce copyright laws and begin

accepting patents.

 

46. In a significant step toward consolidating IPR policy-making,

enforcement and technical assistance, the Council of Ministers

created the National Committee for Intellectual Property Management

on September 18, 2008 with its secretariat within the Ministry of

Commerce. This committee is responsible for developing national

policy on intellectual property, strengthening interagency

cooperation, preparing and disseminating new laws and regulations,

and acting as a clearinghouse for technical assistance relating to

the intellectual property sector. This new interagency IPR

committee chaired by the Minister of Commerce includes a broad range

of IPR actors including representatives from the Council of

Ministers and the Ministries of Industry Mines and Energy; Culture

and Fine Arts; Interior; Economy and Finance; Posts and

Telecommunications; Health; Agriculture, Forestry and Fisheries;

Environment; Justice; Education; and Tourism.

 

47. Trademarks: The Cambodian National Assembly approved the Law

Concerning Marks, Trade Names and Acts of Unfair Competition to

comply with Cambodia\’s WTO obligations under the Agreement on

Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Signed in February 2002, the law outlines specific penalties for

trademark violations, including jail sentences and fines for

counterfeiting registered marks. It also contains detailed

procedures for registering trademarks, invalidation and removal,

licensing of marks, and infringement and remedies.

 

48. Since 1991, the Ministry of Commerce has maintained an

effective trademark registration system, registering more than

35,500 trademarks (nearly 6,599 for U.S. companies) under the terms

of a 1991 sub-decree, and has proven cooperative in preventing

unauthorized individuals from registering U.S. trademarks in

Cambodia.

 

49. Despite lacking clear legal authority to conduct enforcement

activities, the Ministry of Commerce has taken effective action

against trademark infringement in several cases since 1998. The

Ministry has ordered local firms to stop using well-known U.S.

marks, including Pizza Hut, McDonalds, Nike, Scotties, Marlboro,

Seven Eleven, and Pringles. In 2009, the Ministry of Commerce

resolved 12 cases of trademark infringements.

 

PHNOM PENH 00000029 008.8 OF 017

 

50. Copyrights: Copyrights are governed by the Law on Copyrights

and Related Rights, which was enacted in January 2003.

Responsibility for copyrights is split between the Ministry of

Culture and Fine Arts, which handles phonograms, CDs, DVDs, and

other recordings, and the Ministry of Information, which deals with

printed materials. Pirated CDs, videos, textbooks, and other

copyrighted materials are widely available in Cambodian markets and

used throughout the country. Before the adoption of the law, there

were no provisions for enforcement of copyrights.

 

51. To protect and manage their economic rights, authors and

related rights holders are allowed by law to establish a collective

management organization (CMO). The creation of the CMO requires

authorization from either the Ministry of Culture and Fine Arts or

the Ministry of Information, depending on the nature of their work.

The Ministry of Culture and Fine Arts is developing a sub-decree on

collective management. In mid-2007, the Ministry of Culture and

Fine Arts created a Copyright Department which is gradually building

capacity.

 

52. Patents and industrial designs: Cambodia has a very small

industrial base, and infringement on patents and industrial designs

is not yet commercially significant. With assistance from WIPO, the

Ministry of Industry, Mines, and Energy (MIME) prepared a

comprehensive law on the protection of patents and industrial

designs which went into force in January 2003. The law provides for

the filing, registration, and protection of patents, utility model

certificates and industrial designs. The MIME issued a declaration

in June 2006 on granting patents and registering industrial

designs.

 

53. Encrypted satellite signals, semiconductor layout designs, and

trade secrets: The Ministry of Commerce is preparing a draft law

for trade secrets while the Ministry of Industry, Mines, and Energy

is drafting a law on integrated circuit protection. Cambodia has

not yet made significant progress toward enacting required

legislation on encrypted satellite signals, although it obtained a

model law on encrypted satellite signals and semiconductor layout

designs from WIPO in March 1999.

 

54. IPR enforcement: With the exception of the trademark

enforcement, the Cambodian government has taken few significant

actions to enforce its IPR obligations. However, in January 2008,

at the annual conference of the Ministry of Culture and Fine Arts,

the government suggested it would increase prosecutions for

copyright violations on domestically produced products before

expanding prosecutions for foreign products. Cambodian copyright

law allows IPR owners to file a complaint with the authorities to

take action. Law enforcement action taken at the request of owners

is directed against the piracy of domestically produced music or

video products, but not against piracy of foreign optical media.

The owners requesting crackdowns must pay support costs to the

authorities for conducting the operation. Crackdowns on such IPR

violations are not conducted on a consistent basis.

 

55. Infringement of IPR is pervasive, ranging from software,

compact discs, and music, to photocopied books and the sale of

counterfeit products, including cigarettes, alcohol, and

pharmaceuticals. In 2008, the Business Software Alliance estimated

a 95 percent software piracy rate in Cambodia which cost the

industry USD 47 million in 2007. Although Cambodia is not a major

center for the production and export of pirated CDs, videos, and

other copyrighted materials, local businesses report Cambodia is

becoming an increasingly popular source of pirated material due to

weak enforcement. The Ministry of Commerce has plans to put in

place measures to stop IPR-violating products at borders, as

post-inspection mechanisms are unlikely to be effective. During the

TIFA discussions in November 2007, Cambodia requested technical

assistance for a draft sub-decree on Border Measures detailing

procedures at the borders allowing IPR owners to file an application

with customs to suspend clearance of suspected counterfeit goods.

 

Transparency of the Regulatory System

————————————-

 

56. There is no pattern of discrimination against foreign investors

in Cambodia through a regulatory regime. Numerous issues of

transparency in the regulatory regime arise, however, from the lack

 

PHNOM PENH 00000029 009.8 OF 017

 

of legislation and the weakness of key institutions. Investors

often complain that the decisions of Cambodian regulatory agencies

are inconsistent, irrational, or corrupt.

 

57. The Cambodian government is still in the process of drafting

laws and regulations that establish the framework for the market

economy. In addition to existing laws and regulations, in 2009, the

government adopted the Law on Tourism, the Insolvency Law, and a

sub-decree establishing a national commercial arbitration body. A

commercial contract law and other important business-related laws

such as commercial court, e-commerce, telecommunications, and

personal property leasing laws are in draft.

 

58. Cambodia currently has no anti-monopoly or anti-trust statutes.

On a practical level, Cambodia has indicated a desire to discourage

monopolistic trading arrangements in most sectors.

 

59. Cambodia is currently working on the establishment of standards

and other technical measures based on international practice,

guidelines, and recommendations. Under the Law on Standards in

Cambodia, passed in 2007, the Institute of Standards in Cambodia

(ISC) was created within the Ministry of Industry, Mines, and Energy

(MIME) as a central authority to develop and certify national

standards for products, commodities, materials, services, and

practices and operations. The ISC serves as the secretariat of the

National Standards Council which consists of representatives from

various government ministries, state-controlled academic/research

institutions, the private sector, and a consumer representative

created to advise as well as approve standards.

 

60. The ISC has been assigned as the focal point for technical

barriers to trade (TBT) and as the agency responsible for

notifications and publications required by the WTO TBT Agreement.

The Ministry of Health is charged with prescribing standards,

quality control, distribution and labeling requirement for

medicines, but this responsibility may be brought under the ISC in

the future.

 

61. Quality control of foodstuffs, plant and animal products is

currently under the General Directorate of CamControl of the

Ministry of Commerce. Cambodia is a member of the Codex

Alimentarius Commission. Currently CamControl is the national

contact point for Codex Alimentarius. Its primary responsibility is

the enforcement of quality and safety of products and services

relating to sanitary and phytosanitary (SPS) measures. Cambodia was

provided a transition period until January 2007 to implement its WTO

TBT Agreement commitments and until January 2008 to implement its

SPS Agreement commitments, but has not yet fully implemented these

commitments. The RGC plans to adopt a subdecree on Automatic

Adoption of Codex Norms by the end of 2010.

 

62. The Cambodian Constitution and the 1997 Labor Code provide for

compliance with internationally recognized core labor standards.

The law authorizes the Ministry of Labor and Vocational Training to

set health, safety and other conditions for the workplace. (The

\”Labor\” Section of this report discusses the labor situation in more

detail.)

 

63. The National Bank of Cambodia supervises Cambodia\’s banks and

financial institutions while the Ministry of Economy and Finance

regulates the insurance industry. The insurance market in Cambodia

is relatively new, but has recently begun to gain credibility and

expand its scope. Currently, there are a few major insurance

companies operating here such as Asia Insurance, the state-owned

insurance company Caminco, Forte Insurance, Campubank Lonpac

Insurance, and Infinity Insurance. Cambodia Reinsurance Company

(Cambodia Re) is the only reinsurance company in Cambodia

established by the government to carry out reinsurance business

operations for all classes of risk, including general insurance and

life insurance.

 

64. To help Cambodian businesses stay competitive in the world

market, the government introduced specific measures to facilitate

business, in particular exports, by attempting to reduce informal

costs and streamline bureaucratic hurdles. Measures included: (1)

introduction of a joint inspection by CamControl and the Customs and

Excise Department and issuance of a common inspection report valid

for both agencies and the \”Federal Office\” in order to reduce the

 

PHNOM PENH 00000029 010.8 OF 017

 

amount of time spent applying for export goods inspection; (2) based

on this common report, MIME and the Ministry of Commerce will issue

the Certificate of Processing (CP) and the Certificate of Origin

(CO), respectively; (3) reduction of the costs of registration from

USD 615 to USD 177 and of the time limit for Cambodian government

issuance of registration from 30 days to ten and a half working

days; and (4) reduction of time required to acquire documents

related to the CO and exports and for goods inspection.

 

65. Cambodia has renewed its commitment to creating a favorable

environment for investment and trade and has further committed to

reducing unofficial fees and costs related to imports and exports.

 

Efficient Capital Markets and Portfolio Investment

——————————————— —–

 

66. Cambodia is moving to address the need for capital markets. In

November 2006, the National Assembly passed legislation to permit

the government to issue bonds and use the capital to make up budget

deficits. However no bonds have been issued since 2007 and Prime

Minister Hun Sen said in 2008 that the government does not plan to

issue bonds in the near future. In 2007, the government also passed

the Law on the Issuance and Trading of Non-government Securities,

and, in partnership with the Korean Stock Exchange, plans to

establish a stock market by the end of 2010.

 

67. At the end of November 2009, the Securities and Exchange

Commission of Cambodia (SECC) released a draft administrative order

on equity securities issuance, which is expected to be adopted in

2010. According to the regulation, the issuance of equity

securities in the Cambodia stock market can be private placement or

public offering. Private placement refers to a personal offer that

is made to no more than 30 investors and with an issue size not

exceeding 20 percent of shareholder\’s equity when shareholder\’s

equity is less than USD 4.8 million or with an issue size not

exceeding 15 percent of shareholder\’s equity when shareholder\’s

equity is more than USD 4.8 million during a 12-month period. In

addition, the allotment of equity securities of public offerings are

divided, with a reserve of 20 percent of total public offering for

investors who are Cambodian citizens, and 80 percent of the

remaining public offering amount open to investors who are both

Cambodian and non-Cambodian citizens.

 

68. The Cambodian government does not use regulation of capital

markets to restrict foreign investment. Domestic financing is

difficult to obtain at competitive interest rates. A new law

addressing secured transactions, which includes a system for

registering such secured interests, was promulgated in May 2007.

Most loans are secured by real property mortgages or deposits of

cash or other liquid assets, as provided for in the existing

contract law and land law.

 

69. The total assets of Cambodia\’s banking system as of September

2009 were approximately USD 4.9 billion, an increase of nearly 22

percent from 2008. Loans account for about 49 percent of the

banking system\’s assets. The National Bank of Cambodia (NBC)

reported that the non-performing loans (NPLs) ratio of banks has

increased from 3.7 percent in December 2008 to 5.2 percent in May

2009 and that the rate could reach as high as 10 percent by the end

of the year. Credit disbursement has also slowed, from a growth

rate of 50 percent in 2008 to just 1 percent through the middle of

2009. As of September 2009, credit granted by the commercial banks

amounted to USD 2.4 billion. Loans made to services and the

wholesale and retail sectors accounted for over 40 percent of total

loans. The banking sector has shown significant improvement, but

requires continued progress to gain international confidence.

 

70. Under the amended Law on Banking and Financial Institutions,

all of Cambodia\’s commercial banks had to reapply for licenses from

the NBC and meet new, stricter capital and prudential requirements

by the end of 2001. As a result, there was a significant shakeout

and consolidation within the banking sector with the closure and

liquidation of 12 banks. In September 2008, the National Bank of

Cambodia moved to slow the rapid growth in the number of commercial

banks, which increased by more than 20 percent in the first nine

months of 2008, giving commercial banks without an investment grade

shareholder until the end of 2010 to triple minimum capital from USD

13 million to USD 37 million. In January 2008, Cambodia\’s banks

 

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were given their first-ever risk assessment from Standard & Poor\’s

of a \’B+/B\’ rating with stable outlook. Their placement was

alongside that of banks in Venezuela, Bolivia, Ukraine, and Jamaica.

Banks have been free to set their own interest rates since 1995 and

average annual interest rate spread has declined from 15.3 percent

in 2004 to 9.6 percent in May 2009 which reflects an increase in the

interest rate for deposits and a decline in the interest rate for

credit.

 

Competition from State Owned Enterprises

—————————————-

 

71. Private enterprises are allowed to compete with public

enterprises under the same terms and conditions and in general are

not entitled to special trading rights or privileges. However,

certain laws and regulations reserve special rights for the state to

monopolize various services including the Electricity Law which

provides special privilege for the Electricity of Cambodia (EDC) to

provide power transmission to the distribution companies and bulk

power consumers.

 

72. Cambodia has several state-owned enterprises and two

joint-venture enterprises with a majority state holding. These

include rubber plantations and an agricultural inputs company,

infrastructure operating companies, the Phnom Penh Water Supply, the

EDC, the Rural Development Bank, and two joint-venture companies –

telecommunication operator Camintel and Cambodia Pharmaceutical

Enterprise. Currently, the country does not have a sovereign wealth

fund.

 

73. All SOEs are under the supervision of certain line Ministries

or government institutions and are overseen by boards of directors

drawn from among senior government officials. The Law on Audit

established the National Audit Authority and empowers the Auditor

General to conduct audits of state-owned enterprises. The audit

conducted by the Auditor General\’s Office primarily focuses on

compliance with rules governing SOE financial management. Limited

information is publicly available on the financial position and

performance of state-owned enterprises.

 

74. Cambodia has yet to pass the Law on Competition as part of its

WTO accession obligations. Under the draft law, a National

Committee on Competition will be established. However, the 1993

Constitution of Cambodia provides for the state to take necessary

intervention measures to protect the competitive process of the

marketplace as well as to protect consumer welfare.

 

Corporate Social Responsibility (CSR)

————————————-

 

75. CSR is a new concept to Cambodia and is not widely understood

among local producers or consumers. However, certain labor and

social standards have been established in key industries,

particularly in the garment sector. Under the terms of the 1999

U.S.-Cambodia Trade Agreement, the U.S. Government committed to

increase the size of Cambodia\’s garment export quota if the country

could demonstrate improvements in labor standards. This was the

first bilateral trade agreement to positively link market access

with progress in compliance with labor obligations. Currently labor

standard monitoring in the garment sector is being conducted by the

International Labour Office (ILO) in coordination with the

government. The ILO project succeeded in improving compliance with

labor standards, virtually eliminating the worst labor abuses such

as forced labor and child labor within the garment sector. Socially

responsible businesses continue to source garments from Cambodia due

to its well-deserved reputation for high labor standards.

 

76. Currently, the ILO\’s Better Work and Better Factories Cambodia

program is developing a training package on planning and

implementing the transition of the inspections regime towards

substantial compliance with international labor standard such as the

OECD Guidelines for Multinational Enterprises. In addition, several

multinational enterprises conduct CSR programs in Cambodia which are

viewed favorably by the local community.

 

Political Violence

——————

 

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77. Cambodia is relatively peaceful compared to its pre-UNTAC

history. Election-related violence has decreased in each national

election held at five-year intervals since 1993. Cambodia\’s 2007

commune council elections followed by the July 2008 National

Assembly election had little of the pre-election violence or

intimidation that preceded the 2002 and 2003 elections. The 2007

and 2008 polls resulted in clear victories for the Cambodian

People\’s Party, with the Sam Rainsy Party emerging as the main

opposition party.

 

78. Cambodian political activities have turned violent in the past,

and the possibility for politically motivated violence remains.

During the anti-Thai riots in 2003, the Royal Embassy of Thailand

and Thai-owned commercial establishments were attacked. In November

2006, police arrested six people for allegedly plotting to conduct

bomb attacks in Phnom Penh during the Water Festival.

 

79. On July 29, 2007, three improvised explosive devices (IEDs)

were planted at the Vietnam-Cambodia Friendship Monument in Phnom

Penh. One of the IEDs partially exploded, but the others failed to

detonate and were recovered by Cambodian authorities. No one was

injured. On January 2, 2009, two undetonated IEDs were found near

the Ministry of National Defense and state-owned TV3. While there

is no indication these incidents were directed at U.S. or other

Western interests, the possibility remains that further attacks

could be carried out.

 

80. Following the July 2008 UNESCO World Heritage Site listing of

the Preah Vihear Temple, thousands of Thai and Cambodian soldiers

amassed in a few isolated areas along the Thai-Cambodian border,

particularly near the disputed Preah Vihear temple area. Since

then, soldiers have clashed near the temple resulting in deaths on

both sides, but the outbreaks of violence have been rare and lasted

only a few hours. Both the Thai and Cambodian governments have

committed to a peaceful resolution of the dispute.

 

Corruption

———-

 

81. Despite increasing investor interest, Cambodia continues to

rank poorly on global surveys of competitiveness and corruption.

According to the World Economic Forum\’s Global Competitiveness

Report 2009-2010, Cambodia\’s competitiveness ranking slipped by one

point to 110 of 133 countries surveyed, a reversal of the one point

climb to 109 in the 2008-2009 report (of 134 countries). The World

Bank also ranked Cambodia in the lower half of the list, 145 of 183,

on business climate. In 2009, Cambodia scored 2.0 on a scale of 0

(highly corrupt) to 10 (highly clean) in Transparency

International\’s Corruption Perceptions Index, ranking 158 out of 180

countries assessed, suggesting widespread and endemic forms of

corruption.

 

82. Business people, both local and foreign, have identified

corruption, particularly within the judiciary, as the single biggest

deterrent to investment in Cambodia. Corruption was cited by a

plurality of respondents to the World Economic Forum survey as the

most problematic factor for doing business in Cambodia. A 2007

USAID-funded survey of the Phnom Penh Chamber of Commerce also found

that corruption is considered to be the main obstacle for doing

business.

 

83. Public sector salaries range from USD 25-60 per month for

working level officials, and around USD 2000 per month for

high-ranking officials. Although there is an annual salary increase

of 10-15 percent, these wages are far below the level required to

maintain a suitable quality of life in Cambodia, and as a result,

public employees are susceptible to corruption and conflicts of

interest. Local and foreign businesses report that they must often

pay extra facilitation fees to expedite any business transaction.

Additionally, for those seeking to enter the Cambodian market, the

process for awarding government contracts is not transparent and is

subject to major irregularities.

 

84. Current Cambodian laws and regulations and their application

are insufficient to address the problem of corruption. Laws dating

from the UNTAC period (1991-93) against embezzlement, extortion, and

bribing public officials exist, but are enforced rarely, often for

political reasons.

 

PHNOM PENH 00000029 013.8 OF 017

 

85. Cambodia is not a signatory to the OECD Anti-Bribery

Convention, but has endorsed the ADB/OECD Anti-Corruption Action

Plan for Asia and the Pacific. In 2007, the government signed a

regional anti-corruption pact with eight other ASEAN countries, and

in September of the same year, also signed the UN Convention Against

Corruption. Cambodia is considering joining the Extractive

Industries Transparency Initiative governing the oil sector.

 

86. Cambodia is under increasing pressure from donors to address

the issue of good governance in general, and corruption in

particular. Cambodia began efforts to draft and enact

anti-corruption legislation in the 1990\’s. In a draft action plan

on good governance presented to donors in May 2000, Cambodia

promised to pass anti-corruption legislation by late 2001. Since

then, donors have become increasingly frustrated with the

government\’s failure to meet a series of benchmarks to enact new

anti-corruption legislation.

 

87. However, in October, the National Assembly passed a new Penal

Code, which the government has long stated was a prerequisite to the

heavily anticipated anti-corruption law. In December, the Cambodian

government finally approved the draft anti-corruption law which is

expected to be approved by the National Assembly in 2010. Under the

new law, all civil servants would be obliged to declare their

financial assets to the government every two years.

 

88. The Ministry of National Assembly-Senate Relations and

Inspection (MONASRI) has an anti-corruption mandate, but is largely

inactive. In 2007, however, MONASRI, with technical assistance from

USAID, created a draft Access to Information Policy. The draft has

yet to be forwarded to the Council of Ministers. The government

also created an anti-corruption commission within the cabinet in

late 1999, which has undertaken a few investigations, one of which

resulted in the dismissal of a mid-level official in late 2001.

Also in 2001, the government established a National Audit Authority,

which has been only marginally effective because of its lack of

transparency and independence.

 

89. Ignoring the existing anti-corruption commission, the

government established the Anti-Corruption Unit (ACU) in August

2006, a temporary body designed to address corruption until the

anti-corruption legislation is passed. The mission of the ACU is to

focus on preventing corruption, strengthening law enforcement, and

obtaining public support for combating corruption. However the ACU

is considered to be ineffective because of its lack of independence

and capacity.

 

90. In its most comprehensive reform strategy, the Rectangular

Strategy Phase II, adopted as the government platform in 2008 after

phase I in 2004, the Cambodian government once again renewed its

commitment to fight corruption and make good governance the

centerpiece of reform. The strategy acknowledges the importance of

taking action against corruption, but the challenge remains a

daunting and long-term one that will require political will at the

highest levels of the government.

 

Bilateral Investment Agreements

——————————-

 

91. Cambodia has signed bilateral investment agreements with

Australia, China, Croatia, Cuba, the Czech Republic, France,

Germany, Indonesia, Kuwait, Japan, Laos, Malaysia, the Netherlands,

North Korea, the Organization of the Petroleum Exporting Countries

(OPEC), Pakistan, the Philippines, Singapore, South Korea,

Switzerland, Thailand, and Vietnam. Future agreements with Algeria,

Bulgaria, Burma, Egypt, Hungary, Libya, Malta, Qatar, Russia, the

United Kingdom, and Ukraine are planned. The agreements provide

reciprocal national treatment to investors, excluding benefits

deriving from membership in future customs unions or free trade

areas and agreements relating to taxation. The agreements preclude

expropriations except those that are undertaken for a lawful or

public purpose, are non-discriminatory, and are accompanied by

prompt, adequate and effective compensation at the fair market value

of the property prior to expropriation. The agreements also

guarantee repatriation of investments and provide for settlement of

investment disputes via arbitration.

 

PHNOM PENH 00000029 014.12 OF 017

 

92. In addition, in July 2006, Cambodia signed a Trade and

Investment Framework Agreement (TIFA) with the United States, which

will promote greater trade and investment in both countries and

provide a forum to address bilateral trade and investment issues.

Two very successful meetings were held under the TIFA in 2007 in

which the U.S. and Cambodian governments discussed WTO accession

requirements, trade facilitation and economic development

initiatives, and progress on intellectual property rights. Since

then, several bilateral working level meetings have been held to

advance the TIFA agenda.

 

OPIC and Other Investment Insurance Programs

——————————————–

 

93. Cambodia is eligible for the Quick Cover Program under which

the Overseas Private Investment Corporation (OPIC) offers financing

and political risk insurance coverage for projects on an expedited

basis. With most investment contracts written in U.S. dollars,

there is little exchange risk. Even for riel-denominated

transactions, there is only one exchange rate, which is fairly

stable. Cambodia is a member of the Multilateral Investment

Guarantee Agency (MIGA) of the World Bank, which offers

political-risk insurance to foreign investors.

 

94. The Export-Import Bank of the United States (Ex-Im Bank)

provides financing for purchases of U.S. exports by private-sector

buyers in Cambodia on repayment terms of up to seven years. Ex-Im

Bank support typically will be limited to transactions with a

commercial bank functioning as an obligor or guarantor; however, it

will consider transactions without a bank undertaking on a

case-by-case basis.

 

Labor

—–

 

95. The country has an economically active population (defined as

being ten years of age and older) of some 8.8 million people out of

a population of 13.4 million. While government statistics are

somewhat higher, they do not fully capture the problems of

unemployment and underemployment in Cambodia.

 

96. The economy is not able to generate enough jobs in the formal

sector to handle the large number of entrants to the job market.

This dilemma is likely to become more pronounced over the next

decade. Cambodia suffers from a large demographic imbalance.

According to the 2008 General Population Census of Cambodia,

Cambodia\’s annual population growth rate is 1.54 percent. Persons

20 years of age or younger account for 48.1 percent of the total

population. As a result, over the next decade at least 275,000 new

job seekers will enter the labor market each year.

 

97. Approximately 65 – 70 percent of the labor force is engaged in

subsistence agriculture. At the end of 2009, about 278,000 people,

the majority of whom are women, were employed in the garment sector,

with 300,000 Cambodians employed in the tourism sector, and a

further 50,000 people in construction.

 

98. The 2009-2010 Global Competitiveness Report of the World

Economic Forum identified an inadequately educated workforce as one

of the most serious problems in doing business in Cambodia. Given

the severe disruption to the Cambodian education system and loss of

skilled Cambodians during the 1975-79 Khmer Rouge period, workers

with higher education or specialized skills are few and in high

demand. A Cambodia Socio-Economic Survey conducted in 2004 found

that about 12 percent of the labor force has completed at least an

elementary education. Only 1.2 percent of the labor force completed

post-secondary education.

 

99. Overall literacy, for those aged fifteen and over, is 75.1

percent with male literacy rates considerably higher than those for

females in both urban and rural areas. Many adults and children

enroll in supplementary educational programs, including English and

computer training. Employers report that Cambodian workers are

eager to learn and, when trained, are excellent, hardworking

employees.

 

100. Cambodia\’s 1997 labor code protects the right of association

and the rights to organize and bargain collectively. The code

 

PHNOM PENH 00000029 015.12 OF 017

 

prohibits forced or compulsory labor, establishes 15 as the minimum

allowable age for paid work, and 18 as the minimum age for anyone

engaged in work that is hazardous, unhealthy or unsafe. The statute

also guarantees an eight-hour workday and 48-hour work week, and

provides for time-and-a-half pay for overtime or work on the

employee\’s day off. The law gives the Ministry of Labor and

Vocational Training (MOLVT) a legal mandate to set minimum wages

after consultation with the tripartite Labor Advisory Committee. In

January 2007, the minimum wage for garment and footwear workers was

officially set at USD 50 per month. In April 2008, a USD 6 per

month cost of living allowance was instituted to offset high levels

of inflation. There is no minimum wage for any other industry. To

increase competitiveness of garment manufacturers, the labor code

was amended in 2007 to establish a night shift wage of 130 percent

of day time wages.

 

101. Acleda Bank, a local commercial bank, is currently managing

Cambodia\’s first National Social Security Fund (NSSF), which

protects workers against occupational risks and workplace accidents.

The fund was established by sub-decree in 2007 and requires

employers to contribute 0.8 percent of each employee\’s salary to the

NSSF. As December 29, 2009, approximately 350,000 workers, most

from the garment sector, contribute to the fund through their

employer. The Cambodian government has responded to the global

economic crisis by temporarily contributing 0.3 percent towards the

NSSF on behalf of employers for two years (2009-2010) which has

resulted in a reduction of employers\’ obligation from 0.8 percent to

0.5 percent of total wages. A second phase of the fund, to be

implemented in 2010, will focus on health care for employees,

followed by pensions in 2012.

 

102. Enforcement of many aspects of the labor code is poor, albeit

improving. Labor disputes can be problematic and may involve

workers simply demanding conditions to which they are legally

entitled. In labor disputes in which workers complain of poor or

unhealthy conditions, MOLVT and the Ministry of Commerce have

ordered the employer to take corrective measures. The U.S.

Government, the ILO, and others are working closely with Cambodia to

improve enforcement of the labor code and workers\’ rights in

general. The U.S.-Cambodia Bilateral Textile Agreement linked

Cambodian compliance with internationally recognized core labor

standards with the level of textile quota the U.S. granted to

Cambodia. While the quota regime ended on January 1, 2005, a

\”Better Factories\” program continues to build on the labor standards

established.

 

Foreign Trade Zones

——————-

 

103. To facilitate the country\’s development, the Cambodian

government has shown great interest in increasing exports via

geographically defined special economic zones (SEZs), with the goal

of attracting much-needed foreign direct investment.

 

104. The government is preparing a Law on Special Economic Zones

which will define SEZs and establish the rules under which they will

operate. The law may be submitted for approval of the Council of

Ministers in 2010.

 

105. In late December 2005, the Council of Ministers passed a

sub-decree on Establishment and Management of Special Economic Zones

to speed up the creation of the zones. The sub-decree details

procedures, conditions and incentives for the investors in the

zone.

 

106. Since issuing the sub-decree, the Cambodia Special Economic

Zones Board (CSEZB) has approved 21 SEZs as of December 2009, of

which 4 are in operation, located near the borders of Thailand and

Vietnam, and in Phnom Penh, Kampot, and Sihanoukville.

 

Foreign Investment Statistics

—————————–

 

107. Foreign Direct Investment (FDI) proposals approved by the

Council for the Development of Cambodia (CDC) have dramatically

increased in recent years, with approved FDI reaching USD 10.9

billion in 2008, compared with USD 201 million in 2004. However, FDI

inflows declined dramatically to only USD 1.6 billion as of October

 

PHNOM PENH 00000029 016.10 OF 017

 

2009 due to the impact of the global economic crisis. FDI registered

capital however, has been modest since 1995, with an average inflow

of USD 304 million in the period 1995-2008. The FDI registered

capital figures probably understate actual investment, since they

report only registered capital and not fixed assets. CDC statistics

for fixed assets, however, are based on projections, and the CDC has

no effective monitoring mechanism to determine the veracity of the

numbers. The FDI registered capital flow into Cambodia is uneven

and gradually declined from USD 135 million in 1999 to USD 30

million in 2003, but rose to USD 105 million in 2009.

 

108. Total FDI registered capital flows into Cambodia for the years

1998-2009 are presented in the table below, in USD million.

(Source: CDC) (Note: statistics from the National Bank of Cambodia

differ significantly from CDC\’s figures.)

 

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

320 135 74 81 50 30 45 383 209 473 260 105

 

109. Figures from the CDC for registered capital of approved

projects, including domestic investment, and broken down by country

of origin and economic sector, are provided below. The FDI

registered capital figures below may overstate investment because

they include projects that have not yet been, or may never be, fully

implemented and retention of dormant or defunct projects from

earlier years makes the investment figures appear higher.

 

110. Total cumulative registered investment projects approved, by

country of origin, August 1994 to October 2009 (source: CDC)

 

Country USD millions Pct.

Malaysia 1,736 32.17

Cambodia 1,526 28.28

China 603 11.17

Taiwan 405 7.50

Thailand 221 4.09

Singapore 199 3.68

South Korea 170 3.15

U.K. 132 2.44

USA 71 1.31

Vietnam 69 1.27

Indonesia 55 1.01

Australia 55 1.01

France 42 0.77

Japan 24 0.44

Other 88 1.63

Total 5,396 100

 

111. Total cumulative registered investment capital by sector, from

January 1998 to October 2009 (source CDC)

 

Sector USUSD millions Number of Projects

Industry 1,538.7 748

– Food Processing 93.5 13

– Garments 469.4 421

– Petroleum 212.2 9

– Wood Processing 100.3 17

– Footwear 33.8 27

Agriculture 209.6 90

Services 342.8 81

– Construction 64.6 15

– Telecommunications 94.5 16

Tourism 446.4 98

Total 2537.5

 

112. New investment projects in USD million, by country of origin,

2004-2009(source: CDC)

 

Country 2004 2005 2006 2007 2008 2009

Malaysia 7.81 0.6 2.5 19.8 1 na

Cambodia 15 78.5 116.8 264.3 99.8 17.6

U.S. 2.1 2.2 4.3 6.5 12.3 1

Taiwan 4.6 4.1 16.4 14 9.5 5

Singapore 1.6 5.3 3.8 1 12 5.5

China 24 38 28.3 40.4 37.9 34.5

South Korea 4.1 16 4.5 22 19.5 5.2

Hong Kong na 0.3 1.5 0.6 na 1

France 0.6 0.4 na 0.3 2.3 1.6

 

PHNOM PENH 00000029 017.10 OF 017

 

Thailand 2 15 10 13.8 30.6 15.5

U.K. 1.5 1 1 1.5 1 2

Canada 1.7 0.6 1.5 na 4.8 1

Indonesia na na na na na 1

Australia na 7 na 3.5 1 na

Japan 0.7 na 1 7.5 4.6 1

Other na na 8.1 78.5 4.1 11

Total 65.71 169 199.7 473.7 240.4 102.9

 

113. New investment projects in USD million, by sector, 2004-2009

(source: CDC)

 

Sector 2004 2005 2006 2007 2008 2009

Industry 53.5 325 173.4 269.9 90 56.7

– Food Processing 1 na 22 24 4 2

– Garments 19 54 41.9 45.1 49 20

– Petroleum 1 200 na na na 9.2

– Wood Processing 1 na na 2 na 2

– Mining na 30 1 149 4 7

Agriculture 2 4 2 50.1 26 32.5

Services 5 32 16.3 127.2 43 4

– Construct 3 31 6 5 1 na

– Telecom na na na 42.2 2 2

– Infrastructure na na na 65 na 1

Tourism 5.5 18 18 33.5 101 12

Total 66 379 209.7 480.7 260 105.2

 

114. The CDC has registered approximately USD 71 million in U.S.

investment since August 1994. Caltex has a chain of service

stations and a petroleum holding facility in Sihanoukville; Crown

Beverage Cans Cambodia Limited, a part of Crown Holdings Inc.,

produces aluminum cans; and Chevron is actively exploring offshore

petroleum deposits. W2E Siang Phong Co., Ltd., a joint venture

between U.S.- Dutch investors, invested in biogas power generation.

There are also U.S. investors in a number of Cambodia\’s garment

factories.

 

115. In 2008, several Cambodia-focused private equity funds emerged

seeking to raise between USD 100 and USD 500 million each for

investments in infrastructure, agriculture, tourism, and real estate

development, among other sectors. However it appears the global

economic slowdown is limiting fund-raising abilities, and widespread

investments by these funds have not yet materialized.

 

116. Major non-U.S. foreign investors include Asia Pacific

Breweries (Singapore), Asia Insurance (Hong Kong), ANZ Bank

(Australia), BHP Billiton (Australia), Oxiana (Australia), Infinity

Financial Solutions (Malaysia), Total (France), Cambodia Airport

Management Services (CAMS) (France), Samart Mobil Phone (Malaysia),

Shinawatra Mobile Phone (Singapore), Thakral Cambodia Industries

(Singapore), Petronas Cambodia (Malaysia), Charoeun Pokphand

(Thailand), Siam Cement (Thailand), and Cambrew (Malaysia).

 

117. Since 2007, several well-known U.S. companies opened or

upgraded their presence in Cambodia. General Electric and DuPont

have established representative offices. Otis Elevators, a division

of United Technologies, also upgraded to a branch office, and

Microsoft initiated a presence through its Market Development

Program.

 

118. Some major local companies and their sectors are: Sokimex

(petroleum, tourism, garment), Royal Group of Companies (mobile

phone, telecommunication, banking, insurance), AZ Distribution

(construction, telecommunication), Mong Rethy Groups (construction,

agro-industry, rubber and oil palm plantation), KT Pacific Group

(airport project, construction, tobacco, food and electronics

distribution), Hero King (cigarettes, casinos and power), Anco

Brothers (cigarettes, casinos and power), Canadia Bank (banking and

real estate), Acleda Bank (microfinance), and Men Sarun Import and

Export (agro-industry, rice and rubber export).

 

119. In 2009 Acleda Bank opened its first bank branch outside of

Cambodia in Laos, and has announced plans for further expansion into

Vietnam and China. Statistics on Cambodian investment overseas are

not available, but such investments are likely minimal.

 

RODLEY

Written by thaicables

July 22, 2011 at 9:38 am

10BANGKOK45 SCENESETTER FOR ASSISTANT SECRETARY SHAPIRO

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“242728”,”1/7/2010 10:42″,”10BANGKOK45″,”Embassy Bangkok”,”CONFIDENTIAL”,”10BANGKOK3116″,”VZCZCXRO2954

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TAGS: PGOV, PREL, MARR, MOPS, PINS, PHUM, TH

SUBJECT: SCENESETTER FOR ASSISTANT SECRETARY SHAPIRO

 

REF: BANGKOK 3116

 

Classified By: Ambassador Eric G. John, reasons 1.4 (b) and (d).

 

1. (C) Assistant Secretary Shapiro, Embassy Bangkok welcomes

you to Thailand. Despite ongoing domestic discord and

current inward focus, Thailand\’s strategic importance to the

U.S. cannot be overstated. Your visit provides an

opportunity to signal the United States\’ appreciation for the

long-standing bilateral relationship, which has facilitated

shared benefits in the fields of security, law enforcement,

and intelligence efforts, as well as groundbreaking

health/research collaboration and long-standing refugee

support. In just the last three months alone, the U.S.-Thai

partnership has yielded a promising new lead in the drive to

develop an HIV vaccination and the seizure of more than 35

tons of North Korean weapons, two examples which serve to

illustrate the depth and breadth of a relationship. In late

December, the Thai Cabinet approved a supplemental budget to

facilitate the delayed peacekeeping deployment to Darfur.

 

2. (C) As your visit will take place in the run up to the

expected U.S.-Thai Strategic Dialogue, Thai interlocutors

will likely be interested in pursuing discussions on

strategic views of regional security challenges and how the

U.S.-Thai alliance can be focused to assist as Thailand

prepare for threats. The Thai will look to discuss U.S.

assistance through bilateral exercises and training, and

helping the Thai military modernize either by means of

procuring U.S. defense articles or via the hoped for receipt

of excess defense articles by way of Thailand\’s status as a

Major Non-NATO Ally, as Foreign Minister Kasit Piromya raised

in 2009 with Secretary Clinton and other senior USG

officials. In addition, with the Royal Thai Armed Forces

Headquarters (RTARF) preparing for a difficult deployment to

UNAMID in Darfur, the Thai military will look to explore ways

whereby the U.S. can assist.

 

POLITICAL ENVIRONMENT

———————

 

3. (SBU) The last eighteen months were turbulent for

Thailand. Court decisions forced two Prime Ministers from

office, and twice the normal patterns of political life took

a back seat to disruptive protests in the streets. The

yellow-shirted People\’s Alliance for Democracy (PAD) occupied

Government House from August to December 2008, shutting down

Bangkok\’s airports for eight days, to protest governments

affiliated with ex-Prime Minister Thaksin Shinawatra. The

red-shirted United Front for Democracy against Dictatorship

(UDD), followers of Thaksin, disrupted a regional Asian

Summit and sparked riots in Bangkok in mid-April 2009 after

Thaksin, now a fugitive abroad in the wake of an abuse of

power conviction, called for a revolution to bring him home.

2010 promises to be contentious as well, with Thaksin and the

red shirts having vowed to redouble their efforts to topple

the government.

 

4. (C) Prime Minister Abhisit Vejjajiva is a photogenic,

eloquent 44-year old Oxford graduate who generally has

progressive instincts and says the right things about basic

freedoms, social inequities, policy towards Burma, and how to

address the troubled deep south, afflicted by a grinding

ethno-nationalist Muslim-Malay separatist insurgency.

Delivering is another matter, and Abhisit has disappointed us

recently on the repatriation of the Lao Hmong and his

handling of several foreign investment-related issues.

Despite recent higher approval ratings, Abhisit remains

beset by a fractious coalition, vigorous parliamentary

opposition in the form of a large block of politicians under

the Puea Thai Party banner, and street protests from the

red-shirts.

 

5. (C) While both yellow and red try to lay exclusive claim

to the mantle of democracy, neither side of this split is as

democratic as it claims to be. Both movements reflect deep

social concerns stemming from widespread perceptions of a

lack of social and economic justice, but both seek to triumph

in competing for traditional Thai hierarchical power

relationships. New elections would not appear to be a viable

solution to political divide, and political discord could

persist for years. We continue to stress to Thai

interlocutors the need for all parties to avoid violence and

respect democratic norms within the framework of the

constitution and rule of law, as well as our support for

long-time friend Thailand to work through its current

 

BANGKOK 00000045 002 OF 004

 

difficulties and emerge as a more participatory democracy.

 

RECEDING MONARCHY

—————–

 

6. (C) Underlying the political tension in Bangkok is the

future of the monarchy. On the throne for 62 years,

U.S.-born King Bhumibol is Thailand\’s most prestigious

figure, with influence far beyond his constitutional mandate.

Many actors are jockeying for position to shape the expected

transition period Thailand during royal succession after the

eventual passing of the King, who is currently in poor

health. Few observers believe that the deep political and

social divides can be bridged until after King Bhumibol

passes and Thailand\’s tectonic plates shift. Crown Prince

Vajiralongkorn neither commands the respect nor displays the

charisma of his beloved father, who greatly expanded the

prestige and influence of the monarchy during his 62-year

reign. Nearly everyone expects the monarchy to shrink and

change in function after succession. How much will change is

open to question, with many institutions, figures, and

political forces positioning for influence, not only over

redefining the institution of monarchy but, equally

fundamentally, what it means to be Thai.

 

SOUTHERN THAILAND – SEPARATIST INSURGENCY

—————————————–

 

7. (C) An ethno-nationalist Malay Muslim insurgency in

southern Thailand has claimed an estimated 3,500 lives since

2004. The fundamental issues of justice and ethnic identity

drive the violence as many Malay Muslims feel that they are

second-class citizens in Thailand, and ending the insurgency

will require the government to deal with these issues on a

national level. The insurgents use IEDs, assassinations, and

beheadings to challenge the control of the Thai state in the

deep South; the government has responded through special

security laws which give security forces expanded power to

search and detain people. The Thai military is now deeply

involved in counter-insurgency efforts; in the late

1990s-2004, the military viewed the top national security

threat to be the flow of illegal narcotics from neighboring

Burma.

 

8. (C) The insurgents direct their anger at the government in

Bangkok, not at the United States. Since a U.S. presence or

perception of U.S. involvement in the South could redirect

that anger towards us and link it to the international

jihadist movement — a link that is currently absent — we

ensure that any offers of assistance or training pass the

\”location and label\” test. Put simply, we keep U.S. military

personnel away from the far South and we make sure that we do

not label any assistance or training as directly linked to

the southern situation. Likewise, we work to avoid feeding

rampant, outlandish speculation that we are somehow fomenting

the violence in the South in order to justify building

permanent bases — a very sensitive issue in Thailand. We do

not want to jeopardize our access to key military facilities

in Thailand like Utapao Naval Air Station.

 

ENDURING BILATERAL RELATIONSHIP

——————————-

 

9. (C) Despite the political divide, Thailand\’s strategic

importance to the U.S. should not be understated. The

U.S.-Thai military relationship, which began during World War

II when the U.S. trained Thais to covertly conduct special

operations against the Japanese forces occupying Thailand has

evolved into a partnership that provides the U.S. with unique

benefits. Thailand remains crucial to U.S. interests in the

Asia-Pacific region and beyond. Our military engagement

affords us unique training venues, the opportunity to conduct

exercises that are nearly impossible to match elsewhere, a

willing participant in international peacekeeping operations,

essential access to facilities amid vital sea and air lanes

that support contingency and humanitarian missions, and a

partner that is a key ASEAN nation in which we continue to

promote democratic ideals.

 

10. (C) Thailand\’s willingness to allow the United States to

use Utapao Naval Air Station as the hub for our regional

assistance program was key to making the 2004 tsunami and the

2008 Cyclone Nargis relief operations a success. While those

high-profile relief operations highlighted publicly the value

of access to Utapao, the air base is used regularly for

military flights. A prime example was the critical support

 

BANGKOK 00000045 003 OF 004

 

Utapao provided during OEF by providing an air bridge in

support of refueling missions en route to Afghanistan.

Approximately 1,000 flights transit Utapao every year in

support of critical U.S. military operations both regionally

and to strategic areas of the world. Thailand also provides

valued port access with U.S. naval vessels making calls,

primarily at Laem Chabang and Sattahip, over sixty times per

year for exercises and visits.

 

11. (SBU) Beyond traditional military activities, our

bilateral military relationship provides benefits in other

important areas. One example it the Armed Forces Research

Institute of Medical Sciences\’ (AFRIMS) collaboration with

Thai counterparts on basic research and trial vaccines. The

sophistication of the Thai scientific and public health

community makes collaboration as useful to the USG as it is

to the Thais. A number of important breakthroughs, such as

in the prevention of HIV/AIDS transmission from mothers to

children, were developed here, and the first partially

successful phase III, double blind trial for a potential HIV

vaccine occurred in 2009; a second such trial run by CDC is

currently ongoing.

 

COBRA GOLD AND THE MILITARY EXERCISE PROGRAM

——————————————–

 

12 (C) By means of access to good military base

infrastructure and large areas to conduct unrestricted

operations, Thailand gives the U.S. military a platform for

exercises unique in Asia. Thai leaders are far more willing

to host multinational and bilateral exercises than are other

countries in Asia. This has allowed us to use exercises in

Thailand to further key U.S. objectives, such as supporting

Japan\’s growing military role in Asia and engaging the

Indonesian and Singaporean militaries.

 

13. (C) Cobra Gold, the capstone event of our exercise

program, is PACOM\’s largest annual multi-lateral exercise and

for 29 years has served to strengthen our relations with

Thailand, highlight our commitment to Southeast Asia, and

provide exceptional training opportunities for our troops.

The event has evolved over the years and now facilitates

important objectives such as promoting a greater role in the

Asian Pacific region for Japan, Singapore, and South Korea

and re-establishing a partner role with Indonesia. Cope

Tiger, a leading air exercise with the Thailand and

Singapore, and CARAT, a bilateral naval event, are key

mechanisms for engagement of the Thai navy and air force.

The Thai military continues to highlight to us the

significance of these events for training and for

relationship building.

 

PEACEKEEPING EFFORTS AND DARFUR DEPLOYMENT

——————————————

 

14. (C) Thailand has historically been a strong supporter of

UN peacekeeping missions and was an early contributing nation

to operations in Afghanistan and Iraq. In addition, Thai

generals very effectively led UN forces in East Timor, to

which Thailand contributed 1,500 troops, and in Aceh where a

Thai general served as the principal deputy of the Aceh

Monitoring Mission. Thailand is preparing for deploying a

battalion of troops for a difficult UNAMID mission in Darfur

and has asked for USG assistance (Ref A). During your visit,

the Thai will be very interested in discussing ways ahead on

the deployment. Using GPOI funding, we are working with the

military to increase its peacekeeping capabilities, both as a

contributing nation and as a trainer of neighboring nations.

 

BORDER CONFLICT WITH CAMBODIA

—————————–

 

15. (C) Bilateral relations with Cambodia remain volatile,

primarily due to a border dispute centered on 4.6 square

kilometers of overlapping territorial claims adjacent to the

11th century Hindu Preah Vihear temple. Minor skirmishes

have erupted three times since mid-2008, leading to the

deaths of seven soldiers. Cambodian Prime Hun Sen\’s November

2009 decision to appoint Thaksin as an economic advisor

further stoked cross-border tensions.

 

16. (C) The roots of the border dispute lie in the

Siam-France agreements of 1904-8 and a 1962 International

Court of Justice ruling that granted Cambodia the temple but

left the rest of disputed land unresolved. Tensions spiked

in 2008 when the Thai government in power at that time

 

BANGKOK 00000045 004 OF 004

 

supported Cambodia\’s application to UNESCO for a joint

listing of the temple as a world heritage site, only to face

opposition in parliament and an adverse court ruling. Thorny

internal political considerations and historical rancor

between Thailand and Cambodia make progress difficult. We

urge both sides to resolve their differences peacefully

through bilateral negotiations, border demarcation, and a

reduction of troops deployed along the border.

 

REFUGEE CONCERNS

—————-

 

17. (C) Due to inherent institutional capabilities, the Thai

military plays a prominent role in the management of the many

refugees that enter Thailand from neighboring countries.

Thailand continues to host more than 140,000 Burmese and

facilitate resettlement of more than 14,000 refugees to the

U.S. annually, but the recent forced repatriation of two

groups of Lao Hmong in late December provoked international

outcry. We underscore to the RTG our disappointment with the

deportation decision and our continuing concern over access

to the Hmong now that they have been returned to Laos. The

Thai have asked us privately about possible repercussions due

to the deportation.

 

THE INCREASING ROLE OF CHINA

—————————-

 

18. (C) As the shape of Southeast Asia, Asia writ large, and

the world has changed, so have Thai attitudes. The Chinese

have been making a major push to upgrade all aspects of

relations, including mil-mil. Thailand is not interested in

making a choice between the U.S. and China (nor do we see

closer Chinese-Thai relations as automatically threatening to

our interests here), but we will need to work harder to

maintain the preferred status we have enjoyed. While Thai

military links with the United States are deeper and far more

apparent than Sino-Thai links, China\’s growing influence in

Thailand is readily evident.

 

19. (C) The Chinese have made a strong effort to court the

Thai military. The Thai military has a range of Chinese

weapons systems in its arsenal; the PLA Navy is interested in

closer links with the Thai navy, and China has worked with

Thailand to improve air defense equipment provided to

Thailand in the late 1980\’s. In 2007 and 2008, Thai and

Chinese Special Forces conducted joint exercises, and other

mil-to-mil exchanges have expanded in recent years, as has

the number of bilateral military VIP visits.

 

20. (C) During a visit to Thailand by Chinese Minister of

National Defense Liang Guanglie for the King\’s birthday

celebrations in early December 2009, the Thai and Chinese

militaries agreed to expand bilateral exercises to include

the two nations\’ navies, marines, and air forces. The

initial exercise will be conducted early this year, with the

PLA engaging Thai sailors and marines through an amphibious

landing event and a naval rescue and humanitarian relief

exercise. While some entities within the RTG resisted the

expanded engagement, reportedly the MFA and the Marine

Commandant, the Thai tell us that the Chinese pushed hard for

a rapid expansion of bilateral exercises. The Thai Marines

suggested to us that the exercise will be held at the platoon

or company level; it is unclear how many Navy personnel may

participate.

 

21. (C) The expansion of joint exercises follows China

providing Thailand with $49 million in military assistance

following the 2006 coup. Beyond exercises and assistance,

the number of exchanges by Thai and Chinese officers studying

at military institutes has increased significantly in recent

years, particularly since the coup. The PLA has also

actively courted Thai military leaders, including Defense

Minister Prawit Wongsuwan and Army Commander General Anupong

Paojinda, through multiple hosted-visits to China.

JOHN

Written by thaicables

July 22, 2011 at 9:35 am