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July 13, 2012

Clinton Discusses Investment, Debt in Cambodia

by Scott Stearns

PHNOM PENH — U.S. Secretary of State Hillary Clinton is in Cambodia where she met with Prime Minister Hun Sen to discuss U.S. investment and Cambodia's outstanding debt.

Cambodia wants the United States to forgive more than $400 million in debt accrued by the US-backed military government of Lon Nol. He took power in a 1970 coup and borrowed money from Washington at three percent interest, in part, to feed supporters in Phnom Penh as they were surrounded and ultimately defeated by the Khmer Rouge.

Prime Minister Hun Sen says that is "dirty debt" that Cambodia should not have to repay.

Secretary Clinton was asked about the debt following talks with the prime minister and said that under international law, governments are responsible for the obligations of their predecessors "even though that may seem unfair in many instances." Even so, she said she is personally committed to working with Cambodia to make progress in resolving the debt.

"What we want to do is work with the Cambodian government to try to resolve these longstanding issues in a way that is fair, to help the Cambodian government enhance its credit worthiness, increase its access to international capital markets. We think it will be in Cambodia’s interest to be able to enter into international financial markets," said Clinton. "Not be dependent on any one source of funding, but be able to bargain and work toward real credit worthiness."

One idea is to gradually convert loan repayments to domestic investments in education and the environment as a form of additional U.S. development assistance. That has been held up, in part, by the need to establish means of accountability to ensure that the money goes to help the Cambodian people.

Clinton told reporters in Phnom Penh that U.S. assistance to Cambodia has more than doubled over the last decade, to more than $75 million. There is money to help fight HIV/AIDS, to meet the needs of nearly one-quarter of Cambodians who are food deprived, and to reduce maternal and child mortality.

"Sometimes it is a little frustrating, I will admit, for the United States, because we channel our aid, in so far as possible, to the people themselves. We want more people fed," Clinton admitted. "We want more people healthier. We want more men, women, and especially children to have a better life. So we cannot point to a big building we have built. But we can point to more children being alive."

Since normalizing economic relations in 1992, U.S. investment in Cambodia has grown steadily to more than $144 million last year. The government Council for the Development of Cambodia says that is triple the figure for 2010.

Cambodian exports to the United States top one billion dollars annually, mostly garments and footwear.

Clinton is leading the largest-ever delegation of U.S. business to Cambodia as part of an investment forum targeting members of the Association of South East Asian Nations. Participating firms include Boeing, Chevron, Coca-Cola, FedEx, Ford, General Electric, and Proctor and Gamble.