Cambodia cancels $41.2 million loan from Thailand

By SOPHENG CHEANG,Associated Press Writer


PHNOM PENH, Cambodia – Cambodia informed Thailand on Friday it was canceling a US$41.2 million loan from Bangkok meant to finance the upgrade of a highway from the Thai border.

Cambodian Foreign Ministry spokesman Koy Kuong said his country didn't need the loan and could afford to build the road on its own.

The decision comes during a period of bad relations between the two countries over Cambodia's recent welcome to former Thai Prime Minister Thaksin Shinawatra, a fugitive from Thai justice.

Thai-Cambodian relations took a turn for the worse when Cambodia recently named Thaksin an adviser on economic affairs. The subsequent visit by Thaksin, and Cambodia's rejection of a formal request from Bangkok to extradite him, drew a negative reaction from Bangkok.

Each country has recalled its ambassador and Bangkok has canceled an agreement to negotiate on joint development of offshore territory claimed by both countries. It also said it would review all other assistance agreements and projects with its neighbor.

Cambodia is holding a Thai man on a spying charge for allegedly sending a copy of Thaksin's flight schedule to the Thai Embassy during the former leader's visit earlier this month.

The secretary to Thailand's foreign minister, Chavanond Intarakomalyasut, downplayed the importance of Phnom Penh's cancellation of the loan to upgrade the 73-mile (117-kilometer) road stretching from Cambodia's northwestern border with Thailand to the province of Siem Reap.

He called it a normal procedure, as Friday marked three months after the agreement was signed, and Cambodia was supposed to give notice on whether it agreed to its terms.

The road would in large part serve trade between the two countries, which is heavily in Thailand's favor.

He said Thailand had reviewed the agreement, as part of its earlier threat to cancel all assistance agreements, but took no action on it.

A Thai court last year sentenced Thaksin in absentia to two years in prison for violating a conflict of interest law, but he fled into exile before the verdict. He was prime minister from 2001 until ousted by a military coup in 2006.