Cambodia: No Rush to Repay US Debt

PHNOM PENH, Cambodia — Cambodia has more pressing concerns than repaying millions of dollars it owes the United States, a government spokesman said Friday, rebuffing Washington's latest demand for settlement of loans from the 1970s.

"We have many affairs to attend to," said government spokesman Khieu Kanharith, noting that repaying $339 million to the U.S. was not high on Cambodia's priority list.

The comments came a day after Scot Marciel, the U.S. State Department's deputy assistant secretary for East Asian and Pacific affairs, urged Cambodia to sign a draft agreement on repaying the debt. Marciel made the remarks Thursday in Washington in testimony before the House Foreign Affairs Committee's Subcommittee on Asia.

The outstanding debt stems from rice, cotton and other agricultural commodities financed by low-interest loans the U.S. provided to Cambodia during the regime of Gen. Lon Nol in the early 1970s.

Lon Nol came to power in a 1970 coup that ousted Prince Norodom Sihanouk. The United States was the main financial and military supporter of Lon Nol's regime until it was toppled by the genocidal Khmer Rouge movement in April 1975.

The two countries have not yet come up with a repayment plan, partly because the Cambodian government refuses to accept responsibility for debts incurred by the Lon Nol regime, and partly because of a disagreement over the amount of debt owed, Marciel said.

After years of deadlock, Cambodia agreed "in principle with the amount of principal it owed" in 2006 but then refused to sign a draft bilateral agreement drawn up by the U.S., Marciel said. Cambodia has subsequently demanded additional concessions, including a lower interest rate, he said.

He said Cambodia also does not deserve any debt reduction from the U.S. because it is neither heavily indebted nor facing crisis of external balance of payments.

"Cambodia has accumulated arrears to the U.S., while paying other creditors on time, and in at least one case, early," Marciel said.

About $154 million of Cambodia's debt "would be due immediately," if the 2006 agreement is implemented this year, he said.

Khieu Kanharith said immediate payback was unlikely.

"Even if we have to repay it, we can't repay it because that would severely affect our financial and economic situation," he said.

Despite recent economic growth, Cambodia still relies on hundreds of millions of dollars in annual foreign assistance for development.

The government spokesman added that the United States "has not compensated the Cambodian people" for its bombing of Cambodia during the Vietnam war either.

The difficulties Cambodia faces today as it tries to rebuild after more than two decades of civil war "are also partly the result of the American bombing."