A Change of Guard

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Monday 10 December 2012

Debunking Myths about the Debt [The U.S ambassador said Cambodia is unwilling to repay its U.S. debt]

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William E. Todd, U.S. Ambassador to the Kingdom of Cambodia 

Thank you for the excellent feedback that you continue to provide on my “Ask the Ambassador” column.  Engaging directly with all of you on issues that you find important and pressing are a highlight of my work in Cambodia.  I hope to continue to hear from you at AskAMBToddPP@state.gov.

Recently, I have received several questions regarding Cambodia’s bilateral debt to the United States since the matter was raised during the East Asia Summit between our two countries.  As I indicated in a previous column, both the United States and Cambodia agree that resolving the debt issue would go a long way toward strengthening our bilateral relationship and would help spur Cambodia’s economic development by improving its creditworthiness and access to international capital markets.  Unfortunately, there still seems to be some misunderstandings about the specifics of the debt and most of the questions demonstrate how much misinformation out there exists.

What is the source of the debt?  The debt arose from shipments of agricultural commodities, such as rice and wheat flour, financed with low-interest loans by the U.S. Department of Agriculture to Cambodia in the early 1970s.  When the Khmer Rouge regime came to power in 1975, it ceased to repay these loans.

In 1995, Paris Club creditors – an informal group of financial officials from some of the world’s largest economies, including the United States – agreed to a debt restructuring package for Cambodia.  Cambodia signed bilateral debt agreements with France, Germany, Italy, and Japan and began paying those countries accordingly.  The Cambodian government indicated, however, that it was unwilling to repay its U.S. debt, in part, because it did not recognize debts incurred during the Lon Nol era.  According to international law, governments are generally responsible for the debts of their predecessor governments.  For example, the Iraqi government agreed to repay the debts of the Saddam Hussein regime, the civilian government of Nigeria accepted the debts of the preceding military regimes, and Afghanistan accepted the financial burden stemming from decades of foreign occupation and war.  In fact, one of the most important decisions of an independent United States in 1783 was to honor debts to Great Britain.

The United States has remained steadfast in resolving this issue.  After several years of deadlock, we offered concessions of nearly $100 million on the amount of principal owed, leading the Cambodian Ministry of Finance to agree on a final principal figure.  Both parties then moved forward with drafting a bilateral agreement – similar to the ones Cambodia had with France, Germany, Italy, and Japan for repaying those debts – that retroactively implemented the 1995 Paris Club agreement, including a highly favorable interest rate concession.

Although the agreement has been with Cambodia since 2006, the Royal Government has been unwilling to move forward with signing it and has since asked for additional concessions, such as an additional interest-rate reduction and a debt swap arrangement.  The challenge with these requests is that under U.S. law the Cambodian government must be current in repaying its debt before these ideas can be considered.  Furthermore, creating a special debt reduction program for a country that is unwilling, rather than unable, to pay its debts sets a poor precedent for other countries in similar circumstances and sends the wrong message about prudent debt management.  The United States regularly reviews and declines similar requests for debt-for-assistance swap arrangements from debtor countries, including countries that are current on their payments.

So how can we resolve the debt issue?  We have urged the Cambodian government to sign the pending bilateral debt agreement and to re-establish a track record of timely repayment.  If it makes scheduled payments for at least one year, the U.S. government would communicate to the International Monetary Fund that efforts are underway to resolve official arrears, which would pave the way for the Paris Club to consider a favorable rescheduling of the remaining debt.  We now await Cambodia’s decision to move forward.

I hope this explanation helps clear up any misunderstandings regarding the longstanding and thorny debt issue, which the United States remains committed to resolving.  Thank you all very much for spending your Sunday reading my column.  I look forward to reading next week’s questions, so please send your questions to me in English or Khmer at AskAMBToddPP@state.gov, and don’t forget to follow my blog at http://blogs.usembassy.gov/todd/.

William E. Todd is U.S. Ambassador to the Kingdom of Cambodia

15 comments:

Anonymous said...

Cambodia must repay the debt to the U.S under international law and in order to normalize the relations between the 2 countries. The U.S has already given a concession on the loan repayment.

If Cambodia repay the loan, maybe America might give more aid.

Anonymous said...

When the U. S. bombed over 60% of the country, where people could not farm and where their homes were being destroyed and their families were being killed, the U. S. turned around trying to be a nice guy by giving them food with the price tags. It is the dirty debt. I can’t understand how the ambassador tries to explain his view out this circumstantial evidents.

We’re all living in this world with God's giving instinct that telling us what is right and what is wrong. That’d being said, we should be honor and sincere. From the bottom of heart I don’t believe the ambassador is being honor and sincere when he wrote this article. He is only playing politic with people lives.

Anonymous said...

Me too,I believe with all my heart that he play politic as well,say one thing but do another this is not sincere,its politic as usual.The debt must be forgave due to illegal bombardment of Nixon administration secretly against the law of war in a country that was neutrality.Mr ambassador please say thing sincere from your heart don't play politic on khnems'innocent that your gov't killed during the war unjustly,in my opinion the debt should be forgiven because American killed 600,000 Cambodians were purely innocent,and the debt was borrowed to help fighting American war not camboan's war.

Victim of war!

Anonymous said...

Repost:

When the U. S. bombed over 60% of the country, where people could not farm and where their homes were being destroyed and their families were being killed, the U. S. turned around trying to be a nice guy by giving them foods with the price tags. It is the dirty debt. I can’t understand how the ambassador tries to explain his view out of this circumstantial evident.

We’re all living in this world with God’s giving instinct that telling us what is right and what is wrong. That’d being said, we should be honest and sincere. From the bottom of heart I don’t believe the ambassador is being honest and sincere when he wrote this article. He is only playing politic with people lives.

Anonymous said...

The ambassador forgets the facts that a lot of countries are willing to let Cambodia borrow the money today than ever before. The American dirty debt did very little to halt these countries such as Japan, South Korea, let alone China. Cambodia today has better credential than the U. S. back regime Lon Nol per se.

Anonymous said...

It is really dirty debt. Bomb Cambodia. I believe if Cambodia file a lawsuit against the illegal bomb, Cambodia will win for sure. it is a absolute irresponsibility to Cambodian civilians. I hope the US government must act being a superpower of freedom and JUSTICE....................I think before focusing on just human right abuse in Cambodia, the US should focus on Human right's abuse in Thailand and Vietnam. For instance, Thai gov't crackdowned Red shirt protests and killed about 100 civilians. Vietnam government destroyed pagoda, arrest Khmer Krom civilians, and confiscate Their lands. Does the US condemn this act? No. how can Cambodians has hope in the US? Even the person that was already died, the US president don't even give a condolence to him, Prince Sihanouk. But, for Thailand, the US visit Thai king and gave speech. I just realize that the US is just like other ordinary country that think about their own country benefit only....no irresponsibility anything, no respect others as a nation, and no conscience of it's own mistake. Damn the world is really suck!!!!

Anonymous said...

That one-eyed dictator must pay Uncle Sam back every single penny NOW! If he gets the guts to rule, he will also get the guts to clear up the debt.

Anonymous said...

France, Germany, Italy, and Japan did not bomb Cambodia. Cambodia did not have dirty debt with these countries. The embassador should understand the word bomb as well as the debt. It mean dirty debt.

Anonymous said...

Dirty debt indeed! Killed innocent khmers and finance the war with puppet regime Lon Nol to help fight V.C. Now asked to pay the debt that help fighting your war,its wrong and unethical...The debt should be forgaven because its dirty debt already paid inful with the blood of innocent khmers civilians due to secretly bombardment by criminal administration of Nixon and criminal kissinger should be prosecuted as war crime against humanity [khmers civilians] The dirty blood stains debt must be forgaven....The debt already been paid by 600,000 plus souls of innocent khmers that has nothing to do with your war....

Yobal Khmer

Anonymous said...

Mr. Ambassador,

Cambodia was on U.S.'s side fighting the communists. At the end,your country abandoned Cambodia to the communists, and because of that million of innocent Cambodians perished.

Now your government comes back and demands that the children and grand children of those victims pay back the cost of war for which your country was partly responsible.

Is this how America treat its ally/friends?

Anonymous said...

Dear all, don't fall into Hun Sen's propaganda. This is not a dirty debt, the debt was owed due to Lon Nol buying food from America as the U.S ambassador said. If you buy something you have to pay, right? If you don't pay, it's called stealing.

About bombing, America bombed the Viet Cong in Cambodia to chase them out of Cambodia. America did not bomb Cambodians. In the 1960s and 1970s, hundreds of thousands of Viet Cong soldiers invaded Cambodian territory and used it as their bases. The Cambodian government, including Sihanouk and Lon Nol, allowed America to bomb the Viet Cong bases inside Cambodia to chase them out of Cambodia. However, some Cambodians were killed due to the bombings.

Anonymous said...

Some Cambodian were killed? How many Cambodians and how many VC? Do your math!

Cambodia could feed themself if there were no bombing, no killing, and no destroyer.

It is like I burned your house down and then I lended your the money to rebuid the house with interest. If this is not stealing than what is it?

Anonymous said...

No its like;help me fighting my war I'll fed your armies don't worry about foods military supplies but all the expenses were calculated with interest whether we lost the war or win the war.But in the mean time help us fought for us we need you[khmers armies] 3decades later you must pay the blood stains debt with interest,the money that we spend to buy your armies foods/supplies.Well,all those people death but your childrents the victims of the bombardent must pay the debt.Its sound like we were victimized twice from our patents to us their childtens,it'd not fair!...

...wrong again....

Anonymous said...

Has anybody thought about China supporting the Khmer Rouge and lending billions of dollars to the Khmer Rouge to kill 2 million Khmers? Till these days, Cambodia still owe China, but has also repaid a large sum of the Khmer rouge debts. Why didn't you cry foul about China's debts, but only cry foul about a small debt from America?

Anonymous said...

Be Respected to the human's soul..
No matter what, the US loan in any case cannot be enough to be compared with the consequence of the war that the US took part in, in any forms, direct or non-direct. SIc,