Cambodia offers partial repayment of "dirty" US debt

Thursday, March 17, 2011
Reuters

Cambodian Prime Minister Hun Sen had earlier asked the United States to forgive what he called the "dirty debt" built up by the Lon Nol military government that came to power in a 1970 coup backed by Washington.

Cambodia offered on Thursday to repay 30 percent of the debt the country owes the United States, calling this a compromise over money it says was used by a pro-American government in the 1970s to repress its own people.

Cambodian Prime Minister Hun Sen had earlier asked the United States to forgive what he called the "dirty debt" built up by the Lon Nol military government that came to power in a 1970 coup backed by Washington.

U.S. Deputy Assistant Secretary of State Joseph Yun, who is visiting Cambodia, was told the rest could be converted into development aid and Cambodia would pay interest of 1 percent, rather than the 3 percent demanded by Washington.

"We wanted to cancel the whole debt, but with this proposal we want to find something we can agree on," Koy Kuong, Cambodian Undersecretary of State for Foreign Affairs, told reporters.

"If they can't agree to our offer, we won't be able to solve this."

Cambodia and several U.S. congressmen have argued the money was spent on arms that the Lon Nol government used on its own people. It was toppled in 1975 by the ultra-Maoist Khmer Rouge, under whose regime an estimated 1.7 million people died in less than four years.

Yun declined to speak to reporters after Thursday's meeting with Foreign Minister Hor Namhong. According to Kuy Kuong, Yun told the minister his government would consider the new proposal.

One sticking point is that the United States values the debt at more than $445 million, rather than the $317 million Cambodia reckons it owes.

Analysts say Cambodia's close relationship with China, its biggest investor and trade partner, is troubling the United States, which sees the warm ties as part of Beijing's efforts to broaden its influence in Southeast Asia.

Yun's visit came after U.S. Secretary of State Hillary Clinton visited Cambodia in November and called for talks on the debt to be reopened.

Clinton appeared to suggest the possibility of the United States using Cambodian debt payments to fund programmes in the country on education and the environment.