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Monitoring the impacts of government and corporate behaviour in communities overseas.

U.S demands from Cambodia the repayment of $US 339 million loan from 1970’s

Release Date: 25-Feb-2008

The USA has flipped through its rather large black book of non-compliant debtors and has selected Cambodia this month with its judgmental and contradictory finger.

In the 1970’s, during the turbulent Lon Nol era of rule, the USA administered a loan to Cambodia for the purchase of agricultural commodities. This loan was granted on the eve of Khmer Rouge’s induction as the country’s leader and the human rights abuses that characterised this regime have become examples of the most horrific acts ever visited on humankind. Given this bleak history, how can we be certain that this loan was used for the benefit of Cambodia’s people when it was granted in such a turbulent time?

The US is now demanding the repayment of $339 million, at a time when Cambodia has far greater priorities than repaying early 1970s debt. Minister Khieu Kanharith has announced that Cambodia ‘has more pressing concerns’ and this is clear in light of the kingdom’s current poverty. Kanharith has requested that the USA writes off this debt and consider it as economic assistance. Jubilee Australia supports Cambodia’s right to refuse to repay the debt, citing the following arguments:

Firstly, Cambodia has not received any assistance or reparations after the US bombing of Cambodia in the 1970’s. It is evident that the country is still struggling to rebuild after two decades of civil war and part of this struggle can be directly linked to the widespread bombing of the kingdom. Thirty years later the US still has not offered assistance for the destruction it caused, yet it demands immediate payment of a thirty year old agricultural loan. This clear double standard emphasises the contradictory nature the international system, and draws into question the level of responsibility the US has exercised in its ‘development lending’.

Secondly, Cambodia enjoys a strong and mutually beneficial relationship with the US and an unreasonable demand like this could tarnish this friendship. Cambodia gives permission for US oil company Chevron to prospect for oil directly off its coast. This is a privilege being extended to the US that should not be undervalued. To hold these debts over Cambodia whilst enjoying the spoils of the countries natural resources is far from fair and reciprocal. The US must realise that it owes a duty of responsibility to Cambodia.

Thirdly, the US is seeking to set precedence for adherence to the precept under international law that all sovereign debts must be repaid. Yet this is an extremely questionable motive for the US in light of its own record of honouring and upholding international law.  The US has maintained refused to ratify international agreements such as ‘the rights of the child’ and 'the ban on anti-personal mines’, which nearly every member country of the United Nations is a party to. It acted unilaterally when invading Iraq and defied the international community.

Finally, after the fall of Saddam Hussein, the international community declared that Iraq should not have to repay Saddam’s debts. The US was the central advocate for the cancellation of a large portion of Iraq’s debt, arguing that, whatever the reason for the original loans the Iraqi people should not be forced to repay their dictators debts.  If the US can be such an outspoken voice regarding debt cancellation in this example, how can it act in such a contradictory way with regard to Cambodia’s debt?

The request for Cambodia to honour this debt at a time when the country clearly has other national priorities simply serves to illustrate the vacuum that exists in the international system. There is no fair arbitration process to redress the injustice of debts which should never have to be repaid.

Ed Shiell