Forgiving or reducing Cambodia’s approximately $445 million 1970s wartime debt to the US would contradict US debt relief policies and set a “poor precedent,” a US State Department official told a congressional committee Thursday, according to a US government website.
Speaking at the US House of Representatives, Joe Yun, the deputy assistant secretary for the Bureau of East Asian and Pacific Affairs, said Cambodia does not qualify for the US’ debt relief programs due in part to the state of Cambodia’s economy, which saw high growth in the last decade, not including 2009’s recession.
“The Administration is concerned that creating a special statutory debt reduction program for a country that is unwilling, rather than unable, to pay its debts sets a poor precedent for other counties in similar circumstances and sends the wrong message about prudent debt management,” he said, according to a copy of his prepared remarks submitted to the subcommittee on Asia, the Pacific, and the global environment.
“By the end of 2009, Cambodia’s total debt to the United States totaled approximately $445 million. About $405 million of that amount is in arrears and would be due immediately upon the implementation of any agreement to pay the debt,” he said.
In 2007, the debt stood at $337 million, according to previous State Department statements.
Cambodia has been unwilling to sign a bilateral agreement on the debt, seeking a lower interest rate that would contradict longstanding debt policy, Mr Yun said.
The debt originates from the US Department of Agriculture’s financing of $274 million in purchases of US commodities by the Khmer Republic from 1972 to 1974. The money helped the Lon Nol regime divert Cambodian funds toward the war effort, as the republic was an ally in the US war to stop the spread of communism.
Cambodian officials have frequently called for cancellation of the debt, noting that from 1969 to 1973, the US caused severe damage to Cambodia in its illegal bombing campaign.
Most recently, earlier this month Prime Minister Hun Sen referred to the debt as “dirty,” and said a portion of loans were stolen by US republican officials.
Kuy Kuong, the secretary of state for the Foreign Affairs Ministry, declined to discuss the technical issues of servicing the debt.
“I just want to say for the debt solution, Cambodia continues to negotiate with the United States on that case,” he said.