US attempt to recoup Cambodian debt 'cack-handed': former Australian Ambassador

The issue of Cambodia's debt to the United States is back in the spotlight as the US appears set to ignore pleas from the south-east Asian nation to cancel the decades-old arrangement.

ABC (Australia) | 12 March 2017

Key points:

• Cambodia's debt to the US from the early 1970s has ballooned to about $500 million
• The poor south-east Asian nation has asked successive US governments to forgive the debt
• Foreign policy experts say moves to force repayment are unfair

Cambodian Prime Minister Hun Sen late last year called on then-president elect Donald Trump to cancel debt, thought to be around $US500 million.

In 2010, he asked former president Barack Obama to convert the "dirty" debt to aid.

At the time, Hun Sen said the money his country owed the US was incurred by the Lon Nol government that came to power in a 1970 coup backed by Washington, and that it was spent on arms used against the Cambodian people.

The official US line was that the loan had been for agricultural development and that Cambodia had the means to repay.

Hun Sen raised the issue again this year, with Cambodian media reporting the PM as saying the US had no right to demand repayment of a debt that was "blood-stained" from the brutal US bombing of Cambodian territory during the Vietnam War.

Former Australian ambassador to Cambodia Tony Kevin said American activity in the early 1970s had done great harm to Cambodia, and it was well understood in foreign policy circles that it had contributed to rise of the Khmer Rouge.

Lon Nol was toppled in 1975 by the ultra-Maoist Khmer Rouge regime, under which an estimated 1.7 million people died in less than four years, plunging Cambodia into decades of poverty and political instability.

"At the same time the US was giving weapons to Lon Nol, it was bombing the Cambodian countryside into oblivion and creating millions of refugees fleeing into Phnom Penh and destroying all political fabric and civil life in the country," Mr Kevin said.

"And all of this was simply to stop the supplies coming down to South Vietnam, as it was then, from the north.

"So the United States created a desert in Cambodia in those years, and Americans know this."

Mr Kevin said the issue of debt was not raised during his 1994-1997 posting to Cambodia as Australia's ambassador.

He said he assumed that with the establishment of the United Nations Transitional Authority (UNTAC) that oversaw the implementation of agreements for political settlement of the Cambodia civil war, and the normalisation of relations with the US, the debt would have been "forgiven and forgotten".

"We all would have thought it inconceivable that the United States would be approaching Cambodia now in 2017, 50 years later, with such a bill," he said.

PHOTO: Cambodia, one of the world's poorest countries, owes the US around $500 million. (ABC News: Liam Cochrane)

The current US Ambassador to Cambodia William Heidt was quoted in the Cambodia Daily newspaper as saying he had been involved in drafting a deal between the US and Cambodia two decades ago, but the issues remain unresolved.

"I think that is unfortunate, I think that's not in Cambodia's best interest to keep letting that grow forever," he was reported as saying.

"It's Cambodia's interest not to look at the past, but to look at how to solve this because it's important to Cambodia's future."

Mr Kevin called the career diplomat's credentials "impeccable" and said if Ambassador Heidt was raising the issue now, two years into his posting, it was most likely under direct instructions from the new Trump administration.

"I can only say, if this is the case, it is absolutely cack-handed diplomacy, and I use those words with aforethought," he said.

"It's entirely inappropriate for the United States to be asking Cambodia for any kind of loan recovery at this point."

"It's unwise in terms of American foreign policy interests because Cambodia has been moving closer to China in recent years.

"Nothing could be better guaranteed to lock Cambodia in behind China on issues like the South China Sea than to destroy any possibility for flexibility towards Cambodia on that issue than this demand for money. It's just dumb."

PHOTO: A woman collects plastic rubbish, with the Phnom Penh skyline behind her. (ABC News: Athena Zelandonii)