Posted by: sean | April 28, 2008

Cambodian or American debt?

I was checking out the State Department’s blog today to see if they had said anything there about Israeli ambassador Gillerman’s remarks that Carter was a “bigot” and an “enemy of Israel” when I came across this post about Cambodia’s war era debt to the US:

Cambodia’s debt to the U.S. totals $162 million, but with arrears factored in could reach approximately $339 million. This debt stems from shipments of U.S. agricultural commodities (e.g., cotton, rice, wheat flour) to Cambodia in the early 1970s — during the Vietnam War and Cambodia’s Lon Nol era — and financed with USDA loans. When the country fell to the Khmer Rouge in 1975, the regime ceased servicing this debt, and interest accumulated over the next three decades. In February 2006 — after many years of deadlock followed by a fruitful series of negotiations — an agreement in principle was reached on the amount of Cambodian principal owed to the U.S.

The Cambodian government, however, remains reluctant to sign a bilateral re-payment agreement due to domestic political obstacles on accepting responsibility for debts incurred by the Lon Nol regime, viewed by many Cambodians as an illegal and illegitimate government. Furthermore, many Cambodian observers believe a good deal of this assistance never arrived. They contend that Cambodia only served as a conduit for moving the USDA-financed commodities to other locations in Asia and that the Cambodian government and the Cambodian people did not benefit from the loans, even if some Cambodian individuals did gain. Finally, some argue that it is fundamentally unfair that Vietnam, which is far better off economically and was America’s major adversary in the war, was granted a form of debt forgiveness from the United States, while an innocent bystander to that conflict—Cambodia—is offered nothing.

The U.S. has on its side the international law principle that governments are generally responsible for the obligations of their predecessors.

Putting aside for a moment the irony of American lectures on “international law principle,” there are some other things to consider here. 

Considering the fact that the covert American bombing campaign of Cambodia that killed tens or hundreds of thousands of people was also one of the factors that led to the rise of the Khmer Rouge who killed literally millions of people, you’d think that we could give Phnom Penh a pass on their paltry $339 million debt, incurred after a pro-American military putsch, by the way.

Given the context in which the debt was incurred, and that more than half of the debt is interest, and since we’re currently spending over $400 million every day in Iraq, you’d think we could be a good sport and forgive the Cambodian tab.

On a somewhat related note, This American Life once did an excellent piece about US-Cambodian trade agreements. You might think that such a topic is boring. You’d be wrong. Give it a listen here by clicking on “Full episode.”

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