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US Officials Looking Over War-Era Debt Solutions

Joseph Yun, deputy assistant secretary of state for East Asia and Pacific Affairs.
Joseph Yun, deputy assistant secretary of state for East Asia and Pacific Affairs.

Officials from the US State Department and other key agencies, including the Treasury Department, have begun looking at ways Cambodia might solve its longstanding debt obligations.

Cambodia owes the US more than $400 million in war-era debt from the government of Lon Nol, but senior officials here say they should not have to repay it.

US officials say they can't write off the debt, but on a visit here earlier this month, US Secretary of State Hillary Clinton said there may be creative solutions to the debt impasse.

Joseph Yun, the State Deparment's deputy assistant secretary in charge of East Asia and the Pacific, said the debt problem had been an “irritant” in the US-Cambodia bilateral relationship, so officials are now looking at how to overcome it.

“We want to do it soon,” he said. “Secretary Clinton made a commitment that we would send a team to discuss the debt, to resume negotiations.”

Yun said he hoped a team would be dispatched to Cambodia within the next few months to rekindle talks that last took place in 2006.

The debt comes from money borrowed by the Lon Nol government between 1972 to 1975 for the purchase of agricultural commodities as it waged a war with the Khmer Rouge guerrillas.

The debt has accrued to $405 million, including interest and late fees. Cambodia has insisted the debt be forgiven so that it can use the money for development and reconstruction.

“After Secretary Clinton's visit to Cambodia, I believe that the US will reexamine its past decision requiring Cambodia to pay back the debt," Cambodia's ambassador to the US, Hem Heng, said Wednesday. “I hope there will be an expert team coming to Cambodia soon.”

Yun ruled out the possibility of all-out debt forgiveness and said negotiations would be bound by multilateral and domestic rules the US must follow.

“So we have to do rearrangement or rescheduling and negotiations with those rules in mind,” he said. “Within those limits we want to do what we can to resolve those issues.”