Donors are signalling that they are prepared to cut funds to Cambodia if governance

reform - a key plank of the upcoming June 11-13 Consultative Group of Donors (CG)

meeting in Tokyo - is not forthcoming.

Earlier this month the Asian Development Bank (ADB) indicated it would be adopting

a tougher stance on governance with the release of its "Key Governance Issues"

report. The report highlights corruption, lack of government transparency and the

partiality of Cambodia's judiciary as among the key governance failings of Cambodia.

While distancing himself from media assessments of the report as a "damning

indictment" of Cambodia's governance shortcomings, Urooj Malik, Cambodia's ADB

Resident Representative, says the report is "candid in our assessment"

of government failings.

The study, carried out by the Cambodian Development Resource Institute (CDRI) in

cooperation with the Cambodian Government, urges donors to develop specific governance-related

criteria for program monitoring.

In an attempt to force the RGC to ensure that it adheres to donor expectations for

continued aid, the report proposes that "concrete reforms" should become

a "precondition for assistance".

"Clearly the one thing that should preface all these areas of reform is the

government's willingness to enforce its laws is a precondition [of improved governance],"

Malik said. "The assumption is that ownership [of the reform process] should

come from within."

While Malik acknowledges Cambodian Minister of Finance Keat Chhon's concerns that

the implementation of stronger governance criters would increase the burden of poor

countries, he defends the report's recommendations that donors adopt a tougher tone

in linking aid to genuine reforms.

"The concern of the RGC is right, if the formula is applied too rigidly it could

have a counter productive effect so we need to do our homework and apply the criteria

[fairly]," Malik said. "I think that [preconditions] are only fair and

in keeping with what our Board of Directors is advocating and our shareholders are

keen to see."

Last year a CDRI study modeled the Cambodian economy up to 2020 under both a reform

and a non-reform scenario. The report concluded that without reform economic growth

would dry up and the Cambodian economy would "stagnate".

"No level of donor pledges can meet Cambodia's needs [without reform]"

said Malik "Cambodia is reaching a crossroads in terms of its need to develop

its own internal capacity".

The tone and recommendations of the ADB-funded report echo those of a confidential

donor report obtained by the Post that was originally submitted by the World Bank

to the Council of Ministers (CoM)in September 2000.

Entitled "Donors Comments on the Draft Governance Action Plan"(DCDGAP),

the document uses extremely blunt language to outline donor concerns about the RGC's

"...discrepancy between [RGC] statements, policy and action."

One of the main points of concern highlighted by DCDGAP is donor perceptions that

the RGC has failed to adequately enforce the rule of law, specifically with regard

to alleged political killings and official impunity.

"...some [government officials] appear to have broken the law," the document

states. "Yet no effective action appears to have been taken to hold them accountable

under the rule of law. Donors believe that this is having an adverse effect on investor

confidence and on efforts to address corruption or poor performance at lower levels."

Like the ADB-funded report, the DCDGAP criticizes the slow progress toward meeting

reform targets and the need for the RGC to more quickly address donor expectations

for continued funding.

The DCDGAP listed 15 separate measures that the government could undertake "...immediately...

[or] with no or minimal cost to the government."

Thirteen of those 15 requested measures, including the passage of the long-delayed

anti-corruption law, a public assets registry for MPs and senior government officials

and a prohibition on the sale or lease of state property or government contracts

without public tender have yet to be implemented.

Post attempts to contact Bonaventure Mbida-Essama regarding the progress of donors

requests in the DCDGAP were unsuccessful.