CAMBODIA need not worry about specific questions of democracy, human rights and transparency

when it asks aid donors for $1.6 billion in July.

The World Bank made it very clear at a May 10 meeting in Phnom Penh between the Government

and international donors that July's Consultative Group (CG) session in Tokyo will

be about economics - not politics.

Donors, of course, will have already been influenced by Cambodia's "big picture"

- which includes political and human rights concerns - before they come to the Tokyo

table. But those matters won't be broached during formal discussions.

Finance Minister and Senior Minister in charge of Rehabilitation, Keat Chhon, therefore,

appears on firm ground when the World Bank asks him: "How's Cambodia doing?"

"Our achievements have been quite remarkable," he told donors last week.

Cambodia has "fast-forwarded" free market policies during the last two

years. GDP is up; per capita income, though still low ($287), has doubled since 1990;

inflation is down; the currency is stable; and imports and exports are growing.

Chhon predicts more growth and movement toward a free market, something the World

Bank - which is co-chairing the CG meeting with hosts Japan - drives and encourages.

"The gains of the past will be further consolidated and strengthened in accordance

with the policy framework we have agreed with the IMF and the World Bank," he

said.

Planning Minister Chea Chanto said that the reform program could not be abandoned

"as it would condemn Cambodia to economic decline."

The CG is a economic forum devised by the World Bank and the IMF. Previously, aid

pledges were made at an annual ICORC session, which was a peculiar vehicle set up

specifically for Cambodian emergency aid, and where donors could discuss anything

they wished.

There will be another ICORC meeting, probably in Phnom Penh, next year. However,

Cambodian aid for the next three years will have already been set in Tokyo.

There was a consensus to start up the CG process as Cambodia moved away from emergency

relief assistance toward more specific reconstruction and development programs, said

UNDP deputy resident representative Andre Klap.

CG dialogue would become more "exclusive", focusing on Cambodia's policy

framework and capital and aid requirements, he said.

"Ways and means have to be found to deal with non-economic matters related to

human rights, democracy, transparency and the like, since these do impact on donor

commitments," Klap said.

However, Australia did take the initiative at the recent "pre-CG" meeting

to deliver a statement that pointedly mentioned political issues such as the 1998

elections, and democratic principles.

While Keat Chhon appeared to be under no obligation to touch on any issues other

than economic, he did volunteer comments on what are obvious political concerns.

"I would like to once again reassure our external partners and Cambodians alike

that the Government has the strong resolve to pursue progressive policies... in an

open, accountable, predictable and democratic manner.

"Let me stress that we have adopted this path not because someone from the outside

is pressuring us.

"We have adopted this course because all of us in the Government, inspired by

the visionary leadership of our Prime Ministers and under the benevolent guidance

of His Majesty King Sihanouk, genuinely believe that this is in our best interests..."

"We would request that you not judge us by isolated incidents but by the determined

progress we are making."

In Tokyo, Cambodia will face thorny economic questions - with political overtones

- such as the transparency of the military and logging budgets.

The military spent 35 per cent of the 1995 national budget which the Government says

"cannot and should not be sustained in the present circumstances."

One World Bank official said after the meeting that it was difficult to know the

full extent of the military budget. "If the Government doesn't want to tell

us, then we're not going to know."

Aid donors have been lobbied - by most notably British environmentalists Global Witness

- on the secrecy and scale of illegal logging, and the apparent business complicity

between military/Government/Thai and Khmer Rouge.

Global Witness wants conditions put on Cambodian aid. Sources say that while that's

unlikely to happen in Tokyo, conditions could be slapped on Cambodia "very quickly"

if certain parties continue to abuse the Kingdom's forests.

Keat Chhon said that the Government would be adopting the recommendations of the

recent World Bank/FAO/UNDP logging study, which calls for "sustainable management"

of forests.

Though the "friendly" Phnom Penh meeting was not the place for contentious

issues (the first night dinner party in Tokyo is a more likely venue for that, observers

said), Cambodia might itself be asking donors how much aid money is spent offshore

in consultancy fees, and not in the Kingdom.

When asked about "lost" aid after the meeting, Chhon said "even when

consultants depart, they leave behind bridges and roads."

When pressed that all that is left by some consultants are reports, Chhon said: "Even

experts' paper reports are important provided Cambodia uses and follows them correctly."

UNDP's Klap said that in Tokyo his organization would be raising the "dilemma"

of the pressure on both donors and the Government to make quick, visible, often short-term

impacts in their aid projects.

UNDP was concerned to "break open" this short-term "trap" and

concentrate on developing Cambodia's capacity, Klap said.

During the Phnom Penh meeting, the Japanese Ambassador asked how Cambodia planned

to increase public revenue - an indication that Cambodia's feeble tax collection

systems will be scrutinized.

ADB manager Nihal Amer-asinghe followed up by saying that while Cambodia is predicting

7.5 per cent growth on one hand, it is asking for $1.6 billion in aid on the other.

By implication, donors don't want their aid money to be the main source of income

driving Cambodia's growth. Sources note that countries with a large private sector

stake in Cambodia - for example China, Thailand, Singapore and Malaysia - are not

among the Tokyo aid donors.

Nihal said: "The question of counterpart funds becomes very, very important.

In this donor climate aid is becoming more and more difficult. The ratio of government

funding cannot be ducked... we will want a very specific program on this issue [in

Tokyo]."

Australian Ambassador Tony Kevin - the only representative to make a formal statement

- set out the aid priorities of his newly elected government, and announced a new

$9m commitment toward demining.

Kevin said while it was important Cambodia justify to donors its commitment to economic

management, high on his priorities were the need for the coalition to ensure stability

leading up to the general elections, and a "reaffirmed" commitment to democratic

government.

Kevin also supported the involvement of NGOs as CG observers, because NGOs had spent

up to $70m in Cambodia helping "the most needy people."

NGO Forum spokeswoman Nicola Bullard said NGOs hoped to be represented at Tokyo -

as they were in Phnom Penh - by two observers, though this was not guaranteed. The

granting of that concession was requiring "some persistence," Bullard said.

"NGOs have to argue about this everytime, it never comes automatically."