Negotiations on securing loans for Cambodia which were being conducted between representatives

of the four factions, the United Nations Transitional Authority in Cambodia (UNTAC)

and the World Bank have been adjourned until the outcome of the U.N.-supervised elections.

Supreme National Council (SNC) president, Prince Norodom Sihanouk stated that since

the SNC was "very divided" and that the World Bank had problems with UNTAC,

there was no other option but to suspend the talks until a new government was elected.

"The World Bank can deal with the new government in June 1993. If I had not

decided on this solution, we would have never been able to overcome the current impasse,"

Prince Sihanouk wrote in a communique from Beijing dated March 4, explaining his

position.

According to State of Cambodia (SOC) spokesman Khieu Kanharith, the impasse arose

from the Khmer Rouge's outright objection to any form of loans irrespective of when

they were supposed to come on stream and from FUNCINPEC's insistence that a new government

be in place before funds were made available.

FUNCINPEC's Sam Rainsy said that his faction was not opposed to assistance to the

Cambodian people but only to aid under SOC control. "SOC hoped to have the money

of the World Bank to use as it pleased. The decision will have big consequences for

SOC finance," he claimed.

SOC Spokesman Khieu Kanharith, however, disputed this interpretation, saying that

the loans were not going to come on stream until after the elections in May.

A previous FUNCINPEC press release dated Feb. 26 seemed to give some credence to

Kanharith's contention." Even if the funds extended by the international financial

institutions are not disbursed and used during this electoral period, they will still

remain available. Moreover, they will be all the more vital for the Cambodian population

in three months time, when they are then allocated in a more certain manner, serving

the true national interests."

Kanharith stated that the Khmer Rouge's rejection and FUNCINPEC's condition that

the new government be in place would cause major problems because the money was slotted

for agricultural aid, fertilizers and insecticides. If the aid does not come on stream

until after the new government is formed it will be of little use this year. "The

planting and produc-tion will be nearly already over. FUNCINPEC doesn't understand

the situation and the agricultural process. There will be a lot of consequences for

the harvest and the newly elected government," the SOC spokesman stated.

Diplomatic observers confirmed that the loans would not come on stream during the

electoral period, the idea being that negotiations would be over and that the infrastructure

would be in place to allow the quick disbursement of funds after the elections.

The new government will have to be in place and the timeframe for that is three months

after the polls. Then the negotiations will have to start anew, taking several more

months.

Other Western observers suggest that FUNCINPEC's objections stem from a concern that

SOC would use the impending aid as an electoral weapon, saying that improvements

would come if the people voted for SOC.

Kanharith had a different view. "The World Bank insisted that the other factions

should not be concerned because the money was not going to come until June. FUNCINPEC

fears that they will lose the election, they want to destabilize the newly elected

government," he claimed.