About the CBI

October 2005
Background Note: Cambodia

Flag of Cambodia is three horizontal bands of blue (top), red (double width),
and blue with a white three-towered temple representing Angkor Wat outlined
in black in the center of the red band. 2004.

PROFILE

OFFICIAL NAME:
Kingdom of Cambodia

Geography
Area: 181,040 sq. km. (69,900 sq. mi.); about the size of Missouri.
Cities: Capital--Phnom Penh (pop. 1.2 million), Battambang, Siem Reap,
Kompong Cham, Kompong Speu, Kompong Thom.
Terrain: Central plain drained by the Tonle Sap (Great Lake) and Mekong and
Bassac Rivers. Forests away from the rivers and the lake, mountains in the
southwest (Cardamom Mountains) and north (Dangrek Mountains) along the border
with Thailand.
Climate: Tropical monsoon with rainy season June-Oct. and dry season
Nov.-May.

People
Nationality: Noun and adjective--Cambodian(s), Khmer.
Population (2004 est.): 12,824,000.
Avg. annual growth rate (2004 est.) 1.81%.
Health: Infant mortality rate--73/1,000. Life expectancy--55 years male; 61
years female.
Ethnic groups: Cambodian 90%; Vietnamese 5%; Chinese 1%; small numbers of
hill tribes, Chams, and Laotian.
Religions: Theravada Buddhism 95%; Islam; animism; Christian.
Languages: Khmer (official) spoken by more than 95% of the population; some
French still spoken in urban areas; English increasingly popular as a second
language.
Education: Years compulsory--none. Enrollment--primary school, 93%; grades 7
to 9, 20%; grades 10 to 12, 7%; and post-secondary, 1.2%. Completion
rates--primary school, 6.6%; secondary school, 2.4%; university, 0.8%.
Literacy (total population over 15 that can read and write, 2003 est.)--69.9%
(male 80.5%; female 60.3%).

Government
Type: Multiparty democracy under a constitutional monarchy.
Independence: November 9, 1953.
Constitution: September 24, 1993; amended March 6, 1999.
Branches: Executive--King Sihamoni (head of state since October 29, 2004),
appointed prime minister (Hun Sen since January 14, 1985), seven deputy prime
ministers, 15 senior ministers, 28 ministers, 135 secretaries of state, and
146 undersecretaries of state. Legislative--National Assembly, consisting of
123 elected members; Senate, consisting of 61 members. Judicial--Supreme
Court and lower courts.
Administrative subdivisions: 20 provinces and 4 municipalities.
Political parties and leaders: Ruling parties--A coalition government of the
Cambodian People's Party (CPP), led by Samdech Chea Sim, and the National
United Front for an Independent, Neutral, Peaceful, and Cooperative Cambodia
(FUNCINPEC), led by National Assembly President Prince Norodom Ranariddh.
Opposition parties--The Sam Rainsy Party (SRP), led by Sam Rainsy; several
minor parties.

Economy
GDP (2004 est.): $4.2 billion.
Per capita GDP (2003 est.): $282.
Annual growth rate (2004 est.): 5.5%.
Inflation (2003 est.): 1.3%.
Natural resources: Timber, gemstones, some iron ore, manganese and phosphate,
hydroelectric potential from the Mekong River.
Agriculture (35% of GDP, 2004 est.): About 4,848,000 hectares (12 million
acres) are unforested land; all are arable with irrigation, but 2.5 million
hectares are cultivated. Products--rice, rubber, corn, meat, vegetables,
dairy products, sugar, flour.
Industry (30% of GDP, 2004 est.): Types--garment and shoe manufacturing, rice
milling, tobacco, fisheries and fishing, wood and wood products, textiles,
cement, some rubber production, paper and food processing.
Services (35% of GDP, 2004 est.): Tourism, telecommunications,
transportation, and construction.
Central government budget (2003): Revenues--$430 million; expenditures--$644
million; foreign financing--$207 million.
Trade: Exports ($1.683 billion, 2003)--garments, shoes, cigarettes, natural
rubber, rice, pepper, wood, fish. Major partners--United States, Germany,
U.K., Singapore, Japan, Vietnam. Imports ($1.73 billion, 2003)--fuels,
cigarettes, vehicles, consumer goods, machinery. Major partners--Thailand,
Singapore, China, Hong Kong, Vietnam, Taiwan, United States.
Economic aid received: Pledges of $504 million in grants and concessional
loans for calendar year 2005. Major donors--Asian Development Bank (ADB), UN
Development Program (UNDP), World Bank, International Monetary Fund,
Australia, Canada, Denmark, the EU, France, Germany, Italy, Japan, Sweden,
Thailand, U.K., U.S. According to the Cambodian Government, 79% of the $635
million pledged by donors for 2003 was actually disbursed.
Principal foreign commercial investors: Malaysia, Taiwan, U.S., China, Korea,
Hong Kong, Singapore, and Thailand.
Exchange rate (2004): 4,050 riel per U.S. $1.

GEOGRAPHY
Cambodia is located on mainland Southeast Asia between Thailand to the west
and north and Vietnam to the east. It shares a land border with Laos in the
northeast. Cambodia has a sea coast on the Gulf of Thailand. The Dangrek
Mountain range in the north and Cardamom Mountains in the southwest form
natural boundaries. Principal physical features include the Tonle Sap lake
and the Mekong and Bassac Rivers. Cambodia remains one of the most heavily
forested countries in the region, although deforestation continues at an
alarming rate.

PEOPLE AND CULTURE
Ninety percent of Cambodia's population is ethnically Cambodian. Other ethnic
groups include Chinese, Vietnamese, hill tribes, Chams, and Laotian.
Theravada Buddhism is the religion of 95% of the population; Islam, animism,
and Christianity also are practiced. Khmer is the official language and is
spoken by more than 95% of the population. Some French is still spoken in
urban areas, and English is increasingly popular as a second language.

Angkor Wat
Over a period of 300 years, between 900 and 1200 AD, the Khmer Kingdom of
Angkor produced some of the world's most magnificent architectural
masterpieces on the northern shore of the Tonle Sap, near the present town of
Siem Reap. The Angkor area stretches 15 miles east to west and 5 miles north
to south. Some 72 major temples or other buildings dot the area. Suryavarman
II built the principal temple, Angkor Wat, between 1112 and 1150. With walls
nearly one-half mile on each side, Angkor Wat portrays the Hindu cosmology
with the central towers representing Mount Meru, home of the gods; the outer
walls, the mountains enclosing the world; and the moat, the oceans beyond.
Angkor Thom, the capital city built after the Cham sack of 1177, is
surrounded by a 300-foot wide moat. Construction of Angkor Thom coincided
with a change from Hinduism to Buddhism. Temples were altered to display
images of the Buddha, and Angkor Wat became a major Buddhist shrine.

During the 15th century, nearly all of Angkor was abandoned after Siamese
attacks. The exception was Angkor Wat, which remained a shrine for Buddhist
pilgrims. The great city and temples remained largely cloaked by the forest
until the late 19th century when French archaeologists began a long
restoration process. France established the Angkor Conservancy in 1908 to
direct restoration of the Angkor complex. For the next 64 years, the
conservancy worked to clear away the forest, repair foundations, and install
drains to protect the buildings from their most insidious enemy: water. After
1953, the conservancy became a joint project of the French and Cambodian
Governments. Some temples were carefully taken apart stone by stone and
reassembled on concrete foundations. Tourism is now the second-largest
foreign currency earner in Cambodia's economy, and Angkor Wat has helped
attract international tourism to the country.

MODERN HISTORY
Although Cambodia had a rich and powerful past under the Hindu state of Funan
and the Kingdom of Angkor, by the mid-19th century the country was on the
verge of dissolution. After repeated requests for French assistance, a
protectorate was established in 1863. By 1884, Cambodia was a virtual colony;
soon after it was made part of the Indochina Union with Annam, Tonkin,
Cochin-China, and Laos. France continued to control the country even after
the start of World War II through its Vichy government. In 1945, the Japanese
dissolved the colonial administration, and King Norodom Sihanouk declared an
independent, anti-colonial government under Prime Minister Son Ngoc Thanh in
March 1945. The Allies deposed this government in October. In January 1953,
Sihanouk named his father as regent and went into self-imposed exile,
refusing to return until Cambodia gained genuine independence.

Full Independence
Sihanouk's actions hastened the French Government's July 4, 1953 announcement
of its readiness to grant independence, which came on November 9, 1953. The
situation remained uncertain until a 1954 conference was held in Geneva to
settle the French-Indochina war. All participants, except the United States
and the State of Vietnam, associated themselves (by voice) with the final
declaration. The Cambodian delegation agreed to the neutrality of the three
Indochinese states but insisted on a provision in the cease-fire agreement
that left the Cambodian Government free to call for outside military
assistance should the Viet Minh or others threaten its territory.

Neutral Cambodia
Neutrality was the central element of Cambodian foreign policy during the
1950s and 1960s. By the mid-1960s, parts of Cambodia's eastern provinces were
serving as bases for North Vietnamese Army and Viet Cong (NVA/VC) forces
operating against South Vietnam, and the port of Sihanoukville was being used
to supply them. As NVA/VC activity grew, the United States and South Vietnam
became concerned, and in 1969, the United States began a series of air raids
against NVA/VC base areas inside Cambodia.

Throughout the 1960s, domestic politics polarized. Opposition grew within the
middle class and among leftists, including Paris-educated leaders such as Son
Sen, Ieng Sary, and Saloth Sar (later known as Pol Pot), who led an
insurgency under the clandestine Communist Party of Kampuchea (CPK).

The Khmer Republic and the War
In March 1970, Gen. Lon Nol deposed Prince Sihanouk and assumed power. On
October 9, the Cambodian monarchy was abolished, and the country was renamed
the Khmer Republic. Hanoi rejected the new republic's request for the
withdrawal of NVA/VC troops and began to reinfiltrate some of the 2,000-4,000
Cambodians who had gone to North Vietnam in 1954. They became a cadre in the
insurgency. The United States moved to provide material assistance to the new
government's armed forces, which were engaged against both the Khmer Rouge
insurgents and NVA/VC forces. In April 1970, U.S. and South Vietnamese forces
entered Cambodia in a campaign aimed at destroying NVA/VC base areas.
Although a considerable quantity of equipment was seized or destroyed, NVA/VC
forces proved elusive and moved deeper into Cambodia. NVA/VC units overran
many Cambodian Army positions while the Khmer Rouge expanded their smallscale
attacks on lines of communication.

The Khmer Republic's leadership was plagued by disunity among its members,
the problems of transforming a 30,000-man army into a national combat force
of more than 200,000 men, and spreading corruption. The insurgency continued
to grow, with supplies and military support provided by North Vietnam. But
inside Cambodia, Pol Pot and Ieng Sary asserted their dominance over the
Vietnamese-trained communists, many of whom were purged. At the same time,
the Khmer Rouge forces became stronger and more independent of their
Vietnamese patrons. By 1974, Lon Nol's control was reduced to small enclaves
around the cities and main transportation routes. More than 2 million
refugees from the war lived in Phnom Penh and other cities.

On New Year's Day 1975, communist troops launched an offensive that, in 117
days of the hardest fighting of the war, destroyed the Khmer Republic.
Simultaneous attacks around the perimeter of Phnom Penh pinned down
Republican forces, while other Khmer Rouge units overran fire bases
controlling the vital lower Mekong resupply route. A U.S.-funded airlift of
ammunition and rice ended when Congress refused additional aid for Cambodia.
Phnom Penh surrendered on April 17, 1975--5 days after the U.S. mission
evacuated Cambodia.

Democratic Kampuchea
Many Cambodians welcomed the arrival of peace, but the Khmer Rouge soon
turned Cambodia--which it called Democratic Kampuchea (DK)--into a land of
horror. Immediately after its victory, the new regime ordered the evacuation
of all cities and towns, sending the entire urban population out into the
countryside to till the land. Thousands starved or died of disease during the
evacuation. Many of those forced to evacuate the cities were resettled in new
villages, which lacked food, agricultural implements, and medical care. Many
starved before the first harvest, and hunger and malnutrition--bordering on
starvation--were constant during those years. Those who resisted or who
questioned orders were immediately executed, as were most military and
civilian leaders of the former regime who failed to disguise their pasts.

Within the CPK, the Paris-educated leadership--Pol Pot, Ieng Sary, Nuon Chea,
and Son Sen--was in control, and Pol Pot was made Prime Minister. Prince
Sihanouk was put under virtual house arrest. The new government sought to
restructure Cambodian society completely. Remnants of the old society were
abolished, and Buddhism suppressed.

Agriculture was collectivized, and the surviving part of the industrial base
was abandoned or placed under state control. Cambodia had neither a currency
nor a banking system. The regime controlled every aspect of life and reduced
everyone to the level of abject obedience through terror. Torture centers
were established, and detailed records were kept of the thousands murdered
there. Public executions of those considered unreliable or with links to the
previous government were common. Few succeeded in escaping the military
patrols and fleeing the country. Solid estimates of the numbers who died
between 1975 and 1979 are not available, but it is likely that hundreds of
thousands were brutally executed by the regime. Hundreds of thousands more
died of starvation and disease--both under the Khmer Rouge and during the
Vietnamese invasion in 1978. Estimates of the dead range from 1.7 million to
3 million, out of a 1975 population estimated at 7.3 million.

Democratic Kampuchea's relations with Vietnam and Thailand worsened rapidly
as a result of border clashes and ideological differences. While communist,
the CPK was fiercely anti-Vietnamese, and most of its members who had lived
in Vietnam were purged. Democratic Kampuchea established close ties with
China, and the Cambodian-Vietnamese conflict became part of the Sino-Soviet
rivalry, with Moscow backing Vietnam. Border clashes worsened when Democratic
Kampuchea's military attacked villages in Vietnam.

In mid-1978, Vietnamese forces invaded Cambodia, advancing about 30 miles
before the arrival of the rainy season. In December 1978, Vietnam announced
formation of the Kampuchean United Front for National Salvation (KUFNS) under
Heng Samrin, a former DK division commander. It was composed of Khmer
communists who had remained in Vietnam after 1975 and officials from the
eastern sector--like Heng Samrin and Hun Sen--who had fled to Vietnam from
Cambodia in 1978. In late December 1978, Vietnamese forces launched a full
invasion of Cambodia, capturing Phnom Penh on January 7, 1979 and driving the
remnants of Democratic Kampuchea's army westward toward Thailand.

The Vietnamese Occupation
On January 10, 1979, the Vietnamese installed Heng Samrin as head of state in
the new People's Republic of Kampuchea (PRK). The Vietnamese Army continued
its pursuit of Pol Pot's Khmer Rouge forces. At least 600,000 Cambodians
displaced during the Pol Pot era and the Vietnamese invasion began streaming
to the Thai border in search of refuge.

The international community responded with a massive relief effort
coordinated by the United States through the UN Children's Fund (UNICEF) and
the World Food Program. More than $400 million was provided between 1979 and
1982, of which the United States contributed nearly $100 million. At one
point, more than 500,000 Cambodians were living along the Thai-Cambodian
border and more than 100,000 in holding centers inside Thailand.

Vietnam's occupation army of as many as 200,000 troops controlled the major
population centers and most of the countryside from 1979 to September 1989.
The Heng Samrin regime's 30,000 troops were plagued by poor morale and
widespread desertion. Resistance to Vietnam's occupation continued. A large
portion of the Khmer Rouge's military forces eluded Vietnamese troops and
established themselves in remote regions. The non-communist resistance,
consisting of a number of groups which had been fighting the Khmer Rouge
after 1975--including Lon Nol-era soldiers--coalesced in 1979-80 to form the
Khmer People's National Liberation Armed Forces (KPNLAF), which pledged
loyalty to former Prime Minister Son Sann, and Moulinaka (Movement pour la
Liberation Nationale de Kampuchea), loyal to Prince Sihanouk. In 1979, Son
Sann formed the Khmer People's National Liberation Front (KPNLF) to lead the
political struggle for Cambodia's independence. Prince Sihanouk formed his
own organization, National United Front for an Independent, Neutral,
Peaceful, and Cooperative Cambodia (FUNCINPEC), and its military arm, the
Armee Nationale Sihanoukienne (ANS) in 1981.

Within Cambodia, Vietnam had only limited success in establishing its client
Heng Samrin regime, which was dependent on Vietnamese advisers at all levels.
Security in some rural areas was tenuous, and major transportation routes
were subject to interdiction by resistance forces. The presence of Vietnamese
throughout the country and their intrusion into nearly all aspects of
Cambodian life alienated much of the populace. The settlement of Vietnamese
nationals, both former residents and new immigrants, further exacerbated
anti-Vietnamese sentiment. Reports of the numbers involved vary widely, with
some estimates as high as 1 million. By the end of the decade, Khmer
nationalism began to reassert itself against the traditional Vietnamese
enemy. In 1986, Hanoi claimed to have begun withdrawing part of its
occupation forces. At the same time, Vietnam continued efforts to strengthen
its client regime, the PRK, and its military arm, the Kampuchean People's
Revolutionary Armed Forces (KPRAF). These withdrawals continued over the next
2 years, and the last Vietnamese troops left Cambodia in September 1989.

Peace Efforts
From July 30 to August 30, 1989, representatives of 18 countries, the four
Cambodian parties, and the UN Secretary General met in Paris in an effort to
negotiate a comprehensive settlement. They hoped to achieve those objectives
seen as crucial to the future of post-occupation Cambodia--a verified
withdrawal of the remaining Vietnamese occupation troops, the prevention of
the return to power of the Khmer Rouge, and genuine self-determination for
the Cambodian people. A comprehensive settlement was agreed upon on August
28, 1990.

Cambodia's Renewal
On October 23, 1991, the Paris Conference reconvened to sign a comprehensive
settlement giving the UN full authority to supervise a cease-fire, repatriate
the displaced Khmer along the border with Thailand, disarm and demobilize the
factional armies, and prepare the country for free and fair elections. Prince
Sihanouk, President of the Supreme National Council of Cambodia (SNC), and
other members of the SNC returned to Phnom Penh in November 1991, to begin
the resettlement process in Cambodia. The UN Advance Mission for Cambodia
(UNAMIC) was deployed at the same time to maintain liaison among the factions
and begin demining operations to expedite the repatriation of approximately
370,000 Cambodians from Thailand.

On March 16, 1992, the UN Transitional Authority in Cambodia (UNTAC) arrived
in Cambodia to begin implementation of the UN Settlement Plan. The UN High
Commissioner for Refugees began fullscale repatriation in March 1992. UNTAC
grew into a 22,000-strong civilian and military peacekeeping force to conduct
free and fair elections for a constituent assembly.

Over 4 million Cambodians (about 90% of eligible voters) participated in the
May 1993 elections, although the Khmer Rouge or Party of Democratic Kampuchea
(PDK), whose forces were never actually disarmed or demobilized, barred some
people from participating. Prince Ranariddh's FUNCINPEC Party was the top
vote recipient with a 45.5% vote, followed by Hun Sen's Cambodian People's
Party and the Buddhist Liberal Democratic Party, respectively. FUNCINPEC then
entered into a coalition with the other parties that had participated in the
election. The parties represented in the 120-member assembly proceeded to
draft and approve a new constitution, which was promulgated September 24,
1993. It established a multiparty liberal democracy in the framework of a
constitutional monarchy, with the former Prince Sihanouk elevated to King.
Prince Ranariddh and Hun Sen became First and Second Prime Ministers,
respectively, in the Royal Cambodian Government (RGC). The constitution
provides for a wide range of internationally recognized human rights.

On October 4, 2004, the Cambodian National Assembly ratified an agreement
with the United Nations on the establishment of a tribunal to try senior
leaders responsible for the atrocities committed by the Khmer Rouge. Donor
countries have pledged over $40 million of the $43 million international
share of the three-year tribunal budget. Cambodia has committed to pay $13.3
million of the tribunal costs. The beginning date for the tribunal has not
yet been determined.

GOVERNMENT AND POLITICAL CONDITIONS
Cambodia is a constitutional monarchy, and its constitution provides for a
multiparty democracy. The Royal Government of Cambodia, formed on the basis
of elections internationally recognized as free and fair, was established on
September 24, 1993.

The executive branch comprises the king, who is head of state; an appointed
prime minister; seven deputy prime ministers, 15 senior ministers, 28
ministers, 135 secretaries of state, and 146 undersecretaries of state. The
bicameral legislature consists of a 123-member elected National Assembly and
a 61-member Senate. The judiciary includes a Supreme Court and lower courts.
Administrative subdivisions are 20 provinces and 4 municipalities.

Compared to its recent past, the 1993-2003 period was one of relative
stability for Cambodia. However, political violence continued to be a
problem. In 1997, factional fighting between supporters of Prince Norodom
Ranariddh and Hun Sen broke out, resulting in more than 100 FUNCINPEC deaths
and a few Cambodian People's Party (CPP) casualties. Some FUNCINPEC leaders
were forced to flee the country, and Hun Sen took over as Prime Minister.
FUNCINPEC leaders returned to Cambodia shortly before the 1998 National
Assembly elections. In those elections, the CPP received 41% of the vote,
FUNCINPEC 32%, and the Sam Rainsy Party (SRP) 13%. Due to political violence,
intimidation, and lack of media access, many international observers judged
the elections to have been seriously flawed. The CPP and FUNCINPEC formed
another coalition government, with CPP the senior partner.

Cambodia's first commune elections were held in February 2002. These
elections to select chiefs and members of 1,621 commune (municipality)
councils also were marred by political violence and fell short of being free
and fair by international standards. The election results were largely
acceptable to the major parties, though procedures for the new local councils
have not been fully implemented.

National Assembly elections in July 2003 failed to give any one party the
two-thirds majority of seats required under the constitution to form a
government. The CPP secured 73 seats, FUNCINPEC 26 seats, and the SRP 24
seats. As a result, the incumbent CPP-led administration continued in power
in a caretaker role pending the formation of a coalition with the required
number of National Assembly seats to form a government.

On July 8, 2004, the National Assembly approved a controversial addendum to
the constitution in order to require a vote on a new government and to end
the nearly year-long political stalemate. The vote took place on July 15, and
the National Assembly approved a new coalition government comprised of the
CPP and FUNCINPEC, with Hun Sen as Prime Minister and Prince Norodom
Ranariddh as President of the National Assembly. The SRP and representatives
of civil society non-governmental organizations (NGOs) have asserted the
addendum was unconstitutional. The SRP boycotted the vote and currently is in
opposition. In February 2005, the National Assembly voted to lift the
parliamentary immunity of three opposition parliamentarians, including SRP
leader Sam Rainsy, in connection with lawsuits filed against them by members
of the ruling parties.

On October 7, 2004, King Sihanouk abdicated the throne due to illness. On
October 14, the Cambodian Throne Council selected Prince Norodom Sihamoni to
succeed Sihanouk as King. King Norodom Sihamoni officially ascended the
throne in a coronation ceremony on October 29, 2004.

The constitution provides for a wide range of internationally recognized
human rights, including freedom of the press. While limitations still exist
on mass media, freedom of the press has improved markedly in Cambodia since
the adoption of the 1993 constitution, which grants a certain degree of
freedom to the media. The written press, while considered largely free, has
ties to individual political parties or factions and does not seek to provide
objective reporting or analysis. Cambodia has an estimated 20 Khmer-language
newspapers that are published regularly. Of these, eight are published daily.
There are two major English-language newspapers, one of which is produced
daily. Broadcast media, in contrast to print, is more closely controlled. It
tends to be politically affiliated, and access for opposition parties is
extremely limited.

Principal Government Officials
King and Head of State--His Majesty Norodom Sihamoni
Prime Minister and Head of Government--Hun Sen
President of the Senate--Chea Sim
President of National Assembly--Prince Norodom Ranariddh

Cambodia's embassy in the United States is located at 4530 16th Street NW,
Washington DC 20011; tel: (202) 726-7742; fax: (202) 726-8381.

ECONOMY
In spite of recent progress, the Cambodian economy continues to suffer from
the legacy of decades of war and internal strife. Per capita income and
education levels are lower than in most neighboring countries. Infrastructure
remains inadequate. Most rural households depend on agriculture and its
related subsectors. Manufacturing output is concentrated in the garment
sector, which started to expand rapidly in the mid-1990s and now employs more
than 250,000 workers, but faces an uncertain future following the end of
textile quotas at the end of 2004. The other main foreign currency earner is
tourism; Angkor Wat is one of the country's international tourist
attractions. After several years of rapid growth, the tourism sector slowed
in 2002-03, mainly due to severe acute respiratory syndrome (SARS)-related
fears. There was a noticeable rebound in tourist arrivals in 2004, with
foreign visitors to Cambodia topping one million for the first time. The
service sector is heavily concentrated in trading activities and
catering-related services.

Cambodia's real GDP grew at 5.5% in 2002 and 5.2% in 2003, with almost all of
the growth coming from the garment sector. Growth in 2004 was strong at 5.5%,
with the garment sector providing the biggest input into GDP growth.
Inflation moderated from 3% in 2002 to an estimated average of 1.3% over
2003. Inflation remained under control in 2004. The national currency, the
riel, was relatively stable over 2002 but depreciated slightly against the
U.S. dollar in 2003. The National Bank of Cambodia made a series of limited
yet effective interventions in 2004 to keep the riel to dollar rate at
roughly 4,000 to one. The economy is heavily dollarized; the dollar and riel
can be used interchangeably. Cambodia remains heavily reliant on foreign
assistance--about half of the central government budget depends on donor
assistance. Cambodia has had trouble attracting foreign direct investment
(FDI), due in part to the unreliable legal environment. New FDI levels fell
steadily from 1999-2001. According to the National Bank of Cambodia (NBC),
which tracks actual monies spent as FDI rather than simply the value of
approved FDI projects, in 2001 there was $150 million in FDI. In 2002, the
NBC recorded $54 million in FDI. In 2004, FDI was measured officially at $131
million, with over half of that being invested in the garment sector. The
economy also has a poor track record in creating jobs in the formal sector,
and the challenge will only become more daunting in the future since 50% of
the population is under 20 years of age and large numbers of job seekers will
begin to enter the work force each year over the next 10 years.

FOREIGN RELATIONS
Cambodia has established diplomatic relations with most countries, including
the United States. The country is a member of most major international
organizations, including the UN and its specialized agencies, and became a
member of the Association of Southeast Asian Nations (ASEAN) in 1998.

Cambodia is a member of the World Bank, the International Monetary Fund, and
the Asian Development Bank (ADB). On October 13, 2004, Cambodia became the
148th member of the World Trade Organization (WTO).

U.S.-CAMBODIAN RELATIONS
Between 1955 and 1963, the United States provided $409.6 million in economic
grant aid and $83.7 million in military assistance. This aid was used
primarily to repair damage caused by Cambodia's war of independence from
France, to support internal security forces, and for the construction of an
all-weather road to the seaport of Sihanoukville, which gave Cambodia its
first direct access to the sea and access to the southwestern hinterlands.
Relations deteriorated in the early 1960s. Diplomatic relations were broken
by Cambodia in May 1965, but were reestablished on July 2, 1969. U.S.
relations continued after the establishment of the Khmer Republic until the
U.S. mission was evacuated on April 12, 1975. During the 1970-75 war, the
United States provided $1.18 billion in military assistance and $503 million
in economic assistance. The United States condemned the brutal character of
the Khmer Rouge regime between 1975 and 1979. The United States opposed the
subsequent military occupation of Cambodia by Vietnam, and supported ASEAN's
efforts in the 1980s to achieve a comprehensive political settlement of the
problem. This was accomplished on October 23, 1991, when the Paris Conference
reconvened to sign a comprehensive settlement.

The U.S. Mission in Phnom Penh opened on November 11, 1991, headed by career
diplomat Charles H. Twining, Jr., who was designated U.S. Special
Representative to the SNC. On January 3, 1992, the U.S. lifted its embargo
against Cambodia, thus normalizing economic relations with the country. The
United States also ended blanket opposition to lending to Cambodia by
international financial institutions. When the freely elected Royal
Government of Cambodia was formed on September 24, 1993, the United States
and the Kingdom of Cambodia immediately established full diplomatic
relations. The U.S. Mission was upgraded to a U.S. Embassy, and in May 1994
Mr. Twining became the U.S. Ambassador. After the factional fighting in 1997
and Hun Sen's legal machinations to depose First Prime Minister Ranariddh,
the United States suspended bilateral assistance to the Cambodian Government.
At the same time, many U.S. citizens and other expatriates were evacuated
from Cambodia and, in the subsequent weeks and months, more than 40,000
Cambodian refugees fled to Thailand. The 1997 events also left a long list of
uninvestigated human rights abuses, including dozens of extra-judicial
killings. Since 1997, U.S. assistance to the Cambodian people has been
provided mainly through non-governmental organizations, which flourish in
Cambodia.

The United States supports efforts in Cambodia to combat terrorism, build
democratic institutions, promote human rights, foster economic development,
eliminate corruption, achieve the fullest possible accounting for Americans
missing from Indochina conflict, and to bring to justice those most
responsible for serious violations of international humanitarian law
committed under the Khmer Rouge regime.

Principal U.S. Officials
Ambassador--Joseph A. Mussomeli
Deputy Chief of Mission--Mark C. Storella
Political Officer--Margaret B. McKean
Economic/Commercial Officer--Donald B. Coleman
Consular Officer--Terrence E. West
Management Officer--Daniel G. Brown, Acting
Acting Public Affairs Officer--John J. Daigle
Regional Security Officer--John P. Davis
Defense Attache--Col. Terence M. Tidler

The U.S. Embassy in Phnom Penh is located at 27 EO Street 240; tel: (855)
23-216-436; fax: (855) 23-216-811.