The War Economic Aid to Cambodia

PHNOM PENH (DNSI) -Included in President Nixon's $255 million request for aid to Cambodia is $70 worth of economic aid running until June 30, 1971. This assistance is essential to the survival of the Lon Nol regime.

Unlike other aid requests, it is not being presented as a technical aid program designed to "win hearts and minds." A special economic advisor to the President who is presently in Phnom Penh states simply that "this is purely economic aid to support the war effort."

There seems no doubt that the Lon Nol government is in serious trouble. Communist forces have made sweeping gains and have forced the establishment of a "Lon Nol line," which concedes most of the north and north-east to the communists. There are virtually no roads permanently safe for travel. Reliable estimates place no more than 20 per cent of the country under Lon Nol's control.

The Cambodian army has been taking high casualties. And as the realization dawns on its soldiers and the general populace that they are in for a long war, enthusiasm is flagging.

A major factor is increasing disillusionment with Lon Nol among the intellectuals who were the original mainstay of his regime. The most common complaint heard among them is that he is devoting all of his energies to the war, and that little is being done in any other field.

The behavior of South Vietnamese troops has also posed a serious threat. The major emotional fuel for the war to date has been anti-Vietnamese feelings successfully directed against the "North Vietnamese" and "VC" by Lon Nol.

The highest Cambodian officials now complain bitterly, however, against the South Vietnamese. They accuse them of raping, looting, and acting as a conquering army instead of allies. One military spokesman states quite openly that the South Vietnamese do not recognize Cambodian sovereignty in the regions they have occupied.

Underlying all such political problems, moreover, are increasingly serious economic ones.

ALTHOUGH American officials here criticize Sihanouk for economic "stagnation." they say that the economy was in fairly good shape at the time of his fall. By imposing restriction on luxury imports, Sihanouk had balanced imports and exports and there was over $65 million in foreign exchange reserves. French economic advisors to Sihanouk estimated that the supply of currency in circulation could be increased by one-third, from 6 billion riels to 8 billion riels, without introducing serious inflation.

The Lon Nol government has largely financed itself to date through exactly that-printing money. Now, however, much of its reserves has been eaten up.

Uncounted thousands of hectares of rice and other crops have been abandoned. Rubber plantations, producers of most of Cambodia's foreign exchange, lie in ruins. Senate investigators estimate that nearly a million Cambodians have been made refugees in the last six months, and the problems of supporting them add to Lon Nol's difficulties. The population of Phnom Penh alone has nearly double to over a million. And the 400,000 Vietnamese who played a key role in the Cambodian economy have been made refugees or killed.

One of the most serious pressures on the economy has resulted from the mushrooming of the army. Around 30,000 on March 18, it has now grown to 140,000. Plans call for it to be expanded to 210,000 during 1971. The Cambodian soldier is relatively well-paid, receiving about $360 a year in a country where the average annual income is estimated at about $125. The major thrust of American economic aid will be support for the army.

The program envisioned will focus on a commodity import program, hopefully concentrating on a wide range of essentials such as rice, wheat, fertilizers, pharmaceuticals, gasoline, tools, electrical and industrial machinery, rubber products, tractors, etc.

These commodities and funds to purchase them will be made available to the Lon Nol regime, which by selling them on the local market will hopefully acquire enough of its local currency, the riel, to finance its military activities.

AMERICAN officials proudly assert that the entire program will be run by six Americans-four economic advisers and two secretaries. There will be little American supervision of its operation. "This aid program is not like other ones," one American Embassy official says; "the stuff comes to the dock and it's signed over to the Cambodians. That's the last we see of it. There's no 'bullet to the body' policy here."

When reminded that similar programs in Laos and South Vietnam led to such widespread corruption and abuse that they had to be drastically curtailed or abolished. American officials admit that this will be a "problem." However, they say frankly that they have no choice.

Moreover, the question of American investment is so ticklish that it is simply not politically feasible to launch a full-scale American aid program.

American officials here point out that the proposals submitted by USAID/Laos director Charles Mann last summer were scotched. The plans called for setting up a large USAID mission in Cambodia. The estimated cost was in the neighborhood of $200 million. The program, calling for large numbers of American technicians and advisers, was precisely what the Nixon Administration seeks to avoid.

Despite the limited goals of the air program, however, the signs of American presence are everywhere.

The staff of the American Embassy has grown from two before the March 18 coup to over 60. About half are military personnel.

Two bars, the Miami and Amigo, have recently opened. Signboards in front proclaim that "American-style" food and music are offered inside. Within, the blaring juke-boxes, over-priced drinks, and aggressive bargirls familiar to habitues of American haunts in Saigon and Bangkok are very much in evidence. "Before the coup the girls solicited you in French," says one long-time Phnom Penh resident; "now they start off in English."

The Hotel Manoram, the best hotel in the center of the city, once was inhabited by camera-bearing tourists on their way to or from Angkor Wat. Now they have been replaced by the crew-cut, square-jawed and white-shirted American advisers found in CIA hangouts throughout Southeast Asia.

Continental Air Service, a subsidiary to Continental Airlines in the States, has established a beachhead. Continental drops arms, ammunition, and rice and transports troops on contract to the CIA in Laos. It expects such business in Cambodia as well. Although it has only a few planes right now in Cambodia, its director says that they have their full stock in Laos to draw from, and that things will pick up once the aid request is passed.

THE $70 million envisioned over the next six months is clearly a stopgap effort, however. American officials frankly state that it is meant only to shore up the regime so that it does not go bankrupt.

If the Lon Nol government manages to survive the coming dry season, however, the goals of American economic aid will become clearer. If it continues at its present relatively low level, it will be clear that the U.S. is hedging its bets on Lon Nol and simply tying its efforts here to the war in Vietnam.

If, as is more likely, however, the economic aid program is increased and broadened, one can foresee an attempt to install a permanent American presence in Cambodia similar to those in Thailand, Laos and South Vietnam.

The requests made by Nixon for aid to Cambodia during the first part of 1971 will be a good indication. In any event, however, it is the U.S. who will determine the viability of the Lon Nol regime or a non-Sihanouk successor.

Copyright Dispatch News Service International