The World Bank’s decision to re-engage with the Kingdom after a five-year hiatus was made despite stern warnings from the US Treasury Department that Cambodia’s commitment to reform was “questionable” and that the bank did not seem to have learned lessons from past mistakes.

According to a position statement uploaded to the department’s website in the wake of the decision, the US abstained from the vote on May 19 to issue a total of $130 million worth of loans across four projects on the grounds that Cambodia had failed to address the key challenges of corruption, a lack of transparent governance and necessary reforms to the land-tenure process.

“Regrettably, the United States questions the Government of Cambodia’s commitment to these priorities and therefore cannot support new lending to Cambodia at this time. The United States also questions whether the Bank has fully absorbed the lessons of previous projects – such as LASED I – in developing this CEN [Country Engagement Note] and the four projects that are being presented to the Board,” said the letter.

The vote to begin lending anew represented a major shift following a 2011 lending freeze in the wake of the eviction of more than 3,000 families from Phnom Penh’s Boeung Kak lake area. At the time, the World Bank was involved with a $24.3 million land-titling project (LASED I) that was accused of mismanagement and denying thousands of Cambodians property rights.

A person throws an egg at the World Bank office in Phnom Penh earlier this year during a protest.Heng Chivoan

The new lending scheme provides $25 million in developmental aid for the contentious LASED II program. The Treasury statement goes on to say, without mentioning specific incidents, that recent political events have called into question the independence of the Kingdom’s judiciary and its ability to ensure that the projects would be implemented with transparency.

US Embassy public affairs officer Jay Raman yesterday referred questions to the US Treasury. Government spokesman Phay Siphan denounced the statement yesterday, saying Cambodia could take or leave the World Bank’s money and that, despite US protestations, the international lending body was focused on the bottom line.

“The World Bank does not care about development, they care about getting interest paid on their loans. If the US wants to use the World Bank as a political tool, we don’t need its money,” he said, adding that China provided a ready no-strings-attached alternative.

Cambodia National Rescue Party lawmaker Son Chhay, meanwhile, said his party was disappointed in both the World Bank’s decision and the US government’s seeming lack of influence over it. “We would expect that the US would have the majority to overturn this decision. But they didn’t, and it shows that they are not interested in supporting democratic principles,” he said.