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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.

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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."

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