China’s economic footprint grows in Cambodia

Phnom Penh – Cambodia and China marked their 55th anniversary of diplomatic relations last week with swooning mash-notes attesting to their mutual adoration and support.

In a letter to Cambodia King Norodom Sihamoni, Xi Jinping, the president of the People’s Republic of China, lauded its long-standing relationship with the Southeast Asian neighbor.

“Our two sides maintain high political mutual trust, conduct productive practical cooperation in all areas and render each other support in international and regional issues,” Xi said.

With Prime Minister Hun Sen’s ruling party predicted to win again at the polls on Sunday, it is likely that Cambodia’s good relations with China will continue.

Since 1994, China has invested $9.1bn dollars into Cambodia. Just this year, the nation signed off on a $1.67bn MOU for a long-awaited oil refinery.

And in late December, two Chinese companies stunned observers with the announcement they were inking an $11.2bn iron ore mining and rail project in the north of Cambodia.

Hydrodams, which are increasingly dotting Cambodia’s waterways, are built by Chinese companies; Chinese-owned factories around the country are run by Chinese managers; and roads are built with Chinese cash.

There is a military academy funded by China, and the first of a series of Z9 Chinese military helicopters – purchased thanks to a $195m Chinese loan – arrived last week.

Price to pay

However, such high levels of “cooperation” come at a price, critics say.

While US and European Union trade agreements are predicated on Cambodia meeting minimum human rights requirements, Chinese loans come with no such strings attached.

That, in turn, has slowed Cambodia’s development, said Carlyle Thayer, emeritus professor at the Australian Defence Force Academy and a Southeast Asia expert.

“China playing that independent role, gives the Cambodians the opportunity to avoid trying to have to meet international standards,” he said. “It keeps Cambodia underdeveloped in that area of political, governance, and human rights.”

Borne out time and again, few instances demonstrate that dichotomy so clearly as Cambodia’s deportation of 20 Uighur asylum seekers in late 2009.

Sent back at the behest of China, the group included a pregnant woman and her two children and rights groups expected them to face a nasty fate upon their return.

The move was likely necessary from Cambodia’s point of view – just two days after the expulsion, in spite of widespread outrage from Western donors and human rights groups, the Chinese vice-president visited and signed off on $1.2bn in aid and loans.

Environmental track record

Apart from the human rights issue, the projects China is most keen to fund, meanwhile, could threaten Cambodia’s environment.

Chinese state owned companies, the ones behind some of Cambodia’s largest and most sensitive of development projects, “don’t have a good track record for meeting environmental and human rights laws,” Thayer told Al Jazeera.

“There’s polluting industry, bad labor standards. It’s very short-sighted behavior by part of Chinese companies, but they’re there to make money, it’s not for sustainable development.”

Though it may not be sustainable, it is highly lucrative for those in power, Thayer added.

“It keeps the [ruling Cambodian People’s Party] in power, it keeps [Prime Minister] Hun Sen in power; money flows through in that relationship.”

Tug of War

While China has increasingly become a generous and powerful presence in Cambodia, the small kingdom has long enjoyed the kindness of other countries.

Thanks to a modern tradition of international involvement and largess – the country was briefly governed by a UN body at a cost of $1.5bn over the 19 months it governed – Cambodia gets upwards of $1bn in aid each year.

Since the UN Transitional Authority in Cambodia pulled out in 1993, roughly half the nation’s GDP has come from donor pledges. While those ostensibly must be paid in exchange for human rights rendered, that has rarely been the case.

“For two decades, [Prime Minister Hun Sen] has been able to make promises to everyone, including Western donors, to ensure that the flow of foreign funds does not stop. But he has reneged on almost all of his promises pertaining to human rights and rule of law,” said Nicolas Agostini, a delegate to the UN at the International Federation for Human Rights.

“Western donors have been unable to make a difference in terms of Cambodia’s human rights record,” he continued, pointing to the US and EU’s reluctance to withdraw trade preferences even in light of egregious rights violations including child labor and land grabbing.

The US appears to have its hands tied on such matters.

“We are in an extraordinary period of growth and prosperity in the Asia Pacific region, and promoting that growth, facilitating it, sustaining it, and harnessing it, frankly, is central to America’s economic and strategic interest,” Daniel R Russel, Assistant Secretary at the Bureau of East Asian and Pacific Affairs, explained in a Washington DC press briefing earlier this week.

Filling the gap

Though small and devoid of any particularly enticing natural resources, Cambodia appears to have increasingly become something of a battleground as China seeks to expand its geopolitical presence and the US scrambles to counter.

Politicians in Cambodia are campaigning hard ahead of Sunday’s election [AFP]

After the Uighur incident, for instance, the US responded by suspending a shipment of military vehicles. Ever grateful, China swooped in with hundreds of military vehicles, uniforms, and a large grant.

“China is very active in Cambodia,” Daniel Mitchell, CEO of emerging markets investment firm SRP International Group, warned the US Congress earlier this month.

“The Chinese stand ready to fill any aid gaps created by suspension or termination of aid by the US for human rights issues.”

That hearing was a specially convened US House Committee on Foreign Affairs Hearing entitled Cambodia’s Looming Political and Social Crisis.

Though lawmakers urged cuts to aid and slammed the upcoming national elections (“it’s time for Hun Sen to go,” shouted California Congressman Dana Rohrabacher at one point) it is hardly in the US’s interest to back away.

If it hopes to counter China – indeed an entire foreign policy “pivot” is predicated on such a counter – the US must stay.

“Even though human rights are officially part of Western countries’ foreign policies, in practice they come pretty low down the list, compared to business interests, trade, and short-term political stability,” points out FIDH’s Agostini.

China will sink in endless cash in its efforts to “restore the sphere of influence,” as Thayer puts it. Unwilling to cede influence, the US must counter with injections of its own.

And so without much effort, Cambodia will likely continue to benefit from both China and the US.

“The US spends much money on democracy and human rights and China spends so much to help Cambodia get on equal footing with neighboring countries,” said Council of Ministers spokesman Phay Siphan.

“Between the two aids, China and US, Cambodia earns both economic growth and democracy,” he added.

“At one time, we were enemies, now we have become friends.”