The Case for a Cambodian Foreign Policy Reset

Cambodia is in a uniquely challenging position compared to its peers in the Southeast Asian region. Although not a claimant state in the South China Sea disputes, the country has been drawn into the maritime conflicts and has been criticized for its lack of willingness to condemn China over the latter’s expansive sovereign claims and growing presence in the disputed waterway. Meanwhile, as one of the downstream Mekong countries, Cambodia is subject to the consequences of water politics involving fellow Mekong countries and regional powers such as China and the United States.

The South China Sea and Mekong issues are thus two of the key regional challenges confronting Cambodia. The country is also facing great geopolitical challenges resulting from the U.S.-China competition for influence in the Asia-Pacific region. In July 2019, Cambodia was placed in the spotlight when The Wall Street Journal reported that Phnom Penh and Beijing had signed a secret deal allowing China military access to Cambodia’s Ream Naval Base in Preah Sihanouk province.

Although concrete evidence is lacking, analysts and pundits have continued to speculate about the possibility of a Chinese military presence on Cambodian soil. The speculation is understandable considering Cambodia’s steadily growing alignment with China and Beijing’s increasing influence and presence in Phnom Penh.

Cambodia and China recently signed a free trade agreement, a move seen as a response to Cambodia’s partial loss of trade preferences given under the European Union’s Everything But Arms (EBA) trade scheme. The EBA scheme allows Cambodia and other eligible Least Developed Countries to export tariff free and quota free to the European market. To offset the suspension of EBA preferences on 20 percent of its exports to the European bloc (worth about $1 billion), Cambodia has focused on export market diversification by trying to negotiate trade deals with potential partners such as India, Japan, South Korea, the United Kingdom, and the Eurasian Economic Union.

As a small developing state with limited capacity and resources, Cambodia lacks the ability to exercise its agency and remain truly independent of external forces, particularly influence from China, its closest ally, largest creditor, number one trading partner, and leading provider of foreign aid.

In 2012, when Cambodia last held ASEAN’s rotating chairmanship, Phnom Penh was harshly criticized and blamed for the bloc’s inability to issue a joint communique for the first time in its 45-year history. Due mainly to this incident, some analysts have recently suggested that Cambodia and Laos (both of which have come under greater Chinese influence than their ASEAN peers) should be expelled from the grouping.

The proposition to “cut loose the two to save the eight” – to expel Cambodia and Laos from ASEAN to preserve the regional organization – is interesting, yet fails to take into account the fact that the expulsion of an ASEAN member would require the consensus of the remaining members. This ensures that such a development is unlikely, and would only happen if ASEAN’s survival were seriously threatened.

Some Cambodian analysts have dubbed this proposition as “nonsensical.” Others have argued that the call to remove Cambodia from ASEAN makes “an incorrect assumption of Cambodia as a state entirely without agency.” An open letter purportedly written by a group of retired and serving Cambodian diplomats described the proposition as “intellectually deceitful and normatively detrimental” to ASEAN and the region.

These exchanges indicate the challenges facing Cambodia, requiring it to step up its foreign policy in order to navigate the geopolitical challenges and avoid being caught in the middle of the geopolitical tug of war between the U.S. and China.

To manage the geopolitical risk that has caused great concerns in Cambodia as well as in the region, Phnom Penh needs to address issues across at least three domains: domestic politics, international relations, and economic growth.

Many of the problems limiting Cambodia’s foreign policy maneuvering are linked to its domestic politics. As the country has descended into one-party rule, the future of its democracy is uncertain. The last few years have seen the Cambodian government increasing repressive measures to silence critics and forestall challenges from its political opponents. The grim determination of Prime Minister Hun Sen to remain in power has forced his government to lean more heavily on China, an ally that, unlike many Western governments, is willing to turn a blind eye to Phnom Penh’s democratic backsliding.

To arrest the perception that it is a Chinese proxy, Cambodia must address its domestic political problems and seek ways to resolve social inequalities and political divisions that seem to have grown over time. The more Cambodia edges toward open one-party rule, the more closely it will align with China. This will force Cambodia deeper into China’s strategic orbit, making other governments more skeptical of Phnom Penh’s China-related decisions.

Cambodia needs also to rethink its foreign policy approach. Hun Sen’s government has claimed to pursue a foreign policy of independence and neutrality, citing its constitution, which upholds the principle of non-alignment, but analysts and observers are still not convinced. Obviously, since actions speak louder than words, Cambodia must refrain from actions seen to serve China’s strategic interests. It needs to improve its tarnished international image, in particular, by addressing the widespread perception that it is a Chinese proxy.

This is by no means easy, given China’s rise and the significant development prospects associated with embracing China amid the United States’ uncertain engagement in the region. Nonetheless, Cambodia needs to exercise its agency and be more flexible to ensure that its foreign policy is viewed as less tilted toward China. Cambodia has tried to hedge in its relations with the great powers, but it needs to walk the delicate tightrope more carefully in order to navigate the growing uncertainties in the regional strategic environment.

In the meantime, Cambodia needs to continue to focus on sustaining and accelerating its economic growth. Although the country has boasted average GDP growth of 7 percent over the last two decades, due to the COVID-19 pandemic, its economy has experienced the worst growth rate since 1994. Both the World Bank and the Asian Development Bank have predicted that Cambodia’s economy will contract somewhere between 1 and 5.5 percent in 2020. This economic contraction looks set to motivate Cambodia to further embrace Chinese initiatives like the Belt and Road Initiative and the Lancang-Mekong Cooperation mechanism in order to fire up its economic growth. The enthusiastic acceptance of China and its initiatives will make Cambodia more vulnerable to criticism and continue to reinforce perceptions of it as a “Chinese proxy.”

To reduce negative perceptions regarding how it engages with China and other countries, Cambodia must strengthen its economic autonomy and power. It needs to constructively engage all key development partners to support its economic recovery post-COVID-19. Cambodian leaders and policymakers need to reimagine their vision for Cambodia, prioritizing sustainable and inclusive growth. Addressing political issues at home and improving external relations are vital for Cambodia’s future.

As The Diplomat’s Sebastian Strangio noted in his new book, “In the Dragon’s Shadow,” “no country in Southeast Asia is closer to China than Cambodia, and none better demonstrates the extent to which China’s economic and political re-emergence has altered the dynamics of aid and development in the region.” Cambodia’s embrace of China and all things Chinese has also attracted increasing attention in Washington, as evidenced by the U.S. allegations and growing concerns about the Chinese military presence in Cambodia. Given this, the geopolitical challenges confronting Cambodia are likely to worsen as U.S.-China rivalry escalates further.

At this stage, it is not clear how Cambodia can successfully navigate the prevailing regional and geopolitical challenges. However, the country needs to take advantage of the various multilateral mechanisms, including the newly established U.S.-ASEAN Strategic Partnership, and the various initiatives under various nations’ lower Mekong cooperation frameworks. Through deeper and more effective engagement with these inter-governmental frameworks, Cambodia is more likely to garner power and exercise greater agency to realize its national interests and promote regional cohesion.