China-Funded Canal Project Strains Cambodia-Vietnam Ties

Although not officially acknowledged, the Funan Techo Canal, a strategic infrastructure project designed to connect the Mekong River to the Cambodian coast, is causing friction between both Vietnamese and Cambodian authorities and academics in the lead-up to the anticipated ground-breaking later this year. Vietnamese newspapers and social media networks have been captivated by this contentious project. Some Vietnamese observers have even called for the halt of the project, which they deem risky and opaque.

Concerns have also lingered among Vietnamese scholars and netizens regarding the canal’s potential environmental impacts, and, even more seriously, China’s possible military use of the canal. The China Road and Bridge Corporation, a major Chinese state-owned enterprise, will oversee this grand project under a build-operate-transfer scheme, intensifying speculations about the murky relationship between Phnom Penh and Beijing.

The Vietnamese government has repeatedly requested more information from Cambodia and consultations among Mekong stakeholders, including the Mekong River Commission, to mitigate the potential ecological impacts of the canal project on the Mekong River basin. In a meeting with Cambodian Deputy Prime Minister Neth Savoeun in May, Vietnamese Prime Minister Pham Minh Chinh articulated a desire to work closely with Cambodia and other Mekong nations to navigate the Mekong River toward harmonious interests and long-term prosperity.

Vietnam has “asked Cambodia to collaborate” on the project, stated Doan Khac Viet, deputy spokesperson of the Ministry of Foreign Affairs, during a press briefing in April. Le Thi Thu Hang, another Ministry spokesperson, subsequently took a softer line, noting that Vietnam was “highly interested” in the project and “respected the legitimate interests of Cambodia” in line with the 1995 Mekong Agreement. Hang also reiterated Vietnam’s support for Cambodia’s achievements and praised the “fine neighborliness, traditional friendship, comprehensive cooperation” that has characterized the bilateral relationship, presumably to allay Phnom Penh’s probable ire over Hanoi’s persistent expressions of concerns.

But Phnom Penh has been unwavering in its intention to move forward with the 180-kilometer canal. According to Cambodia’s Deputy Prime Minister Sun Chanthol, the project will create economic zones and bring benefits to the country in the areas of trade, tourism, urban planning, and construction, with very little negative impact. He added that the “canal will not be used for any foreign military, as it is against the Cambodian Constitution.” Cambodian newspapers communicated the government’s intent to build the canal by underlining the Cambodian authorities’ “unshakable commitment” to the project “despite objections from Vietnam and several outside parties.”

Cambodia has good grounds to maintain its resolve on its strategic project. With the Funan Techo Canal, the country hopes to reduce transportation costs instead of relying on the current route through Vietnamese ports, mitigate the cost of shipping containers from Phnom Penh to the sea, boost agricultural and aquacultural development, and create jobs for 10,000 Cambodian workers. Because of its small size, limited resources, and vulnerable location, Cambodia must find ways to increase its room for maneuver while seeking diplomatic backing and financial aid from regional powers, particularly China.

Central to Cambodia’s ambition and resolute stance is Prime Minister Hun Manet’s vision of increasing the country’s agency amid intensifying great power rivalry and strategic uncertainties. Last year, during his first overseas tour as prime minister, Hun Manet visited China, where he and Chinese President Xi Jinping vowed to reinforce their commitments towards “deepening China-Cambodia comprehensive strategic partnership of cooperation and achieving high-quality and sustainable common development.” Close personal and state-to-state ties have evolved into the lauded “unbreakable” “ironclad friendship” between the two countries. This is particularly true given that former Prime Minister Hun Sen, the father of Hun Manet, is widely known for his staunch support of Cambodia-China relations.

Still, Hun Manet’s diplomatic outreach has extended beyond China. In December of last year, Hun Manet and his Japanese counterpart Kishida Fumio agreed to deepen security ties and signed seven memoranda of understanding on investment, trade, and other issues. On Manet’s European tour in January, Cambodia and France upgraded their bilateral relationship to a strategic partnership, and leaders from both sides underscored the need to double down on bilateral investment and trade. 

But Cambodia's recent strides in mending ties with the United States are the most significant accomplishment. Despite long-standing concerns about Cambodia’s poor record of human rights and corruption, Washington has been more open to expanding investments in the country in the hopes of fostering fruitful collaboration on conservation, education, health, and other socio-cultural fields.

Hun Manet’s successes on this front have contrasted starkly with his father’s administration. Hun Sen, who handed the reins of power to his son in August last year, had trouble getting closer to the U.S., due to entrenched American perceptions of Hun Sen’s authoritarian style and U.S. concerns about democratic backsliding, political oppression, media censorship, and concerns about the presence of the Chinese military at Cambodia’s Ream Naval Base. Though bilateral trade between the two nations increased steadily, and the U.S. was a significant export market for Cambodia, diplomatic ties stayed stagnant due to the profound mutual distrust between Hun Sen and the U.S. government.

Cambodia’s recent diplomatic initiatives, particularly its creeping rapprochement with Western partners, are indicators of the incumbent administration’s efforts to enhance its agency. Although China remains a crucial partner of Cambodia and it might take years to boost Phnom Penh’s profile in the eyes of Western powers, Cambodia under Hun Manet has sought to diversify its friendships beyond China-centric economic ties and reduce the kingdom’s over-reliance on any one country. For a small state like Cambodia, a good strategy lies in tangible efforts to maintain its strategic autonomy through omnidirectional engagement with great and middle powers. The adjustment of the foreign policy posture by Hun Manet’s government portrays Cambodia’s desire to secure the strategic space conducive to its development.

As for the Funan Techo Canal, the Cambodian government has remained resolute in its resolve to proceed with the planned project, without delay or negotiation with Vietnam. The canal project presents an opportunity for Cambodia’s young leader to establish himself as a steadfast advocate for the country’s national interests and to shore up his authority. At his swearing-in ceremony in August 2023, Hun Manet pledged to speed up development and enhance Cambodians’ livelihoods. The canal project is expected to bolster Cambodia’s self-reliance, drive its economic and social progress, and help the country reach its goals of becoming an upper-middle-income country by 2030 and a high-income country by 2050.

More than 17.4 million Vietnamese call the Mekong Delta, the nation’s primary granary, home, and so Vietnam has every reason to be worried about the canal’s possible impacts. The success of the canal operation depends on the stakeholders’ ability to communicate constructively and use reasonable calculations and well-formulated measures in their planning. 

However, Vietnam’s persistent appeals have failed to make Cambodia think twice about the Funan Techo Canal. Hence, both Vietnamese officials and ecological experts should be prepared with expert-led strategies and practical solutions to better cope with the environmental and ecological impacts that may result from the project. Given the apparent deadlock between the two Southeast Asian nations over the canal issue, the adage “God helps those who help themselves” certainly applies in this case.

Once considered allies in the resistance war against the United States, Cambodia and Vietnam have framed their ties with the mantra “good neighborliness, traditional friendship, comprehensive cooperation, and long-term stability.” But Cambodia and Vietnam are now grappling with the harsh realities of pragmatic politics, which has put this traditional relationship under strain and situated them on opposite sides of the canal issue. With Cambodia backed by China, and unwilling to back down, it is unlikely that the two countries can find common ground on a project that is infused with nationalistic importance.