Sino-American Competition in Cambodia: A 2020 Retrospective
By Pou Sothirak, Cambodian Institute for Cooperation and Peace
An eventful 2020, which saw Cambodia seeking to benefit from both the US and China's activities in Southeast Asia, signals difficulty in the coming year. Pou Sothirak asks, how does Cambodia avoid putting all its eggs in one basket and instead create more balanced engagement with the world's two most powerful states?
This year marks the 70th anniversary of US-Cambodian relations. It is also a year in which Cambodia’s relationship with China continued to expand (e.g. the finalising of the new China-Cambodia trade agreement). Beyond this, 2020 has shown itself to be extremely eventful for Phnom Penh as it continues to find itself at the centre of Sino- American competition in Southeast Asia. Reaping the full potential benefits from both the US and China necessitates Cambodia sustaining a posture of balanced engagement with the two most powerful states in the world.
The most notable event of the year has been the long-awaited revival of Washington’s Lower Mekong Initiative (LMI) in the form of the new Mekong-US Partnership (already being referred to simply as “the Partnership”). While LMI provided over $3.5 billion in assistance to Mekong subregional partner states over the course of its existence, in recent years it had become somewhat moribund, leading to questions about Washington’s long-term commitment to both the subregion and to Cambodia. The announcement of the new Partnership together with fresh commitments of development and humanitarian funding as
well as pledges of significant new private investment have largely stemmed those concerns. Washington has conspicuously framed the Partnership as strong on regional collaboration – underlining its consistency with the missions of the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) and the Mekong River Commission (MRC). Concomitantly, the appointment late last year of a new American ambassador, Patrick Murphy, has resulted in something of a charm offensive by the United States in Cambodia – regularly highlighting new US investment, supporting the education sector,
and providing emergency COVID-19 pandemic relief funds alongside a generally ramped up program of public diplomacy.
Nevertheless, there remains a significant level of distrust between Phnom Penh and Washington – reflected most clearly, perhaps, in the continuing controversy over the question of the future of Cambodian security policy. On the positive side of the ledger, the first steps were taken to resume US-Cambodian military cooperation (suspended since 2017), with the American side pledging to support the training of Cambodia’s officer corps, with a particular focus on blue-helmet peacekeeping – an area where the kingdom has been particularly active in recent years.
US Ambassador to Cambodia, Patrick Murphy, celebrates 70 years of Cambodia-United States relations, Phnom Penh, Cambodia - July 1, 2020. Image credit: US Embassy, Phnom Penh.
However, controversy over Washington’s claims that the government is permitting the construction of a Chinese naval base on Cambodian soil continues. The release of new satellite imagery by the Center for Strategic and International Studies (CSIS) in September, showing the destruction of an American funded building that had served as the Tactical Headquarters for Cambodia’s National Committee for Maritime Security at Ream, reignited the long-running debate and resulted in what has become a now standard pattern of claims and denials on the issue. This question is expected to remain at the core of US-Cambodian relations for the foreseeable future and seems likely to ensure that despite improvements in the relationship over the last year, any apparent bilateral equilibrium will be recognised as inherently unstable.
Beijing, at the same time, continued to press forward with the strengthening of its own ties with Cambodia, this year’s highlight being the inking of a fresh Cambodia-China Free Trade Agreement (FTA). While the text of the agreement has yet to be released, it is broadly expected that the FTA will yield strong gains for Cambodia’s agricultural sector (increasing exports to China) while further deepening the integration of the two economies. At the subregional level, the Lancang-Mekong Cooperation mechanism (LMC) entered the first year of its consolidation phase, with increased project funding to Cambodia and other partner states and continued discussion as to the future home of an envisioned LMC Secretariat (the initiative is presently headquartered at China’s Ministry of Foreign Affairs). While the Belt and Road Initiative (BRI) experienced a very steep learning curve, including significant missteps that led to something of a BRI 2.0 re-launch last year, LMC—a much smaller scale initiative—has generally been viewed quite positively both within Cambodia and the region. Diplomats who have engaged with the LMC have noted their appreciation for the predictability and consistency of LMC aid and investment programming.
In a further gain for China, Beijing committed this year to increased transparency and sharing of data concerning water flows along the Mekong River – a core issue of contestation and a topic of intense importance to Cambodia in light of the significant number of the kingdom’s citizens who rely on
the river for food security. While criticisms and questions continue to circulate as to whether Beijing
will fulfil its pledge by significantly expanding the data that it shares with downstream states, China has created a significant opportunity here to “reset” its Mekong river diplomacy and to build increased trust. In light of the impact on Cambodia’s rural population of an extreme drought earlier this year, the issue of the river and its long-term sustainability remain central to Sino-Cambodian relations.
One clear point of differentiation between the US and China has been in how each side has engaged with the kingdom. As noted above, while Washington continues to engage in official dialogue, it (along with Cambodia’s other major Western partners, e.g. Australia, Germany, France, Sweden, and the EU) has doubled down on public engagement and building stronger relations with civil society, educational institutions, and a particularly strong focus on youth engagement.
Conversely, Beijing continues to focus overwhelmingly on state-to-state contacts, generally limiting its engagement to government entities or other entities and institutions holding some sort of “official” status. The one exception here being China’s private sector which has been the primary source of FDI in Cambodia for some time now. Whether BRI-related investment or independent thereof, China’s private sector continues to make its presence felt in Cambodia – most visibly through the garment and construction sectors. However, the effects of the slowdown in the global economy that occurred due to COVID, exacerbated by capital controls and liquidity issues in China, has had an impact on Chinese investment in the kingdom, with many building projects being placed “on hold”. This has been particularly conspicuous in Sihanoukville, a city transformed by over $30 billion in investment, primarily from China, giving rise to questions as to the future of this giant project. The pandemic also made abundantly clear just how dependent Cambodia is on its tourism sector, not least the millions of Chinese tourists who visit the kingdom each year. That flow has come to an abrupt halt – yielding urgent calls for a more rapid diversification of the economy away from overdependence on tourism and the country’s other two main drivers of economic growth, namely, construction and the textile industry.
Cambodia continues to reach out to and engage with other partners. Japan remains Cambodia’s longest standing and most consistent partner, continuing to build its own strong credibility as a “steady, reliable” partner that does not bring the baggage or challenges that relations with the region’s two great powers inherently entail. Befitting its status as the centre of Southeast Asian geopolitics, two additional actors have begun to make their presence felt: South Korea and India. Seoul continues to expand its New Southern Policy, with Korea International Cooperation Agency (KOICA) projects now a regular part of the development landscape together with more significant outreach across the board in Cambodia. While India, already present in the subregion through its Mekong-Ganga Cooperation initiative and expanding its footprint via Delhi’s “Act East” policy, has begun to play a larger economic role in the kingdom via its “Quick Impact Projects” and gradually increasing investment.
While South Korea remains outside of the minilateral Quad grouping (the Australia, India, Japan, and the United States), the expansion of initiatives on the part of all five countries has allowed analysts to begin to get a clearer picture as to how Cambodia will navigate Sino-American competition. China’s largesse in investment and aid to Cambodia will certainly not be matched by any other single state actor. This has persistently raised the question of how Cambodia can avoid becoming entirely dependent on China given the sheer scale of its financial role. As 2020 comes to an end, a counterweight to China is now coming into view.
Over the course of the last year the Quad has significantly consolidated its role. China’s military conflict with India resulted in intense pushback from Delhi and the signing of a new military agreement with the United States. Australia has also seen a considerable deterioration in its relationship with Beijing, with events reaching their nadir as two Australian journalists fled China under diplomatic protection.
In the case of Japan, its new Prime Minister, Suga Yoshihide, has hinted that Japan will continue along the pro-Washington path set by his predecessor, Abe Shinzo. At this time last year, the Quad was widely viewed as an American-led institution in which Washington was attempting to drag three somewhat reluctant partners into a new bloc designed to preserve the Indo-Pacific status quo. Today, the Quad appears to be firing on all four cylinders. For Cambodia, there are both positive and negative elements to these developments. On the one hand, the consolidation of the Quad as a clear counter-weight to China gives Cambodia more options to play each side against the other in order to negotiate better deals on loans and investment; to avoid over- dependence on either actor; and to adhere to a more robust multilateral foreign policy strategy. Conversely, Quad consolidation could also be a harbinger of deeper conflict to come in the region—particularly in light of growing tensions in the South China Sea—placing Cambodia in a strategically challenging position, intensified by its relatively small size.
The stage is set. In 2020, Cambodia finds itself in a very challenging strategic environment. Sino-American competition in Southeast Asia presents Cambodia with both dangers and opportunities. Given that both countries have played, and continue to play, an important role in boosting Cambodia’s economic and security development, how can Cambodia most effectively balance its relations with these two giants?
In order to maximise its economic, diplomatic and political returns, the kingdom should avoid bandwagoning with Beijing against the US. The logic here is that, as a small state, it is essential to avoid over-dependence on any single power for the kingdom’s future development. Cambodia must find a pragmatic way to balance its relationship with the two giants such that the country’s own interests are advanced rather than compromised.
Cambodia should conceptualise its relations with the US and China in the context of its place in ASEAN. Seeking peaceful co-existence with China alone cannot guarantee long- term stability for Cambodia, given that there are lingering animosities between China and various states in Southeast Asia concerning its assertive position in the South China Sea. Cambodia should not be seen as favouring China at the expense of the security concerns of its ASEAN partners that are claimant states in the South China Sea seeking peace, stability, and freedom of navigation in accordance with international law. In the absence of such a perspective, Cambodia’s relations with its ASEAN partners could rupture and yield severely negative consequences for the country’s own security in the long run.
Cambodia’s foreign policy orientation should be more pragmatic and neutral when it comes to how the kingdom engages with the world’s two great powers. At the same time, Washington should treat Cambodia with due respect as a nation whose soul is not yet lost to China, but rather as a nation that is attempting to reconfigure its foreign relations with all friendly countries, including the US.
In short, Cambodia should avoid putting all of its eggs in one basket. As a small country, it is in the best interests of Cambodia to find the courage and determination to acknowledge our own shortcomings and to try to reset national foreign policy toward a more balanced engagement with all powers.
2020 has been a significant year for Cambodia, with developments occurring at a pace that even local analysts have difficulty keeping up with; 2021, hopefully, will provide a bit of breathing space and a chance to take stock and evaluate next steps. With a new administration taking office in Washington; Cambodian national elections due in July; and continued questions as to whether Sino-American competition will intensify, things are likely, however, to be even busier in the coming year.
Pou Sothirak is Executive Director at the Cambodian Institute for Cooperation and Peace.
Banner image: Phnom Penh, Cambodia. Credit: Chaay_Tee, Shutterstock.