Chinese investment buoys Cambodia’s PM

By Robert Birsel, Reuters

PHNOM PENH — Cambodian Prime Minister Hun Sen’s ruffling of Thailand with threats of “war” shows how a growing alliance with China is allowing him to stand up to his neighbor and, in the process, boost his credentials at home.

This week’s deadly border clashes between the two countries’ armies have put Thailand’s government under domestic political strain and given Hun Sen a chance to score points at home without much risk to Cambodia’s fragile economy.

Two-way trade with Thailand is on the decline and a continued flow of investment from China, South Korea and Vietnam has left the long-serving strongman Hun Sen with very little to lose as he seeks to embarrass Thailand by internationalizing the spat. “Hun Sen realizes he doesn’t need Thailand for very much. Strong ties with China and investors in east Asia, and good relations with Singapore, all leave him in very different position than in the past,” said Michael Montesano, a research fellow at Singapore’s Institute of Southeast Asian Studies. “He has consistently since 2008 had the political initiative and outplayed Thailand at pretty much every turn. He looks very much in control and these confrontations at the border can only help him politically while indicating trouble in Bangkok.” The standoff — which has killed at least 11 people and wounded 85 — in disputed jungle surrounding the 11th century Preah Vihear Temple, a symbol of Cambodian national pride, has complicated a political crisis in deeply divided Thailand. Opposition to Thai PM That might please Hun Sen, who has made opposition to Thai Prime Minister Abhisit Vejjajiva’s Democrat-led government clear over the past two years.

Ironically, Thailand’s nationalist “yellow shirt” protesters reviled by Hun Sen because of their staunch anti-Cambodia stance and claims of Thai ownership of Preah Vihear, have now turned against their former ally, Abhisit.

Their protests in Bangkok, while small, come at a difficult time for the British-born, Oxford University-educated Abhisit, whose government has encountered two years of crippling, at times violent, resistance from another color-coded protest group, the “red shirts,” and will likely faces a crucial election this year.

The yellow shirts say Abhisit’s diplomatic stance towards Cambodia in recent months has resulted in a loss of Thai sovereignty. They’re demanding he steps down. In contrast, Hun Sen’s tough stand against Thailand works in his favor domestically, where his blend of populism and nationalism has won his party a sizable parliamentary majority.

A severing of Thai-Cambodia trade ties would not make a huge dent on either country’s economies.

Thailand’s central bank says its US$265 billion economy, Southeast Asia’s second biggest, would not suffer because exports to Cambodia were worth less than 1 percent of GDP. Blossoming business with other rising economic powers in Asia will ensure Hun Sen’s stance does little harm to Cambodia’s economy, either. Its economy is worth a far smaller US$10 billion, according to the World Bank, and is benefiting as China loses its cheap labor edge to frontier markets such as Cambodia.