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New momentum in Cambodia’s hedging strategy

Phnom Penh sunset facebook/Robert Kleiner Photography

Last week, there were two significant events in Cambodia that may have slipped the attention of observers.

One was the visit of the China’s Vice Minister of Foreign Affairs Kong Xuanyou who on Friday defended his government’s investment policy in Cambodia, asserting that China’s financial assistance was not a “debt trap”. The other was Washington State Senator Doug Ericksen, who also on Friday met with Prime Minister Hun Sen at the Peace Palace, where he lauded last year’s national election as “free, just and nonviolent” and a reflection of the will of Cambodian people.

While the two visits may be just coincidental, this could be a start of a new methodology of hedging and merging Cambodia’s economic and political diplomacy with its biggest supporter, China and its biggest critic, the West.

Rational and reasonable, this type of blended strategic engagement with both China and the West should be viewed with optimism with tactical caution and could signify tempered grand visions with a careful weighing of costs. The biggest challenge to this strategy is whether it will work in the short haul, as for long the intransigence of both Cambodia and the West has affected political diplomacy which in turn had major impacts on the economic front.

Examples of these are the setting in of rice imports safeguards by the EU which made Cambodian rice exports much more expensive, and the kicking in of the process to revoke the Everything but Arms (EBA) duty-free access for Cambodian garment and footwear exports to the European Union.

In the US, meanwhile, Senators Ted Cruz and Chris Coons introduced the Cambodian Trade Act of 2019, which would require the administration to review the preferential trade treatment Cambodia receives under the General System of Preferences (GSP).

The three actions, which are surely coordinated efforts by the West to punish Cambodia for many things that are in reality vague and trivial in nature but big in optics, are measures that will punish Cambodia on many fronts.

These are in the realm of socio-economic stability, as exports cut may result in factory closures and unemployment with a yet to be diversified economy still reliant on the labour-intensive garment and footwear industry.

This may in turn affect political stability as the epicenter of these actions by Cambodia’s big Western trade partners is tied to Cambodia’s shape and style of democracy and human rights which are not in sync with that demanded by the US and its ally, the EU.

Despite this, Cambodia should continue to engage the US and the EU, by seeing the logic of lowering ambitions and focusing sharply on what can be achieved through a multi-track engagement strategy to expand the areas of cooperation and narrow the areas of confrontation.

Economic diplomacy by itself is a major theme of the external relations of virtually all countries. A fine balance between economic and political diplomacy is critical for Cambodia. While being an “ironclad friend” of China, Cambodia is thriving to build good relations with the West as well to avoid the international perception that Cambodia is overly reliant on China.

The message by Prime Minister Hun Sen last week was clear that Cambodia embraces all friends. Deputy Prime Minister Sar Kheng also stressed that Cambodia needs both China and the US. Such a balancing act could help promote Cambodia’s prosperity and when opportunity permits, strengthen its political ties with the West as well.

While individual statements of support from US lawmakers are positive, Cambodia’s current trend of reliance on China must be tempered with increased collaboration between its main detractors, the US and the EU. Both the US and EU, combined together, account for not only the bulk of Cambodia’s exports but also determine Cambodia’s political and economic survival in the short, medium and long haul.

The merging of economic statecraft and day-to-day economic diplomacy with political engagement with the US and the EU must be Cambodia’s foreign policy. Getting this right can provide a huge boost as they determine the future of most of the world’s economic survival, irrespective of what one thinks or concludes.

China alone cannot sustain Cambodia’s long-term economic and political survival. Thus, the grand strategy for Cambodia is to hedge against potential risks and expand cooperation opportunities with the West. Cambodia for its part must try to understand better the political dynamics of the West and know who are the real decision-makers in each capital of the Western partners.

From now, there is a window of opportunity for the West to engage Cambodia. Mutual understanding, mutual trust and mutual respect should be the guiding principles of a new era of comprehensive engagement between Cambodia and the West.

Positive momentum in Cambodia’s relations with the West must be sustained to avoid the economic and political turmoil that they could unleash without a policy of engagement. It is an opportune moment for Cambodia to open its doors to a healthy strategic and economic cooperation with China and the West.

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