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The EBA conundrum – Perception against reality

Sopharith Sin / Khmer Times Share:
Women working at a garment factory on the outskirts of Phnom Penh. KT/Siv Channa

Threatening to cut development aid or impose economic sanctions on Cambodia is not a new phenomenon, it has always been in play since the military clash in 1997. Despite being under international pressure to reverse course, the Kingdom often punches above its weight.

When the U.S. threatened, for instant, to remove Cambodia’s Most Favoured Nation trading status, Prime Minister Hun Sen publicly defied the US to pursue it, as he, Mr. Hun Sen, would not trade national sovereignty.

Facing a similar threat when the EU launched procedures that could potentially suspend Cambodia’s trade preferences, the Kingdom’s political leadership, I think, still doesn’t get the message and even accused the European Union of practicing “double-standards”, an unfair treatment compared to the Thai, Laos and Vietnam governments which are military ruled or are one party states. Indeed, the withdrawal of EBA from Cambodia poses more harm than good, and will undermine the influence of the west in the Kingdom.

Economic sanctions have been one of the primary foreign policy arsenals of western governments for decades, often in the pursuit of enhancing their economic powers and security interests. The economic sanctions on Russia, North Korea, and Iran are some explicitl examples of this.

The practice has also been imposed on regimes in an effort to strengthen political accountability, the rule of law, and democratic development of the sanctioned governments. For instant, the sanctions imposed on the Burmese military government a classic example of such a practice.

In fact, economic sanctions are proven to be less effective and hard to spark the regime change these sanctions are often perceived to inculcate in an academic sense, particularly since it comes at the expense of civilians and their livelihood.

Reforms for economic incentives

To be fair, democratic development and public sector reforms in Cambodia have emerged in response to the dependency on aid, often driven by the international donor community, rather than the recognition of Cambodia’s political leadership or internal pressure from its populace.

Cambodia’s government has made public sector reforms. However, there are those who believe that these are just measures enacted to secure funding and to enhance legitimacy.

Decentralization reform, for example, is the product of international intervention and the influence of globalization in an effort to boost Cambodia’s economic competitiveness and to strengthen government accountability through the distribution of functions and resources from the national to the sub national sector.

The restructuring of Cambodia’s institutions therefore, is many a times, an adaptation to sway the actions of external forces, particularly that from a globalised economy and also donor pressures.

It is noteworthy to acknowledge that, indeed, this interventionary policy has contributed to the improvement of Cambodia’s institutions over the past decades, with the basic principle that government accountability and human rights are upheld.

Negative socioeconomic consequences

The sanctions which are poorly tailored and executed, often with and between the sanctions and sanctioning countries, will jeopardise the effort to address human rights practices, poverty, and poor healthcare in the Kingdom.

The economic sanctions that could be imposed on Cambodia could contribute to the increase in illegal migrations and human trafficking. The Kingdom’s garment industry employs 847,419 workers, the majority of them are women, who barely have secondary education background.

Having no skillsets and the small job market in Cambodia, the job cut and relocation of the factories to withstand the sanctions will force these workers to migrate for employment opportunities, and potentially end up in human trafficking channels and the modern slavery of Thailand’s fishing industry that feeds the EU market for decades.

In a leaked government memo, the sanctions is estimated to cost Cambodia $676 million in tariff based on the $6.2 billion in exports to the EU market in 2016, equivalent to the national budget of the Ministry of Health and the Ministry of Social Affairs combined. Although there isn’t any study about the potential impacts, the sanctions pose significant threats to the livelihood of those workers and their family members. It will also undermine the growth of SMEs and logistics sector in the Kingdom that are largely dependent on the garment industry.

China’s debt-trap diplomacy

Economic sanctions on Cambodia will sour the influence of the European Union and consequently push the Kingdom closer to China.

In response to the potential suspension of EBA and the recent tariff imposed on the Kingdom’s rice export to the EU market, China has promised Cambodia with four billion yuan in aid and pledged to import 400,000 tonnes of rice, giving Cambodia’s government, alternative sources of development aid and loans to withstand the impacts of economic sanctions.

However, the influx of Chinese investment and development aid, often without conditions and lack of transparency, has presented significant threats to accountability and democratic development of the Kingdom.

The primary concern is the Chinese debt-trap diplomacy which has sparked international headlines. Though, Cambodia’s government claims the current debt is manageable, the Kingdom’s debts to China is nevertheless perceived to be at a level where perception has set in that Beijing may take advantage of this situation to put in place a certain degree of political influence on Cambodian affairs.

Having strategic control over Cambodia’s economic corridor, including the Kingdom’s major logistic and tourist hub, China may not hesitate to gamble for the influence over Cambodia to protect its interests. These will certainly pose significant threats to security interests and economic powers of the European Union and its alliance in the long run.

The perceived alleged democratic setbacks could still be improved as it has not deteriorated to the level of the Rphinya’s in Myanmar or the ethnic minorities in Vietnam.

Indeed, there are reformist groups within the political leadership who are willing to improve the institutional arrangements and input legitimacy of Cambodia based on the liberal values.

However, if diplomacy fails and economic sanctions are the last resort, it should be well-tailored with achievable outcomes.

Given the strong division within the European Union and its alliance over the current political development in Cambodia, any economic sanctions will be for the sake of sanctions, and certainly civilian citizens are the ones who pay a heavy price.

Sopharith Sin is a recipient of the Australia Awards Scholarships. He is currently pursuing a Master’s degree in Public Policy and Management at the University of Melbourne, Australia.

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