I’d like to share my personal reflections on what has been happening. I’m afraid I can’t keep it short.
I believe that what happened last week was one of the biggest decisions taken by the CPP leadership in history. Please spare me for not believing that it was the matter of the court and that the outcome would have been different had CNRP hired lawyers to defend them.
At the same time, I am not one of those who believe this is really the end of democratic development in Cambodia. I think it is a very risky approach going forward but it may also present a chance of faster development if there is drastic reform to be taken by the CPP leadership. I may be the odd one out on this but I tend to be optimistic over the long term.
While there have been shortcomings of the CPP so far as we all know, there have also been many shortcomings of the opposition leadership. In my opinion, these are their major mistakes: a) over reliance on the international community, b) underestimation of the capability of CPP, and c) illusion that ‘Rome is built in a day’.
I’ve been observing a few major developments below. My viewpoints may be completely wrong as I am no expert. So please take these with a grain of salt.
1) Over the past 30 years, the global political landscape has changed remarkably towards a more inward policy. There has been a tendency of the rise of the conservatives in traditional donor countries. Many Northern countries have cut back their international aid after their heavy involvement between the 1980s-2000s. The red-handed interventions in Iraq, Afghanistan and later Arab countries may have taken aback many voters there in favour of the conservatives.
In the process, the big international agenda on the Structural Adjustment Programme followed by poverty reduction and MDGs in these past few decades has been fading away in the face of increasing globalisation, open foreign direct investment and trade. The UN, for example, had a strong voice before but is now struggling for sufficient financial resources.
I have no hesitation to say that Cambodia has benefited tremendously from the international community in these recent decades, moving from a very weak to relatively strong capacity in many individuals and institutions. Don’t forget most of us, if not all, are the beneficiaries. The country has been developing from an aid- to trade-dependent country.
Cambodia is a member of the World Trade Organisation (WTO), globally competing with the rest of the world in the Most Favoured Nations (MFN) terms, although the EU’s grant of Everything But Arms (EBA) favour is still very important. I do not know if countries are not admitted to or expelled from the WTO if they are not democratic or have a setback to democracy. It is not the case for the countries around us.
2) Part of the global change is due to the rise of China, which about a decade ago emerged as an alternative to the Western community for international aid. Needless to say, the availability of Chinese assistance has undeniably been playing a major role in not only Cambodia but also the region and the world.
3) To me it seems that in the past two decades, amid the change of the global political approach coupled with the economic progress that enabled some poor countries to stand on their own feet, some “strong” leaders around the world have learned how to “manage” democracy imposed by the Western world to suit the prerequisites in their countries and also to stay in power, of course.
4) Cambodia’s unique background should be not overlooked. The legacy of the civil war complicated by foreign involvement is still haunting, in my view. I don’t know how many are still traumatised and suffering in terms of physical and mental health, whether consciously or unconsciously. This has negatively affected their post-war children as well to some extent. Aside from this, the country still needs vast physical and institutional development.
Due in large part to the open policy and stability in the past decades and being in a dynamic region, Cambodia has been receiving remarkable foreign investments to reap the benefits of cheap land and labour among other things.
I have been witnessing the massive change from very little on the ground to numerous highrises and rapid urbanisation, which is the normal path of development. The catching up with the region in terms of real estate has been unstoppable and is bound to continue in the next 10 years to come.
It is this growth that makes it “too much at stake” for developers to lose. Developers have stakes from many kinds of people including the not-so-rich, the rich and foreigners. I hope in 10 years a lot of unfinished and ongoing projects will be completed and streams of revenue will replace the illegitimate way of income. But this is just my hope. Many say greed has no limit.
These four factors are my own observations and analysis that make me understand how and why things have been happening like this.
Moving forward, so long as the CPP leadership is committed to maintaining a democratic regime, it is imperative that doing business as usual won’t help. Most voters now and in the future are not easy to please. To those numerous people who have been feeling dismal by the recent actions, they need a huge compensation in terms of seeing and benefiting from drastic reforms.
The challenge is how to manage the transition of doing more for the nation and less for furthering family wealth. The risk of losing everything due to the threat of the mighty opposition or colour revolution is very well controlled, if not eliminated.
I think with the significant capacity developed in the past few decades, Cambodia may now have enough professionals with capable heads, good hearts and skillful hands to deliver reform programmes set by and committed to by the country leadership. This would take Cambodia forward much faster than before and make CPP like the long lasting ruling party in Singapore and Japan.
On possibility of sanctions
I’d like to share my understanding on the possibility and impact of sanctions. At the onset, I wish to make it clear I don’t know what instigates what sanctions on the international scene and I haven’t had a chance to do any detailed analysis on what could happen and what can be done in various scenarios. So my viewpoints could be wrong.
The threat of aid cuts is not as effective as 20 years ago when about 50 percent of the national budget came from traditional donors and China was not in the picture yet. For 2018, the budget is about $6,000 million and although international aid accounts for some 20%, much of it is lending from China. As is widely understood, China won’t decrease its loan but is likely to increase it if the Western bloc is cutting theirs.
So let us come to trade. Yes, this would be the most significant aspect. But I’d like to learn more from experts on global political affairs on what triggers exclusion of Cambodia from the WTO and EBA. GSP granted by the US doesn’t matter much because if traders have to pay tax on approximately $170 million of goods under this arrangement, it won’t be too much.
The most significant and possible part is EBA. It won’t affect just the garment sector but also rice and other exports, as Cambodia’s exports to the EU totalled about $4,500 million in 2016. The exclusion from the EBA scheme means Cambodia will have to pay MFN tariffs as most countries do, while 48 Least Developed Countries or LDCs don’t. On average, the MFN tariff rate is about 17% on garments. This is the equal ground on which Cambodia, Vietnam and Thailand have been competing for years in exporting products to America, China, Australia, Japan etc.
The removal of the EU’s EBA benefits from Cambodia will indeed erode the profitability of producers and exporters from Cambodia. Whether it will result in the complete wipe out of the garment industry, causing one million workers jobless, I doubt very much. I don’t even think the EU will soon close its EBA scheme to Cambodia, let
alone expelling Cambodia from the WTO. This is in part because the Cambodian government is smart enough to not give all the reasons for such serious sanctions. The opposition and some people tend to underestimate the capacity of the CPP leadership.
That said, I admit I know very little about the political aspect, the negative impact on the minds of people inside and outside the country. It can be severe and takes much to heal.
But on the economic front, which I’ve been following for my career in the last 25 years, I don’t think it’s going to be that terrible as some believe. At least I have been predicting fairly well the economic developments so far. Being in an economic profession, I could be more positive/optimistic than my friends in the political field.
I completely understand them and share their deep concerns too.
Moving forward, I would not put all my mind into worrying about the sanctions and the consequences. I would pay more attention on what can be done given the situation and possible scenarios. Even if there is a small percentage chance of Cambodia undertaking fundamental reforms and succeed as a strong nation, I’d advocate for it.
Sophal Chan is an independent analyst/director at the Centre for Policy Studies.