A River of Donor Money Into Cambodia Does No Good

As the Cambodian government inches closer to obliterating the opposition, one key question remains to be answered: Why did billions of dollars of aid pumped into the country by international donors fail to generate an accountable system of governance? That question has assumed crucial importance in recent weeks as the strongman Hun Sen has ousted two NGOs and closed more than a dozen radio stations as well as the local offices of Radio Free Asia and the Cambodia Daily. It appears the Cambodian Rescue Party, the main opposition, will be dissolved by the Supreme Court.

Money started pouring in with deployment of the United Nations Transitional Authority in Cambodia (UNTAC) in 1992. The operation was one of the most complex in the history of the United Nations – 20,000 employees and $1.6 billion underpinned the implementation of the Agreements on the Comprehensive Political Settlement of the Cambodia Conflict, a peace treaty signed a year earlier in Paris to end war and hold elections.

Foreign money would bankroll such efforts and help wash the hands of the powers that had long meddled in Cambodian affairs. The United States, with its bombing in the 1970s, but also Vietnam and China - the Khmer Rouge staunchest supporter - had all played a role in making the kingdom one of worst tragedies of the 20th Century.

The departure of UNTAC in 1993 hardly stopped the funding, with Cambodia receiving billions of dollars in aid over the years. Data from the Organization for Economic Co-operation and Development (OECD) marks over $800 millions in official development assistance to Cambodia in 2013 and 2014, and over $600 millions in 2015. In line with a broader trend in the region, the economy has expanded quickly with development indicators improving across the board. According to the World Bank, GDP growth has averaged 7.6 percent between 1994 and 2015, with the number of people living in poverty falling from 47.8 percent in 2007 to 13.5 percent in 2014.

Governance, however, lags behind with corruption hobbling the credibility of the state at every level, from the central government to local offices. Politics has remained much the same – a mix of bold maneuvering, violence and at times farce. For three decades, Hun Sen and his allies have run Cambodia, allowing only a nominal opposition to exist in order to maintain what Sebastian Strangio, a journalist and author of Hun Sen's Cambodia, a volume on the country's recent history, calls “the mirage of democracy.”

Whereas on the surface the country has all the trappings of a democratic state, institutions function very differently from how they are meant to. The judiciary has often gone after the foes of the ruling Cambodian People's Party (CPP), while the Parliament recently modified laws that could well be instrumental in finishing off the Cambodian National Rescue Party.

Resistance to change comes down to local elites having little appetite for a political democratization that would only damage them. “There has not been the political will on the part of the Cambodian government to introduce reforms. They have paid lip service to human rights because to do so would undermine CPP rule,” argued Strangio, who added that the authorities in Phnom Penh have become skilled at making promises and using the right buzzwords to assuage international partners' concerns.

Aid might have improved specific sectors, but it did not manage to buy the leaders' compliance with imported ideals – partly because no matter what they did the flow of money was never seriously affected.

“If anything, aid has fostered bad governance: more corruption. And if it hasn’t, there’s no relationship as the worse the governance, the aid just keeps coming (and sometimes in the past even grew when things went from bad to worse),” said Sophal Ear, an Associate Professor of Diplomacy and World Affairs at Occidental College in Los Angeles.

Complaining is common, with punishment often threatened, but never meted out. Even repeated malfeasance has not elicited strong reactions. Take Cambodia's environment: illegal logging may still be rampant across the country and even within national parks – as Asia Sentinel reported last year – yet over the years foreign funding has underpinned environmental conservation. Even the political shenanigans that preceded and followed the elections in 2013 were not met with a backlash, though they fully exposed the authoritarian nature of local rule.

Since then the country has, if anything, become more authoritarian. Faced with the worst electoral results since the late 1990s, the authorities launched a new crackdown that gathered pace after communal elections in June showed the CPP was still losing ground, resulting in the crackdown on the media and the opposition.

Donors are once again threatening to slash funding. Sweden is up in arms, with Human Rights Ambassador Annika Ben David arguing that “should the Cambodia National Rescue Party be dissolved, this will force my government to rethink our engagement Cambodia.” Human rights groups have called on Europe and Japan to take action, too.

Whether this time things will be different remains to be seen. And more importantly, it is unclear that a significant reduction in aid would have tangible effects. Even assuming there once was a chance of forcing Hun Sen to change his policies, it might now be too late for at least two reasons.

First, the Cambodian economy has become much bigger than it used to be and is expected to keep expanding. This is an excellent development in many ways, but it also reduces foreign leverage. “If aid were cut, it wouldn’t be the end of Cambodia’s economy. The aid industrial complex is there, but it’s a shadow of its former self considering other sectors of the economy: garments, construction, etc,” says Professor Ear, who also authored 'Aid Dependence in Cambodia: How Foreign Assistance Undermines Democracy'.

The second is the rise of China, whose own aid to the country has skyrocketed in recent years. As reported by Reuters, over a third of $732 million in bilateral aid for 2016 has come from China, dwarfing figures from both the US and European countries. The People's Republic also provided about 20 percent of total investment in 2016, more than Cambodians themselves.

Since the country's opening up to the world in the 1980s, Beijing has taken a hands-off approach to domestic issues in countries it deals with – whereas the US and Europe may ignore human rights if it suits them, Beijing takes pride in doing so. As far as Cambodia is concerned, Chinese leaders have made clear they do not intend to criticize any policy Phnom Penh sees fit to undertake, thus emboldening local authorities.

Beijing, Hun Sen quipped in September, is “a strong backer who continues to help Cambodia in all conditions, without allowing any foreign countries to break us”. And for once he might have been fully honest in commenting on policy matters.