Building a resilient Cambodian Economy


March 10, 2019

Building a resilient Cambodian Economy

https://capitalcambodia.com/building-an-economically-resilient-cambodia/?fbclid=IwAR1-Oa4fUT_Z-LHMUPUvarQA1-asp4396Cd4V9OZFmSRL-y4tavaDgZ8ing

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Within the context of looming economic pressures by the EU, analysts have drawn quick conclusions that Cambodia’s economy is going to collapse. This piece provides an alternative view explaining why Cambodia will not face economic crisis driven by external pressures and sanctions.

Cambodia has opted for an open economy since the early 1990s based on the belief that reforms and openings are necessary for economic development. Being a least developed economy, it was granted preferential tariff schemes, and could afford to export to Europe and the US.

The decision of the EU to launch procedures to temporarily suspend trade preferences would compel the Cambodian government to speed up its reforms and diversification strategy. It can be viewed as a “positive” factor.

Improving business and investment environment, increasing productivity, and reducing barriers and cost associated with trade would need urgent attention and intervention from the state. Cambodia’s economic structure has been gradually moving from labour-intensive industries to a knowledgebased economy.

The service sector now accounts for about 50 percent of GDP. The annual growth rate of the sector has been more than seven percent from 2014 to 2018. Economic pressures from the EU will force Cambodia to accelerate its economic restructuring towards a service-driven growth.

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The advantages and strengths of Cambodia rely on its dynamic and entrepreneurial young workforce. As education reforms and skill development programmes are on the right track, Cambodia will be able to produce a new generation of young, skilled workers for the coming years.

Regional integration is one of the key pillars of its foreign economic diplomacy. As Cambodia’s economic lifeline is increasingly connected with ASEAN and Asia, its future will largely be defined by the Asian economic powerhouses. ASEAN will be the fourth largest economy in the world by 2030.

The economic pressures from the EU will not overly affect investors’ confidence as Cambodia will be able to adjust itself to changes. Foreign investors should be confident of the future economic trend and dynamics of Cambodia.

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The first drop of oil to be extracted from Cambodia’s offshore oil field territory is scheduled  for late 2019. The news follows the latest update from KrisEnergy that it has now closed invitations to contractors for the tender for the engineering, procurement, construction, installation and commissioning services for the Apsara Oil Field Project.

 

Light manufacturing, high-tech, and service industries are key areas that foreign investors should invest as the government in cooperation with development partners are pouring in more resources in building hard and soft infrastructure to support the industrialisation and modernisation of the service sector.

The eventual possibility of the EU revoking the EBA has been on Cambodia’s mind for some time now. This led to the formulation and adoption of the Industrial Development Policy (IDP) in 2015. The opening paragraph of the IDP states: “The launching of this policy connotes the necessity and the urgency to embark on a `new growth strategy’ that responds to the structural transformation of domestic economy, and the changing regional and global economic architecture.

The adoption of this policy is motivated by the following considerations:

First, the favourable geopolitical spillovers in terms of linking Cambodian economy and its industry to the region especially within the ASEAN Economic Community and regional economic liberalisation frameworks;

Second, the potential role of industrial sector in promoting growth and creating new jobs in the context of an open economy, a demographic dividend and major structural changes that are conducive for industrial growth;

Third, the critical role of industrial sector as a policy tool to enhance the performance of core economic sectors such as agriculture and services that will boost economic growth;

And fourth, the importance of the industrial sector as a focus for initiating both structural reforms and governance reforms of key national economic institutions with the aim at boosting economic productivity in long-term and avoiding falling into the “middle-income trap”.

However, Cambodia’s industrial sector remains weak and narrow as reflected by its simple structure of manufacturing and low level of sophistication that mainly focusses on garments and food processing while most manufacturing activities are still family-based and do not have the capacity to compete in the international market.

The industries feature a lack of diversity, an informal and missing middle structure, a weak entrepreneurship, an urban-centered industry, low value addition, and low-level technology application. Micro-enterprises represent 97 percent of the sector but generate a mere 30 percent of jobs, and contribute only 12 percent to the overall turnover. But with the eventual EBA revocation, Cambodia ought not be held hostage by the EU or any other trading partner.

The EBA has been “weaponised” by the EU to compel it to make considerable concessions not directly linked to trade but to domestic politics, at a time when EU members themselves are questioning their membership with the trade bloc. Is the EU subservient to the US, and doing its bidding? It appears so, given the quick response of the US Embassy that supported EU’s action, reiterating similar demands on Cambodia.

In this aspect, the speech by Hungarian Foreign Minister Peter Szijjarto earlier this month in the presence of US Secretary of State Michael R. Pompeo deserves a mention. It is a chilling reminder of what Cambodia has faced year after year since 1993.

“We Hungarians, the Hungarian government, has based our foreign policy on mutual respect, and we think that the world is not going to be a better place if some countries spend their time intervening in the internal politics of other countries or lecturing them. Therefore, based on principles, we have extended our veto in the EU whenever it came to criticism concerning the decisions – political decisions of the US.

For that, we have undergone and have taken on conflicts and risks but we’re not going to consent to it in the future, and that either the EU or other international organisation would criticise the sovereign political decisions of the US. At the same time, we also carry out a foreign policy that is based on openness and sincerity. So we say the same thing behind the scenes as we say here. It is easy therefore for us to discuss issues like relations to Russia or the gaining of ground by China in other places or also our relationship with Russia.

“As I also told the Secretary whenever we talk about the economy gaining ground of China, then Hungary is responsible for 1.2 percent of the EU-China trade, and I also say there is a hypocrisy concerning the cooperation with Russia as there is a lot of criticism on the surface, and below it, there is a lot of trade between Europe and Russia in billions of euros”.

Coming back to the EU and Cambodia, why has the EU ignored the gains made by the factories here, many of whom are subjected to stringent inspections and rules, and the generous benefits extended to the workers? Why are there double standards or to paraphrase Szijjarto’s words – a hypocrisy concerning the internal issues of Cambodia as there is a lot of criticism on the surface.

Yet, the EU does business with Cambodia’s neighbours whose workers’ rights are worse? Is it because it hedges on China in terms of its economy and development since Cambodia needs huge investments to boost infrastructure, and hedges less on the West, who in any case, do not invest in such projects on a scale that could replace China? Or is it because Cambodia is seen as a small economy to matter in the grand geopolitical chess game of Western superpowers who use Cambodia’s plight to enforce their own political will on Cambodia and Cambodians?

In time, it would be in the interest of the West – the US and EU, as well as China, Korea, Japan Australia, and Russia to give equal emphasis on Cambodia’s economics and politics, and not just focus on its neighbours who seem bigger but have worse-off human rights and political record. In this scenario, it may not be wrong to say that Cambodia should just abandon the EBA and no longer fight a lost cause.

It should strengthen its economy and trade while cutting corruption and bureaucracy to make the products and economy more resilient, and investor-friendly to all nations, making it a competitive economy. CapCam

 

Brexit Is Hell


March 7,2019

Brexit Is Hell

Over time, public conceptions of hell have migrated from the realm of religious belief to that of literature and political aphorism. And nowhere is the idea of eternal damnation as punishment for one’s own choices more appropriate than in the case of the United Kingdom as it hurdles toward the Brexit abyss.

 

PRINCETON – European Council President Donald Tusk recently sparked controversy by saying there is a “special place in hell” for those who advocated Brexit “without a plan.” To angry Brexiteers, the statement epitomizes the unfeeling, moralistic attitude of the European Union technocracy in Brussels. British Prime Minister Theresa May duly issued a statement rebuking Tusk for his remark.

But May’s response scarcely matters. She has already extended her deadline for holding a “meaningful vote” on an EU-exit deal, effectively confirming that she will remain bereft of a plan until the final moments. At this rate, the delays and extensions of Brexit deadlines might well continue indefinitely.

Tusk’s great offense was to offer a banal and universal truth. Whether you are in London, Washington, DC, or anywhere else, it is never advisable to enter into a negotiation without clear objectives and a sense of how the other side will respond. Hence, throughout history, statesmen such as Otto von Bismarck have regarded diplomacy as a chess game. As Bismarck well knew, it is not enough just to move pieces around; one must also anticipate what will come next.

As for the theological language in Tusk’s indictment, one could argue that it is perfectly appropriate for politicians in a largely secularized Europe to speak of hell. After all, even many Christian clergy have moved beyond belief in an afterlife of perpetual damnation. And the Anglican Church abandoned the idea of purgatory back in the sixteenth century, with the .

In Christopher Marlowe’s classic play Doctor Faustus (1592), the title character asks Mephistopheles what a demon is doing in his study instead of in hell. “Why, this is hell,” replies Mephistopheles, “nor am I out of it.” Equally all-encompassing was the atheist Jean-Paul Sartre’s own conception: “Hell is other people.”

What hell implies in a modern political context is open to debate, at least until we have a twenty-first-century Dante to offer a comprehensive eschatology and a new map to the Inferno. In view of former US Secretary of State Madeleine Albright’ defense of Hillary Clinton’s flawed 2016 presidential bid, for example, hell is the final destination for “women who don’t help each other.” Presumably, Albright did not mean that the 42% of women voters who backed Trump have a fiery future in store for them.

Meanwhile, some Italian journalists have alleged, erroneously, that even Pope Francis has dispensed with the notion of hell. In reality, he has put hell at the center of his vision of humanity. Francis reminds us that hell originally derived from a rebellious angel’s arrogance, or superbia. A vice deeply embedded in the human psyche, arrogance is the act of telling God, “You take care of yourself because I’ll take care of myself,” Francis explained in 2015. Accordingly, “They don’t send you to hell, you go there because you choose to be there.”

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Brexit represents precisely this course. If hell is thinking that you do not need others, and that you need only look out for yourself, then the Brexiteers are already there. Those who believe only in themselves see no need to negotiate, because they assume the other side will simply bend to their will.

But in international relations, the assumption that one can regulate everything by oneself creates a hell that others have to live in, too. Hell, in this sense, is what happens when people succumb to the lure of self-determination and “sovereignty,” creating a self-perpetuating cycle of strained relationships and mutually destructive unilateralism. This version of hell tends to last quite a long time indeed, because each side has its own selective memory and wants to punish the other.

While the assertion of sovereignty seems to conjure endless new possibilities, as it clearly has for the Brexiteers, it actually constrains one’s choices. Those who renounce treaties, for example, invite others to do the same, whereupon it becomes all the more difficult to forge any kind of agreement at all. And those who have convinced themselves that they can choose freely among endless unrealized opportunities tend to live in constant regret of what might have been. This is the trap laid by hubris.

Thus, like Tantalus forever grasping at the fruit that is just beyond his reach, the United Kingdom wants to pursue trade deals that its membership in the EU otherwise precludes. Left unsaid is what that would mean in practice. The UK could aim to maximize prosperity by pushing deregulation as far as possible. Yet to trade profitably with other countries or the EU, it would still have to meet their regulatory standards regarding safety, quality, and so forth. Moreover, outside the EU’s regulatory framework, Britain’s newfound freedom would also imply new responsibilities to introduce regulations protecting UK residents.

The real question, then, is whether escape is even possible. If May wanted to be bold, she could issue the following statement: “Brexit is a terrible mistake. The decision was reached after a campaign of lies and malign foreign influence, and it is obvious that its costs will far exceed its benefits. As such, my government has decided not to pursue it any further. Instead, we will commit to working with the EU to address British concerns and prepare for an unpredictable future.”

Such a statement is of course impossible, because May has already paid the ferryman through her previous choices. What awaits her and the UK is more punishment. First, the dismal reality on the ground will be exposed, and it will stand in shocking contrast to what might have been. Then, someone will have to be held responsible. But assigning blame is a punishment in itself. In Dante’s telling, the adulteress Francesca da Rimini spends the rest of eternity incessantly pinning the blame for her actions on everyone and everything but herself.

Brexit augurs a similar national fate. The debates in Westminster and Whitehall show no sign of ever ending, and it is becoming increasingly obvious why: Brexit is eternal damnation.

 

 

To Lose or Not to Lose: Cambodia’s Dilemma over its EBA Status


February 27, 2019

To Lose or Not to Lose: Cambodia’s Dilemma over its EBA Status

By Kimkong Heng

 

http://www.ippreview.com

https://dinmerican.wordpress.com/2019/02/27/to-lose-or-not-to-lose-cambodias-dilemma-over-its-eba-status/

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William Shakespeare’s famous quote, “to be or not to be, that is the question”, can now be applied to what is happening in Cambodia, but with a twist. As the country is now negotiating with the European Union (EU) regarding the latter’s wish to strip off its Everything But Arms (EBA) trade preferences from the former, we can see the relevance of Shakespeare’s well known line and we can say “to lose or not to lose, that is a Cambodian dilemma”.

After the EU threatened to remove its preferential trade deal in response to Phnom Penh’s perceived lack of commitment to improve its democracy and human rights situation, the country now faces a dilemma. On one side, Cambodia has to satisfy the demands of the EU, which may eventually result in the reinstatement of the opposition Cambodia National Rescue Party (CNRP), dissolved by the Cambodian Supreme Court in 2017. This is a dilemma on the part of the incumbent Cambodian government because, as the results of the 2013 national election and 2017 local elections showed, the CNRP could be a threat to the domination of the ruling Cambodian People’s Party (CPP) of Prime Minister Hun Sen. Dissolving the opposition before the election is clearly a win-win strategy that the CPP employed to secure victory. Reinstating it is certainly not part of the government’s agenda.

On the other side of the dilemma, Cambodia is facing a potential loss of its EBA status after the EU began a procedure to withdraw its trade preferences from the Kingdom in October 2018. Under the EBA scheme, Cambodia being one of the world’s least developed countries is granted with duty-free access to the European market. In 2017 Cambodia’s exports to the EU were valued at 5 billion euros (US$5.8 billion), making Europe the largest export market of Cambodia. The garment and footwear industries, which account for 40 percent of Cambodia’s GDP and employ about 800,000 Cambodian workers, rely to a great extent on tariff-free exports to Europe. Losing the EBA preferences would adversely impact the whole industry which is vital to Cambodia’s economy and has been considered as a sector too big to fail.

Thus, Cambodia is apparently in a dilemma over how to tackle the EBA issue. To continue benefiting from the EU trade preferences, the CPP-led government has to consider bringing back the dissolved opposition, a move Hun Sen and his ruling elites have tried to avoid. However, if Hun Sen’s government refuses to give in to the EU’s human rights demands, it will risk losing the EBA status, the consequences of which may be severe for Cambodia’s economic growth. As it stands, it is no longer a win-win scenario for the Cambodian government. It is a dilemma between sustaining robust economic growth and maintaining political dominance, both of which are critical to the incumbent government’s legitimacy.

Cambodia’s responses to the EU’s potential economic sanctions have been contradictory, perhaps reflecting this dilemma. As David Hutt aptly noted, the Cambodian government’s response to the EBA issue “has oscillated between victimhood and vainglory, between saying Cambodia’s economy won’t be too badly affected by the EBA’s withdrawal and saying that if the EU goes ahead with its threat, it will destroy of livelihoods of millions of Cambodians, mostly the poor”.

The inconsistency in the government’s response may explain the dilemma confronting Hun Sen and the CPP elites. Clearly the Cambodian government understands the potential negative effects that the loss of the EBA scheme may have on the lucrative garment sector that has contributed to Cambodia’s economic growth and directly benefited almost a million garment workers, not to mention the cumulative impact on their extended family. The promulgation by the government that losing the EBA preferences won’t affect Cambodia is far from convincing. How can losing tariff-free export ability not affect the economy that benefits from tariff-free exports? It is not so difficult to comprehend.

After the EU announcement regarding the EBA withdrawal, there have been strong reactions by the Cambodian government and a series of analyses in the media about the EU’s double standards in its treatment of Cambodia. The Cambodian government has called the EU’s EBA threat an extreme injustice and a prejudicial decision. Hun Sen has warned of the death of the opposition and has been reported saying that the EU’s withdrawal of its trade preferences may become the West’s third mistake in dealing with Cambodia.

While Cambodia is facing a dilemma and may easily look to China for support, the EU should probably understand the potential repercussions of its decision.

However, lingering uncertainty regarding the eventual outcome of the EBA withdrawal, coupled with the EU’s recent announcement to implement protectionist tariffs on Cambodia’s rice exports, has worried investors and business leaders in Cambodia. In late January 2019, 40 signatory leaders of industry associations who represent the Cambodian economic community released a joint statement to the EU Trade Commissioner to express their deep concerns with respect to the potential imposition of tariffs and withdrawal of the EBA scheme. The statement appealed to the European Commission and the European member states to continue to support Cambodia by “refraining from taking any action that will harm the interests and livelihoods of the country’s [Cambodia] people”. The EU has not officially responded to the appeal but seems to proceed with its formal procedure to withdraw the EBA benefits from Cambodia; nevertheless, according to the EU, the channels of dialogue to resolve the difference are still kept open.

Although it remains to be seen how this EBA issue will unfold, Cambodia’s recent response to the EU’s calls does not seem to be effective and satisfy the EU’s demands. The Cambodian government has viewed the EU’s dealing with Cambodia as an injustice and a threat to Cambodia’s sovereignty and independence. Complying with the EU requirements, in the Cambodian ruling elites’ view, is like allowing foreign countries or entities to interfere with Cambodian politics or domestic affairs. Cambodia cannot trade its sovereignty, independence, and peace for economic assistance.

Such a line of thinking is applaudable and is well-received by Cambodians, but as has been spelled out in a recent article, “EBA is not a trade pact open to negotiations – it is a trade preference gifted to financially impoverished countries and designed to encourage democratic and social reforms more attuned with European standards”. Therefore, it seems appropriate when the EU demands improvements to the human rights situation in Cambodia. If Cambodia wishes to remain part of this preferential scheme, it has to meet the conditions laid out by the EU with regard to the trade preferences. Cambodia does not have “inherent right to be part of the EBA scheme”.

Despite the dilemma, Cambodia seems to have a choice which, analyzed based on recent political developments, requires it to choose between losing the EBA status or improving the human and political rights situation in the country, perceived to be deteriorating. If no concrete measures are taken to salvage the current situation, losing the EBA benefits would be a high possibility. Cambodia apparently cannot continue to enjoy the duty-free access to the EU market while ignoring the EU’s demands for better human rights and democracy. The aim of EBA preferences is to contribute to the economic development of the world’s poorest countries; however, the preferential scheme does come with conditions that have to be fulfilled by beneficiary countries.

Based on the current development, the EU’s intention to withdraw its special trade preferences granted to Cambodia does have implications for the relationship between the two sides. In the Cambodian government’s words, the EU decision to suspend the EBA preferences would “nullify the enormous positive impact of the European policy from which Cambodia has benefited so far”. The EU measures would also very likely propel Cambodia into a closer embrace of China, its largest aid donor and foreign investor.

Thus, while Cambodia is facing a dilemma and may easily look to China for support, the EU should probably understand the potential repercussions of its decision. Both sides need to bring the issue to the discussion table and continue to keep the path of dialogue open. The way forward, as the EU has suggested, is through dialogue and negotiation. The EU, however, should try harder to understand Cambodia’s difficulty and situation, while Cambodia has to keep an open mind and try to understand the underlying intention of the EU actions with trust and willingness. Going to the discussion table with suspicion, distrust, and accusation is not a viable option, but it only helps to exacerbate the precarious situation.

 

The Accidental Atlanticist-Pence vs. Biden@ Munich


February 26,2019

mike pence munich security conference

The Accidental Atlanticist-Pence vs. Biden@ Munich

https://www.project-syndicate.org/columnist/mark-leonard

At this year’s Munich Security Conference, appearances by former US Vice President Joseph Biden and current Vice President Mike Pence offered the trans-atlanticists in attendance a portrait in contrasts. Yet to achieve the bright future promised by Biden, Europeans need to heed Pence’s dark warnings.

The transatlantic partnership will always be Europe’s most important relationship. But it can last only if both sides take responsibility for their own affairs. The alliance would be immeasurably stronger if it were based on an honest assessment of each side’s interests and values, rather than on quaint illusions of fellow feeling”.–

 

MUNICH – Two Americas were represented by two different vice presidents at the Munich Security Conference this year. Between them, former Vice President Joseph Biden certainly received the warmer reception, but Vice President Mike Pence may have unwittingly emerged as the savior of transatlantic relations.

In his address, Pence duly championed his boss, US President Donald Trump, as the “leader of the free world.” But the “free world” he described was scarcely recognizable to the Munich audience. In the world Trump wants to lead, America is not the exceptional power, but merely a normal country putting its own interests first. By that logic, it is only reasonable to break from multilateral institutions that allow weaker countries to free-ride on American largesse.

In keeping with this vision, Pence used his speech to demand that Europeans spend more on defense, and to extol the virtues of the Trump administration’s trade war against China. But the climax came when he enjoined Europe to get in line with the US in suspending the 2015 nuclear deal with Iran – the Joint Comprehensive Plan of Action (JCPOA) – and restoring sanctions on the Islamic Republic.

According to Pence, Iran is plotting another Holocaust, for which Europeans will bear partial responsibility unless they stop US sanctions. This warning came on the tail of a US-hosted conference in Warsaw, which was designed to drive a wedge between European Union countries and derail the bloc’s efforts to salvage the JCPOA.

Pence spoke for the America that works to divide and weaken Europe. The other America, represented in Munich by Biden, views the Trump administration’s actions as an “embarrassment.” In his speech, Biden described an America that does not want to turn its back on allies and that values democracy, the rule of law, freedom of the press, and a close partnership with Europe based on shared “human decency.”

Biden ended his remarks to great applause, declaring, “We will be back.” Was he referring to an outward-looking America, or to a future Biden presidency? Many of those present hoped for both.

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The rapturous applause following Biden’s appearance was markedly at odds with the awkward, stony silence that followed Pence’s address. The contrast was reminiscent of the early 2000s, when disillusioned transatlanticists took refuge in The West Wing, wherein the cerebral character of President Josiah Bartlet (played by Martin Sheen) stood in stark contrast to George W. Bush and his administration’s disingenuous brutality.

But such escapism yields only false hope. Rather than being lulled into complacency by Biden’s reassuring words, Europeans would be better off heeding Pence. Only by growing up, paying its way, and clarifying its goals can Europe repair the transatlantic relationship and ensure a healthy and durable partnership.

The fact is that Europeans and Americans have long lied to themselves and each other about the extent of their common interests and values. European and US strategic interests have been diverging at least since the end of the Cold War. America rescued a hapless Europe in the Balkan Wars of the 1990s. But by the time of the Kosovo War at the end of that decade, Europeans had begun to wake up to their responsibilities. In the 2008 Russo-Georgian War, and in the conflict in Ukraine since 2014, it was Europeans, not Americans, who led the diplomatic response and imposed the strongest sanctions on Russia.

Moreover, Europe is the only party ever to have mobilized in the name of collective defense under Article 5 of the NATO treaty. Following the terror attacks of September 11, 2001, Europeans sent forces to distant wars in the Middle East, over which they had little control.

In hindsight, it is clear that those wars destabilized Europe’s neighborhood and, eventually, Europe itself. America’s exclusive focus on counter-terrorism left war-torn Middle Eastern countries with fragile governments, or none at all. And in recent years, Europeans have increasingly borne the costs in the form of terrorism and influxes of refugees.

As for the US, many of its 320 million citizens no longer understand why they should have to protect 500 million Europeans, who live, after all, on a relatively peaceful and prosperous continent. They know that their country is in an escalating competition with China in the Indo-Pacific, and are thus shocked that Europeans would join the Chinese-led Asian Infrastructure Investment Bank. Ultimately, Europeans are left between a rock and a hard place. They, too, want to push China harder on trade and investment issues. But the best way to do that is through the World Trade Organization, which the Trump administration is actively undermining.

The divergence in values is no less pronounced. For their part, Europeans support international institutions, rules-based arrangements, and multilateralism generally. But America has always been ambivalent about treaties and institutions that might constrain its sovereignty or defy its objectives.

While Trump and Pence crudely state what today’s America wants, Biden is selling a vision of America that it no longer obtains. The US government does not have the American people’s consent to act on the world stage as it once did. While Americans still recognize the importance of sustaining US economic and military primacy vis-à-vis China, they appear to have rejected the elite consensus on trade, defense spending, and diplomacy.

The transatlantic partnership will always be Europe’s most important relationship. But it can last only if both sides take responsibility for their own affairs. The alliance would be immeasurably stronger if it were based on an honest assessment of each side’s interests and values, rather than on quaint illusions of fellow feeling.

Pence’s blunt speech in Munich may have been painful to hear; but one hopes that it will bring an end to European complacency and point the way to a renewal of transatlantic relations on realistic terms. If that turns out to be the case, Pence will have won the title of transatlantic hero – whether he wants it or not.

Mark Leonard is Director of the European Council on Foreign Relations.

EU Action Against Cambodia too drastic: withdrawing EBA privileges might not do more harm than good.


February 22, 2019

EU Action Against Cambodia too drastic: withdrawing EBA privileges might not do more harm than good.

by Darren Touch

https://thediplomat.com/2019/02/cambodias-democracy-and-eu-trade-privileges-taking-a-long-term-view/?fbclid=IwAR3OdN-YiYAQlocy5ze21pZWsjzaVHqs2cj3moGJJMD6GWo-3PdNNZ9xG-Q

EU-Cambodia relations continued their downward spiral following the official announcement that the European Union (EU) would begin the process of suspending the Everything but Arms (EBA) trade scheme with Cambodia, highlighting the deterioration of democracy, respect for human rights, and the rule of law in Cambodia. Despite improvements by the Cambodian government over the past few months in response to the EU’s concerns, the EU’s strong-handed approach in reprimanding Cambodia is unlikely to improve the current political situation.

The EBA trade scheme allows Cambodia to export products other than weapons to the EU duty-free and quota-free. In 2017, Cambodia exported roughly $5.8 billion worth of goods to the EU, accounting for around 40 percent of Cambodia’s exports. Over 99 percent of Cambodian exports to the EU, Cambodia’s largest export market, were eligible for EBA preferential duties, which included textiles, footwear, and agricultural products, such as rice. Since joining the trading scheme in 2001, the textile industry in Cambodia has experienced tremendous growth, and today employs around 700,000 workers.

Prior to the 2018 election, the EU expressed concerns over the deterioration of Cambodia’s democracy following the dissolution of the main opposition, the Cambodian National Rescue Party (CNRP), by the Supreme Court and the arrest of its leader Kem Sokha on charges of treason. That concern led to the EU withdrawing financial assistance for the election. Although 19 other political parties ran against the incumbent Cambodian People’s Party (CPP) in the July 2019 general election, the CPP won all 125 parliamentary seats, extending Prime Minister Hun Sen’s mandate for another term. By September, the European Parliament had adopted a 13-point resolution “recall[ing] that in accordance with EBA requirements, trade preferences should be suspended if Cambodia is in violation of its human rights obligations.”

 In response to the EU’s decision, the Cambodian government blasted the move as an “extreme injustice,” highlighting that the CPP had strengthened political and civil society spaces, promoted labor rights, and addressed land issues and economic land concessions over the last eight months.

There have been improvements within Cambodia’s political landscape. Following the election, the Cambodian government established the Consultation Forum, a 30-member group that would provide advice on and draft policies as well as monitor the implementation of laws at the national and subnational levels. Moreover, more than 19 political activists have received a royal pardon and were released, including land right activist Tep Vanny, political activist Meach Sovannara, political commentator Kim Sok, and Radio Free Asia reporters Uon Chhin and Yoeung Sothearin. As for the CNRP’s Kem Sokha, he was released on bail after spending a year in prison on charges of treason.

By January 2019, an amendment made to Article 45 of the Law on Political Parties paved the way for the 118 CNRP politicians to have their political rights returned more than a year after their party was dissolved. Since the amendment, former CNRP opposition member Kong Korm has had his political rights rehabilitated in a royal decree by the King Norodom Sihamoni. Recently, in response to requests by 19 civil society organizations, a draft Law on Access to Information will be tabled to Cambodian lawmakers in an effort for the Cambodian government to become more transparent and accountable. To add to the number of political parties, founder and president Ith Sarum launched the “People Purpose Party.”

Democracy faces many challenges throughout the world. Some even argue that democracy has been in a global recession for most of the last decade. Since the promulgation of Cambodia’s constitution in 1993, which proclaims Cambodia as a liberal, multiparty democracy, the international community has aided Cambodia in defining, promoting, and monitoring its democratic norms. However, concerns over Cambodia’s democratic health raise an essential question in the efficacy of international democracy-building efforts: how can the international community continue to support Cambodia given these recent democratic setbacks?

Although the EU intends to safeguard Cambodia’s democracy with its own models, it’s crucial to allow Cambodia to develop its democratic norms and values organically – from the people and by the people. If the EBA is designed to encourage impoverished countries to adopt democratic and social reforms attuned with European standards, this is highly problematic; local context matters. Further, the move to withdraw EBA privileges jeopardizes any possible future long-term efforts by the EU to build local capacities for safeguarding Cambodia’s democracy. Will the Cambodian government want to work with the EU given the negative consequences an EBA withdrawal could have on its people?

Image result for e EU Commissioner for Trade Cecilia Malmstrom and cambodiaodia

The question remains as to whether this is the best path forward in addressing concerns about Cambodia’s democratic health. Like many other post-colonial countries that have gone through years of civil wars, the development of Cambodia’s democratic norms takes time. The EU should acknowledge that and support Cambodia in the long-term.

The EU Commissioner for Trade Cecilia Malmstrom emphasized the “move is neither a final decision nor the end of the process;” but noted “the clock is officially ticking” and the EU needs to “see real action soon.” Given the improvements made by the Cambodian government thus far, it may be helpful to understand what the EU deems as “real action.” In particular, is it the overall improvement of Cambodia’s political environment, or specifically, the release of CNRP president Kem Sokha, the political clemency of self-exiled interim president Sam Rainsy, the reinstatement of the dissolved CNRP, or a new election? Although dialogue will continue between the EU and the Cambodian government, the uncertainty surrounding the EU’s expectations can lead to economic and social instability within the country given that the decision to withdraw the privileges could be decided upon in a year.

Within the next six months, Cambodia will undergo “intensive monitoring and engagement” with the EU. It is still unclear as to how this will unfold with Cambodian authorities –will there be more bilateral meetings between senior Cambodian and EU officials, or will engagement also extend to industry, civil society, and ordinary Cambodians, especially women in the garment industry, who will also be affected by the EU’s decision? An open, inclusive, and transparent engagement monitoring and engagement process will be fundamental to determining whether a withdrawal of tariff preferences will be beneficial or harmful to Cambodia’s democracy in the long term.

The question remains as to whether this is the best path forward in addressing concerns about Cambodia’s democratic health. Like many other post-colonial countries that have gone through years of civil wars, the development of Cambodia’s democratic norms takes time. The EU should acknowledge that and support Cambodia in the long-term.

Darren Touch is a Master of Public Policy and Global Affairs candidate at the University of British Columbia, and an active commentator on Southeast Asian affairs. He is a Schwarzman Scholar recipient (2019-2020).

Cambodian Foreign Policy is headed in the right direction


February 20, 2019

Cambodian Foreign Policy is headed in the right direction

by  Taing Vida / Khmer Times

https://www.khmertimeskh.com/50579745/leng-thearith-says-foreign-policy-is-on-the-right-track/

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 A Cambodian scholar said that Cambodia’s foreign policy towards its neighbours and other countries in the world has been on the right track.

In a Cross Talk interview with Khmer Times on Monday, Leng Thearith, Director of Center for Strategic Studies, said the Kingdom’s foreign policy has improved after the country held its 1993 UN-brokered national election, and has been reformed over the past three years, especially in capacity building and strategic analysis.

Mr Thearith said the Kingdom has good relations with other countries thanks to the government’s efforts in integrating the country into the region as a member of the Asean and the World Trade Organisation.

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However, he said as a small state, Cambodia has limited strategic space to manoeuvre while its foreign policy dynamics face considerable challenges.

“It’s important for a small state like Cambodia to prevent itself from any attack that might be caused by powerful states,” he said. “We must oppose them in order to protect our sovereignty but at the same time, we must cooperate with those states to ensure good relations.”

Mr Thearith said that Cambodia is now seen as apologetically leaning towards China after the government received strong support from China through aid and loans without strings attached, noting that the country’s current approach toward the United States and the European Union will not be helpful in the long run.

“For now, I’m sure that the government is on the right track. Cambodia’s foreign policy’s behaviour changes from time to time,” he said. “Although Cambodia is now leaning towards China, I think the country will change and turn to other developed countries like Japan.”

Mr Thearith said that the government slammed the EU and the US because they meddled in Cambodia’s internal affairs, but later should mend ties for development benefits.

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“For now, the government can turn its back on the EU and the United States because they interfere in the country’s political issue and sovereignty,” he said. “However, in the upcoming years, the government should restore the relations and take advantage of them as development partners.”

The EU last week started the process of intense monitoring and engagement for six months that could lead to the temporary suspension of the EBA trade scheme over perceived human rights setbacks and the decline of democracy following the dissolution of the CNRP.

In response, the Cambodian government condemned the EU trade threat as an extreme injustice, accusing it of using double standards in its treatment of Cambodia.

Political analyst Lao Mong Hay said that the country’s current foreign policy is not on the right track as it is sucked in the Sino-American conflict.

“Now Cambodia is being sucked in the new Pacific war and specially the Sino-American conflict,” he said, noting that the foreign policy behaviour has led Cambodia back to the pre-1970 situation where it was gradually sucked in the then ongoing international conflicts.