Cambodia: Sustaining high economic growth


January 1, 2017

Cambodia: Sustaining  high economic growth 

by  Heng Pheakdey, Enrich Institute

http://www.eastasiaforum.org/2017/01/01/keeping-cambodia-competitive-beyond-2016/

Here Comes Cambodia: Asia’s New Tiger Economy

After decades of conflict and poverty that captured the world’s attention, Cambodia has enjoyed five years of high economic growth that is moving it toward becoming one of the new tiger economies of Asia, according to forecasts in the Asian Development Bank’s Asian Development Outlook 2016.

For the last two decades Cambodia has been one of the fastest growing countries in Asia with an average annual GDP growth rate of 8.1 per cent.

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Cambodia has been highly successful in embracing the ‘factory Asia’ model of growth, supplying its low-cost labour to export-oriented industries. Economic progress in recent years has allowed Cambodia to invest in physical and social infrastructure, attract foreign direct investment, create jobs and lift millions of its people out of poverty. The Asian Development Bank called Cambodia Asia’s new ‘tiger economy’.

Cambodia’s economic performance in 2016 remained robust, with growth continuing at 7 per cent. Strong garment sector exports and foreign investment in construction drove this economic performance. Exports in the garment and footwear industries rose by 9.4 per cent in the first half of the year, almost double the pace in the same period of 2015 thanks to improved production processes and high demand from the European market. As of September 2016, the value of approved commercial projects in the construction sector more than doubled to US$7.2 billion. Imports of construction equipment and materials also increased to support the construction boom.

But solid growth in the industrial sector has been offset by a slowdown in agriculture and tourism. Unfavourable weather conditions and falling commodity prices have resulted in agriculture’s sluggish performance, which grew at a rate of only 0.2 per cent in 2014–2016. Tourism also underperformed in early 2016 due to a decline in tourist arrivals from Vietnam, Laos and South Korea. 1.3 million tourists visited Cambodia in the first quarter of the year, a mere 2.6 per cent increase compared to the same period in 2015.

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The World Bank reclassified Cambodia in July 2016 as a lower middle-income country after its gross national income per capita reached US$1070 in 2015, surpassing the minimum threshold of a lower middle-income nation of US$1026. While this sign of progress should be welcomed, it comes with its own set of challenges. Analysts fear that this new classification will reduce Cambodia’s benefits from international foreign aid and preferential trade agreements that the country enjoyed while still a ‘least developed country’.

To prepare for the anticipated reduction in international assistance and trade privileges, Cambodia needs to strengthen its competitiveness, diversify its economy and upgrade its industries.

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Although garment exports have held up well so far, the sector remains narrowly based and concentrated on a few markets, making it vulnerable to external shocks. To preserve Cambodia’s attractiveness relative to its regional competitors such as Vietnam and Bangladesh, it must diversify into higher value products and services and strengthen labour productivity to reflect the rise of the minimum wage.

The modernisation of agriculture would also help to sustain productivity in the long run. Employing more than half of Cambodia’s labour force, agriculture has contributed significantly to poverty reduction. But high reliance on rain-dependent rice production, slow adoption of quality seeds and inadequate agricultural extension services and irrigation facilities remain key constraints in the sector. Diversifying to less water intensive crops, developing the agribusiness and agro-processing industry, promoting a modernised value chain and cost effective logistics are crucial to put agriculture back on a higher growth path.

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Efforts have been made so far to support economic diversification. The Cambodia Industrial Development Policy was launched in March 2015 to transform and modernise Cambodia’s industrial structure from a labour-intensive industry to a skill-driven industry by 2025. This implies increasing the GDP share of the industrial sector, diversifying goods exports including non-textiles and processed agricultural products and modernising the registration of enterprises. The policy also supports stronger regulations and enforcement and helps create a more favourable business environment.

Domestic investors also have an important role to play in the diversification process. Experts believe that the success of Cambodia’s economy will be driven by local entrepreneurs and the private sector, not by international donor assistance. Providing support to domestic investors in trade facilitation, logistics, infrastructure and human capital is just as important.

Cambodia faces many challenges to stay competitive. To realise its vision of becoming an upper middle-income country by 2030 requires strong commitments to address infrastructure bottlenecks, build a high-quality human capital base, strengthen natural resource management, enhance governance and improve financial services and the business environment.

Heng Pheakdey is the founder and chairman of Enrich Institute.

 

Back in Time –Pol Pot’s Cambodia


December 12, 2016

Back in Time –Pol Pot’s Cambodia

HE RAN the country for less than four years, yet between April 1975 and January 1979 Pol Pot killed up to a fifth—some think a quarter—of the Cambodian people to whom he said he was bringing a new and better life. In its way, it was the worst of the 20th century’s totalitarian horrors, unless the eventual unlocking of North Korea’s doors reveals something even grimmer. Hitler murdered about 6 million Jews and others in his concentration camps; Stalin’s “anti-party” toll was close to 20 million; Chairman Mao’s Great Leap Forward starved over 20 million to death, before moving on to the Cultural Revolution. But Pol Pot’s victims were a much bigger proportion of little Cambodia’s 7 million people, and few of them could even vaguely be called “enemies of the regime”. His killing fields were the most mind-boggling of them all.

Philip Short, who wrote a good book about Mao’s China, has now done a spectacularly efficient job of describing what happened, and how. He has spent four years in Cambodia, talking to survivors of the killing-fields, and perpetrators. He has dug up piles of revealing documents. Some of the brightest illumination comes from the handful of westerners who watched what was going on, not least the diaries of Laurence Picq, an honest young Frenchwoman who went to Cambodia thinking she could help a good cause.

The result is a chillingly clear portrait of Saloth Sar, the man who became Pol Pot (and also Grand Uncle, First Brother and sundry other pseudonyms). From a comfortable background—his sister was one of the king’s concubines—he went to a smart lycée in still French-run Phnom Penh, and then won a scholarship to study in Paris. There he fell in love with Marxism-Leninism in its especially intellectual French form, and from France he went back to the emerging guerrilla war in Cambodia, to bring communism to his countrymen. Calmly and firmly, he worked his way to the top of the party; and in April 1975 his men marched into Phnom Penh.

It then became pure Orwell. Pol Pot at once ordered the total evacuation of all towns and cities—not just the middle class, but labourers, mechanics, street-cleaners, war refugees, everybody. All Cambodians were to become workers on the land. There were to be no wages. Meals were to be provided by collective kitchens (“unity of feeding”). Each Cambodian had to refer to himself or herself as “we”, forbidden to use the first person singular. When one region found it did not have enough food, supplies were not sent from better-off places; rather, the hungry were marched off to look for them.

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Of course, it did not work. Up to 1 million people died of starvation. Protests began, including among party members. The leadership of the party denounced such “microbes”. The protesters were put into camps, including Camp S-21 at Tuol Sleng, the sole task of which was to extract confessions. Many “confessions” turned out to be pure invention, yet all confessors were executed. At least another 100,000 people, maybe 250,000, died at this stage of the proceedings. As Pol Pot’s central committee put it, it was necessary “to avoid a solution of peaceful evolution”, which could “corrode” the revolution.

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Why was Pol Pot’s Cambodia even worse than Mao’s China, Stalin’s Russia and Hitler’s Germany? Here Mr Short, so good at finding out what happened, is less good at explaining why it did.

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Samdech Techo Hun Sen–Making a  huge Difference for Cambodians

He suggests that Pol Pot, like many other Cambodians, was driven by resentment over his country’s loss of glory since the great days of the Angkor empire. But that was 600 years earlier. Lots of other countries have had far more recent puncturings of national pride without being pushed into anything quite as horrible.

Mr Short then wonders whether Buddhism, Cambodia’s main religion, lay near the root cause, because it believes in “the demolition of the individual”. This is nonsense. Buddhism, a gentle faith, believes that individual human beings eventually dissolve into nirvana when in successive lives they have earned it. This is not the explanation of Pol Pot’s slaughters.

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No, it was the bug he picked up in Paris that poisoned Pol Pot. An ideology which believes, as communism did, that a small group of self-selected possessors of the truth will get everything right is bound to produce disaster. Perhaps things were made worse by Pol Pot’s desire to outshine the communists in Vietnam; and maybe also by some still unexamined twist in his psyche. All the same, it was the pseudoscientific certainty of Marxism-Leninism, that malformed child of the Enlightenment, which was chiefly to blame.

Free market alternatives


November 27, 2016

Here is something I wrote in The Phnom Penh Post in 1996, which may still be of interest. Of course, Cambodia has come a long way, having achieved average GDP of over 7 per cent p.a. over the last 20 years. It is enjoying peace and security, thanks to the strong leadership of Prime Minister Samdech Techo Hun Sen.–Din Merican

Logo of Phnom Penh Post newspaper

Free market alternatives

The Editor,

I read Mr Matthew Grainger’s balanced and interesting report on the recent CDRI International Roundtable on Structural Adjustment Programme in Cambodia (January 26, 1996). I also read Dr Walden Bello’s paper titled “Economic Liberalization in Southeast Asia: Lessons for Cambodia”, and Dr K.P. Kannan’s paper, “Economic Reform, Structural Adjustment and Development: Issues and Implications”.

Dr Bello of Chulalongkorn University’s Social Research Institute in Thailand and Dr Kannan, CDRIs research director, are reminding policy makers in Cambodia that there is an alternative paradigm for Cambodian economic development to the standard IMF/IBRD prescription of market economics.

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The trickle-down theory is attractive in concept, but it has limited relevance in the real world due to market imperfections. Government intervention, as a result, is necessary to ensure equity and development without degradation of the environment.

Growth and equity are two sides of the same coin. For that reason, real GDP growth, in my view, is alone not a good indicator, if we ignore the distributional or equity and environmental aspects of development. One has to look at Thailand and Malaysia to realize that this obsession with GDP growth rates among policy makers results in serious socio-economic imbalances with long-term political consequences.

Malaysia’s realization of this problem is now incorporated in its Second Outline Perspective Plan 1991-2000. Even as of yesterday (Feb 13), Malaysia’s Deputy Prime Minister Dato Seri Anwar Ibrahim was reported to have said that in the next Malaysia Plan, our seventh, the social and related aspects of development will receive greater attention. After nearly 40 years of economic management, Malaysia’s decision to evaluate its strategies and adopt new approaches to achieve more balanced development supports Dr. Bello’s call “to articulate an alternative future” and “to ponder carefully the consequences of fast track capitalism…”

We must remind ourselves what development is all about. Here I would quote Dr Kannan:

“In terms of development, the ultimate objective is that of human development and reducing inequities as between people and regions.”

I am, of course, reminded of great development economists of the sixties like Sir Arthur Lewis, Gunnar Myrdal, Jan Tinbergen and Ragnar Nurkse and my mentors in economics, Clifton Wharton Jr., and Ungku Abdul Aziz (Malaysia), who studied the processes of development and underdevelopment with a socio-cultural perspective.

Development is about bringing about systematic change, and providing meaning to the lives of people so that they have opportunities to progress as far as their abilities can take them. It is about ensuring that scarce resources are used responsibly so that succeeding generations can build on the efforts and achievements of their forebears.

It is about institutions, culture and people. It does not exist in a vacuum, certainly not in econometric models, computer simulations, scenario planning systems or in the air-conditioned offices of the World Bank, IMF and the ADB. Most of all, development is about responsibility and accountability for all stakeholders, not a power game.

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Because it is a grassroots process and culture bound, development must be driven by nationals, in the case of Cambodia by Cambodians, with a shared vision, not by experts who have no stake and who do not have to live with the consequences of their prescriptions. This is not to discount the contributions made by the international community, donor countries and multilateral agencies. But it does emphasize that the granting of technical and financial assistance does not confer on the provider the right to impose their own values, preferences and way of life, or to dictate what is best for the beneficiary.

Cambodian leaders know what they want for their country. They have a clear vision of their country’s future as reflected in their National Programme (NPRD) and this is more than what can be said about some countries in the Third World. They have a strategic purpose which is to create a fair, just and peaceful society and, through strong sustainable economic growth, to raise the living standards for all Cambodians.

Cambodia is committed to a democratic system of government with a Constitutional Monarchy, and free market economic system with the private sector as the engine of growth and government in the role of strategist and manager-mentor.

Cambodia is adopting a state-directed economic growth strategy. This approach accepts the price mechanism, and the market in general, as an efficient allocator of resources. It also taps the dynamism of the private sector, but recognizes that government activism is essential in the area of national strategy in a competitive and interdependent world and to tame the excesses of the profit motive and ensure that economic growth is sustainable, balanced and equitable in the long term.

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Their development will be on the back of agriculture which is today the step child of most economies in East Asia. It may not be the “sexy thing” to do, but Cambodia is making its first wise move. Modern agriculture backed by advances in bio-technology, efficient water resource management systems, and strong marketing and distribution networks is a profitable undertaking.

Since the private sector is going to be given a prominent role in the development of the Kingdom, the World Bank and other multilateral agencies should finance a master plan study on small and medium scale industries and businesses and recommend policies and strategies for developing this sector. In many countries in East Asia, this sector is the driver of economic activity with the greatest potential for growth.

It is more refreshing to talk about development than other issues, usually negative ones, about Cambodia. The country has done well since the formation of the Royal Government. The tasks and challenges ahead are daunting. Cambodia needs the understanding and the patient support and cooperation of friends. Credit when it is due should be given. Criticisms, on the other hand, should be constructive.

For democracy to survive in Cambodia, economic development is essential. I have not known of any situation in the world where democracy exists side by side with abject poverty, unemployment, illiteracy and social inequities.

I stand, therefore, to be educated by anyone who has had the privilege of seeing democracy in a symbiotic relationship with the aforementioned phenomena.

I hope your readers – especially those in the IMF, World Bank, ADB and UNDP here in Phnom Penh – will respond with their comments on my letter. If that happens, my purpose in writing this letter as a sort of rejoinder to the Cambodian development debate is well served.

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Din Merican 2016

– Din Merican, Phnom Penh. (Din Merican is an economist with an MBA degree from the United States, who worked for more than 30 years in the Central Bank in Malaysia and in the private banking industry. This letter represents his personal views.)

Electoral Reform in Cambodia


November 21, 2016

Electoral Reform in Cambodia

by Chheang Vannarith

http://www.khmertimes.com

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Cambodia–Kingdom of Wonder and Emerging Democracy

Japan’s foreign policy, under the leadership of Prime Minister Shinzo Abe, has been more robust and assertive, through deep linkages between economic diplomacy and strategic and political interests.

Japan has also started implementing a values-based diplomacy by focusing on democracy and human rights.

Stating that “expanding support for countries that share strategic interests and the universal values of freedom and democracy with Japan is crucial in attaining a free, prosperous and stable international community with the goal of securing peace and stability in developing countries,” Japan’s White Paper on Official Development Assistance in 2012, released in 2013, enshrined democracy support as a crucial principle of the country’s foreign development support and engagement.

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Of Pristine Beauty and Peace

Cambodia is the first country Japan actively involves in democratization, particularly through electoral reform and institutional capacity building. The Cambodian government seems to trust Japan more than other countries in democratic reforms given shared understanding of Asian values.
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Upon the request of Prime Minister Hun Sen in 2013, Japan positively and quickly responded with support to reform the electoral system by providing technical and financial assistance to the National Election Committee (NEC).

After the Paris Peace Agreement in 1991, Cambodians from different political and ideological orientations came together to reconstruct the war-torn country with the introduction of a liberal democratic political system.

Democracy is believed to be the foundation of peace, stability and development. However, democratization is a long, complex process. Democracy will fail if the people fail to understand and practice the core values of democracy. Social cohesion, political consensus, institution building, responsible leadership, citizenship, people empowerment and public participation are indispensable elements in democratic consolidation.

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Obama Gone–Trump Next

Cambodian democracy remains fragile due to the lack of a strong and resilient democratic institution. Over-personalized politics, zero-sum political game, political polarization and irresponsible public manipulation have been threatening the very foundation of democracy.

Although five general elections had been organized since the UN-supervised 1993 election, Cambodia has grappled with post-election political crisis or deadlock.

Election irregularities were the main issues used by the losing parties to protest against the winning parties. Normally, power bargaining and sharing between political parties led to post-election political reconciliation and settlement.

In the aftermath of the 2013 election, the power-sharing arrangement between the Cambodian People’s Party and the Cambodia National Rescue Party was short-lived.

Deep political distrust between the two leaders of the two parties prevents the two parties from reaching any meaningful and fruitful political negotiation. Uncertainty and risks are high ahead of the upcoming elections, which are predicted to be the most competitive race between the two main political rivals. There have been questions raised in relation to whether the upcoming elections will be fair and inclusive. The most puzzling question is whether a power transition, should there be any, would be peaceful.

The international community is pinning its hopes that through free, fair and inclusive elections, Cambodia will be able to maintain political stability and continue to prosper.

Japan and the European Union are the two main donors in electoral reforms. Japan supports the NEC in three areas: voter registration, the improvement of electoral procedures and the enforcement of voter awareness and education activities.

So far, the voter registration system has been smoothly carried out with a computerized system, with more than 74 percent of the electorate registered.

With the improvement of the organizational structure and technical system, the NEC will be able to perform much better than before. There will be no legitimate reason for any political party to protest against the election results, so the post-election political crisis or deadlock will be avoided.

Should electoral reform in Cambodia prove to be a success story, Japan will continue expanding its values-based diplomacy to other parts of the world, similar to what Japan has done with regards to peacekeeping operations.

Personal interest and dedication to human rights and democracy by the former Japanese ambassador to Cambodia, Yuji Kumamaru, also contributes to promoting Japan’s image and role in strengthening democracy in the Kingdom.

“Reforming the election system, along with the NEC demonstrating independence and neutrality, is a perquisite for increasing trust and confidence of people and for all the political parties and candidates competing in the election freely and fairly,” Mr. Kumamaru said on August 18.

“It is hardly necessary to point out that every step of the election processes needs to be as open and inclusive as possible,” he added.

Samdech Techo Hun Sen’s Trump Card


November 11, 2016

Samdech Techo Hun Sen’s Trump Card

by Mish Khan, Associate Editor

http://www.newmandala.org

Cambodia reacts to Trump’s divisive success.

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Cambodia’s Prime Minister Hun Sen has taken to Facebook to congratulate Donald Trump’s success in the United States presidential elections.

Donning a Trump-esque red cap and seated in a golf cart, Hun Sen wrote:

I would like to congratulate HE Donald Trump for achieving victory in [the] US presidential election.

Several days ago I have publicly support your candidature, till several individuals have come out to criticise me and referring to you, Mr Donald Trump, as a dictator to have endorsement coming from a leader like myself.

At this moment the American voters have shown their choice to elect your excellency the same way as my support for your candidacy is not wrong either.

Hun Sen, who has ruled Cambodia for three decades, was referring to backlash from headlines last week when he endorsed Trump for president. He stated on Thursday, “If Trump wins, the world might change and it might be better, because Trump is a businessman and a businessman does not want war.”

In contrast, the opposition Cambodia National Rescue Party openly blasted both Trump and Hun Sen last week, with officially exiled leader Sam Rainsy criticising them as two of a kind.

“Birds of the same feather flock together. Trump seems to believe in the absolute power of money. Hun Sen seems to believe in the absolute power of the gun coupled with money… Trump and Hun Sen are definitely not democrats.”

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Michelle Obama and Cambodia’s Buny Rany meet Cambodian students

Although many analysts claim a Trump administration will probably not represent a major shift in US policy towards Cambodia, which is not of great strategic importance to the United States, a win for Trump could still be a major win for Hun Sen.

For one, a Trump presidency would have much less to say about violations of democracy and human rights in a regime notorious for such abuses.

“For years, Hun Sen has been frustrated by the constant lectures by Western governments about how he runs his country, and the fact that Cambodia so often seems to be ‘singled out’ for criticism over human rights violations. Now there’s a president-elect who has shown little interest in delivering these kinds of lectures,” said Sebastian Strangio, the author of Hun Sen’s Cambodia.

This has been eerily confirmed by the ruling Cambodian People’s Party.

Spokesman Sok Eysan stated, “Trump’s vision would seem to be beneficial for Cambodia, as a small country, as he won’t be like the leaders of the big countries … They want to consider us as children, and evaluate us poorly without respecting sovereignty and independence.”

Furthermore, rebuking Trump may have lost Sam Rainsy a powerful ally in the US — which would be a major blow to his endeavours to oust Hun Sen’s rusted on regime in July 2018 elections.

“Sam Rainsy says Donald Trump is a dictator, and the opposition party used to rely on the US… How will they continue to rely on the US if Sam Rainsy has called the new president a dictator?” asked Eysan.

Mish Khan is Associate Editor at New Mandala and a fourth-year Asian Studies/law student at the Australian National University.

 

ASEAN’s South China Sea ulcer


July 27, 2016

COMMENT: Why the gloom and doom about ASEAN just because the regional organisation is unable to craft and issue a joint statement on the question of the South China Sea.

That is not unusual. Members can agree to disagree and yet ASEAN can remain a cohesive and purposeful organisation to serve the common interest of its members. The Treaty of Amity and Cooperation in Southeast Asia is a key document that forms the glue that binds members and its partners reinforced by the ASEAN Charter. The ASEAN way operates on consensus, consultation, and dialogue.

ASEAN is, therefore, not structured like the European Union centered on a huge and overpowering bureaucracy in Brussels. One of the reasons for BREXIT is the United Kingdom’s desire to preserve its sovereignty and free itself from mountains of EU rules and regulations. The Jakarta based regional grouping, on the other hand,  is a collection of sovereign and independent nations, each acting in accordance with the dictates of their respective national interest, yet agreeing to come together to pursue their collective interest to preserve regional peace, security and stability, and promote trade and investment for socio-economic development. So far, ASEAN is a success story. Since 2015, it is working towards becoming an economic community.

Cambodia's Prime Minister Hun Sen gestures as he delivers a speech during his presiding over an inauguration ceremony for the official use of a friendship bridge between Cambodia and China at Takhmau, Kandal provincial town south of Phnom Penh, Cambodia, file photo.

Cambodia’s Foreign Policy is one of equidistance and neutrality with ASEAN as one of its pillars. (pic above Samdech Techo Hun Sen, Prime Minister of Cambodia)

South China dispute is a convenient diversion. To label it as ASEAN’s ulcer–academics are prone to using colorful descriptions and cliches–is to me a bit of an exaggeration. To suggest that Cambodia is a surrogate of China is way over the top. It is a sovereign and independent nation and an active member of ASEAN and the United Nations. As such, Cambodia has the right to pursue good relations with China, Russia and United States and other countries. Its foreign policy is one of equidistance and neutrality.

Using labels has never helped to solve problems among nations. One can easily get away by saying that in the case of its dispute with China over the South China Sea, the Philippines is a proxy of the  geo-stategic interest of United States and talking tough because Filipinos think they can rely on US military power to defend their interest. This is to deny that the Philippines may have its rights over the disputed area. What purpose is served if Cambodia, a non claimant state, is seen to be taking sides?  Rightly, Cambodia has been promoting peaceful settlement of disputes and urging China to sign a Code of Conduct on the South China Sea which is an ASEAN initiative. Lest we forget the South China Sea issue simply  put is a complex one, one that will engage our diplomats over a long time. –Din Merican

ASEAN’s South China Sea ulcer?

by Dr Mathew Davies

http://www.newmandala. org

The just concluded meeting of ASEAN Foreign Ministers in Vientiane, Lao PDR, looked like it was going to be a high profile failure.  The fear was that the meeting would repeat the 2012 experience of being unable to produce a final communiqué in the face of Cambodia’s insistence that nothing was said that would criticise China over the South China Sea.

Four years later ASEAN may have avoided such a public display of disunity but the released communiqué, together with a JointStatement between ASEAN and China on the SCS, suggest that nothing has been resolved.

The Joint Statement is an insipid document that does nothing to address the cause of the flaring tensions in the region. It is full of bland endorsements of the international legal principles that many have shown a flagrant disinterest in and calls for handling differences in a ‘constructive manner’. If the word constructive in this context is intended to cover the building of military landing strips, the placing of advanced weapons systems and aggressive military posturing, then even given ASEAN’s ability to obfuscate this is a linguistic feat to marvel at.

The Communiqué certainly contains more words on the South China Sea than does the joint statement, a whole eight paragraphs, but it is just as damning. Paragraph 174 notes that only ‘some ministers’ were concerned about ongoing issues (for which read, not the Cambodians). No mention was made of the recent Permanent Court of Arbitration’s ruling on the South China Sea which had so decisively rejected China’s claims in the region in favour of the Philippines.

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Instead all states were called upon to work together to both implement the Declaration on the Conduct of Parties in the South China Sea and work towards building a Code of Conduct to better manage affairs. These are laudable in themselves but hardly helpful given the Declaration was agreed in 2002 and has conspicuously failed to curtail regional tensions and any Code of Conduct would seriously curtail China’s freedom of action in the region, which is completely unimaginable at this stage.

ASEAN’s continued failure to address the South China Sea in anything approaching an effective manner is not only a short term failure – it now represents a significant and ongoing risk to ASEAN’s health. This challenge will not take the form of a heart-attack, a sudden and existential shock to the system. Instead it is an ulcer, a constant pain in the guts that threatens, slowly but inexorably, to flood the system with bile. This challenge takes two forms.

First ASEAN from 1967 has always been about protecting the sovereignty of its members from the encroachment of great powers – as Alice Ba has memorably put it the ‘regional resilience’ of Southeast Asia. ASEAN was founded in the belief of regional self-determination – in the wake of colonialism and amidst the Cold War it was a call to ensure that Southeast Asian states remained in the driving seat of Southeast Asian affairs.

Today, with ASEAN member Cambodia serving as a surrogate for China against the interests of other ASEAN members, it no longer seems to be that the organisation serves the interests of the region.

Failure in the South China Sea to offer even the most tepid of support for member states claims against a rising China, especially the more moderate of those claims, strikes at the heart of what ASEAN was designed to achieve. If ASEAN cannot talk of member states sovereign claims against external great powers, what is the value of ASEAN to those members?

Second ASEAN’s own quest for centrality in Asia-Pacific security is revealed to be a fruitless quest when there is so much reason to question even ASEAN’s relevance to the most pressing of regional security issues. ASEAN has always sought to spread the norms of consensus decision making that it is supposed to follow internally across the Asia-Pacific as a way to exert some sort of pacifying effect on the great powers of the region. Yet if those same norms are now preventing ASEAN’s ability to engage in a meaningful way with China in what way can they be said to be positive and worthy of others following?

The South China Sea issue, then, is not an external threat to ASEAN, but an internal health risk – a sore that if not addressed will continue to leach its poison into the regional organisation and the faith that its members have in it.

The challenge is not a superficial one. It is not about whether ASEAN will unite in the defence of an American designed international order as was the wish of Obama at the Sunnylands Summit or whether it will continue to forge its own path.

The challenge is about whether ASEAN can continue to be valued by its members for the reasons it was created – whether it has the strength of purpose to defend its members from external interference, whether it can continue as a vehicle for regional self-determination rather than a generator of regional discord, and whether it can choose centrality over irrelevance.

As with any health risk, this challenge needs to be confronted sooner rather than later and with a coherent measured response, not a random assortment of lowest common denominator actions. I fear that the prognosis has just deteriorated.

Dr Mathew Davies is head of the Department of International Relations in the ANU Coral Bell School of Asia Pacific Affairs.