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Cambodia & Thailand - the riots: the bill is in

March 14, 2003
Thailand submitted the final bill to Cambodia yesterday for damages inflicted on Thai businesses during the January 29 riots. The total is 2,066 million baht or approximately 48.6 million US dollars. For loss of opportunity an additional cost of 298 million baht (~7 million US dollars) was determined. Thailand has not released the figure for damage to the embassy but outside sources have estimated it at 250 million baht or approximately 5.9 million US dollars.

Prince Norodom Ranariddh, the Head of the National Assembly and former co-Prime Minister (1993-1997) has stated that Cambodia cannot afford to pay this bill.

So the situation is that PM Hun Sen has barred nationals from using the two major land border crossings and now Ranariddh says Cambodia can't pay the bill despite previous assurances from PM Hun Sen that they can.

I think then we can assume that Thai/Cambodia relations are really sunk for the foreseeable future. So what next?

There are a lot of places to go with suppositions of this nature and I'm going to start by backing up a little bit and re-frame some previous arguments I've made.

In my last editorial, published here on March 9, I tried to make an objective analysis of the facts, apply logic and reason, and in doing so I came up with the conclusion that Cambodia screwed up and has to pay and that closing off their border will ultimately do more harm than good. I haven't changed that assessment, but I do want to offer a little more of the Cambodian side of things and offer a scenario whereby I could be proven wrong. I also want to offer an explanation of how Cambodia got into such a mess and what can they do to get out of it without, we hope, digging themselves into a hole so deep they wind up in Lowell, Massachusetts.

Following the riots, Thailand PM Thaksin Shinawatra responded swiftly and surely and in doing so received extraordinary high marks from the Thai populace for his actions, which is exactly the kind of thing a politician wants. However, a strong argument can also be made that as time went on and Cambodia tried to rectify the situation, the Thai PM turned into a bully further humiliating an already embarrassed Cambodia. I think that's a fair assessment and does help explain why Cambodia turned around and sealed their borders saying in so many words, "we'll starve ourselves before we bow down to kiss your feet, ass, pigs, etc."

We're dealing with two important and intertwined non-quantifiable concepts here - pride and face. Pride is no stranger to anyone east or west, and face, while certainly related to pride and a notion somewhat understandable to westerners, is an extremely important idea to Asians and awareness of it does aid in providing an explanation to westerners for what often appears to us as illogical, even self-destructive behavior. Cambodia lost a lot of face when it rioted. The aftermath led to further humiliation which damaged Cambodia's pride and led to further loss of face to the point where Cambodia was forced into a corner and had to respond. Any westerner with experience in Asia knows what happens when someone suffers a massive loss of face, and we all know the results are not pretty. I think it can be said that the Thai PM should have known better.

But the facts are still the facts and they cannot be ignored. Cambodia made a mistake and must pay for it.

The problem is that Thailand has made this more difficult for Cambodia to do and the result is that Cambodia is stuck in a corner and must find a way out. Cambodia has chosen to fight fire with fire.

But is this a course of action they can afford?

Only time will tell. There are already reports of food shortages in the border areas which could potentially lead to a serious famine problem. And the result of that? Civil unrest, rioting, looting, robbery, and this time it won't be directed at Thailand. And reports of problems on a border will certainly harm the tourism industry, which is the one thing over all else that Cambodia can ill afford to damage. The border closure is also going to have the effect of causing shortages in consumer goods which will lead to price increases.

By the way, does anyone see the irony in Cambodia proclaiming this year Visit Cambodia 2003, an all out tourism promotion? This was kicked off successfully with the ASEAN conference on tourism in Phnom Penh only to be followed one week later with... the riots. Good timing, guys. Anyway, I digress.

And what about foreign investor confidence? If investors of other nationalities see this issue as unresolved will they still feel confident to place large sums of money into a venture in Cambodia?

So, immediate short-term repercussions are the potential for civil unrest in the border areas, a shortage of consumer goods and accompanying price increases, damage to the tourism industry, and damage to investor confidence.

But what about the long term? I've often chided Cambodia for being myopic, so let's analyze some of the long term implications and see if something positive can't be pulled out of this.

I've always maintained that Cambodia can be a good place for foreigners to do business so long as you are adaptable, patient, find the right niche, and are prepared for a number of hiccups which you could never plan for in advance. Hence, my concern for the moment that Cambodia is sending a message to the world that says 'we can trash your business and no amends will be made, deal with it', which is why I'm so resolute that Cambodia pays Thailand for the damage and pays quickly.

But as I do maintain an overall positive opinion of Cambodia as a place to do business, does this not present opportunities for investors from other nations to step in and set up shop? And try to do so in a way that will not make the Cambodians feel exploited as some of the Thai industries have? And even better, couldn't some of these new businesses create a profitable business plan that at the same time increases Cambodia's ability to start producing goods on its own? I reckon so long as a handful of Cambo officials are properly taken care of, this might be an opportune time for someone with a couple of million dollars to spend to get in here and spend it.

But never mind investors from outside Cambodia, what can Cambodia do internally? I've always said that Cambodia needs to stand on its own and stop taking handouts from other nations. Well guys, here you go. Why not throw out Bangkok Airways and let one of your own fly the Bangkok to Siem Reap route? Why not build your own cement factories? Your own plastics factories? Why not get a second viable telecommunications firm that is Cambodian-owned and could give MobiHell, I mean Mobitel, a good run? Why do you need Shinawatra and Samart here? You want independence, take it! Do something for yourselves!

Cambodia is on the spot. They have created a situation that will no doubt lead to some difficult times in the next few months, but also presents some unique opportunities for this country to stand on its own, exert greater independence and self-determination, and ultimately come out a better and stronger nation. Conversely, they could take this opportunity and piss the whole thing away (and not for the first time). My Khmer friends, as you so much like to say to us, I will say to you, "it's up to you." Your future is in your hands. Blame no one if you fail. And if you succeed, enjoy the rewards. You deserve whichever result you achieve.





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