Cambodia's Troubled Path to Recovery

Research Paper 34 1995-96

Dr Frank Frost
Foreign Affairs, Defence and Trade Group



Major Issues


Background: the Paris Agreements, UNTAC, and the 1993 elections

Cambodia since 1993

  • Political tensions in 1995 and 1996: Democratic institutions under pressure
  • The immediate outlook
  • King Sihanouk's role
  • The Khmer Rouge: down but not out

Economic Developments

Foreign relations

Australia and Cambodia

  • Political and diplomatic relations
  • Economic relations and the aid program
  • Defence assistance




Association of Southeast Asian Nations
Buddhist Liberal Democratic Party
Coalition Government of Democratic Kampuchea
Cambodian People's Party
National United Front for a Neutral, Independent, Peaceful and Cooperative Cambodia
International Committee for the Reconstruction of Cambodia
International Monetary Fund
Khmer Nation Party
Khmer People's National Liberation Front
Non Governmental Organisation
Party of Democratic Kampuchea
Royal Cambodian Armed Forces
State of Cambodia
United Nations High Commissioner for Refugees
United Nations Transitional Authority in Cambodia

Major Issues

Since the United Nations-sponsored elections in May 1993, Cambodia has been engaged in a process of attempted recovery from over two decades of internal conflict and external intervention. Progress has been made in a number of areas but substantial problems continue to challenge the recovery process. Cambodia has been receiving substantial economic assistance and a formal meeting of donors, the Consultative Group on Cambodia, convenes in Tokyo on 15-16 July to review the country's development and assistance needs. Australia played a major role in helping to develop the international agreements through which the United Nations sought to resolve the conflict in Cambodia and the Australian government has continued to support actively Cambodia's pursuit of recovery. Australia, as the fourth largest aid donor to Cambodia, will be a participant in the Consultative Group meeting.

This paper examines Cambodia's development since 1993, assesses the problems and challenges still facing the country in the wake of many years of conflict, and discusses Australia's continuing involvement in providing support and assistance.

From 1970, Cambodia entered a period of political conflict, internal war and external involvement, including the traumatic rule by the Khmer Rouge (1975-1978) which resulted in the deaths of at least one million people.. The 1993 elections were the outcome of the Paris Agreements on Cambodia (23 October 1991) which established one of the United Nations largest peace keeping operations, pursued with over 20,000 personnel and at a cost of $US 1.9 billion. The Paris Agreements succeeded in ameliorating the international and regional animosities which had fuelled the internal conflicts within Cambodia and paved the way for a new era in international relations for Southeast Asia. However within Cambodia, the UN had difficulties in fulfilling the ambitious mandate assigned by the agreements. In particular, the problems the UN experienced in trying to supervise and disarm the competing Cambodian parties and the refusal by the Khmer Rouge to adhere to the agreements they had signed, thwarted the UN's efforts to secure a fully peaceful environment for the preparation for elections. Nonetheless, the 1993 elections were held successfully, a new democratic constitution adopted, and a new government of the Kingdom of Cambodia was established.

The elections produced two major winners, the Cambodian People's Party (in power in Phnom Penh with Vietnamese support from 1979) and the opposition FUNCINPEC (National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia) To seek a stable administration, the two major parties established a coalition with their leaders, Hun Sen (CPP) and Prince Norodom Ranariddh (FUNCINPEC) serving as co-prime ministers: power was to be shared between these parties and a third and smaller party, the Buddhist Liberal Democratic Party (BLDP). This unusual arrangement has provided Cambodia with a functioning government since 1993. However the new government has faced the legacies of past suspicions and conflicts, armed opposition from the depleted but still operational Khmer Rouge (with its leader Pol Pot evidently still alive), administrative weakness, economic debilitation and some difficult challenges in securing stable relations with the country's two large immediate neighbours, Thailand and Vietnam.

Politically, the coalition government has come under increasing strain for two main reasons. Firstly, the liberal political institutions and environment established through the Paris Agreements and UN involvement have come under pressure as the government has responded negatively to criticism (for example from the recently established Khmer Nation Party led by an expelled former FUNCINPEC Minister for Finance, Sam Rainsy). The press has also been pressured by violent attacks, not satisfactorily explained. Secondly, tensions have increased within the governing parties, particularly as those parties assess their prospects in the local elections (due in mid 1997) and the national elections (mid 1998). Although FUNCINPEC outpolled the CPP in the 1993 elections, the CPP has a stronger organisation and retains a dominant influence in much of the military, police and militias. There was considerable tension in the first five months of 1996 and widespread concerns that the coalition between the CPP and FUNCINPEC might dissolve.

Coalition tensions were contained by mid 1996 but may well re-emerge. It is possible that FUNCINPEC might decide to leave the coalition in the lead up to the next national elections. There is an ongoing potential for further political violence in a highly armed society. The role of King Sihanouk also remains a matter of some uncertainty, partly because of his health problems.

The Khmer Rouge continue to pose an armed challenge to the government and reports in early June of the death of Pol Pot have not been confirmed and appear to have been inaccurate. The Khmer Rouge have suffered a substantial decline in strength since the period of UN involvement. They no longer have material support from China and access to supplies from elements in Thailand has been curtailed sharply. Over 12,000 people have crossed to the government and the Royal Cambodian Armed Forces, after notably ineffective operations in 1994, have been pursuing internal reform and training and displayed an improved performance in 1995 and 1996. Nonetheless, while under pressure, the Khmer Rouge are still likely to be a factor for potential instability and violence in the period before the 1998 elections.

Amid political conflict and ongoing armed insurgency, Cambodia's economy has shown some signs of progress. Overall rates of growth have increased, agricultural production has improved and some investment has been received. However the long term ill effects of isolation and weak administrative capacities have left Cambodia and its natural resources vulnerable to exploitation. The rate of development of the country's forest resources is an important issue which has recently been reviewed by an international report that will be considered at the Consultative Group meeting in Tokyo. The report found that rates of exploitation were five times higher than replacement capacities and that Cambodia was receiving an inadequate financial return. Political instability and the ongoing activities of the Khmer Rouge still threaten Cambodia's capacities to attract needed investment and to pursue long term development to benefit Cambodians, especially those outside the urban areas.

The Paris Agreements opened the way for Cambodia to reduce its international isolation and much has been achieved. Cambodia has been improving relations with China, which in a significant sign of support to the government offered 'non lethal' military assistance in April 1996. The United States is providing both civil and 'non lethal' military assistance but is concerned at some recent internal developments including an evident increase in activities by traffickers in narcotics in and through Cambodia. Relations with ASEAN are developing rapidly: Cambodia became an observer in 1995 and has applied to join as a full member, and may be accepted as early as 1997. Some strain has been experienced in relations with both Thailand and Vietnam since 1993 but active efforts have been made to improve both relationships.

Australia's interests in Cambodia grew steadily from the late 1970s and from the early 1980s, efforts to seek a resolution of the Cambodia conflict became one the main priorities in Australian foreign policy. Australia played a substantial role in helping to pursue the negotiations and policy development which ultimately led to the successful conclusion of the Paris Agreements. Australia committed over 500 personnel to the United Nations Transitional Authority in Cambodia (UNTAC) and provided senior officials, most notably the Force Commander General John Sanderson. Since 1993 Australia has been an active supporter of Cambodia with a large aid program ($A92 million over the period 1994-1998) which has included assistance in the de-mining program (aid increased by the Howard government in May 1996). Australia is also providing military assistance, especially in training; a new Australian-sponsored training facility was opened in late June. Australia thus has a substantial interest in Cambodia's continued progress towards stability and recovery and will be reassessing this progress in the context of the Consultative Group meeting in Tokyo.

The paper concludes by highlighting both the considerable gains made since the Paris Agreements and the substantial problems still confronting Cambodia in its path to recovery. As the scheduled 1998 elections approach, a key issue is whether Cambodia will be able to continue and increase progress towards economic development and improved administrative capacities, while preserving the liberal political institutions established through the Paris Agreements, the UN involvement and the 1993 constitution.


Cambodia was enmeshed in internal conflict for over two decades, including civil war with external intervention (1970-1975), the Khmer Rouge regime (1975-1978) during which at least one million perished, and further externally-assisted domestic conflict after Vietnam's invasion (1979-1989). The end of the Cold War cleared the way for a negotiated settlement through the Paris Agreements (23 October 1991) and in May 1993 United Nations sponsored elections opened a new era in Cambodian politics. It was hoped that Cambodia could now escape from the internal conflict and external interference which had caused devastation and left it at the margin of the Asia-Pacific region.

The Paris Agreements of October 1991 involved the development of a process of political accommodation by which the warring Cambodian parties could try to pursue national reconciliation in the context of a major UN involvement and an internationally supervised election. Although the Khmer Rouge boycotted the process, the other three major parties were able to arrive at a coalition arrangement after the elections which appeared to lay the groundwork for stability and economic development with international assistance.

In the period since the 1993 elections, Cambodia has made progress towards recovery, but that recovery remains threatened by ongoing internal political conflicts, a diminished but still operative Khmer Rouge, and substantial problems in achieving balanced and sustainable economic development. While the coalition arrangement remains in place, a series of conflicts both within and between the major parties has given rise to concerns that a stable government may be difficult to maintain and that the liberal political institutions established through the Paris Agreements might not survive in the climate of discord and conflict. Moreover, Cambodia still faces armed confrontation from the depleted but still operational Khmer Rouge, which hampers international confidence and investment prospects. Cambodia's problems are of concern to its neighbours in ASEAN (which Cambodia has formally applied to join) and to the country's international supporters and aid donors, including Australia. The country's progress towards economic recovery will be reviewed in detail by the meeting of the Consultative Group on Cambodia in Tokyo on 15-16 July 1996.

This paper provides a review of major recent developments in Cambodia and considers the prospects for stability and continued economic progress under the framework established by the Paris Agreements.

Background: the Paris Agreements, UNTAC, and the 1993 elections

After the defeat and overthrow of the Khmer Rouge (from 25 December 1978), Cambodia entered a new phase of conflict. Vietnam sponsored the inauguration of an allied regime in Phnom Penh, (the People's Republic of Kampuchea), government by a pro-Vietnam and pro-Soviet communist party (the Kampuchean People's Revolutionary Party, renamed the Cambodian People's Party in 1991). While the Pol Pot regime had been almost universally condemned, China and the ASEAN members opposed Vietnam's invasion and its continued presence (with over 150 000 troops) after 1979. The ousted Khmer Rouge regrouped and new non-communist 'resistance' guerilla movements were established, particularly the Khmer People's National Liberation Front (KPNLF - led by Son Sann) and the National United Front for a Independent Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC - which supported the ousted former ruler Prince Norodom Sihanouk). All three groups operated from bases in Thailand. Conflict continued through the 1980s, with the Phnom Penh regime receiving assistance mainly from the Soviet bloc, but otherwise internationally isolated. It was this conflict which the Paris Agreements (developed with considerable involvement by Australia) were designed to bring to an end by the means of a negotiated settlement and a neutral and extensive international transitional authority.

The Paris Agreements were signed by nineteen countries, including all the principal regional and international interested countries, and by the four Cambodian parties or 'factions' recognised by the Agreements, the incumbent party in Phnom Penh (the Cambodian People's Party - CPP), the Khmer Rouge, FUNCINPEC and the KPNLF. The UN operation which was established by the Paris Agreements called for 15,900 military personnel, 3,600 civilian police and 1,020 civil administration personnel from more than thirty countries at a total estimated cost of $US1.9 billion. These resources were deployed to pursue a mandate of daunting complexity. Under the Paris Agreements, UNTAC's principal tasks were the supervision of the ceasefire, disarming and demobilisation of most of the factions' armed forces, the assumption of such administrative control over the Cambodian parties' administrations as was necessary to ensure a neutral political environment, the promotion of human rights, the resettlement of refugees and displaced persons, the encouragement of the elimination of mines, and the organisation and conduct of free and fair elections for a constituent assembly which would prepare a new constitution.

The peace operation was to have two major phases. The first phase, beginning from 23 October 1991, was to see a complete ceasefire and the total withdrawal of foreign military forces along with their equipment, with ongoing verification of their non-return. The second phase was to produce the regroupment, demobilisation and disarming of seventy percent of the armed forces of the four Cambodian signatories to the Agreements, with the residual thirty per cent remaining in cantonments under UN control to be either demobilised later (shortly before or after elections) or incorporated into a new national army. UNTAC would foster a neutral political environment and organise and hold elections.

In some major areas of its activities, UNTAC had substantial success. The program to resettle 365,000 people from camps in Thailand, where many had lived for years, reached a peak in January and February 1993 with 40,000 returning each month. By April, the UN was able to declare the program completed. The preparation of the electoral process including the registration of electors and of political parties in Cambodia was also a notable success. UNTAC played a major role in opening up Cambodia's political system by making possible widespread activity by a range of political parties and by improving human rights awareness and (to some extent) practices; for example, a large number of political prisoners were released. UNTAC's radio station also played a key role in enabling information about human rights and the electoral registration process to be spread through the country.(1)

The UN, however, faced severe difficulties in trying to carry out its ambitious mandate. William Shawcross has observed that:

The UN was lamentably slow in deploying UNTAC's elements and advance planning in New York was fragmented. It quickly became clear that the UN was ill-prepared to mount such large peacekeeping operations.(2)

The development of UNTAC as a result took several months with delays occurring in a number of key appointments.

The UN also experienced problems in staffing UNTAC's specialist components. A central part of UNTAC's task was to exercise control over the operations of the rival administrations in the country so as to foster a neutral and peaceful political environment in the lead up to the elections. Since UNTAC never obtained access to Khmer Rouge areas and since the two non-communist resistance parties (KPNLF and FUNCINPEC) had very limited administrations, this meant in effect attempting to monitor and control the administration of the CPP. UNTAC lacked the trained and experienced personnel to monitor effectively, let alone 'control', the complex formal and informal administration of the CPP/SOC.(3) UNTAC's capacity to try to contain the problem of political intimidation, which was widespread before the elections, was hampered by the ineffectiveness of the relatively large police component and by UNTAC's lack of any independent judicial capacity. As Ken Berry (legal adviser to the Australian government's task force on Cambodia in the period of the Paris Agreements) has argued, these problems inhibited UNTAC substantially:

UNTAC's failure to take rapid and, in some cases, adequate control of the key areas of the civil administration of the factions - particularly those of the State of Cambodia (SOC), which was the largest and really the only effective one - and to initiate corrective action when necessary (or even only in the most glaring cases), meant that UNTAC was unable to deal effectively with corruption and with the continuing SOC intimidation of political figures from other parties during the election period.

It also served up on a silver platter spurious justification for the decision of the 'Party of Democratic Kampuchea', the Khmer Rouge, not to comply with key provisions of the Paris Agreements...(4)

The Khmer Rouge were highly reluctant to allow the UN access to their base areas and by May 1992 announced that their forces could not be disarmed under UN supervision unless the administration of the SOC was completely dismantled. The UN proceeded with a partial disarmament and demobilisation of forces of the other three factions but the Khmer Rouge remained apart from the process. UNTAC attempted to impose sanctions on the Khmer Rouge. However, while China had cancelled its material support to the Khmer Rouge in accord with the Paris Agreements, the movement had built up a lucrative trade relationship with Thai business interests in gems and timber and had an income from this which was ample to sustain their armed resistance. By the end of 1992 the UN effectively stopped attempting to implement the full extent of the Paris Agreements and concentrated on promoting the development of a new Cambodian government with domestic and international legitimacy through the planned national elections.(5)

UNTAC's problems and an atmosphere of continuing violence (especially by SOC elements and by the Khmer Rouge, including brutal attacks on Vietnamese residents in Cambodia designed to exploit ethnic tensions) led to a pessimistic outlook among many observers in the lead up to the scheduled elections (on 23-28 May 1993). However, UNTAC's electoral component had done an excellent job in conducting voter registration and in preparing for the conduct of the polls. In the event, the elections attracted the participation of 4.2 million voters, nearly ninety percent of the enrolled Cambodian electorate. The holding of these obviously highly popular and credible elections both legitimised UNTAC's whole effort and provided a basis for the development of a new government for Cambodia.

Cambodia since 1993

The elections ushered in a new era for Cambodia. In the elections the pro-Sihanouk FUNCINPEC emerged as the largest party with 45 percent of the vote (and 58 out of 120 constituent assembly seats) while the formerly dominant CPP gained 38 percent and 51 seats. The Buddhist Liberal Democratic Party (representing KPNLF elements) gained 3.8 percent and 10 seats while a minor party, Moulinaka, obtained one seat. Since a two-thirds majority of the new assembly was required to approve a new constitution, cooperation between the two major parties was a necessity. The two major electoral winners, FUNCINPEC and the CPP, accordingly negotiated about formation of a coalition government. A new constitution was enacted and the Kingdom of Cambodia was established. Prince Norodom Sihanouk, who had been Cambodia's head of state until 1970, had subsequently been titular leader of the resistance forces opposed to Vietnam's presence and who had played a major role in the negotiations to achieve a settlement, was reinstated as constitutional monarch on 24 September 1993.

There was intense competition between the CPP and FUNCINPEC after the elections (including a short-lived secessionist move in June 1993 by dissident CPP elements). After negotiations in which FUNCINPEC was placed under heavy pressure from the CPP to agree to a sharing of ministerial power, the two parties had by October been able to form a coalition government. This had the unusual characteristic of having two designated prime ministers, an arrangement written formally into the Constitution and to apply until after the next elections, due to be held in 1998. The government's two leaders, First Prime Minister Prince Norodom Ranariddh (FUNCINPEC) and Second Prime Minister Hun Sen (CPP), made several foreign visits together and at first appeared to be cooperating effectively. The newly formed Royal Cambodian Armed Forces (RCAF), which had brought together the forces of the SOC regime with those of its former opponents from FUNCINPEC and the KPNLF, had begun operations in late 1993. The Khmer Rouge remained intact but had suffered a severe political reverse through the success of the elections which their intimidation had signally failed to disrupt. Cambodia continued to face massive problems of economic recovery but it now had a functioning and internationally recognised government and the international community had pledged to support the reconstruction process with funding through the International Committee for the Reconstruction of Cambodia (ICORC), another outcome of the Paris Agreements.(6)

For Cambodia, an optimistic 'honeymoon' period in internal politics was soon replaced by a more sober reality. It became clear that, while the UN's involvement had helped give Cambodia a new start, the long-term damage and debilitation suffered by Cambodian society from 1970 had left a legacy of political and armed conflict, poverty and administrative weakness which were likely to take several decades to overcome.

The problems facing the new Royal Government became evident in early 1994 when an over-ambitious effort to confront the Khmer Rouge in several of their base areas resulted in a military rout for the government side which exposed the inefficiency and corruption of its armed forces. After the failure of tentative efforts to develop reconciliation talks, the Khmer Rouge were banned by the government in July 1994, but this was a policy which the government did not have the military or administrative capacities to implement effectively.(7)

Political tensions in 1995 and 1996: Democratic institutions under pressure

Further political tensions have been evident in 1995 and 1996. Tensions have revolved around two separate although related issues: the problems of maintaining the liberal institutions and practices established after 1993, and the continuation of suspicions and hostilities both within and between the major political parties, suspicions which stem from the legacies of over twenty years of civil war.

As a part of the internationally-agreed process to seek an end to the Cambodia conflict, the Paris Agreements prescribed that a new regime should be established through democratic elections and with ongoing protection for human rights, including the rights to free political expression and press comment. There was little historical or social basis for such institutions and values in Cambodia and so the goal of developing them in a country with severe damage remaining from the Khmer Rouge years and from over two decades of internal war was clearly ambitious. There has continued to be a strong commitment among many Cambodians for the preservation of liberal values and practices: a number of Non Governmental Organisations have continued to promote human rights and these have also been monitored by the United Nations Centre for Human Rights and by the UN Secretary General's Special Representative on Human Rights in Cambodia (a position held until early 1996 by Justice Michael Kirby from Australia). However since 1993, democratic practices in Cambodia have come under considerable pressure.

In a review of Cambodian politics in late 1995, the American analyst (and former UNTAC senior official) Steve Heder argued that:

...the inspiration for Cambodian politics has shifted from the Western variant of 'democracy' to an eastern and Southeast Asian one that emphasises 'prosperity' rather than 'pluralism'. In the name of political stability and economic development, as well as in order to fight a lingering and murderous insurgency, the country's current 'multiparty' ruling elite coalition ... has been working to dampen open political contestation and to deliberalize the political atmosphere by co-opting, cowing, or marginalising centers of power, including those that emerged from civil society as a result of the opening effected by UNTAC, pursuant to the Paris Agreements.(8)

Several developments have illustrated the illiberal trends identified by Heder. In October 1994, Sam Rainsy, a FUNCINPEC member and Minister of Finance, was dismissed from his position after he had alienated elements in both FUNCINPEC and the CPP by his pursuit of central government control over finance and by his opposition to corrupt activities. In 1995 Rainsy was subsequently expelled from both the National Assembly (in a way which brought international criticism) and from FUNCINPEC. In November 1995, Rainsy announced the establishment of a new opposition party, the Khmer Nation Party (KNP), but the KNP immediately ran into resistance from the government which refused to accord it legal status (a dispute which was unresolved in mid 1996). KNP members have also complained of official harassment.(9)

During the UNTAC period press freedom was re-established and since 1993 a lively newspaper industry has existed with over twenty papers being published. In mid 1995 the National Assembly passed a new press law that aroused concerns among some elements of the press and human rights groups. The law provided for fines and possible gaol terms for publishing material deemed to affect 'national security and political instability' without however clearly defining either term. The law has not been followed by severe curtailment of the newspaper industry. However the Cambodian press has experienced some incidences of violent attacks which have been considered in at least some cases to have been politically motivated. Several newspapers' offices have been attacked physically and four editors killed in mysterious circumstances, most recently in the case of Thun Bun Ly, editor of Udom Kati Khmer (Khmer Ideal), who was shot on 18 May 1996. After this killing, several other editors expressed fears for their safety.(10)

Political tensions have also been fuelled by divisions both within and between the major political parties (the two types of divisions have, not surprisingly, sometimes been inter-linked). FUNCINPEC has experienced internal strain over issues including the departure of Sam Rainsy (who had been one its best known ministers) and over its relative degree of influence vis-a vis the CPP (see below). The CPP has seen internal tensions between Hun Sen and other senior leaders, notably Interior Minister Sar Kheng and National Assembly Chairman Chea Sim.(11) The Buddhist Liberal Democratic Party (BLDP) experienced a split in mid 1995 and the opposition Khmer Nation Party led by Sam Rainsy has also experienced (less serious) divisions.(12)

The most serious focus for these intra and inter-party tensions, however, has been increasing evidence of ongoing suspicion between the two major governing coalition partners, FUNCINPEC and the CPP.

When the 1993 elections saw over eighty percent of the votes gained by the incumbent CPP and the opposition FUNCINPEC, but with neither party gaining a clear majority in the National Assembly, it was the cooperation between these two parties which made the formation of a government possible. In the early months of the new government, it did appear as if a process of cooperation if not reconciliation was underway. However the longstanding tensions between the two parties have come increasingly to the forefront of Cambodian politics. A key stimulus for this has been the prospect of the campaign for the next elections scheduled for 1998. According to the Constitution, the system of two co-prime ministers in force after 1993 will be replaced by just one prime minister. This has started to concentrate the major parties' attention on the need to consolidate their positions and to differentiate their stances, a process which has brought inter-party resentments increasingly to the surface.

Inter-party rivalry has had a number of manifestations which together produced a high level of tension in late 1995 and the first five months of 1996. FUNCINPEC was placed under strain in late 1995 by the arrest of its Secretary General, Prince Norodom Sirivudh, a half brother of King Norodom Sihanouk. Sirivudh, a former Foreign Minister (who had resigned in October 1994 in sympathy with Sam Rainsy), was arrested on 18 November after he had allegedly threatened to kill Second Prime Minister Hun Sen in a conversation intercepted by the government. Sirivudh went into exile at the end of the year and was sentenced to ten years imprisonment in a trial in February 1996. The conduct of the trial was criticised by foreign governments (including Australia) and human rights groups. Sirivudh's arrest was seen widely as an indication of tensions between and within the Cambodian governing parties, especially between Hun Sen and the CPP and their coalition partner FUNCINPEC.

Tensions continued at the beginning of 1996. In a move that seemed calculated to irritate FUNCINPEC, the CPP moved to have 7 January restored as a national holiday. This was a potentially divisive step because this is the date on which in 1979 Vietnamese and Cambodian allied forces occupied Phnom Penh after the invasion which ousted the Khmer Rouge regime. Although the day is celebrated by the CPP - the party which Vietnam installed in power in Phnom Penh after the invasion - precisely for this reason the day is regarded with antipathy by FUNCINPEC and other former resistance forces. The holiday was reinstated at the instigation of Hun Sen. First Prime Minister Ranariddh agreed to the move and this was seen within some FUNCINPEC circles as another undesirable concession to the CPP. The alienation between the two governing parties was highlighted again by FUNCINPEC's choice of 21 March for the holding of its congress: that date commemorated the establishment of the party as a resistance movement against the Vietnamese presence and against their Cambodian allies in the CPP who ruled the country in alliance with Vietnam.

The two parties have had further areas of disagreement. The proliferation of business deals between elements in the governing coalition and foreign investors has been a source of potential division. A major deal was concluded in 1995 between the Malaysian Ariston group and the government to develop the port of Sihanoukville and one of its elements was to be a monopoly for Ariston in conducting the lucrative casino industry (see section below on economic developments). However this deal, which has been identified particularly with FUNCINPEC, cut across interests which already have casino licenses issued before the 1993 elections and which are associated with the CPP.(13) A further source of irritation was produced by a proposal sponsored by the CPP that Cambodians holding dual nationality should not be allowed to compete for office. This concept seemed aimed especially at a number of FUNCINPEC figures (including First Prime Minister Ranariddh) and other people including Sam Rainsy. At the time of writing the proposal is not being proceeded with, but it was another manifestation of the resentment between the Cambodians who were in the country during the 1980s, and those who were in exile and who only returned after the period of UN involvement.

The tensions between FUNCINPEC and the CPP became clearly evident in March 1996 at the time of the FUNCINPEC party congress. The congress was the first held by the party since 1992 and its assumption of office after the elections. As such it served to focus the frustrations held by many FUNCINPEC members at the fact that although their party won more votes and seats than its main rival the CPP, it nonetheless has ended up as very much the junior partner in the coalition. While the CPP and FUNCINPEC have shared ministerial office, the CPP has retained control of most of the armed forces, and of the police and militia. The CPP has also remained dominant at the provincial and local levels. FUNCINPEC, which did try to set up a country wide organisation before the 1993 elections, has not since been able to match the CPP in organising capacity. FUNCINPEC's limited share of power in relation to the CPP has caused much disquiet in party ranks as have concerns about allegations of corruption against some senior party members.(14) As the question of the next elections in 1998 has been gaining more attention, many FUNCINPEC members have naturally begun to worry about their prospects of keeping their share of the vote.(15)

In a move which seemed designed to give expression to the frustration within FUNCINPEC ranks at the party's limited share of power, Prince Ranariddh declared that if there was no immediate sharing of power within the coalition, 'FUNCINPEC must pull out of the government and become an opposition party in the National Assembly.' The CPP reacted strongly to this comment: in a statement issued on 26 March, the party condemned Ranriddh's threat to leave the coalition, saying that this had adversely affected political stability and that the CPP 'categorically oppose[d] any act... leading to an early dissolution of the National Assembly'. Hun Sen also declared that he would use force against anyone who sought to end the government's term of office early.(16) In the event, the two parties moved to contain the discord and after further meetings reaffirmed their determination to remain in coalition.

However, the potential for further clashes remained. In May, Hun Sen was reported to have expressed his suspicion that pro-FUNCINPEC senior military officers in the Royal Cambodian Armed Forces had undermined the recent efforts to capture the Khmer Rouge base at Pailin. In the same month there were also reports that violence has been occurring in the provinces directed particularly against FUNCINPEC and the Khmer Nation Party and this has been the worst since the period leading up to the 1993 elections. The reports included the alleged killing of a KNP member, the ransacking of a FUNCINPEC office in Ratanakiri province, and the confiscation of weapons belonging to FUNCINPEC members. The intimidation was seen as part of the CPP's response to the FUNCINPEC threat to pull out of the coalition government.

On 26 May the Cambodian Deputy Prime Minister (and CPP member) Sar Kheng said that if the distrust between the CPP and FUNCINPEC 'continues to intensify towards the use of military force', Cambodia would be taken back to where it was before the United Nations intervention. He spoke of 'troops and police' which had been readied 'here and there' and declared that 'the two main parties cannot be broken up. A break-up means death'. Cambodia's neighbours in ASEAN also made their concern evident when Malaysian Foreign Minister Badawi, acting as an informal emissary for ASEAN, went to Cambodia and had meetings with the two prime ministers: he is reported to have advised them that if the two leaders resorted to violence then Cambodia would be on its own.(17)

The immediate outlook

The situation in early July remained strained although the two major coalition parties appeared to have moved to contain the level of tensions between them. However, although relations between the CPP and FUNCINPEC have clearly deteriorated in the past year, it is not necessarily in either party's interest for the coalition to break up. For Prince Ranariddh, while the distribution of power to FUNCINPEC is unsatisfactory, leaving the coalition would hand over all power to the CPP. Some of Hun Sen's comments suggest that he would see a departure of FUNCINPEC from the government as a pretext to suspend the constitutional process altogether. For the CPP, while sharing power with FUNCINPEC may be distasteful, the continuation of the coalition prevents the CPP from being accused of having usurped all power to itself despite its election loss in 1993. If FUNCINPEC departed from the government, this might also encourage a realignment of the opposition parties and might see cooperation or an alliance between FUNCINPEC and Sam Rainsy and the KNP, a development which would not be in the interests of the CPP.

However even if the coalition remains in operation, the open antipathy which has been displayed in recent months suggests that the political climate will remain strained in the lead up to the local elections which are scheduled for mid 1997 and the 1998 national elections. Further conflict cannot be ruled out and there are at least three possibilities which could see the situation inflamed. Firstly, while the CPP and FUNCINPEC are continuing in coalition at present, it is possible that FUNCINPEC's leaders might review this position in the lead up to the national elections. FUNCINPEC might consider that its electoral prospects might be enhanced by separating from the formal coalition arrangement and running for office in open competition with the CPP. Such an electoral contest between the two major parties in the National Assembly in an election campaign conducted without the balancing role played by the large UNTAC presence in 1993 might see tensions generated which could be difficult to contain. Secondly, the continuation of political tensions in a highly armed society makes political violence a real possibility. The assassination of a political leader cannot be ruled out. Such a development could see the dangers of instability and possibly of armed clashes by rival groups increase. A third potential source of added tension arises from the uncertain role and health of the King.

King Sihanouk's role

An additional factor which has added to the sense of instability in Cambodian politics has been King Sihanouk's apparently declining capacity to play the balancing role which he has played at times in the past. During the UN involvement and the period immediately after the 1993 elections, Sihanouk acted as a symbol of national unity and of the capacity for the major Cambodian parties to negotiate and cooperate. However the period since the elections has seen the King's influence decline and his health problems (at 73 years of age he is suffering from several illnesses including cancer) have caused considerable concerns about both his own future and that of the monarchy itself.

In comments in March 1996 King Sihanouk commented in a somewhat pessimistic vein about his own position and that of the royalist party, FUNCINPEC. In a letter to Prince Ranariddh on 8 March, King Sihanouk commented that his future was 'seriously mortgaged' because of health problems and his health would 'inevitably lead one day to my incapacitation to work to serve our country and its well-loved and respected people'. The letter followed an interview with the Cambodia Daily in which the King said that he thought that the CPP was gaining popularity 'for many reasons' and might well win the next elections, with Hun Sen becoming the sole Prime Minister. He also stated that if he died before the next election 'Ranariddh will be King' and that Hun Sen had told him that he wanted Ranariddh to be King. In that event 'FUNCINPEC would disappear and you would have a very powerful head of parliament and party. FUNCINPEC would disappear as Ranariddh would be King, and a King must not have a party, even indirectly'. He expressed the opinion that Prince Sirivudh might have been the best successor to Ranariddh as FUNCINPEC leader but since Sirivudh had been 'politically liquidated' and Hun Sen was unlikely to pardon him 'for twenty years' that option was out, and that added to his fears that FUNCINPEC would disappear. The King added to his pessimistic comments by saying that astrologers had predicted that he would die at the age of 74 (ie within the next year).(18)

The King's pessimistic appraisal of his own health is not necessarily shared by observers. Indeed, in his well known mercurial and sometimes provocative style, King Sihanouk may well have been attempting to stimulate FUNCINPEC leaders and members into more concerted action to protect their party's position and boost its organisation. However the King's comments also highlighted the potential problems for Cambodia which might arise on his death. Under the Constitution the successor to the throne is to be chosen by a seven member Royal Council of Throne, but this needs to be established by law and such a law has yet to be passed by the National Assembly. The question of choosing a successor to King Sihanouk would be likely to be a difficult challenge for the Throne Council, because it would be difficult to select a candidate who would be acceptable to all the major parties. This issue adds another element of uncertainty to the political situation.

The Khmer Rouge: down but not out

While the political parties compete for power in Phnom Penh, the Khmer Rouge continue to operate as a diminished but still operational guerilla force. The death of Pol Pot, who is the clearly pre-eminent leader of the movement, might well weaken the Khmer Rouge substantially but reports of his demise in early June appear to have been premature.

The peace process and the 1993 elections did succeed in pushing the Khmer Rouge to the margins of Cambodian politics. While the Khmer Rouge have sought to continue to justify their struggle on the grounds that Cambodia remains in danger of Vietnamese domination, this rationale has appeared decreasingly relevant to Cambodians. The Khmer Rouge has been able to retain a number of armed units which operate with a functional central command. The movement (as noted above) also has had continuing access to financial support because of its continued occupation of the gem mining area of Pailin and of areas of forest which it has exploited by allowing logging under license. The Khmer Rouge, however, appear to have lost all material support from China since the Paris Agreements and informal assistance from elements in Thailand is thought to have declined substantially since 1994. The ongoing financial potential from timber concessions and the gem trade have also increased internal tensions within the Khmer Rouge, as fighters in the jungle have seen evidence that in a number of cases commanders have kept for personal use some of the wealth gained by the movement's commercial activities. The movement has been weakened severely by large scale defections, which have totalled at least 12,000 people.(19) Recent estimates of Khmer Rouge strength suggest that this may be in the region of 3,000 - 6,000 armed personnel, a substantial decline from the level of up to 30,000 estimated before the Paris Agreements.

In 1995 and 1996 the Khmer Rouge continued to retain strength in northern Cambodia and were able to maintain pressure on some communications routes, such as highway 5 which they were attacking in early 1996. The government's Royal Cambodian Armed Forces (RCAF) have not been able to decisively defeat the guerrillas or prevent their occupation of key areas such as Pailin (southwest of the town of Battambang, near the Thai border). However, the RCAF appears to have been able to operate with greater effectiveness since the debacles in early 1994. The RCAF has received assistance to improve its training and organisational capacities from several countries including the United States, France and Australia (see below). The government has also made some progress in implementing plans for reform of its forces.

The RCAF did not suffer severe reverses in the 1995 dry season and in the 1996 season observers considered that the government forces were showing further signs of improvement. The RCAF in early 1996 was evidently able to extend its areas of control in northern Cambodia although the dry season ended with Pailin still under Khmer Rouge control. The government's failure to delver a decisive blow against the Khmer Rouge was partially offset by a significant defection of a high ranking commander. In March, Keo Pong, who is believed to have been the fourth highest ranking Khmer Rouge military leader, led the whole of the 18th division (which normally operated in Kompong Speu province) over to the government; the defectors, including dependents, numbered 1,665.

After his defection, Keo Pong had said that both Pol Pot (who is 68 years old) and another senior leader, Noun Chea, were in poor health. The issue of the Khmer Rouge's leadership and prospects was highlighted further by reports in early June that Pol Pot had died. These reports turned out to be ambiguous and in late June were rebutted by a senior Khmer Rouge figure.(20) The death of Pol Pot would be likely to diminish the Khmer Rouge's capacities: Professor David Chandler, author of a biography of 'Brother Number One', has argued that he has always been clearly the predominant leader of the Khmer Rouge and that there is no obvious successor.(21) Without Pol Pot, the Khmer Rouge would still have effective armed forces and the capacity to conduct substantial business deals and raise finance from them; these might help give the group some continued raison d'etre. Nonetheless, the Khmer Rouge have been marginalised in Cambodian politics. Even with Pol Pot still able to provide leadership they appear likely to be able to continue to disrupt government control in some parts of the country but not to overturn it altogether. However they appear likely remain as a force with the potential to cause some disruption in the lead up to the 1998 elections.

Economic Developments

While political tensions have continued, Cambodia's economy has shown some signs of growth and progress towards recovery. This growth, however, has been largely concentrated in urban areas with the majority of the rural population experiencing little change so far. Cambodia's prospects for recovery are also hampered by the effects of political instability and by severe institutional weaknesses, which have deterred many investors and attracted those interested in exploitative developments for short term gain. In this environment, natural resources such as timber have continued to be exploited at unsustainable levels.

According to the Asian Development Bank (ADB) in its latest regional survey, Cambodia's economy grew in 1995 at 7.5 percent, a rise from 4 percent in 1994. Agriculture remains the mainstay of the economy and the sector benefited from an increase in rice production in 1995 of 25 percent and of rubber by 15 percent. Investment continued to increase and reached a level of 22 percent of GDP in 1995, an increase from 14.5 percent in 1993 and 19.5 percent in 1994. Private sector investment in 1995 amounted to about 70 percent of the total. Inflation in 1995 was contained at an annual rate of 3.5 percent. The Asian Development Bank has observed that

The Government's fiscal position is expected to improve over the next two years as the tax/GDP ratio rises as a result of improved tax administration under the new tax system, reduced spending on defence and security, and reforms in the civil service system.(22)

The ADB also pointed to favourable trends in exports (which rose by 55.7 percent in 1995). Although Cambodia had a substantial current account deficit, this was offset by investment and by aid which amounted to about 40 percent of the national budget.

There have been strong signs of increasing interest in Cambodia's economy from countries in East and Southeast Asia. Trade with Asian countries has been increasing rapidly. Singapore was Cambodia's largest trade partner with two way trade worth $US 485 million for the January-October period compared with $US 350 million for 1994. Interest in the economy from China has also been growing: about 50 companies have ventures in Cambodia and investors from mainland China have been able to link up with a revived Cambodian-Chinese business community. Cambodia has also opened up non-official links with Taiwan through the 'Phnom Penh Economic and Cultural Representative Office' which opened in Taipei in January 1996.(23) Another sign of economic revival has been the numbers of foreign visitors: visitors increased by 24 percent in 1995, with tourist numbers rising by 38 percent.

However these generally positive trends co-exist with severe structural problems. Several inter-related factors have damaged Cambodia's prospects for attracting and benefiting from productive investment. After over twenty years of internal conflict and international isolation, Cambodia was left with very limited administrative resources. The civil service has a limited budget which allows many officials to be paid at about only $US 20 per month. Many officials often lack the technical training to enable them to assess competing investment proposals. The civil service has also been loosely organised: a census of the government bureaucracy in February 1995 found that 4,000 positions officially drawing salaries were not actually occupied. The bureaucracy is therefore vulnerable to attempts at bribery and corruption. The fact that Cambodia's government is composed of jealous coalition partners has also acted as an incentive for competing ministers to maximise their financial positions by arranging favourable deals with domestic and especially foreign business.

A number of domestic and foreign business figures and groups have been keen to benefit from Cambodia's weak infrastructure. As one recent survey noted:

...both domestic and foreign middlemen are exploiting Cambodia's nascent investment scene with suspect methods. Deals are won by paying off government officials, and often the project is resold for a profit. Projects end up in the hands of firms that are under-financed, incompetent, or simply greedy. While some middlemen are bringing higher standards to Cambodia, the broker culture continues to spawn suspicious deals.(24)

A recent example of a contentious investment project has been the government's deal with the Malaysian Ariston company for the development of Sihanoukville. The project proposed by Ariston included an international airport, a power station, a telecoms project and a four star hotel and casino on Naga island. Although several internationally known corporations bid for the project, the little known Ariston group won the contract: the company's only other known project had been a 20.8 hectare real estate development in Kuala Lumpur. The contract was signed by the Cambodian government on 3 January 1995; on 25 January, Prince Ranariddh unveiled a jet aircraft which had been given to the government by a sister corporation of Ariston. It was later reported that Ariston had gained a monopoly to provide casinos in Cambodia. While a floating casino owned by Ariston opened in Phnom Penh in May 1995, the Sihanoukville projects have appeared to make slow progress, which has led to suspicions that Ariston will gain profits from the casino without completing the Sihanoukville project.(25)

Cambodia's weak institutions have also attracted dubious operations in the finance sector. A report by the Ministry of Finance in 1995 identified 19 of the 29 banks in Phnom Penh as fronts for money laundering operations. This development has been associated with concerns that Cambodia is becoming involved heavily in the narcotics trade and in the laundering of monies from this trade. This issue attracted international coverage in November 1995 and has aroused considerable concern in a number of countries including the United States. The government is trying to counter the problems but they remain substantial.(26)

The administrative and business climate in Cambodia has, not surprisingly, left its natural resources vulnerable to excessive exploitation. The country's timber reserves are one of its most important resources but major concerns have been expressed about the way they are being depleted. A joint report by the United Nations Development Program, the World Bank and the United Nations Food and Agricultural Organisation prepared in late 1995 is reported to present a pessimistic picture of the state of Cambodia's forests. The executive summary stated that 'current policies risk deepening and accelerating deforestation by repeating mistakes made in other forest-rich developing countries'. Cambodia's timber resources, the report said, are being exploited at five times the natural replacement capacity and are being sold at about a fifth of the available world rate. Cambodia is estimated to be earning about $US 20 million per year from forest resources. By auctioning concession rights, raising royalties in line with world prices, and enforcing environmental rules, it estimated that the Kingdom could realise $US 100 million annually, and the logging could be sustainable. The report argued that foreign timber companies had not done proper resource assessments and 'have systematically overestimated timber availability'. Companies would therefore have to log so much land to realise their commitments that the demands on Cambodia's resources would be unsustainable The report advocated a revision of policy which would restrict the rate of exploitation of logs per hectare. Any companies not adhering to commitments could be declared in default and the concessions reallocated after transparent and competitive bidding. This would encourage smaller operations employing more local labour. The report is due to be considered by the next meeting of donor countries of the Consultative Group in mid July 1996.(27)

Foreign relations

The Paris Agreements and the 1993 elections provided a basis for Cambodia to escape from its extended period of relative international isolation. The Agreements played a crucial role in alleviating regional and international tensions over Cambodia and paved the way for the substantially improved relations between a number of regional states, especially Vietnam and both China and the ASEAN countries (in July 1995 Vietnam joined ASEAN as a full member). While internal conditions remain uncertain, Cambodia has been able to open up much wider international and regional relationships although its relations with its larger immediate neighbours, Thailand and Vietnam, have experienced some strain.

Cambodia has retained considerable international goodwill in the wake of the UN involvement and relations with a number of major powers have improved. Cambodia, for example, has an agreement on economic assistance with the European Union, which pledged further aid in May 1996. Japan is also a substantial donor.

The United States provides both civil and 'non-lethal' military aid and Secretary of State Warren Christopher visited in September 1995. A process is underway which should see Cambodia granted 'Most Favoured Nation' (ie normal) status in trade relations with the US although the required bill has not yet passed through the Congress. The US government has viewed with some concern Cambodia's political tensions and at the end of 1995 relations were strained by comments by Hun Sen in which he criticised the US for what he saw as delays in the MFN approval process. The US has also been concerned at recent reports of narcotics trafficking through Cambodia. In March 1996 the US administration announced that it had placed Cambodia on its list of 'drug watch countries'; a country placed on this list has one year to satisfy the US that it has taken action to redress drug related problems, or risk having its aid cut.

Cambodia has also been improving relations with China, until 1991 the most bitter international opponent of the regime in Phnom Penh and of Vietnam's presence and policies in Cambodia. In a striking development in policy, China since 1993 has been prepared to grant some economic assistance and in April 1996 took the further step of providing some military aid as well. A Chinese military delegation led by the Vice Chairman of the Central Military Commission, Zhang Wannian, visited Phnom Penh and after meeting the two prime ministers and senior military officials announced the granting of $US1 million in 'non-lethal' assistance and also offered to provide training. China's move was considered to reflect its desire that Cambodia should not receive military assistance solely from Western countries.(28)

Since 1993 Cambodia has developed much closer relations with the members of ASEAN, especially Singapore, Malaysia and Indonesia, as well as Thailand. This trend resulted in Cambodia's acceptance as an observer in ASEAN in July 1995. King Sihanouk had held long term reservations about ASEAN as a group but in 1995 had to concede to the pressures for closer association. He made official visits to Malaysia and Indonesia in 1995 to consolidate this process. Cambodia has now applied formally to join ASEAN, a development it hopes will occur in 1997. Cambodia would have substantial problems in meeting the demands of ASEAN membership (not least the numerous consultations and committees involved) and its economy is not likely to be ready to take part in the planned ASEAN Free Trade Area for many years. Nonetheless, ASEAN seems likely to accept Cambodia as a member in the near future and this would enhance its international image considerably.(29)

While relations with ASEAN as a group have been developing rapidly, Cambodia has difficult relations with two of its members who are also immediate neighbours, Thailand and Vietnam. Cambodia has traditionally had difficult relations with its large and dynamic neighbours and its economic and administrative weakness has not enhanced its position. Relations with Thailand have been clouded by the legacies of the conflict during the 1980s between Vietnam and the People's Republic of Kampuchea against the resistance guerilla forces, which operated from Thai territory. The formation of a new Cambodian government after the 1993 elections provided new opportunities for relations but problems have remained. In 1994 tensions between the two countries were considerable, after allegations of Thai involvement in a coup attempt in July and of continuing assistance from elements in Thailand to the Khmer Rouge. From 1995, relations have improved as Thailand has appeared to curtail sharply the capacity of the Khmer Rouge to obtain material supplies from Thai territory. Several ministerial visits resulted in agreements on the re-opening of border checkpoints and on transport links.

Thai Prime Minister Banharn Silpa-Archa visited Cambodia in June 1996 and signed agreements for studies for a hydro-electric dam project and for further trade and economic cooperation. Prime Minister Banharn also stressed to the two Cambodian prime ministers the concerns Thailand and ASEAN have about the state of cooperation between the coalition partners, (although his attempt to symbolically link hands with the two Cambodian leaders was received negatively by Prince Ranariddh, who considered it intrusive).(30) The two co-prime ministers sought to reassure Banharn that this cooperation was still in operation. The two countries also agreed to discuss problems of overlapping claims in territorial waters in the gulf of Thailand and through the joint Boundary Commission.(31)

Cambodia's relationship with Vietnam is also a source of existing and potential tensions, but with the level of suspicion much higher among many Cambodians, partly because of Vietnam's presence from 1979 to 1989. Vietnam was a signatory to the Paris Agreements and moves were made soon after the inauguration of the new government in 1993 to create an improved relationship but some problems have continued. Difficulties were experienced after a large number of Vietnamese residents in Cambodia were forced to flee to the Cambodia-Vietnam border after Khmer Rouge attacks in 1993. Several thousand people remained on the border for over a year before they could be repatriated. Some friction has also been experienced because of the activities of Vietnamese groups in Cambodia who are opposed to the government in Hanoi and who have allegedly received financial support from the US. The Cambodian government has expressed its opposition to such activities.(32)

The issue of border demarcation has also been controversial and a joint commission has been established to handle it. In 1996 further controversy arose over the issue of border crossings by Vietnamese farmers who were alleged to be occupying Cambodian territory. The issue seems rather to have been the result of Vietnamese having leased land in Cambodia for agriculture after payments to Cambodian landholders, but the matter was inflamed by comments by Cambodia's political leaders including Prince Ranariddh.(33) The comments were also a reflection of domestic political tensions within the coalition, since many members of FUNCINPEC see the issue of attitudes to Vietnam as a point of differentiation with the CPP, which ruled in alliance with Vietnam for a decade. As the Economist Intelligence Unit has observed, 'being tough on Vietnam is a sure vote winner in Cambodia'.(34) The immediate problems in early 1996 were eased after a visit to Phnom Penh by Prime Minister Vo Van Kiet, which resulted in the creation of mechanisms to enable border problems to be dealt with at the local or provincial levels: Prince Ranariddh subsequently described the outcome as 'very, very positive'.(35) While some contention is likely to continue, both countries have incentives to contain the level of disputation.

Australia and Cambodia

Australian interest in Cambodia grew steadily from the late 1970s and the efforts to contribute towards development of a settlement for the conflict in Cambodia was one of the most significant elements in Australian foreign policy in the past decade. Australia's extensive involvement in UNTAC and the peace process has given it a strong interest in the progress of Cambodia since the elections.

Australia had limited involvement in Cambodia up to the late 1970s but the aftermath of the Khmer Rouge regime and the long period of conflict which followed saw a substantial increase in Australian interest. Australians contributed generously to the efforts to provide relief aid in 1979 and public antipathy to the Khmer Rouge played a role in the decision of the Fraser Liberal-National Party government to withdraw diplomatic recognition from the ousted Khmer Rouge regime (a decision implemented in February 1981). From 1983, the Hawke Labor government increased emphasis on pursuit of an Australian diplomatic contribution to try to explore dialogue over Cambodia and avenues for a resolution of the conflict.

In the late 1980s, with the decline of Cold War confrontation, the climate for Australian interest improved greatly. Senator Gareth Evans (Foreign Minister from September 1988) devoted substantial attention to Cambodia and the Department of Foreign Affairs and Trade developed proposals for a transitional role for the United Nations in Cambodia into a detailed blueprint for such an involvement. This concept was taken up by regional countries including ASEAN and was ultimately adopted by the five permanent members of the UN Security Council. Intensive diplomacy (including many missions by Senator Evans' special envoy, Michael Costello) paved the way for the conclusion of the Paris Agreements in October 1991 which provided for the establishment of the United Nations Transitional Authority in Cambodia (UNTAC).

Australia made a substantial contribution to UNTAC in 1992-1993. Australia provided the Force Commander, Lieutenant-General John Sanderson, the Deputy Electoral Commissioner and over 500 other personnel (mainly military communicators). In April 1993, just before the elections, Australia sent a further 100 personnel and six helicopters to bolster UNTAC. Australia welcomed warmly the successful conduct of the elections and the formation of the new Royal Government.

Political and diplomatic relations

Australia, as a major proponent of the peace process and United Nations involvement in Cambodia, has continued to be closely interested in the progress of the newly re-established Royal Government. Australia has maintained an active bilateral relationship and has given concrete backing to recovery efforts through both strong support in the ICORC and a bilateral aid program of $A92 million over four years (1994-1998). Some areas of contention have been evident, however, as Australia has maintained the hope that Cambodia would be able to both pursue economic recovery and also maintain the liberal political institutions and practices which were established through the Paris Agreements of 1991.

After a period of initial optimism about the prospects for recovery in Cambodia, bilateral relations between Australia and Cambodia in 1994 came to be dominated by two separate incidents involving the traumatic capture and execution by Khmer Rouge elements of two Australians, Kellie Wilkinson and David Wilson, in April and July respectively. These events naturally attracted substantial public attention in Australia and also highlighted the difficulties faced by the new Royal Government in organising and coordinating its efforts to both maintain internal security and combat the Khmer Rouge. In the second half of 1994, the Khmer Rouge had sought to exploit their capture of David Wilson (along with his British and French companions) to try to pressure the Australian government into refusing to extend assistance to the Royal Cambodian Armed Forces. The crisis delayed an Australian decision on military assistance by several months. The confirmation at the end of October 1994 of David Wilson's death was followed by the announcement on 29 November of a reaffirmation of Australia's commitment to support Cambodia and an increase in Australian assistance to the RCAF in a package of measures designed to improve its training and organisation.(36)

Bilateral relations since late 1994 have continued to be close, with a number of high level visits being made from both countries, including that of Governor General Bill Hayden in April 1995, which was the first by a foreign head of state to Cambodia since the 1993 elections. However, comments in March 1995 by Gordon Bilney (Minister for Development Cooperation and Pacific Island Affairs) in Parliament and in an address to the ICORC in Tokyo, signalled a new and more critical note in Australia's ongoing policy of support for the new Cambodian government. Speaking to Parliament on 8 March 1995, Bilney highlighted Australian concerns about recent reports about corruption in Cambodia which he said he feared '... are of considerable substance'. He said that:

Having been given a fresh start by the Paris peace accords, Cambodia has now reached a crossroads where it can choose the path of a jungle economy where the power of the bribe is greater than the power of law, or sound economic management, transparency and the supremacy of the legal process. Australia is, of course, a major donor of development assistance to Cambodia and all the donors are saying to the Cambodian government that now is the time to nip the trend of corruption in the bud - difficult as it is - and not later, when it is too late.

Bilney emphasised the importance of entrenching what he termed 'good governance' in Cambodia, which should involve not only suppressing corruption but also strengthening protection for human rights. He said that in recent discussions with Cambodian ministers, Australia had stressed 'our concern about good governance, economic management, human rights and corruption'.(37)

The Australian government has continued to monitor the state of 'governance' in Cambodia, with some developments causing some further concern. The expulsion of Sam Rainsy from the National Assembly in mid 1995 brought criticism from both the Government and the Opposition: Foreign Affairs Spokesperson Alexander Downer said on 22 June that 'the Coalition regards this as a setback for Cambodia's democratic institutions'.(38) The arrest of Prince Sirivudh also brought criticism from Australia over its implications for political liberty and expression in Cambodia. On 22 November, Gareth Evans said that while he was not able at that stage to make a judgement on the case, he was 'concerned that this may represent an exercise in dealing with a political opponent rather than a serious concern about ...[an] assassination attempt or conspiracy'.(39)

Senator Evans also criticised the trial of Prince Sirivudh in February 1996, saying that the ten year sentence 'was very depressing because I think it does demonstrate that the Cambodian judiciary is less than wholly independent.' Evans' comments were rejected by Cambodia's Minister for Justice and the Australian government was also criticised in a student demonstration outside the house of Ambassador Tony Kevin which appeared to be officially sanctioned if not organised.(40)

Under the Howard Coalition government from March 1996, Australia is maintaining its emphasis on supporting Cambodia's drive towards economic recovery while advocating continued reform and adherence to the institutions adopted through the Paris Agreements. In a public statement on 10 May 1996 in Phnom Penh at a preparatory meeting to the conference of the Consultative Group (the successor to ICORC as the grouping of donors to Cambodia) in Tokyo on 15-16 July, Ambassador Kevin said that:

...our government continues to be committed to support the efforts of the Cambodian government with your program of development and nation building. At the same time, the Australian government will expect the Cambodian government to continue to work to improve the quality of governance and to commit all reasonable resources to increasing the basic living standards of all Cambodian citizens, particularly those in rural areas.

Australia noted with satisfaction the economic progress being made by Cambodia including the achievement of 7 percent growth, single figure inflation and the stability of the riel. At the Consultative Group meeting, donors would be looking at a continuing commitment to gaining high quality investment, a reaffirmed commitment to the development of democratic, transparent and accountable processes, maximisation of good management of resources, continued efforts to extend the domestic revenue base (including tax reform, and sustainable development in the forestry sector). Ambassador Kevin also stated that security and political stability will be an important indicator for potential investors and for donors.

The Coalition will need to ensure stability during the period leading up to the national election. A free election, open to all parties, with full acceptance of the results by all, will reflect well on the Cambodian government and nation.

Mr Kevin emphasised the Australian government's continued commitment to Cambodia by reaffirming the announcement by Foreign Minister Downer on 6 May that Australia would provide $A11 million to assist in the eradication of landmines in Cambodia, including $A9.8 million in the next three years to contribute to demining through the work of the Cambodian Mine Action Centre, and a further $A1.2 million to NGOs to assist mine victims.(41)

Economic relations and the aid program

As a small and underdeveloped economy with an estimated GDP per capita of about $US 210, Cambodia has offered few opportunities for Australian business or investment. The heart of Australia's economic involvement in Cambodia remains the aid program and the activities of several major enterprises, especially Telstra.

Cambodia has been a small market for Australian merchandise exports. During UNTAC's involvement, exports reached $A46.2 million in 1991/92 and $A45.8 million in 1992/93 (much of which was prefabricated housing) but in 1993/94 exports fell to $A9.1 million. Exports showed a modest rise in 1994/95 to $A19.3 million, with the major items being telecommunications equipment, alcoholic beverages and electrical equipment. Imports have remained very limited, reaching just $A279,000 in 1994/95, with dried seafood the only significant item.

Telstra continues to be the most substantial Australian commercial involvement. Telstra has invested over $A16 million and has established infrastructure including earth stations, an international telephone exchange and a payphone network. Telstra expected to break even on its investment in 1995 and to earn profits from 1997.

Australia's aid program continued as a central element in the bilateral relationship. Australia's four year program of providing $A92 million from 1994/95 to 1997/98 is one of Australia's most important aid commitments and places Australia as the fourth largest donor to Cambodia after Japan, the United States and France.

Australian aid in 1995 continued at the planned level of around $A23 million and Cambodia also benefited from other AusAID regional programs to a value of an additional $A5 million. Australian assistance to infrastructure has included the Australian Bridges Project which has been replacing more than 16 damaged bridges on Routes 1 and 5, while providing institutional development for the Ministry of Public Works and Transport. A Program Planning Mission in August 1995 investigated several areas of possible assistance to urban infrastructure including water supply and electricity. In the agriculture sector early aid concentrated on placement of advisers in the Ministry of Agriculture, Food and Fisheries and support for the Australian Catholic Relief Agricultural Extension Project. In October 1995, a larger bilateral project, the Cambodia-Australia Agricultural Extension Project, began and aims to build on the ACR project to establish an effective and responsive national extension service. Australia has also been assisting the Cambodia-Australia International Rice Research Institute (IRRI) Project since 1987 and a review in early 1995 recommended that the project continue for a further five year period. Assistance to health has included placement of a Mother and Child Health policy adviser in the Ministry of Health and a Provincial Health Adviser in Kompong Cham province, and support for a number of Australian NGO projects including HIV/AIDS awareness, basic hospital infrastructure and biomedical equipment maintenance. A further major five year health project on health education and primary health care for Kompong Cham Province was being developed during 1995.

Another important area of assistance has been to support government reform. Senior policy advisers have assisted in key ministries including Foreign Affairs and International Cooperation, Health, Education and Agriculture. Australia has also assisted in the development of an aid coordination agency, the Council for the Development of Cambodia. Australia has contributed funds to the UN Centre for Human Rights. A major three year program of assistance to the justice sector which was under consideration during the year was designed to develop basic standing orders and associated training, basic investigative techniques, documentation, and improved administrative systems. The assistance would focus on police, courts and prisons.

Other areas of Australian assistance included food aid which was needed because of a combination of floods, drought and continuing Khmer Rouge activity in rice-growing areas. From May 1994 to December 1995 Australia provided approximately 29 000 tonnes of rice to Cambodia: the cost of $A17.3 million comprised $A9.3 million from the bilateral program with the remainder coming from the Humanitarian Relief appropriation. Cambodia has also benefited (to a value of about $A5 million per year) from a number of other AusAID programs including the South East Asia Regional Program, the International Seminar Support Scheme, the Women-in-Development Fund and the Professional Development Program.

Defence assistance

Since the new Cambodian Royal Government was inaugurated in 1993 it has been clear that one of its most significant problems was its top heavy and poorly trained and coordinated armed forces. The RCAF's deficiencies had been evident both in fighting with the Khmer Rouge in early 1994 and in the ineffective attempts to assist the Western hostages later in that year. Australia in 1995 and 1996 has been moving to implement the program of increased assistance to the RCAF which had been announced in November 1994.

Australia's assistance program emphasises English-language training, military communications, maritime support and medical assistance. The package announced in November 1994 included helping the RCAF design a training program, bringing two RCAF personnel to Australia to observe training methods, training RCAF personnel in Australia (carried out in October-November 1995) and providing design assistance and funds so that the RCAF can develop another training facility, specialising in counter-insurgency. In June 1996 Australian and Cambodian military officials opened the country's first jungle warfare school at Pich Nil. The school, which includes barracks, firing range and training area, is expected to train battalions of the RCAF in three month programs. The training would be conducted by 55 Cambodian personnel who underwent courses in Queensland in 1995 for counter insurgency instructors.(42)


The developments in Cambodia since 1993 have illustrated that the damage to Cambodia and its society since the late 1960s cannot be overcome rapidly. In retrospect the striking success of the 1993 elections probably created some unrealistic hopes that change and recovery might be more rapid than was ever likely to be possible. The Paris Agreements and UN involvement created new opportunities but old problems have continued, as has the need for a long period of rebuilding.

Cambodia has clearly derived considerable gains from the peace process, UN involvement and the period since the elections. The environment for political expression is much more open than it was before 1991, when the country was effectively a one party state. Human rights conditions have improved and Non Governmental Organisations are active in monitoring them. There has been considerable progress towards reconciliation, ongoing tensions notwithstanding. The country retains the interest of a group of donor countries who are actively following its progress. While economic conditions remain difficult there are encouraging signs of growth, as the restoration of rice exports in 1995 for the first time in 25 years illustrates. The Khmer Rouge have suffered a substantial decline in strength, appear to have lost the major sources of external assistance they formerly enjoyed, and have experienced increasing internal tensions under the pressures of their continuing efforts to promote an armed struggle which has lost relevance to most Cambodians. Cambodia also has much wider international and regional associations and has the chance to re-establish for improved long-term stability in its relations with its neighbours. All of these gains are significant and it is likely that few if any could have been realised without the advent of the Paris Agreements.

Cambodia's path to recovery also faces severe obstacles. Cambodian society was profoundly damaged by the Khmer Rouge years in a way which is tragically unique in Southeast Asia. Governmental and financial institutions are weak and leave the country and its resources open to highly undesirable patterns of 'development' and exploitation. The improvement in the capacities of the Royal Cambodian Armed Forces since 1994 shows that these problems are not intractable but they are nonetheless deep-seated. In politics, the divisions among the parties who contested for power through military struggle up to 1991 have been contained but not resolved by the peace process and electoral competition. The coalition arrangement between the two major winners of the 1993 elections has provided a functioning government but also has built in tensions and contradictions between parties of unequal strength in control of resources and organisational capacities. While the coalition arrangement between the CPP and FUNCINPEC was able to operate in the first three years after the 1993 elections, the onset of further electoral competition at the local and national level is producing renewed difficulties. Cambodia's democratic institutions, while undoubtedly popular with many Cambodians, are fragile and may not easily stand the pressures of open competition.

These issues are important for Cambodia, for its regional neighbours especially in ASEAN, and for the international community, especially the members of the Consultative Group. The Paris Agreements set out not only to encourage national reconciliation and economic recovery in a poor and devastated country but, simultaneously, to sponsor liberal democratic institutions of a character matched by few other Third World countries at a similar level of economic development. International donors understandably wish to see continued progress towards institutional reform and political accommodation and stability. Cambodia faces the challenge of whether it can achieve progress towards social and economic recovery and strengthening of its administrative capacities, while preserving the liberal institutions and political environment which the Paris Agreements made possible.


  1. William Shawcross, Cambodia's New Deal, Washington, Carnegie Endowment for International Peace, 1994, p 12-19.
  2. ibid, p 12-13.
  3. see Lyndall McLean, 'Civil Administration in Transition: Public Administration and the Neutral Political/Electoral Environment', in Hugh Smith ed, International Peace Keeping: Building on the Cambodian Experience, Canberra, Australian Defence Studies Centre, 1994, p 47-58.
  4. Ken Berry, 'UNTAC as a Paradigm: A Flawed Success', Pacifica Review, 7, 2, 1995, p 85.
  5. Shawcross, op cit, p 15.
  6. See Shawcross, op cit, for a useful summary of these developments; and also Frank Frost, The Peace Process in Cambodia: Issues and Prospects, Centre for the Study of Australia-Asia Relations, Griffith University, Brisbane, 1993.
  7. Nate Thayer, 'Govt crisis as military option fails', Phnom Penh Post, 20 May-2 June 1994; Canberra Times, 7 July 1994.
  8. Steve Heder, 'Cambodia's Democratic Transition to Neoauthoritarianism', Current History, December 1995, p 425.
  9. Ker Munthit, 'KNP in hostage row; armed police surround HQ', Phnom Penh Post, 9-22 February 1996.
  10. Huw Watkin, 'Other editors warn "this is not the end of it..."', Phnom Penh Post, 31 May-13 June 1996.
  11. 'King defuses tension among factions', Phnom Penh Post, 3-16 May 1996.
  12. Pierre P. Lizee, 'Cambodia in 1995: From hope to despair', Asian Suvey, XXXVI, 1, January 1996, p 85; Economist Intelligence Unit, Country Report: Cambodia, Laos, 2nd quarter 1996, p 9-10.
  13. Ker Munthit, 'Donors eager to help PM', Phnom Penh Post, 12-25 January 1996.
  14. Jamie Factor, 'Funcinpec: deaf to the sounds of dissarisfaction - CPP: self-preservation coveted above all else', Phnom Penh Post, 3-16 May 1996.
  15. See for example Jason Barber, 'FUNCINPEC wrestles with its future', Phnom Penh Post, 22 March - 4 April 1996.
  16. Economist Intelligence Unit, Country Report: Cambodia, Laos, 2nd quarter 1996, p 5.
  17. Jason Barber, 'Co-PMs still at odds as war of words cools', Phnom Penh Post, 31 May-13 June 1996.
  18. Jason Barber, 'Royal trumps on the table, aces up the sleeve', Phnom Penh Post, 22 March - 4 April 1996.
  19. 'Cambodia Khmer Rouge may be losing fighting spirit ', Reuters, 24 June 1996.
  20. 'Cambodia's Pol Pot said still alive and active', Reuters, 24 June 1996.
  21. David P. Chandler, Brother Number One: A Political Biography of Pol Pot, Sydney, Allen and Unwin, 1992 p 165-188.
  22. Asian Development Bank, Asian Development Outlook 1996/97, Manila, 1996, p 77.
  23. Economist Intelligence Unit, Country Report, 2/1996, p 13.
  24. 'Cambodia investment: Field day for shady middlemen', Economist Intelligence Unit, EIU ViewsWire, 21 May 1996.
  25. ibid.
  26. Far Eastern Economic Review, Asia Yearbook 1996, p 104.
  27. Matthew Grainger, 'Govt rapped over logging practices', Phnom Penh Post, 5-18 April 1996.
  28. 'New found generosity', Far Eastern Economic Review, 9 May 1996.
  29. Economist Intelligence Unit, Country Report: Cambodia, Laos, 2nd Quarter 1996, p 13.
  30. 'Thailand, Cambodia sign trade and cooperation agreements', Agence France Press, 20 June 1996.
  31. 'PM - Khmer co-leaders won't use force to settle conflicts', Reuters, 21 June 1996.
  32. Matthew Grainger and Ker Munthit, 'Vietnamese supported, funded by US group', Phnom Penh Post, 22 March- 4 April 1996.
  33. Adam Schwartz, 'Struggle or Smuggle?', Far Eastern Economic Review, 22 February 1996.
  34. Economisit Intelligence Unit, Country Report: Cambodia, Laos, 2nd Quarter 1996, p 13.
  35. ibid.
  36. For a more detailed account of bilateral relations in 1994 see Frank Frost, 'Cambodia', in Russell Trood and Deborah McNamara, eds, The Asia-Australia Survey 1995/96, Melbourne, MacMillan, 1995, p 101-122.
  37. Commonwealth Parliamentary Debates, House of Representatives, 8 March 1995, p 1828-1829.
  38. 'Mr Sam Rainsy, Cambodian MP', Alexander Downer MP, Shadow Minister for Foreign Affairs, Member for Mayo, Media Release, 22 June 1996.
  39. 'Evans concerned at arrest', Canberra Times, 23 November 1996.
  40. 'Cambodia angered by Evans comments', Canberra Times, 26 February 1996.
  41. 'Statement by Ambassador of Australia, Friday 10 May 1996, preparatory meeting for the First Consultative Group Meeting to be held in Tokyo, 15-16 July 1996'.
  42. 'We teach Cambodia jungle warfare', Sydney Morning Herald, 24 June 1996.

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