When the European Union withdrew part of Cambodia’s trade privileges, the punitive move aimed to cajole Prime Minister Hun Sen’s government to restore democratic politics and improve human rights.
The removal of Cambodia’s Everything But Arms (EBA) privileges, officially imposed on one-fifth of its exports to the EU as of August 12, will cost the crucial export sector hundreds of millions of dollars worth of lost sales every year.
Yet Phnom Penh appears unfazed, judging by an ongoing political clampdown. Dozens of government critics have been arrested and imprisoned since last year. That repression escalated this month when prominent trade union leader Rong Chhun was detained for “incitement to commit a felony”, which has sparked near-daily protests by critics of the government.
“If anything, Phnom Penh is worse than ever, arresting left and right, trampling the little left of democracy, human rights, and freedom it hasn’t already snuffed out,” says Sophal Ear, associate professor of diplomacy and world affairs at Occidental College at Los Angeles.
Brussels agrees that there has been almost no improvement in the situation. “So far, there has not been any indication of progress on these issues,” an EU spokesperson told Asia Times, referring to Brussels’ demands for political progress.
“The EU will continue the engagement with the Cambodian authorities to closely monitor the human rights and labor rights situation in the country,” the spokesperson added.
“In case Cambodia shows significant progress, notably on civil and political rights, the Commission may review its decision and reinstate tariff preferences under the EBA arrangement.”
The EU’s displeasure with Phnom Penh began in late 2017 when Cambodia’s ruling party-aligned Supreme Court forcibly dissolved the country’s only viable opposition party, the Cambodia National Rescue Party (CNRP).
Months beforehand, CNRP leader Kem Sokha was arrested on treason charges related to the spurious accusation that he and the opposition party were plotting a US-backed coup, the same reason given for the CNRP’s forced dissolution.
Kem Sokha remains in detention as his trial has been delayed continously over the past three years, while most other CNRP senior officials fled the country in late 2017.
In 2018, the ruling Cambodian People’s Party (CPP), which has been in power since 1979, won all 125 seats at a general election the US government deemed “neither free nor fair and failed to represent the will of the Cambodian people.”
As the largest importer of Cambodia’s manufactured goods, the EU has played a major role in the development of the country’s US$10 billion apparel sector, a key driver of economic growth and employer of around 900,000 workers nationwide.
The EU’s imposition of tariffs of up to 12% on around 20% of Cambodia’s shipped goods, including some garment and footwear products, will add substantial costs for exporters, making their wares less competitive in the EU’s lucrative markets.
So far, it’s difficult to assess the full economic cost of the EU’s sanctions, but it could be far-reaching if investors decide to move operations out of the country to leverage tariff-free access to EU markets enjoyed by countries like neighboring Vietnam.
The other 80% of Cambodia’s exports to the EU remain tariff-free under the EBA scheme, though Brussels has warned Phnom Penh that a higher percentage of goods could lose their trade privileges if the government fails to change its anti-democratic ways.
Prime Minister Hun Sen has repeatedly said that he is not prepared to accept Brussels’ recommendations for change, rebuffing the EU for allegedly interfering in Cambodia’s sovereignty and calling out its apparent hypocrisy.
Vietnam, a far more repressive state than Cambodia, was awarded a free trade deal with the EU on the same day in February that Brussels partially cut Cambodia from the EBA scheme.
However, Hun Sen has hardly spoken about the EBA issue since February. Government spokesman Phay Siphan told local media this month that this is because Phnom Penh has said all it needs to and “it serves no interest to repeatedly discuss this issue.”
Instead, Phnom Penh says that it can make up for economic losses stemming from the EU’s sanctions through trade diversification, a necessary though wishful plan considering Cambodia’s other main trade partners, namely China, do not import the same manufactured goods as the EU.
Two underlying issues cloud the EBA’s partial removal. For starters, the financial impact will be masked by the far more devastating economic crisis caused by the Covid-19 pandemic, with the World Bank forecasting an economic contraction of as much as 2.9% this year in Cambodia.
Without the pandemic-induced economic crisis, it would have been clear that job and export losses were caused by the EU’s sanctions while making it less obvious that Hun Sen’s government was responsible for causing the economic pain. That arguably would have given the EU with more leverage.
Now, though, it will be almost impossible to know whether factories have closed and jobs lost because of the EBA or Covid-19.
This could explain why Hun Sen and his government have gone mute about the EBA’s partial removal, so as to avoid drawing public attention to the issue.
The deputy president of the now-banned CNRP, Eng Chhay Eang, has also alleged that the government is using long-standing disputes over Cambodia’s shared border with Vietnam – the apparent reason for trade union leader Rong Chhun’s arrest in early August, after he was critical of Phnom Penh’s actions – to distract from the EBA losses.
Yet even if the costs of the EBA withdrawal were more apparent, it’s far from clear that Hun Sen would feel pressure to reform. For years, he has made clear that he’s prepared to allow Cambodia’s economy to suffer for the sake of his own grip on politics.
Speculation about his succession plans grows each month, with most pundits predicting an eventual handover of power to his eldest son, Hun Manet, now the de-facto military chief and head of the ruling party’s youth wing.
But for that to happen, Hun Sen and his CPP party will need to maintain absolute power, especially as dynastic successions are never easy, and especially if the next general election in 2023 is to be used by the CPP as a plebiscite on Hun Manet’s accession.
If Hun Sen was to allow the CNRP to return as a legal entity before that election – as the EU demands – it would weaken the ruling party’s political chokehold and perhaps scupper any chance of a smooth father-to-son dynastic succession.
The opposition party won more than 40% of the popular vote at the 2013 general election and 2017 local elections. Many observers thought it stood a decent chance of winning the 2018 ballot, the likely reason it was banned eight months before the polls.
For the ruling party, ensuring that the CNRP won’t come back is more important than a loss of a fifth of EBA privileges, says Kimkong Heng, a visiting senior fellow at the Cambodian Institute for Cooperation and Peace.
But, Heng added, a loss of more than 50% of EBA privileges might change minds in Phnom Penh, especially as an increase in manufacturing exports to the EU would be one incontestable way of kickstarting the country’s economy after the pandemic.
Unconfirmed reports suggest that the EU intentionally decided upon a limited removal of EBA privileges in February in the hope that it would force Phnom Penh’s hand without impacting too much on the livelihoods of ordinary Cambodians.
Brad Adams, executive director of New York-based Human Rights Watch’s Asia division, told Radio Free Asia this month that he reckons Brussels is planning a “phased approach”, in which the EU will escalate its sanctions until Phnom Penh changes course.
An EU spokesperson said that the bloc’s foreign ministry, the European External Action Service, and the European Commission “reserve their right to make further proposals should they be deemed necessary.”
This may mean increasing the number of exported goods that are tariffed or even targeted sanctions against senior Cambodian officials, including asset freezing and restrictions of travel, involved in the country’s anti-democratic crackdown.
EU Sanctions Map, a website that tracks EU sanctions across the world, shows that Brussels has unilaterally frozen officials’ assets from more than a dozen governments, most from war-stricken countries in the Middle East or failed states in Africa.
In Southeast Asia, the EU slapped sanctions on senior military officials in Myanmar for their roles in the repression of Rohingya, a violent purge some have referred to as “genocide.”
The US government has imposed targeted sanctions on several senior Cambodian officials, including the former chief of Hun Sen’s personal bodyguard unit, Hing Bun Heang.
Unconfirmed reports suggest that the EU might be waiting to escalate sanctions if opposition leader Kem Sokha is convicted of treason, whenever his trial restarts.
“We expect the trial of Kem Sokha to resume soon, and hope that he can be released and play a full part in the political life in the country,” said the EU spokesperson.
Most pundits reckon Kem Sokha will instead be convicted once his trial recommences, but then swiftly be handed a royal pardon by Hun Sen on the condition he stays out of politics.
But there’s no guarantee Kem Sokha will accept this quid pro quo. A meeting between the detained opposition leader and Hun Sen in May, at the funeral of the premier’s grandmother, failed to lead to any restart in his trial, an indication that Kem Sokha likely remains noncommittal to any political deal.