By Jennifer Chen, Intern, CSIS Southeast Asia Program

On December 21, 2009, Beijing once again proved to Washington that it will continue to pursue an active, practical, and possibly manipulative, role in Southeast Asia. This time, China did not claim ownership over the Spratly Islands or order naval patrols in the South China Sea. Instead, all it did was provide Cambodia with economic aid, of which was enough to challenge the United States’ presence in the region. Despite heavy protests from the US and the United Nations High Commissioner for Refugees (UNHCR), Beijing generously provided Phnom Penh $1.2 billion worth of aid immediately following Cambodia’s compliance to deport 20 Uighurs back to China. As China continues to exploit its economic power in exchange for political favors, how should the United States react without inciting unnecessary tension in this trilateral relationship?

Tilting the Balance: China Returns Cambodia’s Political Favor

Since the China-ASEAN Free Trade Agreement (CAFTA) went into effect on January 1, 2010, China and the Southeast Asian nations have gradually expanded their areas of cooperation. As China extends its economic prowess into the region, countries that are the least effective in diversifying their economic dependencies—namely Cambodia and Laos—have grown increasingly receptive to Chinese patronage. Cambodia, who has always maintained close historical and trade relations with China, became one of the first to fall to the Chinese charm.

In November 2009, 22 Uighurs, including 3 children, fled from China to Cambodia to seek political asylum. In Cambodia, while the Uighurs worked with the UNHCR to attain their refugee status, the Cambodian government reciprocated international efforts with agreements to cooperate. However, despite continued assurances to human rights activists, the Cambodian government sent the Uighurs back on December 19 without explanation.

What emerged as more of a shock to the international community was not Cambodia’s decision to deport, but China’s prompt return of Cambodia’s favor two days later, when Beijing signed 14 deals with Phnom Penh totaling USD $1.2 billion. The U.S. Embassy in Cambodia responded by releasing a press report condemning Cambodia’s decision and threatening economic consequences, which unfortunately, did not impose any immediate impact on the subject matter. Clearly, compared to Beijing, Washington’s approach was rather soft and ineffective.

To assume a tougher stance on this issue, the United States suspended aid to Cambodia in April 2010. Two U.S. Senators, Delahunt (D-MA) and Rohrabacher (R-CA) further intensified these measures by introducing the Cambodian Trade Act in May 2010, which called the U.S. government to not relieve Cambodia of any debt owed to the United States. While Washington rationalized that these efforts would compel Cambodia to apologize for its decision, their hard work was dismissed as 257 Chinese military trucks marched into Phnom Penh a month later. Not only China, but Cambodia also, has now demonstrated to the United States that carrots could be more effective than sticks.

Readjusting the Balance: The United States Attempts Reengagement

Compared to the United States, China is clearly ahead of the game in securing Cambodian support and alliance. The relationship between China and Cambodia extends far beyond purely political and economic terms. For example, in May 2010, defense ministers of China and Cambodia met to strengthen military cooperation through productive exchanges of resources and technology. The two countries also engaged in symbolic acts of amity, as demonstrated by Prime Minister Hun Sen and Chinese Ambassador Pan Guang-xue when they inaugurated the Cambodian-Chinese Friendship Bridge at Prek Kdam in June 2010.

Meanwhile, the United States is striving to uphold its influence in Cambodia. Under the Obama administration, Washington signaled intentions to increase trade by facilitating U.S. access to loans for investment between the two countries. The US even went so far as to return seven stolen sculptures from the Angkorian era to counter the symbolism embodied by the Friendship Bridge. Unfortunately, despite these efforts, concerns over human rights and democratic governance have impeded the maturation of U.S.-Cambodia relations. As a result of these inherently aggressive maneuvers, the United States has continued to perceive all undertakings as a competition to win Cambodia.

There are several mistakes to viewing this trilateral relationship as a contest; therefore, the following are some policy recommendations aimed to renew the conventional U.S. perspective on engagement with China in Cambodia:

(1) End the zero-sum game. The U.S. should not feel pressured to follow China. As of 2009, the United States still maintains a stronghold over Cambodia’s trade and economy: while the United States is Cambodia’s largest export partner (42.5%), China has not even made it to the top five. In fact, if the United States chooses to present itself as a strategic rivalry competing against China, in either the economic or political arena, it will only trigger more assertive Chinese policies in the region. Therefore, rather than making predictions from a zero-sum perspective, the United States should consider cooperating with the Chinese private sectors to assist Cambodia with infrastructure and energy development.

(2) Capitalize on the benefits procured from Chinese investments. Secondly, the United States should recognize that Chinese aid to Cambodia, and to Southeast Asia as a whole, may eventually prove beneficial for U.S. investments. In addition, as demonstrated by Chinese engagement with Cambodia over the past months, only with economic cooperation can the United States increase leverage in calling upon the Cambodian government to enhance its democratic practices and enforce the rule of law. For the United States, Chinese investments could in fact, present a win-win situation.

(3) Endorse cooperation with the Southeast Asian neighbors. Thirdly, the United States should encourage Cambodia to increase cooperation with its Southeast Asian neighbors in order to reduce excessive reliance on China. Despite Cambodia’s trade relations with Taiwan, Phnom Penh has supported the One China Policy in return for China’s favor. Although economic aid is an alleged quid pro quo for political conformity, in the case that Cambodia fails to commit itself politically to China in the long-run, it should start enhancing trade relations with its ASEAN neighbors now.

(4) Encourage the use of natural resources. As an alternative, the United States should encourage Cambodia to utilize its rich supplies of natural resources—pulp, palm oil, rubber and gas—to establish an economic presence in the region. For example, in 2005, large amounts of exploitable oil deposits were uncovered beneath Cambodia’s territorial waters, representing a new revenue stream for the government if commercial extraction begins. Cambodia also announced recently that it will begin pumping oil for the first time in December 2012 as it searches for the potential of its offshore reserves, which is an excellent opportunity for the United States to increase scientific and technological exchanges with Cambodia.

Restructuring the Balance: Cambodia Joins in as a Third Side

In face of all hesitation, condemnation, and doubt, the United States should remain confident that it retains an influential position in Cambodia. In order to prevent Cambodia from choosing China over the United States, Washington first needs to stop creating, and believing in the existence of, two distinct, contending, and mutually exclusive sides. Rather, the United States it should perceive China and Cambodia as two separate fronts, and not easily alter its policy on Cambodia based on the level of Chinese engagement. If bilateral standoff is not the desired outcome, then trilateral cooperation would be the only solution.

Jennifer Chen is an intern at the CSIS Southeast Asia Program. She graduates from Georgetown University in May 2011 with a B.S. in International Politics. The author can be reached at jbc47@georgetown.edu.