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Copyright C© 2009 Heldref Publications

Politics of Natural Resource Use inCambodia

KHEANG UNSOKBUNTHOEUN SO

Abstract: Natural resources are neither a blessing nor a curse; intrinsically theycan neither positively nor negatively affect political and economic developments.Rather, the negative effects of natural resources are correlated with a country’s“structured contingency”: the existing political configuration through which theoil revenue is managed and spent. Cambodia’s political configuration is domi-nated by interlocking patron-client networks that require a leader to capture andmaintain the loyalty of key sections of the politico-commercial elite by fulfillingtheir material aspirations through the distribution of perquisites. Under these con-ditions, corruption is widespread, the government institutions are unresponsive,and resources are misallocated. Examining the existing political configuration andthe precedent set by the forest and land sectors, this article argues that future oilrevenue will likely be used partly for self-enrichment of the political elites andpartly to promote political legitimacy of the ruling elites through the politics ofgift giving and patronage. The situation will likely have two significant impacts onCambodia: (1) inequitable development and increased income inequality and (2)perpetuation of Cambodia’s hybrid democracy, preventing any further movementtoward democratic consolidation.

Keywords: Cambodia, democratization, natural resource curse

I n this article, we analyze the politics of natural resource use and its implica-tions for economic development and democracy in Cambodia, examining three

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sectors—forests, land, and oil—to construct three broad arguments. First, existingweak social and political institutions allow the elite to exploit the country’s naturalresources for political gain. Second, although the exploitation of forestry resources(i.e., logging) was used to cement elite pacts and promote peace and political sta-bility, land more recently was used to extend elite patronage to mass patronage inorder to maintain hybrid democracy.1 Third, future oil revenue will clearly pro-mote overall economic growth; however, if current trends—weak countervailingsocial forces, weak political institutions, and corruption—persist, the benefits ofsuch growth will certainly be inequitably distributed. Further, oil revenue will beused to perpetuate Cambodia’s hybrid democracy, stalling any further democraticconsolidation.

To flesh out these arguments, this article is divided into three parts. The firstsection documents existing social and political institutions, arguing that (1) thegovernment strategically keeps government oversight institutions weak, and (2)civil society organizations face internal weakness or are co-opted by the govern-ment so as to prevent the emergence of a countervailing force to the state. Thesecond section examines ways in which forests and land resources have beenemployed primarily to maintain elite pacts and promote peace and stability andsubsequently to foment a hybrid democracy. These patterns of resource exploita-tion, which were first employed by the military and then by business tycoons, hadnegative effects on economic equity, people’s livelihoods and human rights. Thethird section discusses the oil sector, arguing that given the current conditions ofweak societal countervailing forces and weak political institutions, the inflow ofoil revenue will increase inequality and the misappropriation of assets by stateelites. We argue that it is likely the oil windfall will at least minimally benefit ruralvillagers and that it will not lead to the rise of outright authoritarianism but insteadto the perpetuation of hybrid democracy in which the dominant Cambodian Peo-ple’s Party (CPP) will use oil revenue to maintain and strengthen its “gift giving”strategy of mass patronage. Thus, although income inequality and rent seeking ac-tivities may increase, the CPP’s legitimacy will likely be sustained. Viewed from ahistorical perspective, rural Cambodians are likely to see the CPP-controlled stateas one that is transformed from a predatory state to a “service state.”

We conclude that if no meaningful political reform is initiated, although eco-nomic development will occur, resource usage will be suboptimal.

Weak Social and Political Institutions

Natural resources are neither a blessing nor a curse; intrinsically they can neitherpositively nor negatively affect political and economic developments. Rather, thenegative effects of natural resources are correlated with a country’s “structuredcontingency.” According to Terry Karl, “prior interactions of structure and agency

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Politics of Natural Resource Use 125

create the institutional legacy that constrains choice down the road.”2 In otherwords, when revenues from a commodity (e.g., oil) are inserted into an existingpolitical configuration, this configuration will shape how the revenue will beused to influence political and economic outcomes.3 Despite a constitutionallymandated democratic system, power in Cambodia is firmly in the hands of theexecutive branch. The government is built on patrimonialism, whereby a leader’spower comes from his ability to capture and maintain the loyalty of key sectionsof the politico-commercial elite by fulfilling their material aspirations throughthe distribution of perquisites.4 Since the 1998 elections, Hun Sen has served assole prime minister and has been labeled Cambodia’s “strongman.” In fact, hehas served as prime minister of Cambodia since 1984. However, as Sorpong Poeuexplains,

the Prime Minister’s political survival continues to depend on the goodwill of otherCPP officials and military leaders who have also reaped the benefits from the CPP’spolitical hegemony. Those who have benefited from Hun Sen’s grip on power arethose who have helped to keep him in power.5

This power is structured as interlocking patron-client networks, serving as ameans of exclusion and inclusion in a multinetwork competition resulting in themisallocation of government resources, corruption, and unresponsive governmentinstitutions. A well-functioning state requires effective oversight mechanisms,such as the National Assembly, the judiciary, the National Audit Authority, andpublic financial management. Institutions with appropriate authority can holdelected officials and other government institutions accountable for their actions.Contrary to constitutional stipulations, the Cambodian National Assembly lacksthe capacity—political will, capital, and human resources—to exercise its legisla-tive and oversight power.6

Budget and financial management systems, designed to ensure that the budgetis effectively managed with sound accounting reporting, are of an extremely poorquality. The Cambodian government, through public forums and policy papers,consistently acknowledges these problems and has undertaken measures to re-form its public financial management with assistance from donors.7 The results,however, have been mixed. Following the initial outset of reform, governmenttax collection increased from 8.3 percent of the GDP in 1999 to 12 percent in2006,8 but they remain among the lowest in the world.9 Leakage of funds fromprocurement and expenditures at government ministries and agencies is commonand high.

The issues of corruption and anticorruption legislation are illustrative. Despiteinternational pressure and a certain amount of domestic outcry, corruption inCambodia is extensive and systematized.10 Transparency International rankedCambodia 151 out of 163 countries in 2006; 162 out of 179 in 2007; and 166 outof 180 in 2008 on the Transparency International Corruption Perception Index.11

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The estimated amount of fees and commissions paid to government officialsin 2006 is thought to have reached $300 million, equivalent to 50 percent oftotal government revenues. Corruption has also spread to some donor-fundedprojects. In 2003, the World Bank accused unspecified Cambodian governmentofficials of siphoning off funds intended for a demobilization project; in 2006,government officials were accused of embezzling funds earmarked for projectson infrastructure, water sanitation, and governance. Despite initial denials, thegovernment agreed to pay the bank for the allegedly missing funds after theinstitution threatened to withhold financial assistance.12 If corruption exists evenwithin projects funded by multilateral institutions that have political leverageover the Cambodian government and some oversight capacity, then concern overmisuse of revenue of any kind is legitimate. Despite widespread corruption, thegovernment has so far failed to pass the anticorruption law that has been stalled indraft form since it was written in 1994.13

In Cambodia, several accountability institutions exist that are theoretically re-sponsible for fighting corrupt practices. However, accountability institutions, suchas the National Audit Authority and the Ministry of Parliamentary Relations, aremarred with politicization, corruption, cronyism, and nepotism. There are inspec-tion departments located in each government ministry, but these institutions are“ill-equipped to tackle corruption,” because of a lack of capital, political will, andhuman resources.14 Furthermore, these institutions lack independence and trans-parency because they are responsible to the very institutions they are supposedto monitor. After the passage of the Auditor Law in 2002, the government estab-lished the National Audit Authority. There were reports that the office is highlypoliticized and has not been effective in tackling corruption. More important, asa Cambodian Development and Resource Institute (CDRI)/Asian DevelopmentBank confidential report states, the ineffectiveness of these institutions continuesto be reinforced, as “most officials have been to varying degrees co-opted by thesystem. It is difficult for people with unclean hands to point a finger at others.”15

A well-functioning state also requires the rule of law, an effective judicial sys-tem, and regulatory agencies. Significant among these institutions is the judiciary,because it can level the playing field in the political, economic, and socio-culturalrealms.16 Without the rule of law enforced by an effective judiciary, there will beno checks and balances, and therefore no guarantee that the rich and the powerfulwill act within legal and institutional boundaries. Without an independent judicialsystem, elected officials and other government officials are not held accountablefor their actions; consequently, a vicious, unbreakable cycle of patronage, cor-ruption, and abuse of power has been set in motion. These conditions permit theillegal and politicized exploitation of natural resources and increase misappropri-ation of their revenues. The Cambodian judicial system is weak and politicallydependent.17 The system is burdened with scarce human and capital resources,low intrainstitutional cooperation, and corruption—products of the broader

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social, political, and economic environment of the country. Because of the na-ture of power consolidation based on political cooptation, reform efforts thus farhave been selective, piecemeal, and ineffectual.

Civil society organizations, though relatively large in number, remain weak.Such organizations were absent from the Cambodian political terrain prior to theUnited Nations Peace Keeping mission in 1993 and have prospered under sub-sequent international engagement. They provide Cambodians with assistance andservices that range from health care, education, and agricultural support to legalservices, as well as workers’ protection and help in the expansion of the privatebusiness sector. More generally, they have raised public awareness in the areas ofhuman rights, labor rights, democracy, transparency, and accountability throughthousands of training sessions. Despite these advances, Cambodian civil societyfaces many external and internal constraints. The civil society organizations con-tinue to rely on international financial assistance and have low membership. Theyare also riddled with internal problems of autocratic rule and nontransparency,in addition to ongoing governmental suppression.18 Since 2003, the state has ac-tively threatened and suppressed civil society organizations when necessary andco-opted them when possible.19

Chambers of commerce are relevant to our discussion surrounding the poli-tics of natural resource use. Since early 1995, they have been created in twelveprovinces and municipalities.20 Theoretically, the promotion of business associa-tions should be crucial for economic growth, equity, and democracy through thechambers’ role in disseminating information and advocating and lobbying for goodgovernance, the rule of law, and transparency.21 Furthermore, strong, autonomouschambers of commerce and other business associations could contribute to theenlargement of public space. An enlarged public space, along with vibrant civilsociety organizations, can serve to counter the exclusive nature of the state/rulingparty control. In Cambodia, however, the chambers of commerce and big busi-nesses have been co-opted by the government and serve as government partners inan alliance that manipulates state institutions and exploits resources to serve theirmutual political and economic interests.

Ideally, a chamber of commerce is an overarching body representing businesses.In Cambodia, charmers of commerce are exclusive clubs consisting of prominentbusiness tycoons. The Chamber of Commerce of Phnom Penh is known as theOknha Club.22 The Okhna are directly linked to the ruling party and the govern-ment; some are also suspected of engaging in shady businesses.23 Currently, manyof these Oknha have monopolies over critical economic sectors such as the impor-tation of medicines, extraction of natural resources, and management of nationalheritage and tourist sites.24 Out of the Phnom Penh Chamber of Commerce’s fortyelected members, twenty-seven are Oknha, and several of them serve as membersof the National Assembly or the Senate. Provincial chambers of commerce aresimilar in terms of their leadership. In most provinces, the elected members of

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the chambers of commerce are powerful businesspeople who are linked to thegovernment and ruling party through their appointments as advisors to senior CPPparty leaders.

Chambers of commerce in Cambodia government creations, designed to bea resourceful partner to the state in its goal of maintaining its predominance inCambodia’s hybrid democracy. The elections of the chambers’ leaders mirror thenational elections in that they involve the use of material inducement and cash toattract votes.25 As such, the process unfairly preempts representatives from smallbusinesses from leadership.

In the absence of independent and effective legislative and judicial oversightand strong autonomous civil society organizations, the elites face few constraints.They consider the country’s government institutions and natural resources as theirpersonal domains to be used for garnering political support, maintaining patronagenetworks, and accumulating wealth.

Forest, Land, and Politics

Dangerous precedents were set with regard to the exploitation of forest re-sources in Cambodia over the past twenty-five years and in the more recent scram-ble for arable land. Despite international pressure, rent seeking has been rampantin the forest sector as state and nonstate actors colluded in logging, costing theCambodia hundreds of millions of dollars in revenues.26

The government’s mismanagement of the forest sector derives from the calcu-lated subordination of rational legal management to the ending of the civil warand maintaining peace and political stability in the 1990s through pacts betweenthe elites. In 1994, the government permitted the military to secure the forestsector in exchange for its allegiance. With this permission, the army, workingthrough networks of businesspeople, forestry bureaucrats, politicians, and provin-cial authorities sold timber for personal gain and to raise funds for the civilwar.27

By early in the first decade of the twenty-first century, following the end ofthe country’s civil war and the consolidation of power by Hun Sen and the CPP,the government reconstituted the management of the forests, placing the forestrysector under the control of the Ministry of Agriculture, Forestry, and Fishery(MAFF). The ministry introduced laws and mechanisms including mandatoryforest management plans, socioeconomic impact assessments of forest and landconcessions, and a total moratorium on logging.28 Although the logging ban hasreduced widespread illegal logging activities, these new rules and mechanismsdid not eliminate illegal logging in all areas, because of the ongoing dominanceof patronage-based politics. Instead, these rules have produced more central-ized practices involving what a 2007 Global Witness report calls “kleptocraticelites”29 who have colluded with each other to fell tropical forest trees in and

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around concessionary plantation boundaries, in many cases under the guise ofagribusiness investment.30 Their activities deprive local communities of accessto what were once community forests and deprive the state of much-neededrevenues.31

In the wake of the government’s moratorium on logging and a decline inavailable forest resources, a scramble for land resources emerged. The politicalstability and economic growth since the late 1990s has led to the skyrocketingof property prices. Businesses and wealthy individuals engaged not so muchin actual investment but rather in land speculation. Exploiting official policiespromoting agribusiness, the government has awarded vast land concessions topolitically connected businesses. Many of those awards exceeded 10,000 hectaresper company, the limit specified by the 2001 land law. For instance, PheapimexCompany, a major sponsor of the CPP, holds land concessions equivalent to7.4 percent of total land area in Cambodia.32 Many of these concessions weremade in a nontransparent manner,33 and much of the land involved has not beenput into production. This is contrary to the Land Law, which stipulates that anyconcession will risk cancellation if not put into productive use within twelvemonths. As the price of land rose, incidents of land grabbing and human rightsabuses have also increased.34 Furthermore, there is considerable concentrationof land ownership as a consequence of the governmental land concessions andland purchases. This produced a critical situation wherein in 2003, the bottom 40percent of the socioeconomic strata owned only 5.4 percent of the arable land,whereas the top 20 percent owned 70 percent of the land, 64.4 percent of whichwas owned by the top 10 percent.35

The government’s objective of generating revenue from the concession systemfor national development has not been fulfilled because of political and patronagepressures. Nontransparent concessions meant that much of the leasing fees did notenter state coffers, and the concessionary plantations’ ability to offer employmentwas extremely limited. The large-scale land concessions, compounded by the gov-ernment’s unwillingness to address land problems, undermined the government’sLand for Social and Economic Development Project. This project was designed togive social land concessions to the landless and “land poor” as a poverty reductionmeasure. The government could not claim enough “free land” for redistribution.However, as previously discussed, large areas of land were left undeveloped inthe meantime, even though such practices were contrary to the government’s landconcession policy.36 Landlessness and small land holdings are now the primaryfactors for rural poverty.37 Furthermore, weak enforcement of laws, a politicizedlegal system, and collusion between the government and business have led inrecent years to widespread land conflicts. In these conflicts, the poor and the eth-nic minority communities are generally on the losing side. While some of thesepeople lost access to their land, others were deprived of access to nontimber forestproducts, which constituted some 42 percent of their livelihoods.38

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Oil and Politics

Offshore oil exploration in Cambodia’s territorial water in the Gulf of Thailandbegan before the revolutionary period of the 1970s, but such projects were sus-pended as war and revolution engulfed the country. After six years of explorationin the area, Cheveron-Texaco confirmed the existence of substantial deposits ofoil and gas in 2006.39 Explorations have also been made onshore around TonleSap Lake.40 The government divided the offshore exploration area into six blocks(A–F). The announcement of oil and gas deposits by Cheveron-Texaco has at-tracted investment interest from companies of various nations and backgrounds.41

Thus far, despite reports of a number of government-approved contracts, onlyCheveron-Texaco’s rights to explore Block A (granted in 2002) has been madepublic by the government. The exploration is said to be well-advanced and isexpected to yield production by 2011.42

Preliminary estimates by the International Monetary Fund, based on Block Adeposits, suggest that oil revenue will gradually climb from U.S.$174 million in2011 to U.S.$1.7 billion in 2021 before it drastically declines thereafter.43 Anotherestimate based on all six blocks placed the amount of recoverable oil at 2 billionbarrels and gas at 10 trillion cubic feet, which could, given the conservative priceof U.S.$50 per barrels for oil and U.S.$5 per cubic feet for gas, yield annualrevenues on the order of U.S.$6–7.5 billion over the course of twenty-five years.44

From these estimates, it is clear that oil revenue will substantially increase thecountry’s GDP, which is currently about U.S.$4 billion.

This “good news” has generated debates among donor agencies, civil societyorganizations, and academics over the possible “curse” associated with oil rev-enue, including its negative effect on economic development and democratization.Comparative studies on petrostates demonstrate that the catalog of political andeconomic ills that can be related to oil revenue is long, ranging from poor economicperformance to inequality, from weak rule of law to outright authoritarianism.45

The Cambodian government has repeatedly stated that speculative concernsover the “oil curse” are unwarranted. Hun Sen, for example, has been quoted assaying, “Some people are worried about the Nigerian disease, saying that it shouldnot be allowed to reach Cambodia. I have told them that Cambodia is not stupid.”46

He assured his audience in another speech that “Cambodians will use the benefitsfrom oil properly.”47

Given the absence of widespread or sustained social uproar over the pastdecade’s pattern of rent-seeking activities,48 there will probably be little socialprotest over the exploitation of oil resources for the personal enrichment of theCambodian elites and their patronage politics. This lack of popular response isexemplified by attitudes toward the exploitation of other natural resources inthe past, such as land and forests. Only when they were directly affected did

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Cambodians engage in protests demanding changes to the structure that governsthe exploitation and distribution of these resources.49 There are two fundamentalexplanations for this response. First, Cambodians have a low awareness of ag-gregate social welfare loss. This passivity is likely to be even higher concerningoil, as the deposits are located offshore and out of sight, unlike lands and forests.Furthermore, oil extraction will have little impact on people’s daily lives.50 Also,the threat of suppression of dissent by the government is high, preventing non-governmental organizations from promoting popular awareness of oil revenuesand mobilizing people to protest. Protests by forest communities against loggingconcessions in 2003 were quickly suppressed by security forces and local activistswere harassed by government agents.51

As far as future oil revenue is concerned, its concentration in the hands ofthe elites might not be total. The ruling party and elites will likely permit somedegree of trickling down. If recent political trends persist, part of oil revenue willprobably be used to finance development projects in rural areas where povertyis concentrated. However, if current patterns of distribution persist,52 there willstill be a high level of inequality with a large share of the revenues capturedby rent-seeking activities. From a political economy perspective, the Cambodianstate could be classified as a predatory one in which, to use Karl’s phrase, thereexists a “politicized market economy” wherein the “market has so penetrated allaspects of public life that almost anything is up for sale.”53 In this kind of businessenvironment, the fruits of national economic growth go to a small number ofpeople, leaving everyone else far behind. Such inequality will further widen withthe inflow of oil revenues unless significant headway is made to address thisissue. The government tends to assume that a trickledown effect will occur orthat inevitably what is good for the wealthy will also be beneficial for the poor.The Cambodian government officially speaks not of “the haves and the have-nots”but rather, according to Kiet Chhun, senior minister of finance and economy, of“those who have and those who do not yet have.”54 Overall economic growthfor the past fourteen years has been consistently high, averaging 7 percent perannum. Despite this growth rate, the level of poverty has decreased slowly, on anaverage of 1 percent per year, dropping from 47 percent in 1993 to 35 percent in2004.55 Inequality has grown between the urban and rural areas in income, healthcare, infrastructure, and education. In comparison to other countries, Cambodiais among the few places in which the rate of poverty fell slowly in the midst ofhigh economic growth56 and in which the gap between the haves and the have-notsremains wide in the early stages of development.57

The literature on the political economy of oil suggests that, in many cases,oil revenues erode democracy and foster authoritarian rule. For instance, MichaelRoss writes that statistical tests of the autocratic effect of oil revenue supports theargument that “large oil discoveries appear to have no discernable anti-democratic

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effects in advanced industrialized states . . . but may harm or destabilize democracyin poor countries.”58 The inflow of oil revenue could result in an increase in “therepression effect,” because oil wealth will allow the government to increase spend-ing on security, a process that could block people’s “democratic aspirations.”59

The discovery of oil will not drastically transform Cambodian politics. Instead, itwill perpetuate Cambodia’s hybrid democracy. The ruling party will likely captureoil revenue and use it to promote its legitimacy through development schemes andthrough national elections, although not necessarily accountability and rule oflaw.

Oil revenue will allow the CPP to maintain its dominant rule in a number ofways. First, the CPP will use oil revenue to promote its “development projects”in rural Cambodia. Over the past ten years, the CPP has been engaged in sakam-phiep saboroschoun—the politics of building legitimacy through gift giving andconstruction projects such as roads, bridges, schools, and temples. Such devel-opment projects were frequently funded through finances obtained from inter-national assistance and money “donated” by government officials, and, moreimportant, business tycoons.60 Research has shown that gift giving and devel-opment projects captured many rural votes for the CPP. Investment in infras-tructure will become an even more significant factor in electoral politics as theCPP’s appeal as “the Cambodian people’s liberators from the Khmer Rouge’styrannical rule” fades and survivors of that regime age and die. The Interna-tional Republican Institute’s 2006 survey of likely voters shows that infrastruc-ture was the key factor influencing people’s decision to vote for the CPP in the2003 national elections and that over two-thirds of likely voters believed thatthe country is “moving in the right direction” because of the improvements ininfrastructure.61

The rentier effect, wherein government sustainability rests on oil revenue andnot taxes, could potentially provide the government with a free hand to increasespending on patronage and to buy off the opposition—which consequently wouldderail progress toward continued democratization.62 We predict this kind of effectfor Cambodia in terms of future oil revenues. Hun Sen has consistently stated thatas long as he remains prime minister, the government will not tax farmers. Theinflow of oil revenue will enable the CPP to fulfill this pledge. However, experiencefrom other rentier states suggests that a government’s strategy to forego income taxcollection affects the state’s administrative capability and also erodes the state’saccountability to the public.63 Rentier trends have emerged during even the initialstages of development of the oil industry.

The Cambodian National Petroleum Authority is a secret institution whosefinancial management is not under oversight of any other institution, which leadsto questionable practices. For example, the Indonesian oil company PT Medcoclaimed to have paid substantial amounts of money to “Social Development Project

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Funds” as required by the Cambodian government. However, where the moneyends up is a mystery. Global Witness reports that it

has cross-checked this payment with the Ministry of Economy and Finance’s“Tableau des Operations Financieres de l’Etat” (TOEF), which provides informationon annual income to the Cambodian state. The results were worrying. In 2006, theMinistry claims to have received US$19,300 in non-tax revenues from oil and gas.In 2007, it claims to have received US$22,000. Over the same period, Medco claimsto have paid US$7.5 million in fees and bonuses to the Cambodian government. Ifthe money appears elsewhere in the TOFE, it is not clear.64

Despite the fact that oil revenues might perpetuate weak accountability andweak governance, the CPP will, with oil revenue, increase its legitimacy amongmany Cambodians, particularly rural people. Viewed in an historical context, theCPP is likely to succeed in such efforts. Historically, contact with the state was anegative or even deadly experience. The Cambodian state between 1970 and 1997was seen by most of its people as a predatory institution that used its oppressivemechanisms to extract resources and its labor to serve state objectives—to promotezealous ideological purposes, and more recently, to win a civil war.

Under the State of Cambodia (1989–93), prospects for better lives emergedwith the progress of peace negotiations. However, the people’s trust of theCPP-ruled state was not high, as evidenced by the results of the 1993 UnitedNations–sponsored elections, in which the CPP was defeated by the royalist party,the National United Front for an Independent, Neutral, Peaceful, and Cooper-ative Cambodia (FUNCINPEC). Immediately post–United Nations TransitionalAuthority in Cambodia, Cambodia was characterized by rampant corruption, nearabsence of the rule of law, and the massive exploitation of natural resources bythe armed forces, provincial authorities, and politically well-connected businesstycoons.65

However, over the past twelve years, the CPP-controlled state has gained morelegitimacy from the public, particularly from the rural population. The rise of theCPP’s legitimacy is reflected in the last four local and national elections, in whichthe party’s share of the total vote has increased while the level of election-relatedviolence has fallen. There are several reasons for this popularity. First, the coun-try has experienced peace and political stability for a decade. Despite persistentpoverty, the majority of Cambodians now see the state under CPP control as trans-formed from a “predatory state” to a “service state.” Thus, contacts with the stateare no longer zero-sum encounters, but can be productive. Although corruption iswidespread and widely known, people consider party handouts and developmentprojects as an improvement in the redistribution of resources. Regarding this issue,a contemporary saying goes “si haoey ceah chu,” meaning “corrupt officials knowhow to share corruption money.”

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Conclusion

Over the past twenty-five years, the trajectory of resource use in Cambodiahas been to secure military allegiance and maintain elite cohesion with the overallobjective of wining peace. With the achievement of peace and political stability,the focus of the CPP elites has been on winning elections and promoting the furtheraccumulation of wealth among elites. The exploitation of natural resources, suchas timber and land, has been awarded to business tycoons who are, among otherthings, financiers of the CPP mass-based patronage politics. We argue the politi-cal use of natural resources has increased economic inequality and human rightsabuses. The discovery of oil has generated debates over whether this discovery willbe a curse or a blessing for Cambodia’s economy and politics. Given Cambodia’spolitical trajectory, the impact of oil on politics will probably not lead to a signif-icant reversal from or to any improvement of hybrid democracy. Instead, the CPPwill selectively use oil revenue to secure support from rural peasants by providingenough development progress to meet limited expectations, preventing challeng-ing demands for a meaningful redistribution of resources. Of course, the spendingeffect is unlikely, as cases of other rentier states show, to completely block offopposition.66 In the Cambodian context, opposition parties will continue to voicediscontent and attempt to mobilize disaffected groups. However, opposition poli-tics will be unlikely to garner sufficient voice for substantial political change.

Economically, Cambodia is at a crossroads. On the positive side, the discoveryand production of oil provides revenue that will bring needed funds for develop-ment and diversification of the country’s economy.67 The current global financialcrisis is likely to have a significant negative impact on Cambodia, particularly itsleading export industry—garments. Cambodian leaders have repeatedly suggestedthat the agricultural base economy of Cambodia can shield the country from theglobal economic downturn, as those who lose jobs in the manufacturing sectorcan return to farming. However, given the rising rate of agricultural landlessnessand near-landlessness—which affects 46 percent of the rural population68—theemployment-generating capacity of the agricultural sector appears less promisingthan the government believes.

On the cautious side, oil’s impact on the economy will be conditioned by therate of speed, scope, and success of the reforms discussed above. It appears thatHun Sen and his networks are in full control of Cambodia. The future prospects,following the inflow of oil revenue, will depend on the government’s level ofwillingness and ability, particularly that of Hun Sen and his supporters, to createan enabling environment for further administrative, legal, and judicial reforms. Ifthe current trends persist, meaningful reforms in these sectors will be minimal.Consequently, the outcome of the injection of additional revenues from newfoundresources might be capitalism with weak rule of law and development based on apopulist and patronage-based system.

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ACKNOWLEDGMENT

Kheang Un would like to thank the Center for Khmer Studies, Cambodia, for its financial supportfor field research in 2007, and the University of Louisville’s Center for Asian Democracy, where hecoauthored this article while serving as a Visiting Research Fellow. The authors would also like tothank Professors David Chandler, Judy Ledgerwood, and Stephen McCarthy for their comments onearlier drafts of this paper.

NOTES

1. Hybrid democracy refers to conditions where elements of democracy—political and civil libertyand regular free, fair, and competitive elections—coexist with illiberal elements wherein the dominantparty and individuals employ state resources and machinery to maximize and legitimize their politicalcontrol and to limit political and civil liberties. For further discussion of the concept, see StevenLewitsky and Lucan Way, “The Rise of Competitive Authoritarianism,” Journal of Democracy 13, no.2 (2002): 51–65.

2. Terry Karl, The Paradox of Plenty: Oil Boom and Petro-States (Berkeley: University of Cali-fornia Press, 1997), 10.

3. Ibid., 235–36.4. Steve Heder, “Cambodia’s Democratic Transition to Neoauthoritarianism,” Current History 94

(December 1995): 425–29. See also “Hun Sen’s Consolidation: Death or Beginning of Reform?” inSoutheast Asian Affairs 2005, ed. Daljit Singh (Singapore: Institute of Southeast Asian Studies, 2005),113–30.

5. Sorpong Poeu, “Cambodia after the Killing Fields,” in Government and Politics in SoutheastAsia, ed. John Funston, 59 (Singapore: Institute of Southeast Asian Studies, 2001).

6. Cambodian Development and Resource Institute (CDRI) and Asian Development Bank, Cam-bodia: Enhancing Governance for Sustainable Development (Phnom Penh: CDRI, 2000), 116.

7. Caroline Hughes and Kheang Un, Cambodia Country Governance Analysis (report, Departmentfor International Development, Embassy of the United Kingdom, Phnom Penh, Cambodia, March2007).

8. Roger Donnelly, “Cambodia—Risk Assessment, February 2006,” Australian Government’s Ex-port Finance and Insurance Corporation, http://www.efic.gov.au/static/efi/cra/cambodia.htm (accessedJanuary 15, 2008).

9. International Monetary Fund, “Macroeconomic Development, Public Financial Man-agement and Private Sector Development” (statement, Cambodia’s Development Partners,the First Cambodia Development and Cooperation Forum, Phnom Penh, June 19, 2007),http://www.imf.org/external/np/dm/2007/061907a.htm (accessed December 31, 2007).

10. Kheang Un, interviews with leaders of business associations, Phnom Penh, December2006–January 2007.

11. Transparency International, “Corruption Perception Index,” http://www.transparency.org/policy research/surveys indices/cpi (accessed February 14, 2009).

12. Meredith Moore, “In Need of Aid: Cambodia’s Corruption Troubles,” Harvard InternationalReview, Fall 2006, http://www.entrepreneur.com/tradejournals/article/print/156803086.html (accessedJanuary 3, 2008); and Kay Kimsong, “Heated Talk on Bank ‘Scandal’ at Donor Meet,” CambodiaDaily, June 15, 2006.

13. Douglas Gillison and Kay Kimsong, “A Decade of Donor Meeting: Donor Discontent May NotLessen Donor Largesse,” Cambodia Daily, March 3, 2007.

14. CDRI and Asian Development Bank, Cambodia: Enhancing Governance, 106.15. Ibid.16. World Bank, World Development Report 2006: Equity and Development (Washington, DC:

World Bank, 2005), 176.17. For detailed discussion on this topic, see Kheang Un, “The Judicial System and Democratization

in Post-Conflict Cambodia,” in Beyond Democracy in Cambodia: Political Reconstruction in a Post-Conflict Society, ed. Joakim Ojendal and Mona Lilja, 70–100 (Copenhagen: NIAS, 2009).

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18. Caroline Hughes, “Mystics and Militants: Democratic Reform in Cambodia,” InternationalPolitics 38, no. 1 (2001): 47–64; and Kheang Un, “State, Society and Democratic Consolidation: TheCase of Cambodia,” Pacific Affairs 79, no. 2 (2006): 225–45.

19. Caroline Hughes and Kheang Un, Cambodia Country Governance Analysis (report, DFID,Embassy of the United Kingdom, Phnom Penh, Cambodia, March 2007).

20. Unless otherwise stated, data on chambers of commerce in Cambodia is based on the author’sfield research conducted December 2006–January 2007 and June–July 2007.

21. John Lucas, “The Politics of Business Associations in the Developing World,” Journal ofDeveloping Areas 32, no. 1 (1997): 71–96.

22. Okhna is an honorary title bestowed by Royal Decree to any individual who has contributed atleast $100,000 toward national development.

23. Patrick Falby, “Money Can’t Buy You a King’s Respect, but It’s a Sure Path to Royal Honor,”Phnom Penh Post, April 11–24, 2003.

24. See also Global Witness, Cambodia’s Family Trees, May 2007, http://www.globalwitness.org/media library detail.php/546/en/cambodias family trees (accessed October 10, 2007).

25. This view is shared by most interviewees, including officials in some provincial chambers ofcommerce.

26. Global Witness, Cambodia’s Family Trees; and World Bank, Cambodia: Enhancing ServiceDelivery Through Improved Resource Allocation and Institutional Reform (Phnom Penh: World Bank,2003), 8.

27. Philippe Le Billon, “Logging in Muddy Waters: The Politics of Forest Exploitation in Cam-bodia,” Critical Asian Studies 34, no. 4 (2002): 570; and World Bank, Cambodia: Enhancing ServiceDelivery, 8.

28. Technical Working Group Forestry and Environment, “Forest Cover Change in Cambodia2002–2006” (paper, Cambodia Development Cooperation Forum, June 19–20, 2007, 4).

29. They include senior government officials, senior military officers, and business tycoons.30. This occurs, for instance, at the Tumring Rubber Plantation in Kampong Thom

Province. See, for example, Global Witness, Cambodia Family Trees, 29; and Liam Cochrane,“Cambodia: Can’t See the Forest for the Thieves,” World Politics Review, June 6, 2007,http://www.worldpoliticsreview.com/article.aspx?id = 829 (accessed February 21, 2009).

31. Global Witness, Cambodia’s Family Trees.32. Ibid., 10.33. See United Nations High Commissioner for Human Rights (UNHCHR), Economic Land Con-

cession for Economic Purposes in Cambodia: A Human Rights Perspective (Phnom Penh: UNHCHR,June 2007).

34. “Cambodia: Invasion of the Land Grabbers,” Economist, March 10, 2007; Yun Samean, “HunSen Given Power to Fire Land-Grabbers,” Cambodia Daily, March 5, 2007; World Bank, Cambodia:Sharing Growth: Prepared by the World Bank for the Cambodia Development Cooperation Forum(Phnom Penh: World Bank, 2007); and Cambodian Human Rights and Development Association,Human Rights Situation Report 2005 (Phnom Penh: Cambodian Human Rights and DevelopmentAssociation, 2006).

35. David Dapice, A SWOT Analysis of Cambodia (Phnom Penh: UNDP, 2005), 15. See also TheWorld Bank, Sharing Growth, 55.

36. Un, fieldnotes, March–April 2006.37. Shaun Williams, Where Has the Land Gone? Land Rights and Access in Cambodia (Phnom

Penh: OxfamGB, Cambodia Land Study Project, 1999); and World Bank, Cambodia Halving Povertyby 2015: Poverty Assessment 2006 (Phnom Penh: The World Bank, 2006). This was not the casehistorically; Khmer rural farmers generally held sufficient land to sustain a family.

38. Christian Sloth, Khlok Botra, and Heov Kim Sreng, “Non-Timber Forest Products: Their Valuesto Rural Livelihood,” Cambodia Development Review 9 (October–December, 2005): 4.

39. David Chandler, A History of Cambodia (Boulder, CO: Westview, 2008), 295.40. Global Witness, Country for Sale: How Cambodia’s Elite Has Captured the Country’s Extrac-

tive Industries, February 2009, chap. 4.41. Some of these companies are from Australia, China, Japan, Indonesia, Thailand, South Korea,

and Kuwait. See for example, Global Witness, Country for Sale, 11.

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42. Global Witness, Country for Sale, 11, 42. Cheveron formed a partnership with Japanese MitsuiOil Exploration Co., Ltd. and Korean GS Caltex Corporation.

43. Susan Postlewaite, “Oil Spigot Set to Flow in 2011,” Phnom Penh Post, September 7–20,2007. According to Douglas Gardner, United Nations Resident Coordinator and UNDP ResidentRepresentative, “this calculation was based on oil price of US$60 per barrel and extraction costsof US$20 per barrel with some 60 percent of gross revenues accruing to the Government based ona sliding formula in the production sharing agreement with Chevron” in Block A only. Gardner,“An Historic Opportunity to Achieve Shared Prosperity and Secure Long-Term Stability” (speech,Cambodia Outlook Conference, January 2007).

44. Dapice, SWOT Analysis, 8. Some experts cautioned that even the conservative estimate by theIMF appears to be overly optimistic. On this discussion, see Global Witness, Country for Sale, 10.

45. Macartan Humphreys, Jeffrey D. Sachs, and Joseph E. Stiglitz, eds., Escaping Resource Curse(New York: Columbia University Press, 2007); and Michael Ross, “Does Oil Hinder Democracy?”World Politics 53, no. 3 (2001): 325–361; and Karl, Paradox.

46. Radio Free Asia, “Cambodia Oil Windfall Sparks Corruption Concern,” http://www.rfa.org/english/features/lelyveld/2007/03/12/cambodia oil (accessed September 23, 2007).

47. “Hun Sen Downplays Foreign Concern Over Cambodian Oil Benefits,” People’s Daily On-line, http://english.people.com.cn/2007704/25/print20070425 369420.html (accessed September 22,2007).

48. Although opposition parties, such as the Sam Rainsy Party and Human Rights Party, andnongovernmental organizations have held some protests against land grabbing and logging, the scaleof these protests was not significant enough to damage CPP’s legitimacy.

49. Kheang Un, interviews with human right workers, Phnom Penh, Cambodia, 2003, 2007.50. Onshore drilling might generate conflicts over compensation for drilling on farmers’ land or

community land.51. Kheang Un, interview with human rights worker, Phnom Penh, Cambodia, May 2003. It should

be noted that a coalition of NGOs created a watchdog institution to monitor government policies overnatural resources. It is still in its infancy and has not had any activities by the time of this writing. Thename of the interviewee has been withheld to protect the informant as per NIU IRB regulations. Seealso Roger Henke, “NGOs: People’s Movements and Natural Resources in Cambodia,” in Cambodia’sEconomic Transformation, ed. Caroline Hughes and Kheang Un (Corpenhagen: NIAS, forthcoming).

52. Arguably, the ruling elite and the CPP need to maintain a certain degree of electoral legitimacythrough economic development and infrastructural investment.

53. Karl, Paradox, 236, 340.54. Kiet Chhun, Senior Minister, Ministry of Finance and Economy, “Sharing Growth: Equity

and Development in Cambodia” (speech, Workshop to Launch a World Bank Report, Phnom Penh,Combodia, June 12, 2007).

55. World Bank, Cambodia: Sharing Growth, ii.56. Dapice, SWOT Analysis.57. Tim Conway (senior poverty specialist, World Bank Cambodia), in conversation with Un, June

2007.58. Ross, “Does Oil,” 344.59. Ibid., 335.60. See Caroline Hughes, “The Politics of Gifts: Tradition and Regimentation in Contemporary

Cambodia,” Journal of Southeast Asian Studies 37, no. 3 (2006): 469–89; and Kheang Un, “PatronagePolitics and Hybrid Democracy: Political Change in Cambodia, 1993–2003,” Asian Perspective 29,no. 2 (2005): 203–30.

61. International Republican Institute, Survey of Cambodian Public Opinion (Phnom Penh: IRI,2006), 3, 7. See also Un, “Patronage Politics.”

62. Ross, “Does Oil,” 232–34.63. Robert Bates and Da-Hiang Donald Lien, “A Note on Taxation, Development, and Represen-

tative Government,” Politics and Society 14, no. 1 (1985): 53–70; and Michael Ross, “Does TaxationLead to Representation?” British Journal of Political Science 34, no. 2 (2004): 229–49.

64. Global Witness, Country for Sale, 49.

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65. William Shawcross, Cambodia’s New Deal: A Report (Washington, DC: Carnegie Endowmentfor International Peace, 1994).

66. Gwenn Okruhlik, “Rentier Wealth, Unruly Law, and the Rise of Opposition,” ComparativePolitics 31, no. 3 (1999): 295–315.

67. At the time of this writing, global demand for the price of oil is low due to the worldwideeconomic recession. However, the upward trend in prices is expected to resume within the next twoyears.

68. World Bank, Sharing Growth, 54.

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