Geoffrey Cain
World Politics Review
Up to $1.7 billion a year in oil money is set to flow into impoverished Cambodia, where 35 percent of the population lives under $1 a day and where this year's national budget is only $1.8 billion. Yet in a country ranking a dismal 166 out of 180 on Transparency International's annual corruption rankings, allegations of nepotism and cronyism are already surfacing around the country's nascent oil sector, set to start production in 2012. Critics, like London-based watchdog Global Witness, claim the makings of a "resource curse" are in place, wherein a political elite will siphon profits that should be used to address poverty.
The International Monetary Fund initially estimated the newly found oil reserves, discovered in 2005, at 2 billion barrels, while energy giant Chevron forecast a more modest 400 million barrels. Amendments to a 1991 oil law subsequently placed the fields under the jurisdiction of the Cambodian National Petroleum Authority (CNPA), controlled directly by Prime Minister Hun Sen and his deputy, Sok An, with little parliamentary oversight. Global Witness claims the CNPA is rife with secrecy, its administrators regularly withholding documents and denying telephone usage to employees. That's in addition to millions of dollars, paid by companies to secure oil blocks, that aren't showing up in the government's revenue reports.
The developments follow a pattern that has emerged in other countries that have fallen prey to oil curses, such as Nigeria, Venezuela, and Iraq. Ou Virak, head of the Cambodian Center for Human Rights, argues that Cambodia has much in common with those three countries, in particular the fact that all government bodies and revenues are under the control of a few people. One Asian Development Bank consultant even labeled the CNPA a part of Sok An's "empire" (which also includes the corruption-rankled genocide tribunal).
The diversification into pillaging the oil and mining sectors comes after the country's ruling elites exhausted Cambodia's logging resources to fund their civil war in the 1990s. International donors largely remained silent at the time, said Eleanor Nichols of Global Witness. Now she says they must demand reform to keep Cambodian leaders from plundering oil and mining resources with impunity as well. The government allegedly said in October it would not endorse the Extractive Industries Transparency Initiative (EITI), a global coalition of businesses and governments that require disclosure of revenues, according to a Global Witness report. But Nichols said EITI is back on the table, with donors urging more transparency in Cambodia's oil find.
With foreign aid contributions totaling half of the government's $1.8 billion budget, donors can easily exert far-reaching influence upon Cambodia's ruling elite. But new donors with new agendas are courting Phnom Penh as well, and they don't attach the same conditions of democratic reform that Western governments do. In January, Sen finished his first-ever tour through Kuwait, which offered $546 million in soft loans for agriculture -- destined for Cambodia's vast rice fields -- as a means of securing its own food supplies.
China, facing staggering demand for minerals and timber to support its rapid growth, is also counteracting longstanding Western influence in the mineral-rich country. In exchange for access to resource supplies, China is powering the Cambodian countryside -- which faces some of the highest energy costs in the world -- by building $1 billion worth of hydroelectric dams. All of Beijing's soft loans come with no strings attached.
Whether Middle Eastern countries and China will hold Sen to international transparency standards remains to be seen, but transparency has so far not been high on their list of priorities. With Cambodia now hurtling headlong into an oil disaster, donor pressure will prove crucial to resisting the resource curse pattern plaguing developing countries.
Geoffrey Cain has covered Asia for the Economist, Far Eastern Economic Review, and .net Magazine. His personal Web site can be found here.
The International Monetary Fund initially estimated the newly found oil reserves, discovered in 2005, at 2 billion barrels, while energy giant Chevron forecast a more modest 400 million barrels. Amendments to a 1991 oil law subsequently placed the fields under the jurisdiction of the Cambodian National Petroleum Authority (CNPA), controlled directly by Prime Minister Hun Sen and his deputy, Sok An, with little parliamentary oversight. Global Witness claims the CNPA is rife with secrecy, its administrators regularly withholding documents and denying telephone usage to employees. That's in addition to millions of dollars, paid by companies to secure oil blocks, that aren't showing up in the government's revenue reports.
The developments follow a pattern that has emerged in other countries that have fallen prey to oil curses, such as Nigeria, Venezuela, and Iraq. Ou Virak, head of the Cambodian Center for Human Rights, argues that Cambodia has much in common with those three countries, in particular the fact that all government bodies and revenues are under the control of a few people. One Asian Development Bank consultant even labeled the CNPA a part of Sok An's "empire" (which also includes the corruption-rankled genocide tribunal).
The diversification into pillaging the oil and mining sectors comes after the country's ruling elites exhausted Cambodia's logging resources to fund their civil war in the 1990s. International donors largely remained silent at the time, said Eleanor Nichols of Global Witness. Now she says they must demand reform to keep Cambodian leaders from plundering oil and mining resources with impunity as well. The government allegedly said in October it would not endorse the Extractive Industries Transparency Initiative (EITI), a global coalition of businesses and governments that require disclosure of revenues, according to a Global Witness report. But Nichols said EITI is back on the table, with donors urging more transparency in Cambodia's oil find.
With foreign aid contributions totaling half of the government's $1.8 billion budget, donors can easily exert far-reaching influence upon Cambodia's ruling elite. But new donors with new agendas are courting Phnom Penh as well, and they don't attach the same conditions of democratic reform that Western governments do. In January, Sen finished his first-ever tour through Kuwait, which offered $546 million in soft loans for agriculture -- destined for Cambodia's vast rice fields -- as a means of securing its own food supplies.
China, facing staggering demand for minerals and timber to support its rapid growth, is also counteracting longstanding Western influence in the mineral-rich country. In exchange for access to resource supplies, China is powering the Cambodian countryside -- which faces some of the highest energy costs in the world -- by building $1 billion worth of hydroelectric dams. All of Beijing's soft loans come with no strings attached.
Whether Middle Eastern countries and China will hold Sen to international transparency standards remains to be seen, but transparency has so far not been high on their list of priorities. With Cambodia now hurtling headlong into an oil disaster, donor pressure will prove crucial to resisting the resource curse pattern plaguing developing countries.
Geoffrey Cain has covered Asia for the Economist, Far Eastern Economic Review, and .net Magazine. His personal Web site can be found here.
12 comments:
Oil curse?..this is what i believe some of the people thinks.Good thing they think is bad thing and bad thing they think is good think.
No matter what's other people are thinking just do the right things for Nation and for the Country.
it's good that we strived to see this so-called "curse". so, what to do about it so to prevent it from being a "curse"? i'm sure by us thinking critically and working together for goodness sake, i truly belief we can make it work and make it beneficial like pumping this wealth into building better education system better healthcare system, better and lasting, good infrastructure that the country badly needed, more reform in gov't services and better gov't salary so people don't have to steal so much due to low salary and on and on... it is possible to achieve these things, my dear, but first we as a people and country must have strong will to overcome all adversary and obstacle; we must keep educating and telling ourselves that it can be done and be put to good use. have a strong will, a strong, invinsible determination to make it happen. after all, we do want our cambodia to be better not only for ourselves, but our children, our nationality and so on... i believe this can turn to a blessing if we set our mind to it. it's called will-power, and it is very strong force, believe it or not! please continue to think critically and we shall overcome all evil forces or obstacles. that said, yes, it requires the entire nation to participate in this; don't so selfish; open up and help others for you too will feel better about your achievement as well. god bless cambodia.
Hanoi will collects them all $$$$$$! CAM MEUNG HNIEV LAM ONG OUY!
As long Hun SEN stay in power, Vietnam will sucks all of that oil and gas from Hanoi..
I believe a large part of the oil money will line up the pockets of CPP officials for sure as revenue starts to streaming in. Cambodians must learn to discipline themselves from corruption that eventually will put all of us in shame and suffering again.
Lining pockets of a few CPP families and cronies will make Cambodia better and happier when everyone else around are suffering.
I also believe Cambodia can do better, only if, we learn to discipline and refrain ourselves from stealing the nation. I also want to see the ORDER be used from HUN SEND for the right reason. If HUN SEN can over come for what he is known for... Cambodians will be very grateful to Cambodia's once trouble son.
I know we all ashamed when our national pride is being put down by others for our inability to run our resource rich country and still our people are staving and illiterate. But what else can we do do to change their perception of us as a Cambodian?
correction:
Lining pockets of a few CPP families and cronies will NOT make Cambodia better and happier when everyone else around are suffering.
We haven't seen a drop of oil from the ground yet, and look at what pouk Ah Scam Rainxy has done to our country image!
I believe more Rich people is better,As long the money still inside the Kingdom Of Cambodia.The money will spill to the middle class and the middle class have to be smart(get more knowledge=MONEY)
The reality is that we don't have transparency mechanism in place to monitor the revenue, not only from oil and gas but from every resources.
We have acknowledge the problem and try to tackle together. We cannot just blame on Vietnam... it is our own mess. We can see clearly from several comments above that there are still people refuse to acknowledge the reality.
Very true, 6:21.
when people talk about the long run, they are really saying that thay can distinguish between the signal and the noise.Yet the world is a terrible noisy place,I beleive you are done a wonderful job for short time.
Thank you!!!..It's take time to solve all the major problem.
Pouk Ah Scam Rainxy must face a tribunal for destroying Cambodia and torturing Khmer people til extinction.
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