Constitutional Crisis: A correspondance between Opposition Leader Sam Rainsy and SRP MPs

Dear colleagues,

The publication today of the “interpretation” by the CPP-controlled Constitution Council concerning Article 76 of the Constitution, shows that the CPP does not fully understand the rationale behind our initiative:

1. Actually, we don’t aim at the dissolution of the National Assembly but we simply want to make its decisions invalid from the day the number of National Assembly members falls below 120.
2. This invalidity has nothing to do with the 7/10 quorum but it derives from the upstream constitutional requirement for the National Assembly to have at least 120 members.
3. While the Constitution DOES NOT limit the scope of the requirement to any period of time, the CPP interpretation according to which this constitutional requirement to have “at least 120 members” applies ONLY at the beginning of the National Assembly -- and not throughout its term -- is definitely subject to caution and certainly leaves room for different interpretation.
4. Suppose a new car is required to have four wheels when it is produced at a factory. Is this requirement valid ONLY at the beginning? Certainly NOT. Suppose the car loses one wheel some time after its production. Such a car, with only three wheels, cannot be used normally as usual. It has become dangerous for its passengers, for other cars and for the public at large.
5. The conflicting interpretations by the CPP and the SRP will create at least some doubt about the legally and the validity of any decision made by a National Assembly with less than 120 members. More precisely, when it comes to the ratification by the National Assembly of loans from international institutions and foreign countries, even a little doubt is enough for serious and professional creditors to stop, reduce or delay any loans that appear more risky (see point F7 in my economic analysis below).

Our final and practical objective is to put decisive pressure on the CPP to make them accept:

1. A moratorium on land grabbing and forced evictions in line with a recent appeal by the United Nations.
2. A revision of the composition of the National Election Committee in line with a recommendation from the European Union so as to ensure more transparent and acceptable elections in 2012 and 2013.

Sam Rainsy

November 13, 2011

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November 13, 2011

WHY THE HUN SEN REGIME RELIES MORE AND MORE HEAVILY ON EXTERNAL BORROWINGS

The economic situation in Cambodia is artificial, fragile and explosive based on the following interrelated facts (from F1 to F7):

F1 : A dollarized economy. The country’s money supply is composed of US Dollars for up to 95% and Riels for only 5%. The exchange rate (1 US Dollar = around 4,000 Riels) is totally artificial, being easily manipulated given the respective amounts of Riels and Dollars in circulation. Because it is pegged to the Dollar, the Riel is overvalued compared to the currencies of our neighbouring countries and commercial partners after taking into account the differences in inflation rate in the different countries (caution: official statistics in Cambodia are manipulated for political reasons). The dollarized economy and the overvalued Riel contribute to a loss of competitivity for Cambodia’s economy which in turn contributes to a huge trade deficit and a large unemployment.

F2 : High inflation rate, meaning increasing cost of living. This seems paradoxical given F1 because inflation tends to be lower in countries with an overvalued currency. But the high inflation in Cambodia is largely due to compulsory bribes throughout the production and distribution processes, other forms of financial extortion and commercial monopolies based on government systemic corruption. Inflation is an insidious form of wealth transfer from the weak and the poor to the powerful and the rich, whereas the ongoing land grabbing is a direct and brutal form of such a transfer.

F3 : High and increasing unemployment rate partly due to the dollarized economy (see F1) but also to demographic factors, inappropriate education system, corruption-related hindrances to foreign direct investment and poor economic governance.

F4 : Deteriorating living conditions because of high inflation and low salaries for workers, employees and civil servants. Farmers’ income also suffers from government corruption and neglect and the absence of any consistent agricultural policy (by comparison see SRP political platform for agriculture). Hidden and disguised unemployment is a major cause of poverty (see F3).

F5 : Huge trade deficit (imports of goods and services larger than exports). The main cause for such a deficit is low productivity and declining competitivity associated with the dollarized economy (see F1) and high inflation (see F2).

F6 : Continuous fiscal (or State budget) deficit. Because of government corruption (loss of State revenues, unjustified increase in State expenditures that are always inflated) the fiscal deficit is persistently high and needs to be covered by international assistance, increasingly by borrowings from foreign institutions and countries.

F7 : Increasing borrowings from foreign institutions and countries, such as China over a recent period (see F6). The corresponding capital inflows help perpetuate the dollarized economy (see F1). External borrowings feed corruption, allow continuous fiscal and monetary irresponsibility on the part of the CPP-led government that is in a position to indulge in vote buying (donations and patronage system). Thanks to the increasing amount of non-transparent external borrowings in foreign currencies, secret amounts of Riels could also be illegally printed (paper money) by the CPP for corruption and election purposes without notably affecting the exchange rate (see F1). Therefore, external borrowings play a pivotal role in maintaining the CPP in power by preventing a deterioration of the fiscal deficit (see F6) and a worsening of the balance of payments (see F5) that would result in dramatic consequences for the economy and for the CPP political domination (see F2, F3 and F4 which show how the economic, social and political situation is potentially explosive).

Sam Rainsy

Elected Member of Parliament

Former Finance Minister