Trade, aid fail Cambodia's poor

August 15, 2008
Joanne Knight
The Age (Australia)

The future is bleak for Cambodians and Burmese when corruption is rife.

BURMA and Cambodia occupy significant geopolitical positions in Asia. The West has an interest in controlling this area as a buffer against China's growing power. As a pawn in global politics, Cambodia is being controlled through international aid at the expense of its people.

Burma is possibly heading in the same direction. As Burma bows to pressure from the West to allow aid into the country after cyclone Nargis, critics argue the aid will come tied to economic liberalisation.

Cambodia and Burma share striking similarities: both are extremely poor and are governed by corrupt elites. But Cambodia is about 10 years ahead in accepting Western aid. Its present does not augur well for Burma's future.

The outcomes of Cambodia's development have been mixed: extremely beneficial for economic growth, the ruling elite and crony capitalism, and less advantageous for the poor. The development has been centred on trade liberalisation, with open markets for the country's timber and textile exports. The World Bank has reported that local corruption has impeded the country's development, particularly poverty reduction, but the real difficulty may be the porous state of Cambodia's economy.

Corruption is common in Cambodia. Transparency International's Corruption Perceptions Index ranks Cambodia at 162 out of 179 countries (Burma ranks at 179, the worst country along with Somalia). Some claim that much aid from the international community has gone to private pockets.

Since the Paris peace agreement of 1991, Cambodia has been subjected to the scrutiny of international donors, including the World Bank, the International Monetary Fund and the Asian Development Bank. Aid constituted more than 10% of gross national income in 2004, far more than the low-income country average of 2.8%. In 2006, the amount of aid reached $US595 million. Cambodia is also a fast-growing economy, with annual economic growth at nearly 11% in 2006. But poverty has fallen at a rate of only 1% a year. Two key features of Cambodia's National Strategy Development Plan 2006-10, funded by the World Bank, are trade liberalisation and the creation of export-processing zones.

Development projects have done little to limit corruption in Cambodia. The World Bank's Forest Concession Management and Control Pilot Project (FCMCPP) began in 2000, funded by a $US5 million Learning and Innovation Loan. In June last year, Global Witness published Cambodia's Family Trees, which detailed the intimate connections between the owners of logging companies and the Cambodian Government. Owners of the largest logging companies — Kingwood Industry, Everbright CIG Wood and Colexim Enterprise — are friends and relatives of Prime Minister Hun Sen. They have been repeatedly involved with extensive logging outside of their plantation areas, terrorising locals and exempted from paying royalties and taxes.

In 2002, under pressure from international donors, the Cambodian Government imposed a moratorium on harvesting in logging concessions, after the companies failed to submit forest management plans. The moratorium ended in December 2004, on the condition that logging was supervised to ensure no fresh logs entered the supply chain. But no measures were taken to prevent further illegal logging. The FCMCPP has grievously failed Cambodia.

International donors are quick to point to political corruption in Cambodia to explain its lack of progress in decreasing poverty, but such moral judgements ring rather hollow when $US600 million in Asian Development Bank funds are invested in offshore private equity funds, many domiciled in tax havens such as the Cayman Islands.

National institutions are required to divert money back into the country. Development policies focused on economic liberalisation will not foster them. Without the political will to create these institutions, any benefit will continue to be siphoned off into the hands of international business and corrupt local political and business elites. The future for the people of Cambodia and Burma is bleak without policies that focus on their wellbeing.

Joanne Knight worked for seven years as a consumer credit and housing adviser for the Brotherhood of St Laurence and the Victorian Government.

Political Cartoon: Why are we so poor?

Photo by Virak
Cartoon by Sacrava (on the web at http://sacrava.blogspot.com)

Phnom Penh: scrapheap of the poor

10 years on from historic coup, success story is blighted by corruption

From Nick Meo in Phnom Penh
Sunday Herald (Scotland, UK)

THE MUNICIPAL dump on the outskirts of Phnom Penh is where Cambodia's luckless poor go when they become truly desperate.

As the monsoon rains pour down scavengers hunt through piles of stinking refuse for bits of saleable scrap or even edible food. At this time of year, with the rain and mud at their worst, they have been known to disappear into water-filled holes or slip under the tracks of the dump's bulldozers.

This is the Cambodia that the tourists don't see. On the surface the nation appears to have become a success story, with its years of mass murder and war behind it; now there is political stability, more than 10% annual economic growth and a thriving textile sector.

But the scavengers at the dump are evidence of the downside - the victims of the corruption and greed which has thrived since the current prime minister, Hun Sen, grabbed power in a coup 10 years ago this week. Since then, behind a veneer of democracy, the corrupt elite around him has become richer and a gaping chasm has opened between rich and poor.

The corruption problem is one of the worst in Asia. Last year, Transparency International rated Cambodia at 151 out of 163 nations in its government corruption index. Yet fears are growing that a dysfunctional political system will soon become much worse.

In three years' time, massive offshore oil wealth will start to be pumped - perhaps as much as 500 million barrels.

It should produce a bonanza which could fund the schools, roads and hospitals that Cambodia desperately needs, but instead it will almost certainly flow into the pockets of the corrupt. The poor could then become even worse off because prices will be forced up as the economy grows.

Aid workers speak of the example of Nigeria, where years of oil revenues have been stolen by the corrupt and life has hardly changed for the poor. The resulting anger there has caused crime and instability - spectres which are beginning to concern diplomats in Phnom Penh.

So far, the poor have had to accept their fate, but with so many dispossessed existing alongside a class of wealthy who enjoy flaunting it there are concerns that political unrest could grow.

The ugliest form of exploitation has been an epidemic of land-grabbing in which businessmen pay thugs or corrupt police to drive the poor from their homes so they can build on sites which are rocketing up in value.

Many of those victims end up struggling to survive in the dump. Some were evicted from urban shanty towns which are bulldozed for development; others were tribal people tricked out of their forest lands or peasants with a few paddy fields which a sharp-eyed developer realised could turn a quick profit.

In the dump most of them live on the edge of the sprawling refuse heaps in a shanty town which they have built from scrap, afflicted by disease and preyed on by toughs. Other victims of land-grabbing live in refugee camps, waiting for help promised by the authorities which never seems to arrive.

The problem is so serious that the UN's Special Rapporteur on Human Rights in Cambodia last month issued a report on land-grabbing, accusing the corrupt rich of having a devastating effect on the poor and driving tens of thousands from their homes into destitution.

It is easy to drive the poor off because few Cambodians have land titles. After the chaos of Khmer Rouge rule between 1975 to 1979, when more than a quarter of the population was murdered and property was abolished, the survivors often settled where they could without documents to prove ownership. Following the fall of the regime the most ruthless thrived. Now they are rich.

Illegal logging of the once-beautiful and extensive forests has been another way for the rich to turn a fast buck. Last month watchdog group Global Witness castigated a clique around Hun Sen for making tens of millions of dollars out of logging. The prime minister was furious - with Global Witness.

He also attacked international aid donors when they ticked him off for corruption last month at an annual meeting to fork out millions of dollars in taxpayers' money, much of which will be stolen. Hun Sen pledged to clean up the corruption, as he does every year, and the donors pretended to believe him, as they do every year. The donors don't press too hard. Most are worried that Cambodia is getting too close to China, which is eyeing the offshore oil and making aid pledges without complaining about human rights abuses.

Meanwhile, as the rich build mansions and work out how to make money out of the forthcoming oil boom, the poor are left to survive as best they can.