http://www.atimes.com/atimes/Southeast_Asia/IA26Ae02.html

Cambodia's coming energy bonanza
By Shawn W Crispin

undisclosed discussions with senior members of Hun Sen's ruling Cambodian People's Party (CPP).

Yet there's also a potential Cold War twist to China's bid. Any future oil-and-gas-production agreements with the CPP-led government will likely need to pass through Sokimex, Cambodia's leading conglomerate, which through a joint venture with Tela Petroleum Group controls 80% of the country's domestic oil and



gas distribution. The politically connected company also maintains significant holdings in hotels and maintains monopoly rights to ticket sales for the Angkor Wat ruins, the country's chief money-spinning tourist destination.

Sokimex is majority-owned by ethnic Vietnamese Sok Kong, former president of the Phnom Penh Chamber of Commerce and a longtime friend of Hun Sen, according to a researcher conducting due diligence on the company. Although today Hun Sen is clearly Cambodia's most dominant politician, there are still lingering questions about his ties to Vietnam, which first put him in power after invading the country and ousting the Khmer Rouge regime in 1979.

A controversial border treaty Hun Sen signed with Vietnam in 2005 raised allegations that his government ceded too much Cambodian territory to Hanoi - charges the feisty prime minister countered by jailing journalists and activists. Energy analysts note that Cambodia's newfound reserves coincide with the expectation that Vietnam's own diminishing fuel supplies will run out over the next decade. So far Hanoi has no plans on how it might fill this future energy gap.

And while it is unlikely that Vietnam has enough political clout left in Phnom Penh to override Beijing's bid for majority access to Cambodia's reserves, the enduring Cold War relationship could materially affect how the oil and gas are divvied up among its energy-starved regional neighbors.

Crude comparisons
What is more likely is that senior CPP officials have designs on building up Sokimex and perhaps also Tela Petroleum through lucrative state energy concessions, which, once converted into foreign-currency earnings, may be tapped to support its patronage-based political machine and further consolidate the party's dominance over Cambodian politics - akin to how Malaysia's ruling United Malays National Organization has relied on state oil giant Petronas for its own political purposes.

The political opposition has already lodged price-gouging allegations against the two politically connected energy companies, which to date are still net oil and gas importers. The Sam Rainsy Party complained last year that domestic retail oil prices failed to fall in line with declining global oil prices, which fell by about 25% between mid-July and November last year. They have also publicly accused the two companies of tax and customs-duty evasion on imported petroleum products.

Western donors have already sounded warnings about the potential pitfalls of Cambodia's supposed newfound energy wealth. For instance, the World Bank has pointedly compared Cambodia's situation to that of oil-rich Nigeria, where corrupt politicians have pilfered billions of dollars' worth of oil revenues and where local versus national claims to resources have recently degenerated into civil war. Thirty years and thousands of drained oil wells after Nigeria's oil boom began, it is still one of the world's most impoverished countries.

Hun Sen's government has come under intense donor pressure to tackle endemic corruption among his ranks, which in recent years has reached such outrageous proportions that donors have threatened to withhold future aid disbursements without demonstrable progress in curbing graft. Global corruption watchdog Transparency International said in a recent study that "corruption pervaded almost every sector of the country" and that "those in power have little reason to change a system that has secured them much power and personal wealth".

If recent projections are realized and energy revenues start flowing in 2009, the pie is set to grow substantially. And Hun Sen's government, which currently relies on foreign aid for about 60% of its working budget, will very soon neither be dependent on Western aid for its economic sustenance, nor particularly motivated to change its corrupt ways as suggested by finger-wagging Westerners.

Cambodian officials have already promised to funnel future energy receipts into rebuilding the country's shattered infrastructure, including hospitals and schools. Judging by the status quo, however, any hopes that Cambodia's incipient energy bonanza will substantially trickle down to the 35% of the population mired in poverty will likely prove more pipe dreams than political reality.

Shawn W Crispin is Asia Times Online's Southeast Asia editor.

(Copyright 2007 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)





Dont get me started about this

Thank you for your elaboration. Well put and well stated.

dam. it sounds as if cambodia has all the right ingredients in recreating another nigeria

^ I know, i wonder how much of that oil is gonna benefit the people. Because in the hands of the corrupt and elite, it will go nowhere and lead not even to a single growth in development / economy

I'd like to know your oppinion though Lemon Grass =) and yours too Goomba!

My opinion; very bleak for Cambodia! However, I hope there will be some sort of political settlement for people in power to let the lesser people have some lifelyhood, if not part of the action. The people who will be the biggest looser and will always be loosers are the Khmer people. I just want my people to have some share in Cambodia's future sucess. What I fear most is another civil war in Cambodia because of the corruptions.
Some of you may wonder, why is this Khmer person from Thailand care so much about Cambodia? Well, Cambodia is the heartland of Khmer people. Why would it be called "Srok Khmer"?
For this comment, I will be labeled as a traitor and a racist and many, many other names as others find fit to call me.

Not to sound so pessimistic, but from reading and hearing all these accounts and anecdotes of corruption from the news and people who have first hand accounts, I think that tells you that it [corruption] sure as hell is real and it exists there [Cambodia]. With that said, I feel that Cambodia is so deeply rooted in corruption, it would take more than miracles to lift this curse. First and most importantly is to unite all Cambodians/Khmer's. How do we do this? Promote Nationalism but at the same time if possible, give recognition to all the different cultures of Cambodia. People who care more for the greater good of his or her nation have many things to be proud about and with pride, they lead the country into a path of a bright future. Sacond is to fight corruption at it's core. Greed. I felt so sick to my stomach when I read about how bad the corruption was in the school system of Cambodia. Teachers selling donated school supplies for distribution to students who can barely afford it, let alone the price of education. That is so greedy! How do you teach people to be less greedy? I think Nationalism. When people who feel like they belong, people of all social classes, and people of all backgrounds are united, they are more compassionate for one another. The third step would be to increase economic/political/business education. The last step is education.

The bottom line is : I think we cambodians just need to learn to love each other.

Nationalism is a great idea, and its good that you believe in Unification because a United Cambodia is a strong Cambodia. yeah its true that teachers are bribed by their students. The government just doesnt pay them enough to survive. While the politicians are profitting millions from lumber, land investments, the people under just go hungry...

My point exactly. Everyone is so damn greedy and it all trickles down. I understand now, these same teachers that sell donated school supplies aren't greedy cause they want to be. These damned politicians have no sense of nationhood among Kampuchea. That's probably a good reason why they were placed in their position set up by the Vietnamese. What would it take to reduce the amount of corruption?