[Editor’s Note: Cambodia has racked up about $4.3 billion in bilateral debt with China, leading Ear Sophal, author of “Aid Dependence in Cambodia: How Foreign Assistance Undermines Democracy” and Associate Professor of Diplomacy & World Affairs at Occidental College, Los Angeles, to argue that the government is mortgaging the country to Beijing. VOA’s Sok Khemara spoke with Sophal by email this week to discuss Cambodia’s changing international relations.]
VOA: Are debts and loans from China really helping Cambodia’s economic growth?
Sophal: If they go toward productive investments, yes, they will promote long-term growth later (any kind of spending has short-term stimulating effects, but they can also crowd out good investments -- making everything more expensive), but not if the terms are terrible or the price (of the infrastructure) is too high. Everything has a price; the price must be right and not usurious.
VOA: What do you see in Cambodia’s latest developments and growth after getting more debts and loans from China?
Sophal: Previous debt sustainability analysis suggests that Cambodia is not in over its head, but so much of what goes on in Cambodia is based on growth fueled by a bubble — primarily real estate. When the bubble bursts, who will be left holding the bag? Do you really think Cambodia can escape economic cyclicality and grow and grow but never correct? No economy in the world only grows and never suffers from a recession. The coattails of China are great; they have been for Australia, but too much dependence on anyone is bad. When China sneezes, Cambodia will catch a cold.
VOA: Are those loans and debts acceptable to the public? Should they know about this?
Sophal: There should be transparency as to the terms of the loans and amount of debts; the price of infrastructure. If one says I built you this $157 million stadium, is it really worth $157 million? What if it’s only worth $57 million? Didn’t you pay an extra $100 million in loans? Sure, the terms might be very low-interest rate or whatnot, but the value of the goods built is inflated.
VOA: Can Cambodia pay back the debts and loans from China in the future?
Sophal: I hope so. The alternative is neo-colonialism. In Sri Lanka, China built a nearly $300 million airport (with 2/3 from the ExIm Bank of China). It opened in 2013 and is today so empty that only two airlines fly there, only one of which is international. The airport can handle one million passengers per year and is 10,000 square meters. It’s basically empty. Hopefully, nothing like this will happen in Cambodia. We’re building a new $1.5 billion airport for Phnom Penh and a nearly $1 billion airport for Siem Reap. Another lake will be partially filled-in for the new airport in Phnom Penh. It never ends with filling in lakes. Its as if we don’t need lakes… only land… until it rains so much that you wish you had a place for all that water to go to.
VOA: What are the risk factors for Cambodia to get more debts and loans from China?
Sophal: At some point, you owe a country so much that they own you. It’s true of foreign aid from not just China but from any single source that becomes overwhelmingly large as a share of your overall debt profile. They demand to build a military base—or port—on your land. They're already building two airports. You cannot say no. You become a province to them.