Why has the US blacklisted a Chinese firm in Cambodia?
The United States has blacklisted a Chinese firm building an extensive resort in Cambodia, alleging human rights violations and corruption. However, there is much more to the project and the US’s actions than meets the eye.
By Umair Jamal
The United States has blacklisted a Chinese company building the Dara Sakor resort in Cambodia over alleged corruption charges.
The US Treasury Department’s Office of Foreign Assets Control announced that the Union Development Group (UDG) “forced Cambodians from their land and devastated the environment, hurting the livelihoods of local communities, all under the guise of converting Cambodia into a regional logistics hub and tourist destination.”
Washington imposed sanctions on the Chinese company under the Global Magnitsky Act. The act empowers the US government to target human rights violators globally by freezing their funds and prohibiting companies from doing business with them.
However, the corruption allegations may not have been the key reason for the ban. UDG is building a resort complex in Cambodia but the US alleges that the company is helping Beijing to build a military base in Cambodia.
The crackdown highlights a new phase in Washington’s efforts to pressure companies helping Beijing expand its military operations across Southeast Asia and around the world.
And the development is set to usher in another phase of the ongoing trade conflict between Washington and Beijing in Southeast Asia whereby even small businesses and private entities could come under pressure from both China and the US.
What prompted the US to blacklist the firm?
The US Treasury Department says that UDG is building its project in Cambodia on land seized from local people. Reportedly, work on the resort complex began in 2008 after Cambodia leased 111,200 acres to UDG for 99 years. The company said it planned to invest US$3.8 billion, building a resort with business, industrial and residential areas.
It is an unusual step for Washington to use a domestic law to impose sanctions on a Chinese firm in Cambodia for committing human rights violations. While UDG is not the only Chinese firm working in Southeast Asia or elsewhere that is accused of human rights abuses, it is the only firm on which the US has imposed sanctions.
The company’s project in Cambodia likely carries implications for American security interests in the region. Reuters reported that “The firm is building the Dara Sakor complex in a national park on the Cambodian coast, with a runway capable of taking some of the world’s biggest planes.” There are concerns that UDG is building additional military infrastructure close to the project, fueling speculation about the civilian and security nature of the project.
Is China building a military base in Cambodia?
The size of UDG’s Dara Sakor resort seems to be far bigger than expected to meet tourism needs. The Chinese firm has repeatedly denied reports that its project in Cambodia has military objectives. However, the project has long been suspected of having the backing of the Chinese government.
Several senior government officials from China have visited the project site and helped put the firm in contact with the Cambodian government. Last month, Chinese foreign ministry spokesman Wang Wenbin said that Washington “has repeatedly used unwarranted allegations that China’s relevant project in other countries could be transformed into military bases to discredit and attack our normal cooperation with relevant countries.”
US Secretary of State Mike Pompeo recently said there were “credible reports” that the Dara Sakor project’s scope extends to military purposes. “If so, (this) would go against Cambodia’s constitution and could threaten Indo-Pacific stability, possibly impacting Cambodia’s sovereignty and the security of our allies,” he added.
The Cambodian government has denied that the project has any military aims or the country is planning to provide China with naval bases. However, it is unclear as to how big a role the Cambodian government has in the project.
An article published in the Wall Street Journal last year alleged that Cambodia had signed a secret agreement with China to station its armed forces at a coastal naval base. “A pact – signed this spring but not disclosed by either side – give China exclusive rights to part of a Cambodian naval installation on the Gulf of Thailand, not far from an airport being constructed by a Chinese company,” it read.
Analysts share concerns about China’s military intentions in Cambodia
Paul Chambers, a regional analyst at Naresuan University, told the South China Morning Post that the Cambodian government may be considering approving a Chinese naval base in the country. These claims are consistent with a recent report the US Department of Defense published. It raised concerns about China’s plans to use Cambodia as a naval and military base.
Assessing whether the project is intended for military use, Gregory Poling, director of the Asia Maritime Transparency Initiative at the Centre for Strategic and International Studies said “if there is any country in Southeast Asia where the Chinese might be able to gain a rotational military presence, it would be Cambodia.”
Yun Sun, director of the China Program at the Washington-based think tank The Stimson Centre, agreed, adding that the UDG project had “the capacity for military use,” likening it to similar developments in Djibouti, Myanmar, Pakistan and Sri Lanka.
To an extent, the ban is a warning for other businesses working on China’s flagship projects in Southeast Asia that they could be next if Washington believes they are undermining its regional interests. Furthermore, the development is only going to accelerate both China and the US’s efforts to divide ASEAN nations to further their military and political gains.
Cambodia could become the first Southeast Asia country with a base for Chinese military assets. If that happens, it would almost certainly destroy the notion that ASEAN or any of its members can keep Southeast Asia neutral as Beijing and Washington’s rivalry continues to escalate.