Cambodia Land Deal Condemned

By Luke Hunt
The Diplomat
August 12, 2011

For a while now, residents of Phnom Penh have watched aghast as the government has allowed a property developer to clear the shores of a city lake of those residents deemed too poor to live there, and then fill it in with slurry from the Mekong River. Boeng Kak Lake was an historic site that provided much needed drainage for a city that often floods in the wet season. Now it’s not much more than a puddle, ready for developers to build luxury flats and high-end shops for the country’s elite and small middle class, often known locally as the Khmer Riche.

The site has also become a flashpoint for righteous NGOs fed up with the crony capitalism that has dogged Cambodia since peace was finally established in 1998 and a government that insists such projects must go ahead if the country’s economic development is to happen.

That was until the World Bank stepped in, conducted its own surveys in response to complaints from NGOs, and suspended all new lending to Cambodia after the government failed to agree on fair compensation packages for remaining land owners.

The bank’s inspection panel has found that residents around the lake were denied access to due process of adjudication of property claims, and that they had subsequently been displaced in violation of policies already agreed to by the bank and the government.

Two thousand people have already been evicted, of whom the panel said the bank had been too slow in responding to them, and another 10,000 are facing eviction.

The development is being led by Inner Mongolia Erdos Hongjun Investment Corp of China. The company has apparently promised investments worth $3 billion in Cambodia on projects ranging from housing to power generation.

The World Bank move was a calculated decision. Western governments have shied from calls over recent years to use foreign aid as an inducement to encourage or force the Cambodian government to improve its human rights record and reduce corruption. The fear is that any cut would simply push Cambodia further into the arms of a waiting China, which always insists it invests and disperses foreign aid with no strings attached. World Bank investments are just $343 million and focused on health and education.

Prime Minister Hun Sen may be no angel, but he is the wiliest of all leaders in Southeast Asia. And, given his experience with foreign governments over the years, he’s unlikely to be overwhelmed by Chinese interpretations of noblesse oblige.

Similarly, he loathes being told how to spend money by international institutions like the World Bank.

Perhaps it’s time his government reconsidered an earlier deal that would set aside 15 hectares around the lake for a local housing development and perhaps even renovate what remains of the lake as a park.

That deal was rejected by the government in 2007, when a 99-year lease was granted to the developers. But its reinstatement would go a long way in easing tensions with the World Bank, which over the years has done much more for Cambodia than the Chinese.