Category Archives: economics

What’s the Matter with Cambodia?

From Cambodia’s Curse: The Modern History of a Troubled Land, by Joel Brinkley (Public Affairs, 2011), Kindle Loc. 258-289:

Ask any Cambodian leader why the nation remains so stagnant while most of its neighbors prosper, and he will blame the Khmer Rouge years. “We are a war-torn country just now standing up from the ashes,” Nam Tum, chairman of the provincial council in Kampong Thom Province, said in 2009, echoing similar remarks by dozens of officials, thirty years after the Khmer Rouge fell from power. In Phnom Penh at that time, the United Nations and Cambodia were putting several Khmer Rouge leaders on trial. But so much time had passed that the leaders were old and frail. Some of them were likely to pass away before they could stand trial. Pol Pot was already long dead.

At the same time, though, Vietnam’s experience over the same period complicates Nam Tum’s argument. Vietnam suffered a devastating war with the United States in the 1960s and ’70s that killed 3 million Vietnamese and destroyed most of the nation’s infrastructure, just as the Khmer Rouge (and the American bombing of eastern provinces) did in Cambodia.

The war in Vietnam ended just four years before the Khmer Rouge defeat in 1979. Yet today Vietnam’s gross domestic product per capita is almost ten times higher than Cambodia’s. Only 19 percent of the economy is based on agriculture, compared to more than one-third for Cambodia. Vietnam manufactures pharmaceuticals, semiconductors, and high-tensile steel. Cambodia manufactures T-shirts, rubber, and cement. Life expectancy in Vietnam stands at seventy-four years. In Cambodia it is sixty-one, one of the lowest in the world. (In the United States it is seventy-eight years.) [But see Note 1 below.]

Most Vietnamese students stay in school until at least the tenth grade. By the tenth grade in Cambodia, all but 13 percent of the students have dropped out. Vietnam’s national literacy rate is above 90 percent. UN agencies say that Cambodia’s hovers around 70 percent, though available evidence suggests that may be far too generous. Most Cambodians over thirty-five or forty years of age have had little if any schooling at all. The explanations behind these and many other cultural and economic disparities lie in part in the nations’ origins. Vietnamese are ancestors of the Chinese, while Cambodians emigrated from the Indian subcontinent. [Not! Emphasis added. See Note 2 below.] From China, the Vietnamese inherited a hunger for education, a drive to succeed—attitudes that Cambodian culture discourages.

Author David Ayres wrote in his book on Cambodian education, Anatomy of a Crisis, that in Vietnam, “traditional education provided an avenue for social mobility through the arduous series of mandarin examinations.” In contrast, “Cambodia’s traditional education system had always reinforced the concept of helplessness, the idea that a person was unable to determine their position in society.” Village monks taught children that, after they left the pagoda school when they were seven or eight years old, their only course was to make their life in the rice paddies, as everyone in their family had done for generations.

The two nations have fought wars from their earliest days, when the Vietnamese were known as the Champa [Not! Emphasis added. See Note 3 below.] and lived only in the North of the country. The rich, fertile Mekong Delta in the South was part of Cambodia for centuries—until June 4, 1949, in fact, when France, which was occupying both nations, simply awarded the territory to Vietnam. And North Vietnam, where most Vietnamese lived, early in the nation’s history, was not blessed with the same fertile abundance as Cambodia. As a result, the Vietnamese never acquired a dependence on “living by nature.”

Even with Vietnam’s fertile South, an accident of nature has always given Cambodia an advantage. The Tonle Sap lake sits at the center of the nation, and a river flowing from it merges with the Mekong River, just north of Phnom Penh. Each spring, when the Mekong swells, its current is so strong that it forces the Tonle Sap River to reverse course, carrying tons of rich and fertile mud, as well as millions of young fish, back up to the lake. When the lake floods, it deposits new, rich soil on thousands upon thousands of acres around its perimeter. The fish provide meals for millions of people through the year. Cambodian civilization was born on the shores of the Tonle Sap. The wonder and reliability of this natural phenomenon still encourage many Cambodians to “live by nature.” Even now, many Cambodians say they have no need for society’s modern inducements.

Notes: Brinkley’s book does a good job of assembling evidence of thoroughgoing corruption throughout Cambodian society, based on his own personal interviews and on reading what government officials and fellow journalists have written. This is how most journalists seem to work. They don’t appear to read much history, and thus have little frame of reference for anything that happened before their lifetimes. (They don’t even check Wikipedia!) The introductory passage quoted above contains the worst examples of garbled history that I have encountered so far in this book.

1. The Khmer Rouge specifically targeted and killed most of their urban, educated, and entrepreneurial population, forcing everyone into autarchic, agrarian, rural communes, committing excesses even by the standards of Mao’s Cultural Revolution. North Vietnam, by comparison, may have imprisoned, killed, or driven into exile large numbers of urban, educated, entrepreneurial southerners, but they had from early on adopted Russian-style industrial models of building socialism, which depended on cadres of educated technicians. Furthermore, within its decade of economic chaos and stagnation after absorbing the south (1975-1986), Vietnam began reforming its Stalinist centrally planned economy and moving toward a Deng Xiaoping-style socialist-oriented market economy (called Doi Moi). These reform efforts began in the south, which had had a free-wheeling colonial- and military-oriented market economy until 1975. In Vietnam: Rising Dragon (Yale, 2010), Bill Hayton argues that unified Vietnam owes its economic dynamism primarily to the former South Vietnam.

2. The Cambodian (Khmer) and Vietnamese languages are both classified as Austro-Asiatic (also known as Mon-Khmer), thought to be indigenous to mainland Southeast Asia (roughly centered on the Mekong River Valley), with scattered outposts in northeastern India. “Cambodians” never migrated from India, nor were Vietnamese the ancestors of the Chinese. All of Southeast Asia was heavily influenced by South Asian culture for many, many centuries, but only northern Vietnam was ever conquered and ruled by China for a thousand years (111 BC to AD 938). Like Korea and Japan, Vietnam long ago adopted Chinese as its language of scholarship and all three languages retain thousands of words borrowed from Chinese. All three countries belong to the Confucian-influenced East Asian cultural sphere.

3. Cham peoples occupied most of the central coast of present-day Vietnam for at least a thousand years before they were finally conquered by the Vietnamese between 1471 and 1832. They were maritime peoples who spoke Malayo-Polynesian languages and had wide trading ties across the Malay world and beyond. During the 12th century, the Kingdom of Champa sacked Angkor Wat, but it was gradually diminished and its people dispersed by constant warfare with Khmer and Vietnamese kingdoms. Like most of the Malay world, the Cham absorbed much Hindu religion and culture during early times, and much Islamic religion and culture in later centuries.

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UN Occupies Cambodia, 1992

From Cambodia’s Curse: The Modern History of a Troubled Land, by Joel Brinkley (Public Affairs, 2011), Kindle Loc. 144-165, 1178-1197:

In fact, the Cambodian “war” had ended in 1979, more than a decade before the UN occupation began. An old leader had regained his strength while new ones had emerged. Prince Norodom Sihanouk, the consummate self-interested monarch who was extremely popular with most of the Cambodian people, had ruled Cambodia since 1941, until a military coup deposed him in 1970. The Khmer Rouge brought him back as their titular head of state—though he was imprisoned in his palace during their reign. Then, as the UN troops began arriving in 1992, they made him honorary king again. But he wanted nothing less than his old job back—the all-powerful monarch, just like the kings who had ruled Cambodia since the beginning of time. Now, however, he had competitors.

During the Vietnamese occupation, from 1979 to 1989, a young Khmer Rouge officer named Hun Sen was named prime minister. He was barely educated, but clever and utterly ruthless—as one might expect of a young man trained by the Khmer Rouge and then the Vietnamese military. The prime minister’s job was handed to him in 1985; he was not about to give it up.

A third competitor arose, Norodom Ranariddh, one of Sihanouk’s sons. He had led a hapless guerrilla organization, funded by the United States. Its goal was to drive the Vietnamese and their appointed government, including Hun Sen, out of the country. After Vietnam pulled out, Ranariddh coveted power too. He seemed to know or care little about governance. But as prime minister, he knew he would be able to enrich himself. Ranariddh was not as clever as Hun Sen, but he was of royal lineage, which gave him a strong advantage.

So, past examples like Germany and Japan—even South Korea—simply were not useful models for this grand experiment. In fact, the Cambodian venture was unprecedented. Even before the UN troops left, the three aspiring leaders were grappling for power, as if the UN election had never taken place. Their contest lasted many years.

The troops may have left, but the United Nations was still there, running a phalanx of charitable organizations—UNICEF, UNESCO, the World Food Program (WFP), and the rest. The United States Agency for International Development (USAID), the World Bank, and other major relief agencies from around the world worked alongside the UN. In fact, in time, 2,000 different donors and nongovernmental organizations (NGOs) set up shop in Cambodia. As the power struggles grew heated, even violent, the government grew ever more corrupt, and the donors began pushing the leaders to live up to their promises, to serve their people.

Hun Sen, Ranariddh, and the king offered little more than lip service to those demands, but that seemed to be enough. The donors kept giving money, hundreds of millions of dollars, year after year—even as the nation headed for a military showdown to settle the power struggle once and for all.

If anyone had doubted Hun Sen’s true intentions, he made them clear during the first Paris Peace Conference, in 1989, when he declared, “You can talk about sharing power in Paris, but not in Cambodia.” Vietnam had handed him the nation in 1985. He had ruled it uncontested for seven years. He would not step down or share his throne without a fight. And now, with wide reportage of the bamboo-pole incident [in which UN representatives were turned back at a bamboo-pole roadblock], Hun Sen and everyone else realized that the UN was not to be feared. It was nothing more than a paper force. A correspondent for the Far Eastern Economic Review, reporting from Cambodia at the time, put it this way: “The Cambodian people believed that the UN blue berets were like Jupiter threatening to unleash lightning against the Khmer Rouge. What do people see? UNTAC pulls back.”

The fact remained that the Khmer Rouge had not been defeated. The UN’s deputy military commander, Michael Loridon, a French brigadier general, urged his commander to attack and “deal with the Khmer Rouge problem once and for all.” That never happened, though the debate continued for years, until the last UN officer boarded a plane home. From the first days of the UN occupation, everyone knew that over ten years the Vietnamese army, with hundreds of thousands of troops, had never been able to defeat the Khmer Rouge. So what could the UN possibly do now?

By December 1992, more than a year after the Paris Peace Accords, the United Nations finally had its full force of soldiers and administrators in country. They were too late. Every Cambodian already knew that Jupiter had never climbed up the mountain. Pol Pot and Hun Sen were ignoring the UN and facing no penalty. But the truth was, the UN force offered a great deal more than the prospect of military reconciliation. Most Cambodians loved having them in town.

The visitors spent money, more money, and then more money still—$3 billion in all. Every staffer was given a daily living allowance of $145 on top of his salary—a year’s income for most Cambodians. Contractors had quickly put up apartment buildings and now were taking in $2,000, $3,000 a month—ridiculously high rents for Phnom Penh. Hotels were full, and new ones were under construction. Anyone who’d ever had a fleeting thought of running a restaurant scrambled to open one. Everyone with a car hired himself out as a driver. Brothels worked overtime; UN doctors treated thousands of their men and women for sexually transmitted diseases. Liquor vendors couldn’t keep up with demand; restaurant and bar owners had to replace fixtures and furniture broken in drunken brawls almost every evening. UN vehicles and equipment routinely disappeared in the night, but no one was sure whether the thieves were Cambodian or renegade UN employees.

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Nationalist, not Moralist, Conflict in Asia

From Asia’s Cauldron: The South China Sea and the End of a Stable Pacific, by Robert D. Kaplan (Random House, 2014), Kindle Loc. 322-333, 585-592:

There is nothing romantic about this new front line. Whereas World War II was a moral struggle against fascism, the Cold War a moral struggle against communism, the post-Cold War a moral struggle against genocide in the Balkans, Africa, and the Levant, as well as a moral struggle against terrorism and in support of democracy, the South China Sea shows us a twenty-first-century world void of moral struggles, with all of their attendant fascination for humanists and intellectuals. Beyond the communist tyranny of North Korea, a Cold War relic, the whole of East Asia simply offers little for humanists. For there is no philosophical enemy to confront. The fact is that East Asia is all about trade and business. Even China, its suffering dissidents notwithstanding, simply does not measure up as an object of moral fury.

The Chinese regime demonstrates a low-calorie version of authoritarianism, with a capitalist economy and little governing ideology to speak of. Moreover, China is likely to become more open rather than closed as a society in future years. China’s leaders are competent engineers and regional governors, dedicated to an improving and balanced economy, who abide by mandatory retirement ages. These are not the decadent, calcified leaders of the Arab world who have been overthrown. Rather than fascism or militarism, China, along with every state in East Asia, is increasingly defined by the persistence, the rise even, of old-fashioned nationalism: an idea, no doubt, but not one that since the mid-nineteenth century has been attractive to liberal humanists.

Truly, in international affairs, behind all questions of morality lie questions of power. Humanitarian intervention in the Balkans in the 1990s was possible only because the Serbian regime was not a great power armed with nuclear weapons, unlike the Russian regime, which at the same time was committing atrocities of a similar scale in Chechnya where the West did nothing; nor did the West do much against the ethnic cleansing in the Caucasus because there, too, was a Russian sphere of influence. In the Western Pacific in the coming decades, morality may mean giving up some of our most cherished ideals for the sake of stability. How else are we to make at least some room for a quasi-authoritarian China as its military expands? (And barring a social-economic collapse internally, China’s military will keep on expanding.) For it is the balance of power itself, even more than the democratic values of the West, that is often the best preserver of freedom. That also will be a lesson of the South China Sea in the twenty-first century—one more that humanists do not want to hear.

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Geostrategic South China Sea

From Asia’s Cauldron: The South China Sea and the End of a Stable Pacific, by Robert D. Kaplan (Random House, 2014), Kindle Loc. 222-253:

The South China Sea functions as the throat of the Western Pacific and Indian oceans—the mass of connective economic tissue where global sea routes coalesce. Here is the heart of Eurasia’s navigable rimland, punctuated by the Malacca, Sunda, Lombok, and Makassar straits. More than half of the world’s annual merchant fleet tonnage passes through these choke points, and a third of all maritime traffic worldwide. The oil transported through the Malacca Strait from the Indian Ocean, en route to East Asia through the South China Sea, is triple the amount that passes through the Suez Canal and fifteen times the amount that transits the Panama Canal. Roughly two thirds of South Korea’s energy supplies, nearly 60 percent of Japan’s and Taiwan’s energy supplies, and 80 percent of China’s crude oil imports come through the South China Sea. Whereas in the Persian Gulf only energy is transported, in the South China Sea you have energy, finished goods, and unfinished goods.

In addition to centrality of location, the South China Sea has proven oil reserves of seven billion barrels, and an estimated 900 trillion cubic feet of natural gas. If Chinese calculations are correct that the South China Sea will ultimately yield 130 billion barrels of oil (and there is some serious doubt about these estimates), then the South China Sea contains more oil than any area of the globe except Saudi Arabia. Some Chinese observers have called the South China Sea “the second Persian Gulf.” If there really is so much oil in the South China Sea, then China will have partially alleviated its “Malacca dilemma”—its reliance on the narrow and vulnerable Strait of Malacca for so much of its energy needs coming from the Middle East. And the China National Offshore Oil Corporation has invested $20 billion in the belief that such amounts of oil really do exist in the South China Sea. China is desperate for new energy. Chinese oil reserves account for only 1.1 percent of the world total, while it consumes over 10 percent of world oil production and over 20 percent of all the energy consumed on the planet.

It is not only location and energy reserves that promise to give the South China Sea critical geostrategic importance, it is the territorial disputes surrounding these waters, home to more than two hundred small islands, rocks, and coral reefs, only about three dozen of which are permanently above water. Yet these specks of land, buffeted by typhoons, are valuable mainly because of the oil and natural gas that might lie nearby in the intricate, folded layers of rock beneath the sea. Brunei claims a southern reef of the Spratly Islands. Malaysia claims three islands in the Spratlys. The Philippines claims eight islands in the Spratlys and significant portions of the South China Sea. Vietnam, Taiwan, and China each claims much of the South China Sea, as well as all of the Spratly and Paracel island groups. In the middle of 2010 there was quite a stir when China was said to have called the South China Sea a “core interest.” It turns out that Chinese officials never quite said that: no matter. Chinese maps have been consistent. Beijing claims to own what it calls its “historic line”: that is, the heart of the entire South China Sea in a grand loop—the “cow’s tongue” as the loop is called—surrounding these island groups from China’s Hainan Island south 1,200 miles to near Singapore and Malaysia. The result is that all of these littoral states are more or less arrayed against China, and dependent upon the United States for diplomatic and military backing. For example, Vietnam and Malaysia are seeking to divide all of the seabed and subsoil resources of the southern part of the South China Sea between mainland Southeast Asia and the Malaysian part of the island of Borneo: this has elicited a furious diplomatic response from China. These conflicting claims are likely to become more acute as energy consumption in developing Asian countries is expected to double by 2030, with China accounting for half of that growth.

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Deng Xiaoping in Singapore

From Asia’s Cauldron: The South China Sea and the End of a Stable Pacific, by Robert D. Kaplan (Random House, 2014), Kindle Loc. 1569-1586:

In the heart of Singapore, along the Singapore River, near to the perfectly engineered design statement that is the Asian Civilizations Museum, stands a diminutive and elegant monument to the late Chinese leader Deng Xiaoping. Deng was arguably among the greatest men of the twentieth century, because he dramatically lifted the living standards of close to a billion people throughout East Asia by introducing a version of capitalism to the Chinese economy. No man in history improved the quality of life for more people in a shorter time than Deng. But Deng elicits mixed feelings in the West. He was a ruthless authoritarian, who was the driving force behind the massacre of perhaps thousands of protesting students at Tiananmen Square in Beijing in 1989. Only in Singapore would he be so openly honored—at so appropriate a measured level, and for the right reasons. “Singapore has raised pragmatism to the level of a philosophy,” explained retired local diplomat Tommy Koh, whose idea it was to erect the monument to Deng. Singapore, he told me, stands against the beauty of ideas in favor of what works.

Standing next to the monument to Deng, I looked out at downtown Singapore: a dull grayish and blue-slate corporate park built on the scale of a megacity, the product of a meticulous mind, with sharp puzzle pieces of skyscrapers all neatly fitting together, maddening in their mathematical logic. At work was the abstract genius of the Chinese, who understand the conceptual utility of empty spaces; as opposed to the Indianized Malay mind, which is more at home in the world of thickly colored and deliciously cluttered textiles, with their floral and cartouche patterns (as evidenced by the displays in the nearby museum). But to call Singapore cold and impersonal is too easy a judgment. For everywhere there is civilizing greenery, starting with the dazzling bougainvillea bushes that line the road from the airport. Singapore is the only place in the Indo-Pacific, other than Japan, where traffic stops voluntarily for pedestrians.

At the end of history there is somnolence: that is the lesson of Singapore. Pragmatism carried to the furthest degree may not inspire the Western humanist mind, but it has been the only way for Singapore to survive as a physical speck of a city-state at the southern tip of the Malay Peninsula, whose location is coveted by the great powers. Singapore’s inner logic follows from its geographical vulnerability.

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Burmese Junta’s Policies toward Minorities

From Where China Meets India: Burma and the New Crossroads of Asia, by Thant Myint-U (Farrar, Straus and Giroux, 2011), Kindle Loc. 1569-1581:

In a way, the Burmese army’s policies towards their opponents were the direct opposite of the policy of Western governments towards the ruling junta. Western governments had employed economic embargoes and diplomatic isolation, hoping that by shunning the Burmese generals, the generals would eventually come around. They didn’t. The Burmese army employed very different tactics. They fêted their erstwhile foes, calling them ‘leaders of the national races’. They took them to the big cities, created new desires and allowed them to enrich themselves. Business links, even illicit ones, were actively promoted. They did this knowing that it would sap the insurgents’ strength as fighting organizations. By 2010 the Burmese army was in a far stronger position than when the ceasefires were first agreed.

Under the new constitution, some power would be devolved to local governments, each with their own semi-elected legislatures. It would be far from a federal system and the real authority of the local governments would be heavily circumscribed. But it was a small concession to ethnic minority leaders who had been fighting for genuine self-determination.

The Burmese military leadership also offered the ex-insurgent armies a deal on their future armed status: reorganize your men into a ‘Border Guard Force’, that will partly be officered by us and that will ultimately come under our authority. It meant a partial but not complete integration with the Burmese army. Acceptance would mean sweet business deals and a place for former rebel leaders in the new order. Some of the smaller militias accepted. The rest have not, so far.

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North Korea’s Economic Collapse

From Nothing to Envy: Ordinary Lives in North Korea, by Barbara Demick (Spiegel & Grau, 2009), Kindle Loc. 1810-1832:

KIM IL-SUNG’S DEATH had, in fact, not changed much in the country. Kim Jong-il had gradually been assuming power over the decade preceding his father’s death. The economy’s inevitable collapse had been set in motion years before under the weight of its own inefficiencies. But North Korea’s Great Leader picked a convenient time to die, one that would prevent his legacy from being tarnished by the catastrophic events of the coming years. Had he lived a moment longer, North Koreans today would not be able to look back with nostalgia at the relative plenty they had enjoyed during his lifetime. His passing coincided with the last gasps of his Communist dream.

By 1995, North Korea’s economy was as stone-cold dead as the Great Leader’s body. Per capita income was plummeting, from $2,460 in 1991 to $719 in 1995. North Korea’s merchandise exports dropped from $2 billion to about $800 million. The collapse of the economy had an organic quality to it, as though a living being were slowly shutting down and dying.

In Chongjin, the hulking factories along the waterfront looked like a wall of rust, their smokestacks lined up like the bars of a prison. The smokestacks were the most reliable indicators. On most days, only a few spat out smoke from their furnaces. You could count the distinct puffs of smoke—one, two, at most three—and see that the heartbeat of the city was fading. The main gates of the factories were now coiled shut with chains and padlocks—that is, if the locks hadn’t been spirited away by the thieves who had already dismantled and removed the machinery.

Just north of the industrial district the waves lapped quietly against the empty piers of the port. The Japanese and Soviet freighters that used to make regular calls to pick up steel plates from the mills were gone. Now there was only North Korea’s fleet of rusting fishing vessels. Perched on a cliff above the port, giant letters proclaimed KIM JONG-IL, SUN OF THE 21ST CENTURY, but even they appeared to be crumbling into the landscape. The red lettering on the propaganda signs along the road hadn’t been repainted for years and had faded to a dull pink.

One of the most polluted cities in North Korea, Chongjin now took on a new beauty, stark and quiet. In autumn and winter, the dry seasons in northeast Asia, the sky was crisp and blue. The sharp odor of sulfur from the steelworks had lifted, allowing people once more to smell the sea. In summer, hollyhocks crept up the sides of concrete walls. Even the garbage was gone. Not that North Korea ever had much litter—there was never enough of anything to go to waste—but with economic life at a standstill, the detritus of civilization was disappearing. There were no plastic bags or candy wrappers wafting in the breeze, no soda cans floating in the harbor. If somebody stamped out a cigarette on the pavement, somebody else would pick it up to extract a few flecks of tobacco to roll again with newspaper.

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