PM may have shot himself in the foot with Cambodian loan threats

Thailand would have been a beneficiary in road project, but with Hun Sen unyielding that opportunity seems lost
Prime Minister Abhisit Vejjajiva might be underestimating his Cambodian counterpart Hun Sen when he tried to say yesterday that the latter made a wrong decision in rejecting a Thai loan of Bt1.4 billion to renovate a road from the Thai border to Siem Reap.

"I would like to tell the Cambodian people that it is their leader who made the decision to reject the cooperation project, not Thais," he said in his response to Hun Sen's verbal attack made earlier.

Abhisit used bluffing to score a point, saying Hun Sen was misinformed and this led him to making the wrong decision to reject the deal. In fact, it was the Thai government and Abhisit himself that sent a confusing signal on the project to Cambodia last month.

Angered by the appointment of former prime minister Thaksin Shinawatra as Hun Sen's adviser, Abhisit instructed the finance minister to review financial assistance to Cambodia during a meeting of the National Security Council on November 12, when Thaksin was in Phnom Penh to give a lecture to Cambodian economists.

Deputy Finance Minister Pruetichai Damrongrat told reporters after the meeting on that day that the prime minister wanted the ministry to halt the loan to repair the road from Surin to Siem Reap.

Abhisit thinks that he has turned the tables on Hun Sen. Indeed, it is Cambodia, instead of Thailand, that can use the project as a weapon to berate the opponent. Hun Sen said on Monday that Thai leaders look down on Khmers and he would not accept any Thai "assistance". What he really meant to say was "business". Thai assistance is actually in Thai interest. The Cambodian leader slammed a further Thai threat to close the border between the two countries, saying: "If you are [an] idiot, if you want the loss, please do it."

The Thai prime minister believes that Cambodia badly needs financial assistance from Thailand, as Hun Sen has urged him when they met several times to speed up the project, which has been agreed upon in principle for a long time by previous governments.

Abhisit's Cabinet in July approved the financial assistance to renovate Cambodian highway No 68 from O'Smach near the border in Surin to Kralanh in Siem Reap. The project should not take a U-turn as Thailand's Neighbouring Countries Economic Development Cooperation Agency had already signed an agreement on the financial assistance with Cambodian authorities in Phnom Penh in August.

The 116-kilometre road would benefit not only Cambodia but also Thailand, which would gain a lot from the project. In practice, the financial assistance is a prerequisite to hiring Thai companies and purchasing Thai goods. Scrapping the deal means a loss of business opportunities for the Thai private sector.

The road project's internal rate of return is 23.53 per cent. The Thai government would earn 1.5 per cent in interest per year for 20 years. The upgrade would facilitate more traffic between the Thai border and the tourist destination of Siem Reap, which is home to the World Heritage Site of Angkor Wat. By 2015, cars using the road would increase to 4,633, and to 15,671 by 2033.

The project's cancellation would hurt Thailand more than Cambodia since Phnom Penh now has many options to find sources of funds to build the road. Without Thailand, there are many other financiers available such as Japan, South Korea and the Asian Development Bank.

Meanwhile, Cambodian officials along the border were reportedly instructed by Prime Minister Hun Sen to skip activities marking World Aids Day with their Thai counterparts, aggravating fears for a crossing closure.

Over the past decade, Sa Kaew would co-host the annual event with Cambodia's Banteay Meanchey province in the middle of the Thai-Cambodia Friendship Bridge.