Cambodia’s Currency Crackdown and Citizenship Controversy Stir Regional Tensions

Cambodia is at the center of two unfolding controversies that have sparked economic and political ripples across Southeast Asia. The Electricity Authority of Cambodia (EAC) has ordered a halt to billing in Thai Baht along the border, a move aimed at bolstering the national currency, the Riel, while a provocative proposal by Senate President Hun Sen to revoke citizenship for certain individuals has ignited fierce debate. Together, these developments highlight Cambodia’s assertive stance on sovereignty and economic independence, raising questions about regional trade dynamics and domestic stability.

Thai Baht Ban: A Push for Economic Sovereignty

In a decisive step to curb the widespread use of foreign currency, the EAC issued a directive on October 10, 2024, prohibiting electricity providers in border regions from issuing bills in Thai Baht. This policy targets areas near Thailand, where the Baht has long been a de facto currency due to cross-border trade and economic interdependence. The Cambodian government, under Prime Minister Hun Manet, seeks to reinforce the use of the Riel, which has struggled to gain traction in these zones despite being the official currency.

The decision has immediate implications for businesses and residents in border provinces such as Koh Kong and Banteay Meanchey. Many local vendors and utility users have relied on the Baht for its stability compared to the Riel, which often fluctuates in value. A small business owner in Poipet, a bustling border town, expressed frustration over the abrupt change. “We’ve used Baht for years because it’s easier for trade with Thai partners. Switching to Riel overnight is going to cause confusion and losses” he told Asianews.network on October 12, 2024.

Economists warn that the move could disrupt cross-border commerce, a vital lifeline for Cambodia’s western regions. Trade with Thailand accounts for a significant portion of Cambodia’s informal economy, with goods and services often priced in Baht. According to government estimates, transactions in foreign currencies, including the Baht and US Dollar, dominate over 80% of economic activity in border areas. Converting payments to Riel could impose additional transaction costs, estimated at 3,500 Thai Baht (~US$105) per month for mid-sized businesses, based on current exchange rates as of October 2024.

The EAC’s directive aligns with a broader national campaign to de-dollarize and de-Bahtize the economy, a policy championed by the National Bank of Cambodia (NBC) since the early 2000s. Yet, enforcement has been inconsistent, with foreign currencies remaining prevalent. Analysts suggest this latest measure may be more symbolic than practical, aimed at projecting economic sovereignty amid growing regional competition. “Cambodia is signaling that it won’t be a satellite economy to Thailand or the US” noted a regional economic expert based in Phnom Penh, speaking to Asianews.network on October 11, 2024.

However, the policy risks straining relations with Thailand, a key trading partner. Thai authorities have yet to respond officially, but border trade associations have voiced concerns over potential retaliation, such as tighter customs controls or currency restrictions on the Thai side. If tensions escalate, the economic fallout could affect thousands of Cambodian workers and traders who rely on daily cross-border exchanges.

Hun Sen’s Citizenship Proposal Sparks Outrage

Simultaneously, a political firestorm has erupted over Senate President Hun Sen’s proposal to revoke citizenship for individuals deemed disloyal to the state. The former longtime prime minister, who stepped down in 2023 but retains immense influence, suggested on October 8, 2024, that citizenship could be stripped from those engaging in activities that undermine national interests. While specifics remain vague, the proposal is widely interpreted as targeting political dissidents and dual nationals, particularly those critical of the ruling Cambodian People’s Party (CPP).

Hun Sen’s remarks, reported by Asianews.network on October 9, 2024, have drawn sharp criticism from human rights groups and opposition figures. “This is a dangerous precedent that could be weaponized against anyone who disagrees with the government” said a spokesperson for a Cambodian civil society organization, speaking anonymously due to safety concerns. The proposal has also alarmed Cambodia’s diaspora, many of whom hold dual citizenship and fear being caught in the crosshairs of such a policy.

Public reaction has been deeply divided. In Phnom Penh, some residents expressed support for Hun Sen’s hardline stance, viewing it as a necessary measure to protect national unity. “If someone is working against Cambodia, why should they keep citizenship?” a street vendor told Asianews.network on October 10, 2024. Others, however, see it as a thinly veiled attempt to silence dissent. An opposition supporter in Siem Reap called the proposal “a return to authoritarian tactics” echoing concerns about shrinking democratic space under CPP dominance.

Legally, revoking citizenship raises complex questions. Cambodia’s constitution guarantees the right to nationality, and any amendment or new law would require significant parliamentary backing—something the CPP, with its near-total control of the National Assembly, could likely secure. Yet, international observers warn that such a move could violate global human rights norms, particularly the Universal Declaration of Human Rights, which discourages statelessness. If enacted, the policy might also complicate Cambodia’s relations with countries hosting large Cambodian diaspora communities, such as the United States and Australia.

Regional and Domestic Implications

The convergence of the currency ban and citizenship proposal underscores Cambodia’s broader struggle to assert control over its economic and political spheres. Both policies reflect a government keen to consolidate power and reduce external influence, whether from neighboring Thailand or dissenting voices abroad. However, they also risk alienating key stakeholders—border communities, trading partners, and the international community.

On the economic front, the Thai Baht ban could serve as a litmus test for Cambodia’s de-dollarization efforts. Success would bolster the Riel’s standing and reduce reliance on foreign currencies, a long-standing goal of the NBC. Failure, however, might deepen economic disparities in border regions, where access to Riel-based financial services remains limited. The government has pledged to support the transition with awareness campaigns and incentives for Riel usage, though details on funding and implementation are sparse.

Politically, Hun Sen’s citizenship proposal adds another layer of tension to an already polarized landscape. With opposition parties marginalized and independent media under pressure, the threat of citizenship revocation could further deter dissent. Yet, it may also galvanize underground resistance or international advocacy, potentially drawing scrutiny from bodies like the United Nations or the European Union, which have previously sanctioned Cambodian officials over human rights concerns.

Looking Ahead: Stability or Strain?

As Cambodia navigates these twin controversies, the path forward remains uncertain. The Thai Baht ban, while rooted in economic nationalism, could backfire if border communities and Thai counterparts resist or if trade disruptions spiral. Meanwhile, the citizenship proposal, if pursued, might cement the CPP’s grip on power but at the cost of domestic unrest and global criticism.

For now, the government appears resolute. Prime Minister Hun Manet, who has largely operated in his father’s shadow, faces a critical test in balancing these assertive policies with the need for regional cooperation and internal cohesion. As Cambodia charts its course, the eyes of Southeast Asia—and the world—will be watching to see whether these moves strengthen the nation or sow deeper divisions.