Cambodia and the Oil Curse

The IHT reports that Cambodia is struggling to balance the historical legacy of the Khmer Rouge and the country's new ambitions as it moves into the future. The entire transformation of the nation is perhaps almost totally encapsulated in the government's upcoming decisions regarding the massive oil deposits Chevron found off its southern coast.

On one hand, off-shore deposits, while initially more expensive to develop, are a godsend for international markets that don't want to be influenced by domestic unrest and governments that don't have complete control over their people. Only 28 years after the Khmer Rouge was ousted, Cambodia is desperately trying to avoid the example set by Nigeria and Chad. Despite massive oil revenues, the average people of Nigeria and Chad have actually gotten worse off due to corruption and economic dislocation.

Unfortunately for the people of Cambodia, the only solution that has ever succeeded in the presence of an oil bonanza - strong, yet market-sensitive government institutions - is woefully absent. Standard oil industry practice is to make "signature payments" to countries at the time oil contracts are signed, but Cambodia's government won't disclose how much money it received or what happened to the revenue. The money machine is just getting started, and the government is already mismanaging things.

Cambodia has a history of failing to exploit its natural resources. Already much of Cambodia's natural bounty of gems and timber has disappeared without substantial benefit to the people. And even the monies generated by tourism at the national treasure of Angkor Wat go into private hands.

Cambodia's record doesn't inspire much hope of lifting the oil curse, but in a country where 35 percent of the population lives on less than 50 cents a day the situation ever more bleak.