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As Iran sanctions threaten, Iran sees new friend in Cambodia

Leaders from Iran and Cambodia met this month in their most senior exchange to date. Some say it is a sign that Iran sanctions are pushing Tehran to develop new trade partners.

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Iran sanctions: Cambodian Foreign Minister Hor Namhong speaks during a news conference in Phnom Penh August 6. 'To impose sanctions against Iran is not a solution,' Hor told reporters Aug. 16 in Phnom Penh, days after his meeting in Tehran with Iranian President Mahmoud Ahmadinejad.

Chor Sokunthea/Reuters

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By Stephen Kurczy, Staff writer / August 26, 2010

Iran seems to have found a new friend in the unlikeliest of places: Cambodia. Tehran hosted a high-level delegation from the Southeast Asian nation earlier this month to discuss bilateral trade and mutual dislike of American "interference."

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It's the latest sign that the Islamic republic is seeking out new partners – no matter how small – in the face of increased sanctions.

"There is no doubt that Iran’s growing isolation, resulting from the force of UN sanctions, is behind Iran’s push to improve relations with Cambodia and other willing states," says Alon Ben-Meir of the Center for Global Affairs at New York University. "The sanctions against Iran are having a serious effect. For this reason, Iran at this juncture will trade with any country it may find. Cambodia happened to be an easy target because of its energy vulnerability."

In June, the United Nations, European Union, and United States all passed sanctions in an effort to target Iran's uranium-enrichment program.

"To impose sanctions against Iran is not a solution," Cambodian Foreign Minister Hor Namhongtold reporters Aug. 16 in Phnom Penh, days after his meeting in Tehran with Iranian President Mahmoud Ahmadinejad. Mr. Hor advised "negotiations and engagement" instead.

Iran offers trade, technology

The two countries established formal relations in 1992 as Cambodia emerged from civil war, but Cambodian government spokesman Khieu Kanharith says this is the most senior bilateral exchange to date.

"Iran requested to have a diplomatic relation with Cambodia. We don't see any objection to that," says Mr. Khieu, who is also the minister of Information. "Our policy toward Middle Eastern countries is to sell more of our products, mainly agricultural, and try to get more knowledge on oil management."

The summit touched on trade, investment, tourism, and oil, which is notable in light of Cambodia's hopes to tap recently discovered offshore oil reserves. After years of exploration and speculation – from international firms such as Total and Chevron – oil production is projected to begin in 2012. Then, in mid-August, a top Cambodian official told Nikkei news agency that Cambodia is looking into nuclear technology and hopes to build its first nuclear power plant as early as 2020.

President Ahmadinejad "voiced readiness to share Iran's experiences with Cambodia in various fields of agriculture, science, technology, and research," according to Fars News Agency. The two sides agreed to establish a joint economic commission to explore opportunities, according to The Tehran Times.

Shared dislike of American 'interference'

They also found common ground in rejecting pressure from the US. “My country has always been opposed to the interference of the United States in other countries’ internal affairs," Hor said, according to the Islamic Republic News Agency (IRNA).

Economic ties remain minimal between Iran and Cambodia. The two countries’ trade value during the past Iranian calendar year (ending March 20, 2010) stood at $539,000, according to The Tehran Times. In the three months prior to June 21, Iran exported $120,000 and imported $66,000 to and from Cambodia.

Even more than a new economic partner, Iran is apparently looking to Cambodia as a conduit to reach greater Southeast Asia through the 10-country Association of South East Asian Nations (ASEAN). "Cambodia can play a key role in connecting Iran and the association," Iran's Accredited Ambassador to Cambodia Seyed Javad Qavam Shahidi told the FARS news agency after Hor's visit.

Web of geopolitics

In the complex web of geopolitics, it makes sense that Iran would warm relations with Cambodia, says British historian Philip Short. China woos Cambodia and Burma as counterweights to regional power India, while also wooing Iran and Pakistan as counterweights to longtime rival Russia, he says.

"So, for Cambodia and Iran – both Beijing’s good friends – to get cozy isn't a surprise at all. In fact, one wonders why it didn’t happen earlier," says Mr. Short, author of the Khmer Rouge history "Pol Pot: Anatomy of a Nightmare" and the biography "Mao: A life."

"For Cambodia there’s an obvious economic interest," continues Short. "And for Iran, which is still pretty isolated, the more diplomatic support it can garner the better."

China has invested millions in infrastructure projects in Cambodia. In December 2009, Beijing pledged $1.2 billion in aid and soft loans. That made China a bigger benefactor to Cambodia than all other countries combined. In July, international donors pledged $1.1 billion in annual aid to Cambodia, which was still the most ever from them. "China is Cambodia’s best buddy," says Short.

But Cambodia has also been courted avidly by Washington in recent years. In July, US soldiers participated in a peacekeeping exercise with troops from 23 Asia Pacific nations as part of the US-run 2010 Global Peace Operations Initiative. Washington and Beijing have long competed for influence in the region, with China supporting the Khmer Rouge insurgency against a US-backed government of the 1970s.

No warning from Washington?

Cambodia's business community appears unfazed by the country's newfound friendship with Iran.

"If Iran wishes to offer any material support to Cambodia, why shouldn’t they accept it? Cambodia is a neutral country with a lot of needs, and welcomes all the help it can get," says Douglas Clayton, CEO of the private equity fund Leopard Capital, which has attracted international investors to a $34 million multisector equity fund in Cambodian businesses.

A spokesperson from the US Embassy in Phnom Penh says that Washington urges "all UN Member States, including Cambodia, to fulfill the objectives of UNSCR 1929 (United Nations Security Council Resolution 1929) by meeting not only their mandatory minimum obligations but also by applying accompanying measures." UNSCR 1929 was passed in June to target Iran's nuclear enrichment program.

While Cambodia's government spokesman says that Phnom Penh has not been warned against developing ties with Iran, Professor Ben-Meir of New York University suspects the US may have dropped a hint to Cambodia against getting too close.

"Soon Cambodia itself will begin to feel the pressure from the international community to stop trading with Iran," he says. "Cambodia therefore will continue to play a balancing act, swaying from which side it is getting the greater benefit. For this reason, the United States and the EU will have to come up with some aid to Cambodia if they wish to distance Cambodia from Iran."