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Logo of Phnom Penh Post newspaper Phnom Penh Post - "Guanxi" versus the rule of law

Schoolgirls walk past the Anti-Corruption Unit in Phnom Penh
Schoolgirls walk past the Anti-Corruption Unit in Phnom Penh. The results of the dominance of "guanxi" are staring us in the face. Heng Chivoan

"Guanxi" versus the rule of law

Over two consecutive years, the press reported on crowds of uniformed police, military police and soldiers gathering in front of the homes of highly connected businessmen. In the first year, they were spotted outside the house of a senator whose wife runs a large company; the following year, they showed up in front of the house of a powerful tycoon. They were there to receive ang pao (red envelopes) of cash gifts for Chinese New Year. One can guess how much larger and thicker were the envelopes their superiors might have received. At the time, the company of the senator’s wife was embroiled in a land dispute and forced-eviction controversy.

Relations or connections between businessmen and government officials – as well as among businessmen themselves – and the related offering of mutual favours are common in Cambodia. Donations and sponsorships of projects by businesses, and offers of favours and privileges – including government contracts and economic land concessions to them and/or of the honorific title of okhna to their owners – are a form of currency.

It is well-known that Cambodian authorities invariably ignore the plight of occupants of land granted to these companies and the impact of such concessions on the environment. They do not hesitate to forcibly evict such people or force them to accept unfair compensation.

All this is an extended form of a practice known in the Chinese business world as guanxi.

Guanxi in Chinese literally means relationship – any type of relationship – and in the Chinese business world it refers to a network of relationships among various parties that cooperate together and support one another by exchanging favours. “You scratch my back, I’ll scratch yours.”

Chinese migrants brought the system with them to Cambodia, where it took on some Cambodian characteristics as government bigwigs became major members of such networks. The rise of guanxi with Cambodian characteristics will only gain momentum with the arrival of more Chinese companies, their owners, their employees and other Chinese nationals.

Free from any legal inhibition from their country of origin, which many of their Western counterparts are subject to, and being better endowed than their local counterparts, these Chinese businesses can afford to exchange bigger favours for more services from the government. Out of necessity, they do not hesitate, as their local counterparts have done before them, to enlist government circles in their network.

With its renewed strength, guanxi with Cambodian characteristics increases corruption and the dominance of companies over the government and the less well-off; affects the country’s international relations; stunts the development of the rule of law; contributes to violations of human rights; creates further injustices, uncertainty and instability in the country; and, in the long run, will work against the local business community itself.

Actually, based on the Paris Peace Agreements of 1991, its own constitution and the international human rights law it has vowed to adhere to, Cambodia should be a liberal democracy governed by the rule of law.

A 2004 report to the UN Security Council says that “the rule of law and transitional justice in conflict and post-conflict societies” refers to “a principle of governance in which all persons, institutions and entities, public and private, including the state itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human rights norms and standards”.

“It requires, as well, measures to ensure adherence to the principles of supremacy of law, equality before the law, accountability to the law, fairness in the application of the law, separation of powers, participation in decision-making, legal certainty, avoidance of arbitrariness and procedural and legal transparency.”

Following coaching by Western donors over the past 20 years, Cambodian rulers should well understand this rule of law, the ills guanxi has created or contributed to, and the remedies that the rule of law can provide to address these ills. But they are reluctant to establish such rule as it would set limits on their power and personal benefits. They have persistently shown resistance to any foreign aid package, invariably from Western donors, containing requests for the adoption of elements of the rule of law. They do not welcome aid with conditions attached, and their relations with such donor countries are far from being cordial.

In contrast, Cambodian rulers prefer to seek aid from donors that do not attach such conditions to it and have turned mainly to China, which cares little about the rule of law. Its guanxi suits the recipients better when they can use powers outside the law to return favours and privileges to China and its companies and nationals.

The deportation of Uighur asylum seekers, the offer of support for China’s position on the South China Sea issue and the offer of economic land concessions, licences for the exploitation of the country’s natural resources and protection to Chinese companies are instances of reciprocity from Cambodia.

Guanxi with Cambodian characteristics distorts the functioning of a market economy based on competition, which requires stability, trust, certainty, security of property and contracts, fair play, equality before the law, transparency and impartial law enforcement by the government. All of this can only be secured with an effective rule of law.

Above all, the benefits of the original guanxi itself cannot be had when members of the network break the law or operate outside it.

The results of the dominance of guanxi over the rule of law are now staring us in the face. The government can no longer afford to overlook them or the importance of a strong and effective rule of law. It must expunge guanxi and establish the rule of law now. All the elements are there for the government to perform the task; all they have to do is take the UN’s definition to heart.

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