World Bank supremo, Robert Zoellick (center) on a field trip to meet micro-business clients, Yi Lab, left and her husband, Leab Roth.
One embarrassing faux pas aside - mispronounciating microfinance bank ACLEDA as something
sounding a lot like al Qaeda - new World Bank president, Robert Zoellick, did his
best to distance himself from his beleaguered predecessor, Paul Wolfowitz.
His gaffe corrected, Zoellick went on to outline a new image of Cambodia and its
future. His remarks were a departure from his predecessor's approach to issues of
corruption, resource management, and governance in the Kingdom.
"Cambodia can develop an international brand for socially responsible production,
resource development and tourism," Zoellick said. "That reputation would
help Cambodia to sustain high growth and overcome poverty in the face of tough global
The last Bank president to visit Cambodia, James Wolfenson in 2005, spoke forcefully
of the importance of governmental reform and the fight against corruption.
He concluded with an announcement that the Bank would reduce its funding to the Kingdom
in response to "poor performance on governance indicators." Wolfowitz did
not visit Cambodia.
Zoellick, who addressed foreign and domestic press on August 5 at the end of a two-day
visit, spoke briefly of the importance of combating corruption and strengthening
the rule of law. In his remarks, the importance of governmental reform was strongly
linked to positioning Cambodia as a player in a competitive global market.
"Cambodia is a small country so it needs to be distinctive to get on the map,"
Establishing high standards - be it in the garment industry, the banking sector,
or the management of natural resources - could be one way to achieve this, he said.
"Investors have a choice, and what Mr. Zoellick was saying is that Cambodia
can brand itself, for example by setting high labor standards, so that it can compete,"
said Sin Foong Wong, country manager for Cambodia, Vietnam and Laos, of the International
Finance Corporation (IFC), the World Bank's private sector wing.
A New Beginning?
The Bank has a chequered history in Cambodia.
On at least three separate occasions in the last decade, major scandals have erupted
which have resulted in the withholding of funds, the cancellation of contacts and
the suspension of projects. In all cases, once some disciplinary action had been
taken, it has been back to business.
Experts say Zoellick's move from criticism to muted praise, and emphasis on the private
sector, is a positive sign. It may indicate a more pragmatic Bank stance towards
Cambodia's ongoing development.
"Recently, we have touted Cambodia's double digit economic growth," said
Tioulong Saumura, SRP parliamentarian and economist. "It makes sense that the
president of the World Bank has been struck by this, and thinks there may be an avenue
for reform by using this high growth."
Bullish economic growth has not stopped the emergence of a gaping income disparity.
Saumura said it was possible Zoellick feels this problem could be more easily addressed
through the private sector.
"The idea of a Cambodian 'brand' is a good one," she said. "More and
more buyers have a social conscience; they don't want garments from sweatshops. Cambodia
cannot possibly compete with the vast reservoirs of cheap labor in China or Bangladesh
so don't go for cheapness, go for high standards. It may not make Cambodia more competitive
from a strict economic point of view, but it will make us more appealing."
By emphasizing governmental reform aimed at business development, the World Bank
may be introducing a non-combative way of facilitating a proper institutional framework
and the rule of law, said Saumura.
"It is very savvy and wise advice," she said. "Under the guise of
making Cambodia more competitive, the World Bank will push our leaders along a path
that is actually very good for Cambodia itself."
Still, some analysts question the legacy of the world financial body who's mission
is to help the poor.
"I don't think this - or indeed any - international body has been efficient
in Cambodia," said Ou Virak, president of the Cambodian Center for Human Rights
(CCHR). "They need to look at themselves and be more efficient and principled
in their approach."
Nearly 15 years after the international donor community joined the UN-initiated process
of rebuilding Cambodia, the majority of the Kingdom's citizens continue to have no
access to minimum standards of education, health care, justice or income security,
said Basil Fernando, executive director of the Asian Human Rights Commission (AHRC).
"How can anyone claim that they have done something for this country?"
he asked. "The proof of the pudding is in the eating. If there is a new realistic
vision from the World Bank's leadership it would be a welcome shift."
Complete control of all economic activity, by a group of people who also totally
control political activity, has not been of benefit to either the economic or the
political systems of the country, said Fernando.
"The only way the legal institutional framework will be strengthened in Cambodia
in the current circumstances is via the intervention of international agencies,"
he said. "If the World Bank and others pursue this new initiative strongly,
then those who have political power have no way to resist."
Cambodia is considered to be a "challenging" business environment. At the
moment in Cambodia there is not true and fair competition in the private sector,
"It is only those with the backing of high ranking officials who can do business,
all others struggle," he said. "But it is hard for even the Prime Minister
to fight corruption. He needs to keep those around them happy, and so he has to allow
corruption to continue."
As a result, both governmental and private sector reform will have to start at an
individual level, said Virak.
"It could start with one politician declaring their assets to the public,"
he said. "I call on any politician to do this. The challenge is for one person
to come clean - say 'yes, some of my income may be questionable, but I am prepared
to answer to the public, from today on this is what I stand by,' that would be a
catalyst for broader change."
Experts say that years of demands for governmental reform from the Bank now seem
like empty threats as a result of their continued engagement. Zoellick's emphasis
on private sector development could be a more effective means of achieving the improved
governance the Bank has long been demanding, said Fernando.
"The Cambodian government controls people who confront the system directly,
who want to take the place of the current bureaucracy," he said. "But,
in reality, the government will be undermined by their own backwardness."
Real commitment from the Bank to improving leadership in industry, and sufficient
investment of energy and resources to improve the education levels of Cambodian citizens,
is only way the current political leadership will ever be replaced, said Fernando.
"It is a very deep internal process," he said. "And it will work -
Hun Sen will not bother about changes that will only appear in 15 years time."
Zoellick has replaced criticism with encouragement, indicating that the Bank will
not rely on its ability to pressure the government to develop the institutions central
to the rule of law.
"If the strategy is genuine and deep it may work; it makes sense," said
Fernando. "It depends on whether they have worked out the details, not just
the general statement of policy. The time for compromise will come in Cambodia; they
can't go on, including the government, in this obsolete fashion forever."