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

competition."

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,"

he said.

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."

Skepticism remains

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,

said Virak.

"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."

Empty Threats

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."