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China’s takeover of Sihanoukville is almost complete, despite base row

Later, an eyewitness – who does not want to be named – relates what happened.

“At first I tried to split them up when they were arguing. Then the ex-husband pulled out an iron bar. He smashed her twice in the back of the head. She walked a few more steps and then she fell down. He ran,” the man says.

“It sounds like [from what was being shouted] they were already divorced. He was looking for her every night, going from casino to casino. I’m not sure if she is alive or dead, but they have taken her to the provincial hospital.”

Cambodian motorbike and tuk tuk drivers wait for customers outside the Oriental Pearl Casino and the Gobo East Casino in Sihanoukville in 2018.

Cambodian motorbike and tuk tuk drivers wait for customers outside the Oriental Pearl Casino and the Gobo East Casino in Sihanoukville in 2018.Credit:Kate Geraghty

Just a hundred metres up the road, outside another casino, five young Chinese men and a woman – all of whom appear to be intoxicated – are fighting. The woman is at the centre of the group, crying.

It’s 10.30pm in central Sihanoukville and these scenes have taken place just a few hundred metres from the roundabout in the middle of town. Drunken violence and disorder has become commonplace here in what was once a sleepy tourist town that drew Western backpackers because of its pristine beaches, cheap food and relaxed atmosphere.

A little over a year ago, The Sydney Morning Herald and The Age travelled to Sihanoukville to investigate the breadth, scope and impact of Chinese investment on the city and its place in China’s sprawling, $US1 trillion Belt and Road Initiative.

In the intervening year, China’s grip on Sihanoukville has only deepened.

Recently Chinese Defence Minister Wei Fenghe said his country was willing to deepen military exchanges and cooperation with participants in the Belt and Road Initiative – a comment that belled the cat for critics.

That’s where Cambodia’s Ream naval base comes in.

It’s like the Cambodian saying: you can’t hide a dead elephant in a basket

Sophal Ear, a Cambodian-American associate professor at Occidental College in Los Angeles

A recent Wall Street Journal report, citing a leaked copy of a draft agreement between Cambodia and China, said the two nations had signed a deal to give China access to the base, which lies about 25 kilometres from Sihanoukville and was built by the United States a quarter of a century ago.

The access, according to the report, would last for 30 years and allow China to station personnel, store weapons and park warships. China would build two new piers for the two navies to use, and dredging would occur so that larger Chinese warships could be accommodated.

US officials have also been lobbying for Cambodia not to allow China use of a huge new airport being constructed by a private Chinese company at Dara Sakor (about 65 kilometres west of Ream, in Koh Kong province).

Even though it’s in a sparsely populated area, this would be the country’s largest airport and could handle huge passenger jets and potentially long-range bombers.

The Journal report about the proposed military base kicked off a firestorm of protest from both Cambodia and China. Cambodia’s long-serving leader, Hun Sen, decried it as “fake news” and argued the country’s constitution forbade the presence of foreign troops. China denied military ambitions in Cambodia.

The Australian government is sceptical about those denials, as is the US government. One senior national security official said the base plan was “seriously disturbing” and had triggered alarm in government circles.

Critics including Australian National University security expert John Blaxland argue that China’s approach in Cambodia – even if it’s about preferential access to a base, rather than a permanent facility – is much like its creeping militarisation of hotly contested islands in the South China Sea. There, first land reclamation and dredging built up a series of artificial islands, then runways and other infrastructure, and, finally, weapons systems were installed.

He says it was carefully keeping the development “below the threshold that would trigger a violent military reaction by anyone in the neighbourhood”.

Even so, other countries in the region – including Thailand, Australia, Indonesia, Singapore and Japan – are watching developments closely. Their fear is that China is, once again, establishing facts on the ground, even as it obscures its intentions.

Reluctant witnesses

In Sihanoukville and the nearby Ream naval base, locals were reluctant to talk about the growing Chinese presence.

Watchful Cambodian troops were thick on the ground, zipping past on motorbikes, lazing in hammocks, standing on sentry duty. Several members of the elite Brigade 70, linked closely to Hun Sen, were active in the area.

Those living near the base and running small shops that serve the Cambodian military personnel have all heard about China’s plans for the base, but none will talk openly.

Cambodian workers in Sihanoukville Special Economic Zone.

Cambodian workers in Sihanoukville Special Economic Zone.Credit:James Massola

“There is no Chinese military base here and I haven’t seen Chinese soldiers,” said one woman who ran a small shop several hundred metres from one of the base’s entrances. “But our only customers are from China, they come to enjoy the food and my restaurant”.

She would not provide her name.

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NGOs who have previously spoken out against Hun Sen’s regime have also gone to ground.

Last month, Cambodia’s Defence Ministry took a group of about 70 journalists on a carefully stage-managed tour of the Ream base to “prove” there was no Chinese presence on the ground. That is true for now. But just a few days after denying the Chinese presence, Hun Sen proudly announced his country would buy another $US40 million in weapons from Beijing.

Sophal Ear, a Cambodian-American associate professor at Occidental College in Los Angeles, is convinced the base will go ahead, comparing the mooted arrangement at Ream with China’s first overseas base in Djibouti, Africa.

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“The Chinese can certainly use the facility to store all the munitions, fuel, etc and [for] power projection. While not as powerful as an aircraft carrier stationed there [it] is essentially complete. You have a Trojan Horse Chinese base masquerading as a Cambodian base. Everyone can deny, but it’s like the Cambodian saying: you can’t hide a dead elephant in a basket,” he says.

“He [Hun Sen] figures the benefits outweigh the costs. Or, he only sees the benefits and not the costs. Those benefits are certainly money and the backing of China for his hold on power.”

John Blaxland of the ANU said that if China was able to add a military presence in Ream and at the new airport at Dara Sakor it would, combined with its islands in the South China Sea, be able to project force across the Malacca Strait, a crucial international shipping lane. This capability could also reach Thailand, Singapore and Malaysia – including that country’s Butterworth air force base, where Australia has men and materiel stationed.

He says it’s only a matter of time.

“For China, this is about latent capabilities, because you can fly a squadron of fighters into an airbase in a matter of minutes or days,” Blaxland said.

Australia had important security obligations under the five-power defence arrangement (which also includes Britain, New Zealand and Singapore) and “this is much closer to Australia and its interests than most people would realise”.

China-driven development and construction in Sihanoukville is rampant.

China-driven development and construction in Sihanoukville is rampant.Credit:James Massola

Colonisation by investment

But while the geopolitical game of  accusations about the Chinese intentions plays out, the colonisation of Sihanoukville by mainland Chinese investors continues apace.

The numbers are staggering. According to figures from the Cambodia Development Council in 2016, Chinese money accounted for about 30 per cent of the $US3.6 billion ($5.3 billion) in foreign investment in Cambodia. By 2018, that figure had risen to 51 per cent of the $US6.45 billion invested.

Research conducted by the Sydney Morning Herald and The Age shows the number of government-designated special economic zones has nearly doubled since 2013, from 22 to 39 sites. They have attracted tens of millions of dollars in mainly Chinese investment and seen a large number of factories built that employ both locals and Chinese workers.

Another casino or bar goes up in Sihanoukville.

Another casino or bar goes up in Sihanoukville.Credit:James Massola

In Sihanoukville, according to Preah Sihanouk provincial police commissioner Chuon Narin, there are 156 hotels and guesthouses, 150 of which are owned by Chinese investors. The local police said there were 62 legal casinos (up from 45 in November 2018). But even government agencies cannot get the numbers clear: the Finance Ministry said 88 casinos were operating in Sihanoukville alone, with more under construction.

Dozens of entertainment clubs, karaoke bars and massage parlours are owned by Chinese investors, who also own 95 per cent of the city’s restaurants.

In addition, a 2019 report by the United Nations office on Drugs and Crime estimated Cambodia was home to 150 of the 230 licensed casinos operating in South-east Asia.

That report noted that many had emerged after a crackdown on money laundering activities in Macau, China, in 2014. This raises concerns that the criminal activities associated with casinos had been displaced to other parts of South-east Asia.

Norinda Khek, the communications director for the Cambodia Airports group, said 92 per cent of tourists to Sihanoukville now come from mainland China, with 2 per cent from Malaysia, 1 per cent from Indonesia and the remaining 5 per cent from other countries.

An average of 64 flights per day arrive or leave Sihanoukville’s airport, servicing 35 destinations in China and only two in Thailand, one in Malaysia and one in Vietnam. Visitor numbers have tripled to almost 250,000 in the first few months of the year. Sihanoukville’s permanent population is just 300,000.

While the mooted military base has caught international attention, it’s the casinos and the towering resorts – current and planned – that most prominently embody China’s play in Sihanoukville.

On 23 Tola Street, one of the main casino thoroughfares, cement trucks and heavy construction vehicles – most bearing Phnom Penh number plates – drive back and forth 24 hours a day. Interspersed among them are Porsches, Bentleys, Mercedes and hulking, shiny new Japanese utes, which nudge the tuk-tuks and ageing Camrys most locals drive.

The street’s name, translated, means 23 October and is a reference to a more optimistic time in Cambodia’s recent past – the signing date of the Paris Peace Agreement that ended the bloody Cambodia-Vietnam war.

So damaged is the road from the heavy vehicle traffic that metre-wide potholes appear every few metres, and the mud has washed away much of the bitumen.

Busloads of Cambodian casino workers – who earn between US$300 and $US400 per month, more than the $US182 per month minimum wage – inch up and down the street, taking the workers to shifts that run around the clock.

Inside the casinos, hundreds of Chinese tourists hunch over the tables, quietly sipping soft drinks and smoking, watching closely the stacks of US dollars and Chinese yuan piled on the poker, baccarat and roulette tables.

The street, and the surrounding area, is replete with signs advertising the availability of Chinese karaoke, Chinese payment service WeChat and restaurants selling Chinese meals.

Sealong Bay hotel development near Ream Naval base: another construction on an empty field.

Sealong Bay hotel development near Ream Naval base: another construction on an empty field.Credit:James Massola

Few Cambodian restaurants are left in the centre of Sihanoukville. At one, the owner – who did not want to give his name – told us he was recently offered $US20,000 per month to rent out the tumble-down building that houses his business.

Business is terrible, he said, because the number of local customers had plummeted precipitously and the Chinese tourists did not want to eat the local food.

He doesn’t want to rent it out, but is prepared to sell the 1200-square-metre plot of land for $US6 million – an unimaginable figure just a few short years ago, but the going rate now.

Anger, crime and violence

Locals are angry at the growing Chinese presence in their home town. While they welcomed development, investment and jobs, they resented the pace and scale of change, and the fact that they are being priced out of being able to live, or do business, in their own city.

Twenty-eight-year-old Vanny, a trainee casino worker, said she earned about $US300 per month and that that amount would increase once her training was finished. Her old job was in a shoe factory in the town of Kampot, where she made $US182 per month (the minimum wage) – not enough to live on, she said.

“I am happy with the work but not with the living conditions, especially in the city. It’s a mess and it’s caused by Chinese development.

“And there is more crime. A few weeks ago, a Chinese man was shot dead in front of the White Sands casino. Another Chinese woman was shot dead by the Chinese nearby another casino, in the street.”

In one of the special economic zones, factory workers told us the work was easy and the wages were good – though the rising cost of living had eroded some of the benefits of their $US300 to $US400 per month pay cheque.

One woman, a Mrs Mann, had worked sewing backpacks and purses for more than a year. She said she had had no difficulties working in the Chinese-owned factory but had heard other locals complaining.

“For me it is no problem, I used to work in construction. This is much easier.”

Later, a tuk-tuk driver joked grimly that “in the next five years there will be no more Cambodians living in Sihanoukville. It will only be Chinese here.

“When a landlord can rent a stall to a Cambodian for $US100 per month, but the Chinese can pay $US700 per month, he rents it out to the Chinese.”

Police patrols have been stepped up to try and tackle crime in the city, while China’s Foreign Affairs ministry recently warned its citizens to pay close attention to their personal security.

Near Otres Beach, once a popular destination for Western tourists, the low-slung Cambodian villas and hotels have disappeared one by one, with both local and Western owners unable to resist the siren song of Chinese money. Rubbish is strewn around the vacant fields with “For Sale” signs in them.

At the airport Reinhold Scheiner, an Austrian who lives in Thailand, says he had come to Sihanoukville for three nights, but was leaving after just one.

“It’s terrible here. There are many Chinese tourists, it’s very dusty, the people are not friendly and it’s crazy here,” he says.

“I’ve never seen anything like this before. Siem Reap [a tourist town famous for the Angkor Wat temple] was beautiful, very nice people, very beautiful, very clean. This is very different.

“Here, my feeling was, ‘Welcome to hell’.”

Sihanoukville is a city transformed, where some Cambodians now feel like strangers in their home town.

The political argument may be “Will there or won’t there be a base?”, but one thing is abundantly clear: China has already arrived and it isn’t going anywhere.

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