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Dr Milton Osborne
On the evening of 25 June, after eleven months of wrangling, apparent near agreement and then the collapse of negotiations, an agreement that will allow the formation of a government was finally reached between acting Prime Minister Hun Sen and FUNCINPEC leader, Prince Norodom Ranariddh. Hun Sen's party, the CPP, had failed to win a two-thirds majority in the July 2003 elections and could not form a government without the support of parliamentarians from FUNCINPEC and/or the Sam Rainsy party (SRP). This was not forthcoming as Ranariddh and Sam Rainsy, temporarily united in a 'Democratic Alliance', refused to give their support without a range of concessions from Hun Sen and the CPP. Cambodia has had a caretaker government under Hun Sen, who has continued to exercise power, largely without constraint. Important legislation ratifying Cambodia s accession to the World Trade Organisation and allowing a UN-backed tribunal to try surviving Khmer Rouge leaders has had to be put on the back-burner. Also some aid donors have been reluctant to make contributions while there was no official government.
After an official signing ceremony on 30 June, a government should be formed in early July. The final agreement, which builds upon the previous 2 June (near) agreement, has Hun Sen again becoming prime minister, while Ranariddh will assume the position he held formerly as chairman of the National Assembly. In news reports immediately after the 2 June announcement of an agreement, Ranariddh referred to solutions having been reached on no less than seventy-three issues, including matters related to corruption and civil service salaries. Somewhat curiously at the time, these initial news reports made no reference to Sam Rainsy.
By 13 June it had become clear that all was not plain sailing. While insisting that Sam Rainsy was backing the agreement he had reached with Hun Sen, Ranariddh now said that agreement was still be to be reached on what and on how many portfolios would be held by non-CPP members of a coalition government. The 'Democratic Alliance', Ranariddh said, expected to hold fifty per cent of the ministries and, most importantly, these would have to be 'important' portfolios.
Two days later, on 15 June, this agreement had collapsed. Hun Sen was insisting that the division of ministries should be on a sixty-forty basis and Ranariddh rejected this proposal. In statement acknowledging the collapse of negotiations Ranariddh said that it was now up to his father, King Sihanouk, to find a solution to the country's political impasse. The King has been in self-imposed exile in North Korea, insisting that he will not return to Cambodia until an agreement is reached.
In the final agreement, FUNCINPEC loses three ministries (the Justice, Information ministries and the ministry overseeing parliamentary elections.) The CPP will get the sixty-forty split of the ministries it was insisting upon, while the same power-sharing arrangement for the Interior and Defense portfolios will apply as after the 1993 and 1998 elections. The SRP has been locked out of these negotiations, but FUNCINPEC can decide to share some of its portfolios with its alliance partner, should it so choose.
WATCHPOINT: Will FUNCINPEC hand over any of its portfolios to the SRP so as to include it in the new government?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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