Cambodian Logging

Log rolling: Thai forestry contracts help to fund Khmer Rouge
By Ken Stier in Bangkok
21 January 1993
Far Eastern Economic Review
FEER

Left to pursue their own commercial instincts, Thai loggers and miners may have been well on the way to inadvertently financing the Khmer Rouge's return to power in Phnom Penh. The imposition of a logging ban by Cambodia's Supreme National Council (SNC) in September, followed by UN sanctions on the supply of petroleum products to the Khmer Rouge at the end of 1992, may have lessened the dangers. But if the sanctions fail the Thai business connection could still help fuel a Khmer Rouge comeback.

That, at least, is one conclusion that could be drawn from a recent Thai intelligence document that estimates the radical communist group could earn more than US$1 billion from Thai logging companies, including one owned by the Thai Government, if they were allowed to harvest the forest concessions they have already been granted.

The projected cash flow from Thai business interests easily dwarfs the combined revenues of the three other Cambodian factions, and could become a decisive factor in the power struggle which now seems likely to continue beyond the elections planned for May.

"It is estimated that {Khmer Rouge} business dealings with Thailand have so far earned . . . Baht 2.7 billion {US$106 million}, with present monthly earnings of about Baht 200 million," said the report, prepared by the Thai National Intelligence Agency (NIA) and recently obtained by the REVIEW.

"If all 16 companies that have been granted logging concessions by the Khmer Rouge were able to extract all the timber they possibly can, these earnings would rise to around Baht 700 million per month," the report continued. The NIA, one of Thailand's two main intelligence agencies, is the equivalent of the US Central Intelligence Agency.

The report lists a total of 22 Cambodian logging concessions, including four awarded by the faction loyal to Prince Norodom Sihanouk and two by the faction led by former prime minister Son Sann. Among the groups the Khmer Rouge awarded concessions to is the Forest Industry Organisation, a Thai state enterprise.

Khmer Rouge earnings from Thai business interests include revenue from mining operations, which are earning roughly Baht 100 million per month. Logging, which Thailand banned on its own territory in 1989 to arrest the alarming rate of deforestation, is a much bigger business than gems. But Thai logging operations in Cambodia only began in early 1992, before being interrupted by the April-October rainy season. Work had just been resumed in earnest when the SNC, Cambodia's reconciliation body, banned log exports on 23 September.

The Khmer Rouge timber concessions, which allow Thai firms to take out more than 15 million cubic metres, are for periods of three to five years. The first concessions were awarded in November 1989, soon after the faction began to recapture territory in the wake of the last major Vietnamese troop withdrawal in September that year. But the majority of deals date from early 1992. This reflects the problems the Khmer Rouge faced after the signing of the Paris peace agreements.

"After the agreement was signed, our Chinese friends stopped all assistance," senior Khmer Rouge official Ieng Sary told a Thai newspaper recently. "So we had to sell some trees to the Thais to meet the immediate needs of the people."

According to the NIA document, the Khmer Rouge is spending Baht 45 million a month on "Class 1-Class 4 stores for their troops replacing the supplies formerly provided by China." In Thai military nomenclature, these classifications include ammunition, rations, petroleum products and uniforms.

The report confirmed that Thai loggers are also providing payment "in kind." This includes "motor vehicles, radios and communications equipment, mobile telephones, generators, quinine, etc. to a value of at least Baht 4.5 million so far."

It is now the Thais who have been left holding the short end of these timber deals. The logging ban, reinforced by the UN sanctions, places a "tremendous burden on Thailand and our private sector," says Thai Foreign Minister Prasong Soonsiri. He adds that it is "totally legitimate for Thailand to see what can be done in cooperation with Untac {UN Transitional Authority for Cambodia} and the Supreme National Council to minimise the impact on Thailand."

Faced with the possibility that sanctions may damage the interests of the military and its allies in parliament, the Thai government has begun expressing scepticism about their political effectiveness. According to Prasong, "the Khmer Rouge {leaders} are very dogmatic people and will continue to do and say what they believe, regardless of their material wealth."

Prasong, a former head of the Thai National Security Council who played a key role in helping build up the Khmer Rouge to fight Vietnamese troops after their 1979 invasion of Cambodia, said: "We believe that there is no direct link between the Khmer Rouge's material gains through trade with Thailand and its continued intransigence."

Western diplomats have expressed some doubt about the estimates in the NIA report. "This is considerably more {Khmer Rouge revenue} than the highest numbers I have heard previously," said a Western military analyst who monitors Thailand's policy towards its neighbours. "It seems excessive just because of the sheer physical difficulty of moving that amount of timber."

But this difficulty is being tamed by a network of new logging roads -- financed and built out by Thai loggers in 1992 -- that extend from the Thai border deep into Cambodia's rainforests.

At Ban Mamaung in Trat province, one of over a dozen major border checkpoints spread out along the 725-kilometre Thai-Cambodian border, logger Chatrachai Tantangsakul told a group of visiting Thai MPs that he and two other firms had cut a 70-kilometre road through rugged jungle terrain to reach their 200-300 square kilometre logging tracts.

In a makeshift customs office the visitors saw a chart showing that Chatrachai's company had taken out 1,158 logs between mid-May and June, when the rainy season interrupted operations.

Whatever the truth behind the revenue figures, the trees are coming down at a rate that alarms forestry officials. Roughly 7 million hectares of Cambodia's land area of 18 million hectares is still covered by forests, but the country also has one of the world's highest per capita deforestation rates, according to an April 1992 UN Development Programme (UNDP) study.

"Forest destruction threatens the productivity of agriculture and fisheries -- in short, the very sustainability of economic development in Cambodia," warned the authors of the study, which provided the original environmental impetus for the logging ban.

So alarmed were the authors that they recommended that "the donor community should carefully examine the case for granting institutional support to the four parties of the peace agreement during the pre-election period."

Warning that the country's best forests will be gone in five years, the UNDP report recommended that the Geneva-based Societe General do Surveillance -- or a comparable surveillance company -- be retained to enhance the country's customs system, as it did in Indonesia.

But given the factions' open defiance of the SNC's sanctions, any significant improvement may have to wait until well after the elections.