As Cambodia positions itself as a growing economic hub, a major infrastructure project is set to redefine its logistics landscape. In May 2023, Cambodia’s Council of Ministers approved the Tonle Bassac Navigation and Logistics System Project. This formalises Cambodia’s decision to spend US$1.7 billion on building the 180-kilometre inland Funan Techo Canal, which will span the provinces of Kandal, Takeo, Kampot and Kep and cover a population of 1.6 million people.

Phnom Penh describes the canal as a national infrastructure miracle that will transform Cambodia’s international politics. Senate President Hun Sen has proposed that the government call on all Buddhist monasteries to hold religious ceremonies showing Khmer pride during the 5 August 2024 groundbreaking of the canal project.

The canal is meant to strengthen Cambodia’s sovereignty and independence in regional trade and economic growth, while enhancing water management, agriculture, logistics and trade security in the Mekong subregion. Phnom Penh also wants to reduce its dependence on Vietnam’s maritime trade routes and ports through the canal.

But the canal project has raised security concerns from other Mekong countries. Vietnam is concerned about the potential implications that the mega-project could have on the Mekong Delta. The spokesperson of Vietnam’s foreign ministry Pham Thu Hang said that ‘Vietnam hopes Cambodia will continue collaborating closely with the Mekong River Commission (MRC) countries to share information and fully assess the impacts of the Funan Techo Canal Project on water resources and ecological environment of the Mekong subregion.

This worry arises from the inadequacy of the data contained in the notification document submitted by the Cambodia National Mekong Committee to the MRC in 2023. This is the only notification document that outlines the project’s functions, impacts and blueprints. But the document frames the project as a ‘tributary’ project, despite the canal linking two major Mekong channels. This allows Cambodia to bypass the 1995 Mekong Agreement protocols requiring prior consultation and technical review from all members.

Laos, another MRC member, officially supports this project. Its support is expected to assuage fears about the environmental impact of the project among other regional countries.

Security concerns within the riparian countries are mainly concentrated in non-traditional security areas, such as water resources management and environmental sustainability. But China’s central role in the construction of the Funan Techo Canal adds another layer of complexity. The canal will be developed as a build-operate-transfer project under the Belt and Road Initiative, led by the state-owned China Bridge and Road Corporation. Notably, 51 per cent of the investment in the project will be Cambodian.

Beijing’s enthusiasm for the canal project stems from its underlying interest in building leadership in its southern neighbourhood. China’s approach in the Mekong subregion relies on promoting infrastructure-based development to strengthen ASEAN’s connectivity. By advancing port infrastructure, China aims to form a new economic corridor model that integrates maritime, river and road routes, aligning with its expansion of high-speed rail networks in the Indochina peninsula.

China’s leadership in economic development also faces challenges amid the potential escalation of the US–China conflict in the waters of the eastern Asia Pacific. China’s promotion of the Funan Techo Canal could in turn mitigate rising security risks from the Taiwan Strait and South China Sea. The canal will establish an outbound route from China’s southwestern provinces through the Mekong River to the Andaman Sea, facilitating uninterrupted trade. The project could also further stimulate Vietnam’s integration into China’s Trans-Asian Railway network.

Jointly strengthening their capacity to respond to these non-traditional security challenges will become an increasingly important agenda for the Mekong countries. The MRC has previously used external pressure to address similar issues regarding Laos’s Don Sahong Hydropower Project. The MRC safeguarded its authority through the support of NGOs and extra-regional partners such as the United States, Japan and Australia.

But this approach may hinder non-traditional security cooperation by excluding China, an indispensable builder of regional connectivity and an upper Mekong country. China’s exclusion undermines effective joint governance on security issues in the shared river. Despite China’s influence, the Mekong countries are unwilling to give up their hedging strategies in favour of development and fear becoming pawns of major powers. When meeting with US Secretary of Defense Lloyd Austin, Cambodian leaders asked Washington ‘not to include Cambodia in its geopolitical strategy, and not to take Cambodia as a place for geopolitical competition’.

Stakeholders should strengthen cooperation within the subregion, including with China, to effectively manage non-traditional security concerns. With the MRC unable to solve non-traditional security issues through cooperation between China and the lower Mekong countries, stakeholders should consider revitalising subregional cooperation through the Lancang–Mekong Cooperation mechanism, whose members include China, Cambodia, Vietnam, Laos, Thailand and Myanmar.

This institutional arrangement has a more stable plan of action and financial support to ensure transparent, consistent and timely sharing of hydrological data and close cooperation with the MRC. It also commits itself to considering each country’s domestic conditions, coordinating relations between upstream and downstream areas, left and right banks and tributary and trunk streams to realise the sustainable development of the shared river.