Tensions Between Thailand and Cambodia Spark Regional Jitters

What started as a domestic political headache is now turning into a regional migraine. Thailand’s suspension of Prime Minister Paetongtarn Shinawatra has set off a chain reaction, with tensions along the Cambodian border rapidly intensifying — and investors, diplomats, and neighbors are starting to take notice.

The spark? A leaked call between Shinawatra and former Cambodian leader Hun Sen. The call’s contents remain murky, but its fallout is not. Cambodia has since hardened its stance, steering away from existing bilateral frameworks and hinting at international arbitration. Bangkok sees this as a clear violation of the 2000 memorandum that outlines how border disputes should be handled — quietly, and between the two countries.

The economic impact came fast. Trade between the two nations — worth around €4.5 billion last year — is taking a hit. Thai officials warn that up to €1.5 billion could be lost in 2025 if things don’t calm down. Border crossings are down, and tourism in the eastern provinces has already dipped. The SET Index dropped 5.2% in June, and the baht has slid 1.2% against the dollar.

It’s bad timing all around. Thailand’s economy was already in low gear. The World Bank recently slashed its growth forecast for this year to 1.8%, down from an earlier 2.9%. Industrial output is flat. Investors are jittery.

No one’s pulling out the ASEAN charter just yet, but the regional body’s limits are showing. Its hands-off approach works — until it doesn’t. Behind closed doors, some officials say the bloc looks increasingly toothless when one member appears to provoke another.

Meanwhile, Cambodia’s political machinery is in motion. Officially, Prime Minister Hun Manet has stayed quiet. Unofficially, all eyes are on his father. Hun Sen may no longer hold office, but few doubt he’s still pulling strings. His connection to the phone call leak hasn’t gone unnoticed in Bangkok.

Strategically, the timing couldn’t be more delicate. Thailand remains a key partner in Washington’s Indo-Pacific plans, while Cambodia has grown closer to Beijing. As the two countries trade diplomatic jabs, some analysts worry that a simmering border feud could morph into a wider geopolitical flashpoint.

Back in Bangkok, the government is treading water. The Constitutional Court is unlikely to issue a ruling on Shinawatra’s fate before the end of the summer. Acting Prime Minister Suriya Jungrungreangkit, with little mandate and less momentum, has few levers to pull.

For now, the region watches and waits. This isn’t the first time politics have tested Southeast Asia’s fragile balance — but the stakes this time feel higher, and the room for miscalculation, smaller.

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