Cambodia–Thailand Economic Conflict and the Limits of Geoeconomics in Southeast Asia

Phnom Penh, 2015 | Photo @Rambo2100 on Flickr

In this article published by New Mandala, Richard Yarrow writes about the economy of Thailand–Cambodia border conflict. He asserts that Thailand’s attempts to use economic power to influence the outcome of its border conflict with Cambodia in 2025 largely failed, due to major changes in the Cambodian economy that have lessened its reliance on its richer neighbor.

In mid-2025, both an armed military conflict and an economic conflict broke out between Cambodia and Thailand. The border conflict—which involved land and aerial fights and threats of a naval blockade—killed dozens of people, displaced roughly a million civilians, and reshaped the domestic politics and foreign policy stances of each country. The conflict’s economic dimension has been less discussed, but is no less important.

Geoeconomics, referring to the competitive use of economic policy or commercial means to advance states’ international interests, has gained popularity in policy discourse in many Southeast Asian capitals. As many Southeast Asian states have limited militaries and are committed to some diplomatic norms of ASEAN, it makes sense for policymakers to prefer competing through economic tools rather than militarily.

When the 2025 border conflict began, Thailand tried to assert a decisive advantage over Cambodia through economic pressure, as a larger, industrialised power sanctioning its lower-income, trade-dependent neighbour. However, unlike during previous border conflicts, Cambodia resisted and largely overcame the economic pressure, and Thailand’s strategy appears to have been largely unsuccessful.

This raises vital questions for each country and for Southeast Asia generally. How did Cambodia persevere as well as it did, despite previously relying on Thailand for much of its energy needs and trade in other goods? How and why did geoeconomic strategy and statecraft succeed or fail?

The economics of the conflict reflects major recent trade and industrial changes in both countries, and suggests lessons in economic policymaking and resilience for both Thai and Cambodian authorities. More fundamentally, the conflict raises difficult questions about how well most Southeast Asian governments—due to geography, political capacity, and changing economic structures—can implement an effective geoeconomic strategy. Many leaders may find that geoeconomics offers them less—or a much narrower policy path—than they had hoped.