Beginning in 1966-7 and becoming much more discernible by 1969, the balance of forces within Cambodia had been shifting in ways much more difficult for Sihanouk to manage. The socioeconomic foundations of his state had been strained and weakened. The government’s major role in managing much of the economy, which had considerably increased in 1964 following the ending of American economic aid, had become clumsy and increasingly ineffective. A steady expansion of secondary and tertiary levels of education had for several years far outrun the capacity of the private economy and bureaucracy to absorb the young graduates, leaving an everincreasing number of discontented urban unemployed.1 Sihanouk’s abrupt ending of American economic assistance in 1963 had been only very partially offset by other sources of foreign economic assistance. Discontent had risen within the bloated bureaucracy and especially among army officers, a significant proportion of whose salaries had been dependent upon American financial aid and who saw their income shrink soon after it was ended in 1963. US military assistance had covered slightly over 25 per cent of expenditures for defense in 1963, and its absence appears to have been primarily responsible for a subsequent increase in the overall budget deficit by almost the same percentage. (The continuing growth of deficit financing was such as to bring the governor of the National Bank to warn in 1966 that it would inevitably lead to “social discontent as a result of the decrease in the purchasing power of the currency.”)2
Laura Summers has observed that during the late 1960s “The official political economy that was supposed to favor rural cultivators was clearly breaking down leaving approximately 20-50% of all peasants in increasingly desperate straits.”3 The government’s dependency on foreign currency earned by the country’s rice exports increased its efforts to force peasants to sell their rice crop to it at officially set prices, causing widespread peasant resentment. Sihanouk’s prime minister, General Lon Nol, was so heavy handed and abusive in enforcing this requirement in the Samlaut area of the rich province of Battambang as to help fan resentment into a brief and largely spontaneous rebellion, for which the still very small Cambodian Communist Party (Khmer Rouge) was happy to take largely unearned
credit. Sihanouk, though apparently himself muddled as to the causes of the rebellion, removed Lon Nol from office.4 But a major cause for the government’s pressure on the peasantry remained. This was the leakage across the frontier into South Vietnam of a major portion of the rice crop (and hence of the country’s ability to earn foreign exchange) which was smuggled through local Chinese merchants and/or Lon Nol’s army officers as intermediaries into the hands of Vietnamese Communists or Chinese merchants based in South Vietnam, all of whom were ready to pay much higher prices than the Cambodian government.5 As a consequence, legally channeled export earnings from rice dropped in 1969 to approximately a quarter of what they had been in 1967 and 1968.6
There seems to be little evidence that this situation resulted in Sihanouk himself losing favor among the peasantry, whose regard he had long assiduously cultivated. But it was very clear that the state of the economy, and especially the loss of American economic assistance, had resulted in a mounting disaffection among the upper and intermediate levels of urban society, most of whose standard of living significantly declined during the second half of the 1960s. It was the increasing discontent of this element that nourished what Sihanouk referred to as the “Right Wing” in Cambodian politics. Its strength grew as Sihanouk moved against urban high school students and graduates radicalized, in part at least, by the paucity of employment prospects, thereby, along with other factors, weakening a sufficiently countervailing force on the left to permit him to balance the extremes in the political spectrum.