From Democracy to Diplomacy: The New U.S. Strategy in Cambodia Post-USAID

The ongoing dismantling of the United States Agency for International Development (USAID) under the second Trump administration marks a dramatic shift in U.S. foreign policy, particularly in countries like Cambodia, where USAID has played a historic role in shaping diplomatic relations. For decades, the United States presence in Cambodia has been tied to USAID and its promotion of democratic values, human rights, and good governance—core pillars of U.S. foreign policy. However, with the withdrawal of USAID, the United States risks losing a crucial tool for influence in Cambodia and over the Hun family-led government, which has long been resistant to external pressure on political reforms and human rights. This shift leaves a diplomatic void that could be filled by alternative actors, most notably Beijing. The absence of USAID presents the United States with a unique challenge: how can it maintain its influence in Phnom Penh and persuade the Hun family government to reconsider its alignment with China without aid? This reorientation of policy offers an opportunity to rethink the United States’ relationship with Cambodia. Washington could foster a more pragmatic engagement based on economic cooperation and regional security, rather than the contentious demands for political reform that have previously strained bilateral relations.

Imbalance of Cambodian bilateral relations

Beyond aid, the United States maintains an unbalanced relationship with Cambodia. Compared to China, the United States has fragmented engagement across environmental, economic, diplomatic, and military fronts. Environmentally, the United States is involved in regional efforts, spearheading the Friends of the Mekong initiative on Mekong River resource management. U.S. economic engagement, however, is hampered by sanctions, trade benefit suspensions, and arms embargoes. The United States is Cambodia’s second-largest trading partner and the primary destination of Cambodian exports, with $9.92 billion of trade flow in 2024, but lags far behind on investment.

While the Cambodian and U.S. governments have not had high level engagement since Hun Manet met then-acting deputy secretary of state Victoria Nuland and other U.S. representatives on the sidelines of the United Nations General Assembly in September 2023, there have been promising signs of a thaw in military relations. Commanding general of the United States Army Pacific Gen. Ronald P. Clark visited Phnom Penh in February 2025, where he met Prime Minister Hun Manet and military chief Gen. Mao Sophan to discuss bilateral efforts toward defense and peacekeeping. Despite these tentative engagements, the bilateral relationship is colored by a history of U.S. criticism on political openness and concerns about human rights—a shortcoming in the relationship that the soft power of USAID aimed to fill. 

China, by contrast, has a more multi-faceted approach with Phnom Penh. The Mekong River, flowing through China’s southern territory and eventually downstream to Cambodia, is a uniting force in Sino-Cambodian relations to coordinate resource management. Cooperation on shared resources takes the form of China’s partnership with the Mekong River Commission, as well as an entirely separate Mekong Cooperation Framework substructure called the Lancang-Mekong Cooperation, which focuses on infrastructure projects and trade between China and Mekong countries. Beijing also maintains close economic ties with Phnom Penh; China is Cambodia’s largest trading partner with $15.19 billion in trade volume in 2024. Close relations are further exemplified by a Special Economic Zone in Cambodia’s southern city of Sihanoukville, which was transformed by Chinese investment. Bilateral diplomacy remains a top priority for China, with its most recent high level diplomatic engagement being Cambodian Senate president and former prime minister Hun Sen’s December 2024 visit to Beijing, where he was greeted by President Xi Jinping to discuss their “ironclad” relationship and improving exchanges and mutual ties. Militarily, Beijing and Phnom Penh remain close, with assumed Chinese exclusive access to Cambodia’s Ream Naval Base and the “Golden Dragon” annual joint military exercises. Sino-Cambodian government-to-government relations are strong in every sense of the word.

USAID and Chinese equivalents

Before January 24, USAID in Cambodia had three main development objectives: inclusive and sustainable economic growth; health, education, and welfare advancements; and human rights and government accountability improvements. These objectives, centered around U.S. interests and ideals, reached all 25 Cambodian provinces, totaling more than $3 billion in aid in the last three decades. In 2024 alone, USAID provided $98.47 million to Cambodia, the bulk of which was directed toward the health ($34.44 million) and democracy, human rights, and governance ($22.69 million) sectors. One of the most substantial individual USAID projects in Cambodia is dedicated to clearing unexploded ordnance, an endeavor that provided Cambodia with $10 million annually. While this project recently resumed operations after receiving a waiver from the Trump administration, the long-term sustainability of this funding remains uncertain.

Chinese assistance in Cambodia takes a different form. Unlike the United States, China's aid is less concessional, most often taking the form of loans rather than grants, but also less tied to political conditions. Instead, it focuses on the construction of large-scale infrastructure projects, many of which fall under China's Belt and Road Initiative. This assistance has totaled an estimated $17.73 billion between 2000-2021, with the most substantial projects focused on transportation and energy, including for dams, highways, and rural grid extensions. While some projects also focus on government and civil society, a majority of aid from China does not look to improve human rights and government accountability like USAID did. Yet, China now looks to upstage the United States at its own humanitarian game, contributing $4.4 million and capitalizing on the U.S. announcement to cut demining aid in the 14-day window before the Trump administration reversed its decision and issued a waiver resuming funding.

The goals of implemented aid between the United States and China vary significantly and shed light on the role of aid in bilateral relations with Cambodia. By investing in projects that enhance Cambodia's infrastructure, China has strengthened its role as a key partner, contributing to Cambodia’s economic growth while avoiding the sensitive topics of governance and human rights. This strategy has positioned China as the dominant foreign power in Cambodia, filling the void left by the diminished U.S. diplomatic presence and offering a more stable and less confrontational partnership more palatable to Cambodian leadership.

An opportunity in disguise

The removal of USAID represents a significant setback for U.S.-Cambodia relations. The agency had been a cornerstone of U.S. diplomatic and development efforts, particularly in promoting democracy, civil society, and good governance. For decades, USAID programs in Cambodia advanced U.S. interests through soft power instruments like the promotion of democratic values, human rights, and government accountability. The withdrawal of USAID removes a vital tool for Washington to exert influence on Phnom Penh, and without it, the United States loses a key channel through which it could help shape Cambodia's political trajectory.

However, in a new administration with yet-unstated intentions in Cambodia, it is unclear whether democracy promotion remains a key objective or if other interests—such as economic or security cooperation—will take precedence. While the dismantling of USAID is a clear setback for U.S. soft power, it could also offer a new approach that, paradoxically, allows the United States to engage Cambodia in ways more acceptable to the Hun family-led government. Without the pressure of USAID’s focus on human rights and governance reforms, the United States could rebuild a relationship based on economic cooperation, infrastructure development, and regional security—areas where Cambodia is more receptive and where the United States can still maintain influence while competing with China. This shift could allow the United States to focus on a more pragmatic, mutually beneficial partnership while avoiding more contentious political issues that have historically strained bilateral ties.

While this represents a departure from the traditional U.S. foreign policy approach, the withdrawal of USAID may offer the Trump administration an opportunity to engage Cambodia without the friction caused by demands for political reform. By repositioning itself as a partner focused on economic and security interests, the United States could still preserve its presence and influence in Cambodia, albeit through a different lens. 

Sophia Datta is a research intern with the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.