The United States and Cambodia have agreed to revive their annual military exercises for the first time in eight years, a move that analysts describe as a major reset in relations.

Following a near-complete breakdown in ties in 2017, when Cambodia aligned itself more closely with China and accused Washington of plotting a domestic coup, there have been tentative steps toward rapprochement since a visit by then-US President Joe Biden in 2022.

The restart of the military exercises was announced by US Defense Secretary Pete Hegseth after a meeting with Cambodian Defense Minister Tea Seiha on the sidelines of a security summit in Malaysia. The US also officially lifted a four-year arms embargo on Cambodia on November 7.

This came shortly after a deal on US tariffs last month, and after US President Donald Trump oversaw the signing of a peace accord between Cambodia and Thailand to end an ongoing border conflict — although Bangkok suspended the ceasefire agreement this week.

Sophal Ear, a political scientist and associate professor at Arizona State University in the US, told DW that the restart is arguably the strongest signal of US-Cambodia rapprochement since the joint military drills were suspended.

"While other diplomatic engagements have occurred, the return of military exercises carries symbolic weight and implies a deeper level of trust and cooperation, even if this is just the beginning of a longer process," he said.

Balancing between Washington and Beijing

The US-Cambodia "Angkor Sentinel" drills had taken place annually from 2010 until 2017, when Phnom Penh cancelled that year's event, ostensibly because its troops were needed to manage local elections.

However, the announcement came amid a rapid acceleration in Cambodia's alignment with China, its largest trading partner and investor.

Cambodia began military exercises with China. In November 2017, the ruling Cambodian People's Party (CPP) launched a major crackdown to consolidate its one-party rule.

The Southeast Asian nation's only viable opposition party was forcibly dismantled that year on accusations it was plotting a US-backed coup.

Relations deteriorated further in 2018 after Washington accused Phnom Penh of secretly signing a deal that would allow the Chinese military exclusive access to Cambodia's Ream Naval Base. The US alleged that the base on the Gulf of Thailand would be Beijing's first military outpost in the Indo-Pacific.

As part of the talks to restart joint drills, US Defense Secretary Hegseth reportedly secured Phnom Penh's consent for a future US naval visit to the Ream base.

Recent years have seen a gradual improvement in US-Cambodia engagement, helped by a flurry of diplomatic visits.

In August, the Cambodian government nominated Trump for a Nobel Peace Prize after he intervened to force Cambodia and Thailand to agree to a ceasefire over their ongoing border confrontation. A five-day conflict the previous month left 43 people dead and hundreds of thousands displaced.

Cambodia, aware of its military and economic weakness compared to Thailand, is reliant on international support to pursue its territorial claims.

"The US is the only country that can totally bring peace for Cambodia and Thailand because President Trump will speak his mind for peace," Seun Sam, an analyst at the government-aligned Royal Academy of Cambodia, told DW.

However, relations remain fraught over Cambodia's vast cyberscam industry, which is increasingly seen by Washington as a national security concern. Americans lost $10 billion (€8.6 billion) to scammers based in Southeast Asia last year, a 66% increase from 2023, according to the US government.

Last month, Washington imposed groundbreaking sanctions on Prince Group, one of Cambodia's largest conglomerates, for its role in the illicit industry.

Prince Group founder Chen Zhi had $14 billion in cryptocurrency assets seized by the US Treasury, the largest such bust in history.

Seeking favor with Washington

A Cambodian official, who spoke to DW on the condition of anonymity, said that the recent flurry of deals with the US is a result of Phnom Penh's realization that the status quo was untenable.

The country's economy is in poor health, with a major downturn in tourism and Chinese investment, partly due to the reputational damage caused by the scam industry. Many sectors have also yet to recover from the COVID-19 pandemic.

The ongoing confrontation with Thailand has decimated cross-border trade and seen the return of almost one million migrant workers from Thailand, whom Phnom Penh is struggling to accommodate.

Trump's first tariff announcement in April called for a crippling 49% rate on Cambodian goods, one of the highest in the world. The US purchases around two-fifths of all of Cambodia's exports.

Although these tariffs were reduced to 19% in August, there are major concerns in Phnom Penh that the whims of the White House could decimate Cambodia's manufacturing sector, the backbone of its economy.

The Cambodian official told DW that the government now accepts it can no longer depend entirely on Chinese investment and must make genuine efforts to engage with the US to protect the economy and the legitimacy of the ruling CPP, which has been in power since 1979.

When lifting the arms embargo on Cambodia last week, the US State Department said this was because of Phnom Penh's "diligent pursuit of peace and security, including through renewed engagement with the United States on defense cooperation and combating transnational crime."

Cyberscams in focus

Cambodian Prime Minister Hun Manet, a graduate of America's elite West Point military academy, announced last week that he had also pledged to boost counter-scam cooperation with the US after a phone call with FBI Director Kash Patel.

Cyberscams have become an existential problem in Cambodia, with some estimates suggesting the illicit sector is worth around $19 billion annually, equivalent to 40% of the formal economy.

Hundreds of thousands of people, including many foreigners, have been trafficked to work in the illicit sector, many subjected to slave-like conditions.

Last month, Seoul banned its nationals from travelling to certain areas of Cambodia after a South Korean, who had been trafficked into a scam compound, was found dead after being tortured.

Phnom Penh insists it takes this issue seriously, although there are accusations of foot-dragging, as many of Cambodia's political and economic elite are reportedly profiting from the illicit sector.

Analysts told DW that the recent rapprochement with the US is driven by Cambodia's efforts to generate much-needed diplomatic stability as it faces a protracted conflict with Thailand, major economic shocks, and the geopolitical fallout of its increasingly insurmountable cyberscam problem.

However, it shouldn't be read as a major swing by Phnom Penh away from China, which remains Cambodia's main economic partner and a close geopolitical ally.

"Not necessarily a deterioration" of relations with Beijing, "but rather a recalibration," Ear said.

"The decision to restart US drills suggests Phnom Penh is seeking greater autonomy in its foreign-policy choices and sending a message that it values strategic flexibility more than exclusive alignment."

Edited by: Wesley Rahn