Cambodia

BANGKOK — With summer around the corner, soaring prices and other complications from the war with Iran are straining the tourism-dependent economies of Cambodia, Thailand, Vietnam and other countries in Southeast Asia.

The region’s peak tourist summer season is at risk as elevated jet fuel costs coupled with ceasefire uncertainties prompt flight cancellations and higher ticket prices.

Tourism in Asia has yet to fully recover from the COVID-19 pandemic. Now, many countries are coping with the war’s repercussions on global energy supplies and prices, which hit Asia first and hardest. Some families are pulling back on travel as gas and groceries get more expensive worldwide. Crowds have thinned at some places once synonymous with travel.

“With gasoline prices rising and tourism declining, how can we make money?” asked Siv Pech, a 58-year-old rickshaw driver in Siem Reap, home to Cambodia’s centuries-old Angkor Wat temple complex.

Tourism is an economic lifeline for many developing nations. It contributes nearly 13% of gross domestic product in Thailand and nearly 9% in Vietnam, and it underpins millions of jobs in Cambodia. Travelers bring in much-needed foreign currency for import-dependent economies such as the Philippines and Nepal.

Those tourism dollars are more crucial than ever as war-driven spikes in oil prices push up the cost of fuel imports, especially for parts of the world that relied on the Strait of Hormuz off Iran’s coast as a conduit for much of their oil and gas. Iran essentially shut down the strait to commercial traffic after the U.S. and Israel launched the war more than three months ago.

The war will determine which tourism businesses can survive long enough to benefit from the eventual return of travelers, said Jitsai Santaputra of the Lantau Group, an energy industry consulting firm. “This, happening within five years of each other, first the pandemic and now the war, is horrible for the tourism industry,” she said.

Travel costs

Jet fuel shortages and surging costs have led Vietnam Airlines, the Malaysia-based AirAsia group, Hong Kong’s Cathay Pacific and other carriers to cut flights or otherwise adjust schedules.

European carriers face a squeeze for similar reasons.

Airspace closures across the Persian Gulf early in the war and the intermittent closures of certain Persian Gulf airports cut off key layover locations for Asia-bound flights or forced commercial airplanes to take longer, costlier routes.

Airfares have jumped, with airlines such as Air India and Cathay Pacific implementing sharp increases in fuel surcharges.

Cathay Pacific’s fuel surcharge for medium-haul flights has jumped to $80, up from $34 before the war. For long-haul flights, it increased to $174, up from $73.

“Jet fuel prices remain at highly elevated levels” and have increased cost pressures, said Lavinia Lau, Cathay’s chief customer and commercial officer. Travelers are booking closer to their departure dates, she said, indicating growing unease.

Sandra Awodele, a freelance travel writer in the Washington area, often plans year-round international trips and hoped this summer would be when she finally crossed off Asia from her bucket list.

In March, she began planning a long-awaited vacation to Thailand, envisioning one to two weeks of exploring. Her plans hit a wall when she checked airfares.

“I looked at flight options and that’s where it ended,” Awodele said.

On the ground, rising fuel costs in tourism-dependent Southeast Asia are squeezing taxi and ride-hailing app drivers.

Pech, the Cambodian rickshaw driver, said he used to earn up to $20 a day toting tourists around Siem Reap. That’s plummeted to about $5 a day.

His gas bill eats half of that. The rest goes to food. “Some days, I don’t earn even a cent,” he said.

Slow summer expected

Tourism is vital for many regional economies, accounting for nearly 11% of economic activity in the Assn. of Southeast Asian Nations in 2019, according to the World Travel and Tourism Council.

An analysis by Moody’s Analytics estimated effects from the war would probably reduce economic growth across the Asia-Pacific region by 0.1 to 0.4 percentage points in 2026.

“The conflict will weigh on growth mainly through higher production costs and consumer prices, along with weaker external demand from trade and tourism,” said Albert Park, chief economist at the Asia Development Bank.

Higher airfares and weaker travel confidence can quickly spill over into household livelihoods and public revenues in economies where visitor arrivals are a major source of jobs, income and foreign exchange, according to a recent report by the United Nations Development Program.

Travel is often the first expense people cut when the economy worsens, said Le Tuyet Lan, who runs bed-and-breakfast properties in Vietnam’s Hanoi and Ho Chi Minh City.

In times of crisis, luxury travelers tend to shift toward mid-range options, mid-range travelers move toward budget hotels, and the cheapest tier of the market becomes the most vulnerable.

“This will disrupt the whole industry,” she said.

‘We are feeling it’

Tourism in Thailand is “a big industry and we are feeling it,” said Santaputra with the Lantau Group in Bangkok, one of Southeast Asia’s most visited cities.

The number of visitors to Thailand fell 7% year-on-year in April, while European arrivals fell almost 16% and Middle Eastern arrivals sank 57%, according to the Ministry of Tourism and Sports.

In neighboring Cambodia, Sokha Sambo, owner of the popular Sambo Khmer & Thai Restaurant in Siem Reap, said the rising price of liquefied petroleum gas used for cooking has strained her budget, hindering her ability to dish out her signature green curries.

“I’m worried about gas and goods inflation. It makes the business less profitable and difficult to cover employees’ salaries,” said Sambo, who has 14 staff members.

In the first four months of 2026, the number of recorded international and domestic visitors to Siem Reap dropped by 37.5% compared with the same period last year, according to the province’s tourism department.

“This has greatly affected all of us,” Sambo said.

Delgado and Chan write for the Associated Press and reported from Bangkok and Hong Kong, respectively. AP writers Aniruddha Ghosal in Hanoi and Rio Yamat in Las Vegas and freelance journalist Sinorn Thang in Phnom Penh, Cambodia, contributed to this report.

Preah Vihear/Siem Reap provinces – When asked how she spends her day, 11-year-old Sokna rattled off a list of chores.

She first fetches water, then washes dishes and sweeps the leaves and dust from around the blue tarpaulin tent her family now calls home, in the grounds of a Buddhist pagoda in northwestern Cambodia.

Sokna and her sister have stopped attending school, their mother Puth Reen said, since moving to this camp for people displaced by the recent rounds of fighting between Thailand and Cambodia.

The two sisters are among more than 34,440 people who remain in displacement camps in Cambodia – 11,355 of whom are children – as of this month, according to the country’s Ministry of Interior.

“I tried to tell them to go to school, but they don’t go,” Puth Reen told Al Jazeera, explaining how precarious life had become since returning to live in Cambodia after fleeing neighbouring Thailand, where she had worked for many years, as the fighting started.

Like Puth Reen and her family, the future looks murky for the tens of thousands of Cambodians – including many schoolchildren – who are still in displacement camps, and their lives remain disrupted months after the last outbreak of fighting between Thailand and Cambodia.

Forced to flee their homes in areas where local troops are now stationed and on high alert, or in areas occupied by opposing Thai forces, Cambodia’s internally displaced say they are surviving off aid donations, while those more fortunate are transitioning from emergency tents into wooden stilted houses provided by the Cambodian government.

But with tension still evident between the leadership in Bangkok and Phnom Penh, the tenuous ceasefire along the Thai-Cambodia border means life cannot yet return to normality.

Some areas on the Cambodian border, such as the villages of Chouk Chey and Prey Chan in Banteay Meanchey province, have become rallying points for nationalists who post on social media about the Thai occupation of Cambodian territory. Their anger is directed at the large shipping containers and barbed wire that Thai forces have used to block access to villages once inhabited by Cambodians and occupied during fighting.

The Thai military-installed containers now form a sort of new frontier between the two countries.

The Cambodian military has also prevented people, such as local farmer Sun Reth, 67, from returning to their homes in front-line areas, which are still highly militarised zones, with troops ready at any moment for a new round of fighting.

“Now the Cambodian military base is just next to [my house],” Sun Reth said, adding that she was not allowed by authorities to sleep in her modest home or pick cashew nuts from her farm to sell for a little income.

Cambodian children more focused on ‘rumours’ of war

The long-held border dispute between Thailand and Cambodia erupted into two rounds of conflict last year, over five days in July and almost three weeks in December.

Dozens were reported killed on both sides, and hundreds of thousands of civilians fled their homes as both countries’ armed forces fired artillery, rockets, and, in the case of Thailand, conducted air strikes deep into Cambodian territory. Thailand has a modern air force, a military capability not possessed by its smaller neighbour.

Cambodian and Thai officials reached a ceasefire on December 27, but the situation remains tense five months on.

For families who fled the fighting, school continues for most children in the displacement camps, but parents say education is fragmented while their lives are still so unsettled.

Mothers at the Wat Bak Kam camp for the displaced in Preah Vihear province told Al Jazeera that primary school students can join classes at a local school, but high school students need to travel daily to the provincial capital, about 15km (9 miles) away.

Now the rising cost of petrol, due to the US-Israel war on Iran, has made it even harder for teenaged students, who have access to motorcycles, to make the journey to school.

Kinmai Phum, technical lead for WorldVision’s education programme, which is providing support to the camps, said school dropout rates and children skipping classes have increased substantially among students from the displaced border regions.

Kinmai Phum said the situation is a perfect storm of problems: Displaced families have been forced to move around for shelters, schools and temporary learning spaces lack facilities, and some students have psychological trauma due to the conflict.

“Local authorities [are] concerned that many children may not return to school at all if displacement and economic hardship persist,” Kinmai Phum said.

Yuon Phally, a mother of two, said she had noticed the impact of the war on her daughter and son, who are in their first and third years in primary school.

When they return from school, Yuon Phally said, they tell her about rumours they had heard about Cambodia and Thailand resuming fighting.

“Their feeling is not fully focused on school; they focus more on these rumours,” she said.

Her children’s world was more impacted by the conflict because their father is a soldier stationed in the Mom Bei area of the border.

During the fighting in December, Yuon Phally said she could not convince her children to go to school because they all waited to see if their father would call on a mobile phone from the front line.

“I couldn’t hold back my tears, and that added more pressure onto my kids,” she said.

“They would ask about their dad and how he is doing now. Then they told me to eat rice. They understood my feelings.”

She said her children’s focus on their studies only improved after their father returned from fighting to the camp where they are staying, to rest and recover from sickness and injuries sustained in battle.

‘Who doesn’t want to have peace?’

Soeum Sokhem, a deputy village chief, told Al Jazeera how his home is located in the militarised “danger zone” along the border, but he feels compelled to return every few days to check on his house, tend crops, sleep an occasional night, and check in with other neighbours doing the same.

“I can’t just stay here”, he said of camp life.

“I have to go back.”

When asked how he felt about the border war, Soeum Sokhem said he had experienced so much war in Cambodia that he did not know how to describe his “inner feeling like I really want to”.

He then listed off all the conflicts he had lived through in Cambodia since the 1960s: The spill over into Cambodia from the US war in neighbouring Vietnam; the US bombing campaign in Cambodia; the genocidal Khmer Rouge regime, and the civil war that followed after Vietnam’s intervention to topple the regime’s leader Pol Pot in 1979, and which lasted until the mid-1990s.

Then in the 2000s, sporadic border fights with Thailand began, he said.

Cambodia’s contemporary history has been anything but peaceful, a fact which might explain why the current Cambodian government so often speaks of peace. Government buildings and billboards proclaim the government’s unofficial motto: “Thanks for peace.”

“But who doesn’t want to have peace?” Soeum Sokhem said, after charting his life and the many conflicts he had lived through.

Now the 67-year-old said he once again hears gunfire occasionally when he returns to check on his home on the front line.

“Before, when I walked there, it was normal,” he said.

“But nowadays, I walk with fear when going back there.”

Thailand has formally scrapped a 25 year old agreement with Cambodia aimed at jointly exploring offshore energy resources in disputed waters. The decision, announced by Prime Minister Anutin Charnvirakul, marks a significant shift in bilateral relations and raises fresh uncertainty over the future of energy cooperation in the region.

The agreement, known as Memorandum of Understanding 44, was signed in 2001 to create a framework for joint exploration of oil and gas reserves in overlapping maritime claims within the Gulf of Thailand. Despite its ambitious goals, the pact has seen little tangible progress over the past two and a half decades.

A Long Stalled Framework

Memorandum of Understanding 44 was designed as a dual track mechanism. It sought to enable joint resource exploration while allowing both countries to continue negotiations over maritime boundary demarcation. However, repeated political disruptions, competing national interests, and periodic tensions prevented meaningful advancement.

Thai officials have increasingly argued that the agreement failed to deliver results, with no concrete development of hydrocarbon resources despite years of dialogue.

Domestic Politics and Strategic Timing

The cancellation also reflects domestic political dynamics in Thailand. Anutin, who secured reelection following a surge in nationalist sentiment, had pledged to withdraw from the agreement as part of his campaign platform.

Although he has stated that the decision is not directly linked to recent border conflicts, the broader context suggests otherwise. Nationalist pressures and public opinion have played a role in shaping policy, particularly after violent clashes between the two countries last year.

Cambodia’s Response and Regional Implications

Cambodia has previously expressed strong opposition to Thailand’s plan to withdraw, describing it as deeply regrettable and reaffirming its commitment to the agreement. The lack of immediate response following the announcement leaves open questions about Phnom Penh’s next steps.

The termination of the pact could complicate future negotiations, especially in resource rich areas where both nations maintain overlapping claims. It may also delay potential energy development projects that could have benefited both economies.

From Cooperation to Legal Frameworks

Thailand has indicated that it will now rely on the United Nations Convention on the Law of the Sea as the basis for any future discussions. This shift signals a move away from cooperative frameworks toward a more formal and potentially contentious legal approach to resolving maritime disputes.

While UNCLOS provides established mechanisms for dispute resolution, negotiations under its framework can be lengthy and politically sensitive.

Conflict and Fragile Stability

The backdrop to this decision includes two recent rounds of armed conflict along the Thailand Cambodia border, which resulted in significant casualties and large scale displacement. Although a ceasefire has been in place since late December, tensions remain high, and mutual distrust persists.

Each side continues to blame the other for initiating the clashes, underscoring the fragile nature of the current peace.

Analysis

Thailand’s withdrawal from the joint energy agreement reflects a broader shift from cooperative engagement to assertive unilateralism. While the official rationale centers on lack of progress, the timing and political context suggest that strategic and domestic considerations are equally influential.

For Thailand, the move reinforces national sovereignty and responds to domestic expectations. However, it also risks escalating tensions with Cambodia and undermining long term opportunities for shared economic gains.

For Cambodia, the collapse of the agreement represents both a diplomatic setback and a potential loss of access to jointly developed energy resources. It may now seek alternative avenues, including international arbitration or renewed bilateral negotiations under different terms.

At a regional level, the decision highlights the challenges of managing overlapping territorial claims in resource rich areas. Without effective cooperation mechanisms, such disputes are more likely to shift toward legal confrontation or political escalation.

Ultimately, the end of this long standing pact underscores a key reality in international relations. Agreements that lack sustained political commitment and mutual trust are unlikely to endure, particularly in environments shaped by nationalism and unresolved territorial disputes.

With information from Reuters.