Navigating a Geopolitical Fault Line: Thailand and Cambodia

Last month’s armed conflict between Thailand and Cambodia is not an isolated event, but a resurgence of a long-standing territorial dispute with roots tied to colonial-era borders. The core of the disagreement lies in the poorly defined borders from the early 20th century. A major flashpoint has been the 11th-century Preah Vihear temple, a UNESCO World Heritage site, whose ownership of the surrounding land has been contested despite a 1962 International Court of Justice ruling that placed the temple itself in Cambodian territory. This historical grievance has led to multiple armed clashes in the past, including 2008 and 2011.

The path to the July 2025 conflict was a series of escalating incidents. In May, a Cambodian soldier's death in a border skirmish intensified tensions, followed by a landmine incident in July that injured Thai soldiers. Thailand's claim that the landmines were recently laid and not native to the area further inflamed the situation. This led to Thailand recalling its ambassador and a threat to close border checkpoints. The full-scale fighting began on July 24, 2025, and spread across multiple border regions. Both sides employed significant military assets, with Thailand reportedly using fighter jets for airstrikes and Cambodia utilizing rockets. The conflict resulted in dozens of deaths, a majority of whom were civilians.

The political dynamics within both countries were also a critical factor. The conflict directly impacted the domestic political landscape in Thailand, particularly concerning its Prime Minister, Paetongtarn Shinawatra. Her suspension from office was a result of a leaked phone call with former Cambodian leader Hun Sen, where her comments were perceived as undermining the Thai military and her nation's interests. Hun Sen's deliberate release of the call served to embarrass her and assert his influence, fueling nationalist rhetoric on both sides.

The international community was swift to react, with mediation efforts led by Malaysia, the current chair of ASEAN. The United States reportedly intervened by threatening to freeze trade talks with both nations until a ceasefire was in place. This international pressure, combined with the escalating human and economic costs, led to an agreement for an "immediate and unconditional ceasefire" on July 28, 2025. The situation remains highly fragile, with both sides accusing each other of violating the terms of the agreement and reports of new landmines being planted.

The economic and humanitarian toll has been substantial. The fighting displaced hundreds of thousands of people, with a majority of them being civilians. On the economic front, Cambodia has been hit particularly hard. The tourism sector, a cornerstone of its economy, saw a dramatic drop in visitors and cross-border trade was severely disrupted. Nationalist sentiment in Cambodia led to boycotts of Thai brands, directly impacting their business operations. While the larger Thai economy has been less affected, a prolonged conflict could threaten its reliance on Cambodian migrant workers and impact its significant bilateral trade. The instability has also created a major deterrent for foreign direct investment (FDI), directly threatening Cambodia's previous high ranking in the Asia-Pacific Greenfield FDI Performance Index for 2025.

The events surrounding the Thailand-Cambodia conflict underscore the imperative for businesses to proactively manage geopolitical risk. This crisis illustrates how swiftly political tensions can escalate into armed conflict, disrupting trade, displacing populations and undermining economic stability. For any enterprise with regional and global interests, the ability to anticipate, assess and mitigate such risks is a core component of resilient strategy.

Stylos Advisory is poised to help businesses navigate this complex landscape, offering strategic guidance and solutions to protect your operations and investments from geopolitical volatility.