Triangle Trouble: What’s Next for Vietnam’s Indochina Strategy?

For decades, the Cambodia-Laos-Vietnam Development Triangle Area (CLV-DTA) has been a modest yet symbolically important initiative for Hanoi. Established in 1999, it sought to foster cross-border development in the three Indochinese nations, promoting economic cooperation, infrastructure projects and political dialogue. The initiative plays a vital role in Vietnam’s broader regional strategy, ensuring its influence as China’s presence grows. However, this looks increasingly fraught with Cambodia’s withdrawal from the arrangement.

It was Cambodia’s long-time leader, Hun Sen, who initiated the CLV-DTA. But Vietnam has been seen as the group’s natural leader. It has even attempted to expand its scope to cover the entire region. Until recently, few expected a sudden rupture despite simmering anti-Vietnam sentiment in Cambodia. On 12 August 2024, Hun Sen, now President of Cambodia’s Senate and still the country’s true power, defended the CLV-DTA, insisting that Cambodia would not withdraw. A few days later, Vietnam’s foreign ministry praised the initiative’s achievements and talked of a December summit. Yet, on 21 September, Phnom Penh stunned its partners by announcing Cambodia’s withdrawal from the CLV-DTA. It cited the need to prevent “extremists” from weaponising the initiative to slander and attack the government.

For Vietnam, the CLV-DTA was never just about economics. Cambodia and Laos sit along Vietnam’s western borders, where memories of past armed conflicts and external interventions still shape Hanoi’s security concerns. As such, it viewed the CLV-DTA as a means to bind its neighbours into a cohesive bloc that could counterbalance external influence and protect its “sphere of existence”.  To this end, Vietnam has made substantial investments. By 2024, it had 110 projects in the CLV-DTA regions of Cambodia and Laos, worth a total of US$3.76 billion, or half of Vietnam’s total investment in the two countries. Additionally, the agreement provided a platform for dialogue that, crucially, excluded China — and had external support from Japan, South Korea, and the Asian Development Bank. To some extent, this helped Vietnam maintain its position as the “big brother” in the group.

Thus, Cambodia’s decision to exit the CLV-DTA deals a major blow to Vietnam’s “near-abroad” strategy. The official reason given — domestic pressure — is unlikely to satisfy Hanoi, particularly after repeated assurances from Cambodia’s top leaders. Given Hun Sen’s tight grip on power, it is implausible to believe that internal opposition forced his hand. More likely, Phnom Penh’s actions, including its decision to build the controversial Funan Techo canal with Chinese backing, signal a pivot towards closer ties with Beijing. Just days after the withdrawal, Cambodian Prime Minister Hun Manet urged the Khmer-Chinese Coalition Association to explore investments in the very border regions once central to the CLV-DTA.

More importantly, Vietnam should shift its focus from building an exclusive trilateral grouping to encouraging Phnom Penh and Vientiane to integrate more deeply into existing regional frameworks, including ASEAN-led platforms and Mekong sub-regional initiatives.

The timing is particularly galling for Vietnam. It comes just months after an unprecedented power transition from the late leader Nguyen Phu Trong to To Lam, Vietnam’s new helmsman. Phnom Penh’s actions could be interpreted as either its insensitivity to Hanoi’s goals or a deliberate test of Vietnam’s new leadership — neither is likely to be well received in Hanoi.

Cambodia’s withdrawal has ramifications that stretch beyond the economic sphere. The CLV-DTA encompassed crucial dialogue mechanisms such as regular summits between the ruling parties, governments, and national assemblies, as well as cooperation in health programmes and cross-border crime prevention. Although Phnom Penh insists that its exit will not disrupt these channels, it is hard to see how they will continue to function effectively without a formal institutional framework.

The withdrawal also creates losers all round. Cambodians in border regions are at risk of missing out on US$1.7 billion of committed Vietnamese investment — no small sum for these underdeveloped areas. The Cambodian government may have quelled immediate domestic pressure, but at the cost of further deteriorating ties with Vietnam and risking future anti-Vietnamese nationalism. While Phnom Penh may seek greater economic benefits by leaning towards China, antagonising Hanoi — which could have served as a perfect leverage in its dealings with Beijing — could prove to be short-sighted. Vietnam’s “bamboo diplomacy,” which deftly navigates ties with both China and the US to optimise its geopolitical space, offers a useful example. A good hedger expands their options; a bad one narrows them. Cambodia appears to be doing the latter.

Cambodia’s departure from the CLV-DTA underscores the fragility of Vietnam’s regional strategy. The vision of a stable “three-legged stool” supporting the Indochina bloc is wobbling. Laos’ increasing dependence on China only adds to Hanoi’s headache. To preserve its strategic interests, Hanoi must recalibrate its approach. Offering more economic incentives or diplomatic reassurances could help bring Cambodia back into the fold. Involving trusted external partners, particularly Japan and South Korea, could alleviate concerns and dampen anti-Vietnamese narratives. Strengthening people-to-people ties through cultural exchanges, scholarships, and professional training — alongside regular party-to-party engagements — will help foster long-term political and social bonds, especially as the old generation of leaders fades from power.

More importantly, Vietnam should shift its focus from building an exclusive trilateral grouping to encouraging Phnom Penh and Vientiane to integrate more deeply into existing regional frameworks, including ASEAN-led platforms and Mekong sub-regional initiatives. Promoting their engagement with larger, rule-based institutions would align with Vietnam’s security interests while avoiding the perception of being a paternalistic power. This approach would allow Cambodia and Laos to develop their strategic autonomy and balance their relationships with external powers, including China and Vietnam. Hanoi should recognise that its neighbours desire to “breathe through (their) own noses” — as Hun Manet put it — if it hopes to maintain its relevance in a rapidly shifting regional landscape.

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