Thailand-Cambodia Ceasefire: A Fragile Truce with Profound Economic and Regional Implications

The central investor question is whether this truce can hold long enough to allow for meaningful economic recovery and regional stability. The answer hinges on a pattern of repeated breakdowns. This is not the first attempt at peace. The agreement is framed as a continuation of the Kuala Lumpur Declaration, a deal signed in October that was paused by Thailand in November. The earlier ceasefire's collapse, where both sides blamed each other for renewed clashes, sets a precedent of fragility. The new 72-hour test period is a direct response to that history, a mechanism to build trust incrementally.

The core dispute that makes any truce so precarious remains legally unsettled. The conflict is rooted in a territorial dispute between Cambodia and Thailand over certain areas of their border, centered on the Preah Vihear temple. While the International Court of Justice ruled in 1962 in favor of Cambodia, the broader border demarcation was never fully resolved. This unresolved legal status means the underlying cause of the fighting persists, creating a tinderbox that any minor incident can ignite.