DESPITE an aggressive series of military offensives, the Cambodian government remains unable to shake what it calls the ``Khmer Rouge problem.''
In the past year, the government has cut deeply into the 20 percent of the country controlled by the guerrillas and last week toppled Pailin, the ``capital'' of the Maoist guerrilla group in western Cambodia. But Western diplomats and Asian analysts doubt Phnom Penh has significantly offset the strategic balance between the two adversaries.
``I would not say it [Pailin] was taken easily; I'd say it was given up by the Khmer Rouge in favor of guerrilla tactics,'' says a Western military analyst. ``I don't see it as a major military setback, but it is a financial disruption for them.''
With its sapphire-rich soils and forested mountains, the Pailin area has been the principle source of income for the Khmer Rouge since China cut aid to the group as part of an internationally brokered peace accord signed in 1991. The group is thought to earn millions of dollars a month from gem mining and logging in the Pailin area.
Pailin ``was their main economy, and if you occupy the bank you are in a better position to negotiate,'' says Roland Eng, Cambodia's ambassador-designate to Thailand.
Since the guerrillas refused to contest the UN-supervised elections in May 1993, Phnom Penh has continued to try to lure them into some limited participation in the government. The radical faction has consistently balked at what they see as an attempt to marginalize the Khmer Rouge politically, and most analysts expect the group will yet again show the resilience that has characterized its 15-year insurgency.
Cambodian officials quickly assured Thai business interests working in Pailin that their contracts with the Khmer Rouge would be honored by Phnom Penh. ``As to trade, I think that as the Khmer Rouge continues to be marginalized and forced into smaller and smaller enclaves, the trade ... will be with representatives of the Phnom Penh government,'' said US Ambassador to Thailand David Lambertson, earlier this month. ``That's already begun to happen.''
While most observers were stunned by how quickly Pailin fell, witnesses who fled to this Thai border area argue the guerrillas chose a tactical retreat. Pailin may not be as economically significant to the guerrillas as it once was. Income from gems and logging has tapered off dramatically in the last year from rapid exploitation, many diplomatic analysts and business people say. It is widely believed that the Khmer Rouge has invested a significant portion of its windfall profits into businesses in Thailand, ensuring uninterrupted income.
``I think you can safely say that their financial position is pretty sound,'' one Western intelligence analyst says. ``Especially at a low-level guerrilla activity, they can continue for many years.''
Further, Pailin may prove to be a burden for the government. Phnom Penh's aggressive pursuit of the Khmer Rouge in the past year has been costly. Cambodia spends roughly a third of its budget - about half of which is provided by development aid - on security.
A Thai military source likens Pailin, which sits in a valley surrounded on three sides by mountains where the Khmer Rouge is well-entrenched, to Dien Bien Phu, the site of the French military disaster in 1954 that led to its withdrawal from Vietnam.
Supply lines to Pailin are relatively easy to cut off, especially with the onset of the rains. ``It would be very easy for the Khmer Rouge to make the continued occupation of Pailin extremely costly,'' the Western military analyst says.
But Cambodian officials insist the disruptive potential of the Khmer Rouge is increasingly marginal. ``The most important thing is not the Khmer Rouge. The most important thing is the economy,'' Ambassador Eng insists.
The Tokyo conference of donors last month pledged $490 million in aid to Cambodia for 1994 and an additional $271 million in 1995. Those commitments reflect endorsements of the country's Western-educated economic team, which has stabilized the currency, increased tax revenues, and launched a campaign against corruption.
There is, however, no denying what King Norodom Sihanouk recently called the ``Khmer Rouge problem.'' In a signed, eight-page article, the king wrote: ``There must be more probing successes in the war we are waging against the Khmer Rouge.''