High-Dependency Border Fractures and National ‘Cascading Vulnerability’: A Framework for Identifying Critical Vulnerabilities, Intelligence-Driven Simulation, and Early Warning in Cambodia Based on Structured Knowledge Graphs, with a Discussion on Thailand's Compliance Economic Action Portfolio Amidst Border Conflict Spillover

1. Introduction

The vulnerability of small open economies often extends beyond the question of ‘which sector is relatively weak’ to encompass ‘which dependency chain, if disrupted, could simultaneously drag multiple sectors into a pressure zone’. Fuel supply exemplifies this: it is not merely an energy issue, but a common upstream input for transport logistics, pricing, tourism, and industrial fulfilment. When critical fuel channels face sudden constraints, the shock propagates cross-sectorally through the cost-expectations-cash flow-credit chain, manifesting as deteriorating financial asset quality and macroeconomic growth deceleration. This ‘cascade’ describes how a localised shock first disrupts a key link, then propagates and amplifies along dependency chains, ultimately triggering sequential failures across multiple systems or sectors.

For Cambodia, international institutions have repeatedly cautioned in recent years: the property and construction sectors are undergoing correction, financial system vulnerabilities are rising, and external trade policy uncertainties may intertwine with domestic balance sheet pressures to form downside risks (IMF, 2024; IMF, 2025; World Bank, 2025). Concurrently, public reports from 14–15 December 2025 concerning escalating border tensions between Thailand and Cambodia alongside tightening fuel supply channels provide a real-world window into such ‘trigger points’: Thailand discussed or implemented fuel restrictions and halted fuel shipments via Laotian border crossings to prevent diversion to Cambodia (Reuters, 14 December 2025; Reuters, 15 December 2025).

Research Questions:

RQ1. From a ‘dependency network’ perspective, what constitutes Cambodia's most vulnerable sector/link?

RQ2. Is its systemic vulnerability concentrated in a few ‘high-degree dependency edges’?

RQ3. How would the rupture of these links trigger cross-sectoral cascades? How might an observable early warning indicator system be constructed?

RQ4. Against the backdrop of conflict spillover, what combinations of economic actions—non-civilian-targeted, compliant, and reversible—could Thailand employ to mitigate regional systemic risks?

2. Theoretical Framework: From 'Sectoral Risk' to 'Dependency Edge Risk'

2.1. Dependency Networks and Cascading Instability

This paper abstracts the national economic-social-infrastructure system as a graph G=(V,E): nodes V represent critical subsystems/sectors (exports, employment, finance, property, fuel, electricity, climate, tourism, governance, etc.), while edges E denote cross-system dependencies (input constraints, funding chain constraints, price/expectation transmission, regulatory adjustments, etc.). The ‘weakest link’ is defined herein as: a dependency edge exhibiting high interruptibility, broad spillover effects, and significant recovery difficulty. Empirically, such edges often possess a ‘high betweenness’ characteristic, meaning they lie on multiple critical paths; once disrupted, cascading effects are substantially amplified.

2.2. Academicisation of Intelligence Analysis Methods: Reproducibility, Verifiability, and Early Warning

Intelligence research emphasises structured reasoning and continuous validation under conditions of incomplete information. This paper formalises this approach into three academic outputs: (1) Graphical representation: node-edge inventories (definitions, directions, evidence anchors); (2) Deductive modelling: cascade pathways following critical edge disruptions (causal chains and feedback loops); (3) Metricisation: signposts (observable leading indicators and threshold logic).

3. Data Sources and Methods

3.1. OSINT Sources and Credibility Stratification

This paper exclusively utilises verifiable open sources: IMF Article IV-related publications and country reports on Cambodia (anchoring property corrections, financial vulnerabilities and risk structures); World Bank's Cambodia Economic Update: Navigating Uncertainty (anchoring macroeconomic trajectories and uncertain environments); ADB/WBG Climate Risk Country Profile: Cambodia (anchoring climate and flood exposure), Reuters reports on events such as fuel restrictions, border access tightening, and foreign trade tariff pressures (anchoring trigger windows and actual occurrence conditions), and border situation briefings and security advisories issued by Thailand's Public Relations Department and Ministry of Foreign Affairs (anchoring policy narrative boundaries and the ‘compliant/humanitarian/reversible’ design space).

3.2. Anchored Qualitative Quantification: Vulnerability Function

In the absence of comprehensive microdata, this paper employs ‘anchored qualitative quantification’ to establish relative rankings for critical edges:

Vuln_edge = Disruptability × Spillover × Recovery Difficulty

Disruptability denotes the susceptibility to disruption (whether single-point channels exist, and whether conflicts/policies can rapidly impact this edge). Spillover indicates the extent of spillover effects (constraints across multiple sectors and the scope of chain reactions). Recovery Difficulty signifies the difficulty of recovery (costs and time lags associated with alternative pathways, inventory buffers, and institutional repairs).

4. DN-KG Structured Knowledge Graph Construction: Nodes, Edges and Evidence Anchors

4.1. Node Set (Nodes)

To ensure reproducibility, this paper fixes ten core nodes (scalable but not arbitrarily renamed):

N1 Exit Engine;

N2 Employment and Household Debt Repayment Capacity;

N3 Financial System Asset Quality;

N4 Real Estate and Construction Chain;

N5 Fuel Supply Chain;

N6 Power System;

N7 Border Security and Geopolitical Conflict;

N8 Climate–Agriculture–Food Prices; N9 Tourism and Service Sector Confidence; N10 Governance and Regulatory Capacity.

4.2. Key Dependency Edges and Directional Definitions

This paper defines nine core dependency edges (directions indicate primary transmission pathways; bidirectional feedback may exist in practice):

E1: N1 → N2 (Exports–Employment Edge): Changes in external demand/tariffs affect orders and working hours, subsequently impacting employment and income. (Reuters, 2025-05-15; Reuters, 2025-08-01)

E2: N2 → N3 (Debt Service – Asset Quality Edge): Declining income and mounting debt pressures heighten overdue and non-performing loan risks. (IMF, 2025-01; IMF, 2025-12)

E3: N4 → N3 (Property – Financial Edge): Property market correction and declining collateral values amplify financial risk exposure. (IMF, 2024; IMF, 2025-12)

E4: N3 → N1/N2 (Credit Supply – Real Economy Employment Edge): Deteriorating asset quality triggers credit contraction, conversely suppressing corporate liquidity and employment. (IMF, 2025-01)

E5: N7 → N5 (Conflict – Fuel Channel Edge): Border conflicts/restrictions disrupt cross-border fuel transportation and supply routes. (Reuters, 2025-12-14; Reuters, 2025-12-15)

E6: N5 → N9/N1 (Fuel – Tourism/Contract Fulfilment Edge): Fuel cost volatility and supply instability raise logistics expenses, undermining tourism and export contract fulfilment. (Reuters, 2025-12-15)

E7: N6 → N1 (Electricity – Industrial Continuity Edge): Power supply stability and cross-border electricity import capacity affect continuous industrial production. (Reuters, 21 October 2024)

E8: N8 → N2/N9 (Climate – Livelihoods/Services Edge): Climate shocks like floods impact agriculture and prices, spilling over into livelihoods and service sector expectations. (ADB & WBG, 2021)

E9: N10 → N3 (Regulatory – Risk Identification/Mitigation Edge): Regulatory transparency and macroprudential measures influence the pace of risk exposure and intensity of financial contraction. (IMF, 2025-12)

5. Key Judgement (KJ) Confidence Level

KJ1 (High Confidence): Cambodia's most vulnerable short-term exposure to ‘trigger-type cascading’ risks lies within its fuel supply chain and critical transit routes (E5, E6). This assessment is based on publicly reported fuel restrictions and transit route tightening measures observed on 14-15 December 2025, coupled with the inherent cross-sectoral spillover characteristics of this border area. (Reuters, 14/12/2025; Reuters, 15/12/2025)

KJ2 (High Confidence): The primary structural vulnerability in the medium term stems from concentrated external exports (particularly to the US) → employment and debt servicing capacity → financial asset quality (E1, E2, E4). This is underpinned by Cambodia's high export dependency on the US, coupled with significant employment absorption in apparel and footwear sectors. Tariff uncertainties have been publicly reported as a major external shock source. (Reuters, 2025-05-15; Reuters, 2025-08-01)

KJ3 (High Confidence): Property market correction (N4) serves as a key amplifier of financial vulnerability (E3), potentially accelerating credit contraction feedback through collateral value and risk recognition. This is supported by the IMF repeatedly linking property and construction market corrections to financial risk exposure in its 2024/2025 materials. (IMF, 2024; IMF, 2025-12)

KJ4 (Medium Confidence): Cross-border electricity dependency and climate slow variables (E7, E8) typically manifest as ‘background pressures’ but may transform into non-linear amplifiers when compounded by conflict/trade/financial stresses. (Reuters, 2024-10-21; ADB & WBG, 2021)

Note: Confidence levels are determined by the consistency of public evidence, the authority of sources, and the verifiability of logical chains.

6. Findings: Intelligence-Level System Interpretation of Cambodia's Most Vulnerable Sectors/Links

6.1. Primary Vulnerability: Fuel Supply Chain and Critical Channels (E5/E6, Triggering Breakpoints)

Vulnerability Mechanism: (1) Channel Constraints/Fuel Restrictions (Conflict and Regulatory Triggers) → (2) Supply Volatility and Cost Escalation (Widening Wholesale-Retail Price Spread, Declining Days of Inventory) → (3) Rising Logistics and Production Costs (Increased Export Fulfilment Costs; rising service sector costs) → (4) Tourism and service sector confidence erosion (increased cancellation rates, cash flow contraction) → (5) Household expenditure contraction and rising default risks → (6) Financial asset quality pressure and credit tightening (reverse impact on the real economy).

The critical aspect of this chain is that fuel serves not merely as a ‘sectoral input’ but as a shared upstream constraint across multiple systems; thus, its impact can cascade across sectors. Public reports dated 15 December 2025 indicate Thailand has halted fuel shipments via Laos border crossings and expressed concern over diversion to Cambodia, while discussing measures such as high-risk maritime restrictions. This signals a marked increase in the tangible vulnerability of this supply route. (Reuters, 15 December 2025)

Early warning indicators: refined oil arrivals and regional inventory days; wholesale-retail price differentials and transport cost indices; rapid shifts in tourism cancellation rates and hotel occupancy; industrial shutdown/shift reduction signals and export fulfilment delays; short-term delinquency rates at financial institutions and changes in restructured loan proportions.

6.2. Second Vulnerable Trunk: Export Concentration – Employment – Debt Servicing – Finance (E1/E2/E4, Medium-Term Structural Chain)

Vulnerability Mechanism: External tariff/market access shocks and order volatility → Declining working hours and wages → Reduced household debt servicing capacity (including micro-loan pressures) → Rising arrears and non-performing loans → Diminished risk appetite among financial institutions → Credit supply contraction → Decline in domestic demand and investment → Further employment pressures (forming a feedback loop).

Public reports indicate that Cambodia's exports to the United States account for a significant proportion of its total exports, with the garment and footwear sectors absorbing a substantial share of employment. Tariff negotiations and changes in tax rates directly impact its growth and employment outlook (Reuters, 15 May 2025; Reuters, 1 August 2025). This chain is ‘structural’ because it relies not on isolated events but on export composition and market concentration; consequently, its risk manifests as a combination of ‘persistent exposure—triggering window—financial feedback’.

Early warning indicators:

-

Shipment volumes to the US, order cancellations and delivery delays;

-

Manufacturing layoffs/shutdowns, changes in working hours and wage arrears signals;

-

Microloan delinquency rates, proportion of restructured loans, regional cash flow pressures; bank credit growth and risk premium shifts.

6.3. Third Vulnerability Amplifier: Property Correction – Collateral – Non-Performing Exposure – Credit Crunch (E3/E4)

IMF documents from 2024 and 2025 highlight that property and construction sectors are undergoing correction, with credit slowdown exposing financial vulnerabilities and downside risks (IMF, 2024; IMF, 2025-01; IMF, 2025-12).

Mechanism: Declining property transactions and prices → Falling collateral values and deteriorating developer cash flows → Accelerated risk recognition and rising non-performing exposures → Financial institutions tightening credit supply → Declining corporate turnover and household consumption → Shift in the macroeconomic growth trajectory.

The danger of this amplifier lies in its ‘non-linearity’: when risk recognition shifts from “delayed” to ‘concentrated exposure’, credit contraction may suddenly accelerate.

Early warning indicators: Simultaneous decline in transaction volumes and prices (by region); project suspensions and developer default signals; structural shifts in non-performing loans, restructured loans, and extended loans; credit supply contraction and rising financing costs.

6.4. Background Slow Variables: Cross-Border Electricity and Climate Flood Exposure (E7/E8)

Reuters reports Cambodia plans to enhance its electricity import capacity, reflecting its reliance on cross-border power and interconnection structures (Reuters, 21 October 2024). The ADB/WBG Climate Risk Profile highlights Cambodia's high exposure to climate risks such as flooding, which pose long-term pressures on agriculture, water resources and livelihoods (ADB & WBG, 2021).

Systemic Implications: Within a compound scenario of trade shocks, tightening fuel supply routes, and rising financial vulnerabilities, electricity and climate shocks could become the ‘last straw’, propelling otherwise manageable pressures beyond cascading thresholds.

6.5. Cambodia's Electricity Import Sources and Import Share Data (Focusing on 2023)

This document compiles Cambodia's primary electricity import sources and import shares, presented according to different statistical methodologies. Due to variations in statistical boundaries and methodologies, minor discrepancies in ‘shares’ may occur. Therefore, comparative explanations are provided for the electricity sector methodology (GWh), trade statistics methodology (HS 271600), and capacity methodology (MW).

6.5.1. By Electricity Sector Metrics (EAC Annual Report Metrics, Compiled via JICA's ASEAN Power Grid) In 2023

As shown in Figure 1: The import source countries are Laos, Vietnam, and Thailand. In 2023, Cambodia's total imported electricity amounted to approximately 3,373.19 GWh, accounting for roughly 20% of the total available electricity supply (Availability) for that year, which stood at approximately 16,987 GWh.

Country of origin	Imported electricity（GWh）	Share of imported electricity	Share of national available electricity supply (approx.)
Laos	2,558.68	75.85%	15.06%
Vietnam	682.29	20.23%	4.02%
Thailand	132.22	3.92%	0.78%
Total	3,373.19	100.00%	≈20%
Note: This figure is derived from the electricity sector's statistical tables (imported electricity broken down by country), and more closely reflects the actual cross-border electricity purchases/receipts within the power grid.

6.5.2. According to Trade Statistics (UN Comtrade / World Bank WITS, HS 271600 Electrical Energy), 2023

Similarly, Laos, Vietnam and Thailand are shown as the primary source countries. Based on this methodology, Cambodia imported approximately 3,484.45 GWh of electricity in 2023, valued at around US$243.91 million; Laos accounted for the largest share.

Country of origin	Imported electricity（GWh）	Share of imported electricity	Import value (million USD)	Share of import value
Laos	2,590.74	74.35%	181.35	74.35%
Vietnam	760.93	21.84%	53.27	21.84%
Thailand	132.77	3.81%	9.29	3.81%
Total	3,484.45	100.00%	243.91	100.00%
Note: Trade statistics are more closely aligned with customs/trade declaration statistics and may differ from power sector statistics in terms of metering boundaries, classification, and reporting criteria.

6.5.3. Supplement: Based on the "Installed/Contracted Import Capacity" Metric (MW)

(1)

Disclosure from Cambodia's energy regulatory authority: Total installed capacity in 2023 stood at 4,649 MW, of which imported electricity capacity/import capacity amounted to 672 MW (14.46%).

(2)

Reuters report (as of October 2024): Cambodia holds import contracts totalling approximately 1,030 MW with Thailand, Vietnam, and Laos, equivalent to nearly a quarter of its power generation capacity. Officials emphasise that imports may approach zero during periods of ample rainfall and will never exceed approximately 25% of total generation at any point.

6.5.4. Why Discrepancies Arise in ‘Import Share’

(1)

Power sector methodology (GWh): More closely reflects actual cross-border electricity purchases/receipts via the grid.

(2)

Trade statistics methodology (HS 271600): Closer to customs/trade declaration statistics, potentially differing from power sector statistics in terms of boundaries, measurement, and classification.

(3)

Capacity methodology (MW): Reflects the upper limit or contracted volume of ‘how much can be imported’, not equivalent to actual electricity consumption (GWh).

7. Scenario Simulation: Trigger – Cascade – Policy Window (Commencing 15 December 2025)

7.1. Near-Term Scenario (4–12 Weeks): Persistent Fuel Channel Constraints

Trigger conditions: Continued fuel restrictions and channel tightening, compounded by anticipated management of ‘high-risk maritime zones’ driving up insurance and logistics costs (Reuters, 15 December 2025).

Cascade Path: Primarily through E5/E6, spreading to tourism and services (N9) and export fulfilment (N1), with cash flow pressures feeding back into finance (N3).

Policy Window (Cambodian Side): Stockpiling and substitution pathways, price stabilisation mechanisms, cash flow support for tourism and SMEs, transparency in financial risk identification and resolution.

7.2. Mid-Range Scenario (Q1–Q2): Renewed Escalation in Foreign Trade Tariff Uncertainty

Trigger Conditions: Renewed volatility or heightened uncertainty in terms of trade with the US (Reuters, 15 May 2025; Reuters, 1 August 2025).

Cascading Path: Intensification of E1/E2/E4 chain, transmission of manufacturing employment pressures to household balance sheets, feedback loop formed by credit contraction in financial sector.

Policy Window: Export market diversification and industrial upgrading, buffering employment and income shocks, microcredit risk resolution and debt restructuring framework.

7.3. Structural Scenario (Q2–Q4): Secondary Dip in Property Correction and Accelerated Risk Confirmation

Triggering Conditions: Prolonged property market correction and deteriorating developer cash flows precipitate concentrated defaults, compelling regulators to accelerate risk confirmation (IMF, 2025-12).

Cascading Pathway: E3/E4 amplifiers activate, credit contraction drags on the real economy and employment, shifting the macroeconomic growth trajectory downward.

Policy Window: Non-performing asset disposal mechanisms, prudential regulation and stress testing, transparent communication to avert panic withdrawals and excessive contraction.

8. Thailand's Proposed Economic Action Package

(Strict compliance with regulations and humanitarian principles; no provision of combat coordination or violence optimisation advice)

Important Declaration: Any reference to ‘cooperation with military operations’ implies coordination of violent acts. This document does not offer specific strategic recommendations that could enhance the efficiency of military strikes, amplify harm to adversaries, or circumvent international obligations. The following content solely examines how Thailand may employ economic policy instruments within the context of conflict spillover to achieve: safeguarding domestic livelihoods and market stability; mitigating regional systemic risks; reducing secondary harm to civilians; and creating conditions for de-escalation negotiations. Its legitimacy and narrative boundaries are anchored by the Royal Thai Government's official stance of ‘acting lawfully, protecting civilians, and upholding peace’ (Royal Thai Government PRD, 13 December 2025; MFA Thailand, 13 December 2025).

8.1. Elevating ‘Fuel/Critical Goods Restrictions’ to a Precise Mechanism: List-Based, End-Use Verified, Auditable, and Reversible

Recommendation: Should controls on fuel and sensitive materials be implemented, adopt a precise governance framework comprising ‘whitelist/blacklist + end-use verification + audit trails + time-bound provisions + phase-out mechanisms.’ This avoids indiscriminate restrictions triggering panic hoarding, smuggling arbitrage, and unintended harm to third countries/civilians. This recommendation directly addresses the fuel restrictions and tightening of transit channels reported in public sources on 14–15 December 2025 (Reuters, 2025-12-14; Reuters, 2025-12-15).

8.2. Establish ‘Humanitarian Exception Channels’ with Third-Party Verifiable Oversight to Mitigate International Backlash and Humanitarian Risks

Recommendation: Explicitly exempt humanitarian supplies (medical goods, potable water, infant care products, staple foods) from port and logistics restrictions, while introducing third-party oversight or joint verification mechanisms to mitigate secondary risks stemming from the chain: ‘economic measures → civilian strain → international backlash and diplomatic fallout.’ Conflict escalation and security advisories inherently amplify pressures on civilian displacement and service provision (U.S. Embassy Bangkok, 8 December 2025). .

8.3. Implement Tiered and Geographically Granular ‘Maritime/Port Risk Advisories’ to Avoid Collateral Damage to Thailand's Shipping and Tourism Reputation.

Recommendation: Alerts concerning ‘high-risk waters/ports’ should be implemented as follows: tiered classification (red/orange/yellow), clearly defined geographical boundaries, specified time windows, and a public declaration that ‘this does not constitute a blanket disruption of international commercial shipping.’ This approach will mitigate irrational surges in insurance premiums and prevent long-term damage to Thailand's port and shipping credibility. Public reports have already referenced discussions on ‘high-risk waters’ and the official stance that ‘international transport remains unaffected’ (Reuters, 15 December 2025).

8.4. Simultaneously Introduce a ‘Dual-Track Buffer Package for Spillover Impacts’: Stabilising Livelihoods + Managing Macroeconomic Expectations

Recommendation: For livelihoods, employ short-term stabilisation tools for oil prices and logistics costs (temporary tax adjustments, transport subsidies, supply guarantees in key regions) ; macro-level measures should enhance expectation management and risk communication for tourism and border industries (avoiding escalation of security advisories into nationwide risks), while providing enterprises with risk disclosure and emergency financing channels. Security advisories and media coverage significantly impact tourism and investment expectations (U.S. Embassy Bangkok, 8 December 2025).

8.5. Position ‘Anti-Smuggling, Anti-Money Laundering, and Disrupting Cross-Border Criminal Financing Networks’ as the Core Economic Governance Framework, Rather Than Pursuing Indefinitely Expanding Blanket Prohibitions and Restrictions.

Recommendation: Enhance monitoring and enforcement against smuggling arbitrage, fraudulent trade, underground banking networks, and cross-border cash corridors. Adopting ‘enforcement through compliance’ as the central narrative and policy lever will help minimise collateral damage to civilian supply chains and reduce risks of international law and humanitarian disputes.

8.6. Designing ‘Verifiable Indicator-Linked De-Escalation Mechanisms’ to Transform Economic Measures into Reversible Leverage for Negotiation Downgrades

Recommendation: All economic measures should be tied to verifiable de-escalation conditions with explicit phasing-out pathways (e.g., ceasefire verification → partial border reopening → gradual lifting of logistics restrictions → trade resumption) to avoid path dependency where irreversible measures prolong conflict and accumulate costs. The Thai Ministry of Foreign Affairs briefing emphasises that ceasefires require mutual consent and good faith from both parties, serving as a viable anchor for establishing an institutionalised ‘condition-de-escalation’ framework (MFA Thailand, 13 December 2025; Royal Thai Government PRD, 13 December 2025).

8.7. Adopting a ‘Minimal Negative Externalities’ Design for Third-Country Routes (Particularly Laos) to Avoid Regional Relationship Costs and Recurring Cascades

Recommendation: When controls involve third-country routes, policy texts should explicitly state that measures ‘do not target the livelihoods or governments of third countries,’ while providing transitional arrangements and communication mechanisms to reduce regional diplomatic costs and instability in alternative routes. Public reports indicate Thailand employs a ‘preventing diversion’ rationale rather than framing it as ‘pressuring third countries’ (Reuters, 15 December 2025).

8.8. Incorporate Thailand's Actions into Quantifiable KPIs to Ensure ‘Assessability, Correctability, and External Accountability’

Recommended minimum KPI set: - Spillover control (Thailand's domestic fuel price/logistics cost fluctuation range, supply coverage rate in border provinces) - Compliance with humanitarian principles (humanitarian exemption clearance rate, completeness of enforcement audit documentation, timeliness of corrective action for violations) - De-escalation effectiveness (ceasefire verification milestone completion rate, phased indicators for cross-border movement recovery, risk aversion index: tourism cancellation rate/insurance premium rate/border commercial disruption level).