A report in The Wall Street Journal on Sunday concerning Chinese military basing rights in Cambodia raises deep concerns as to the trajectory of US-Cambodian relations and whether they can be rescued from what is rapidly becoming a downward spiral.

American officials have claimed that they have seen an early draft of an agreement between Phnom Penh and Beijing concerning future military cooperation. As the Journal noted, “The pact – signed this spring but not disclosed by either side – gives China exclusive rights to part of a Cambodian naval installation on the Gulf of Thailand, not far from a large airport now being constructed by a Chinese company. Some details of the final deal were unclear, the officials said, but an early draft, seen by US officials, would allow China to use the base for 30 years, with automatic renewals every 10 years after that. China would be able to post military personnel, store weapons and berth warships, according to the draft.”

The question of a Chinese military presence in Cambodia was strongly denied by Prime Minister Hun Sen and other government officials, with the PM noting that the presence of foreign military personnel would be a direct and clear violation of the Cambodian constitution. The government has long denied, vocally and consistently, that permission would ever be given for a Chinese military presence in Cambodia.

The issue has been simmering for months and is the most significant stumbling block to any real improvement in US-Cambodian relations. With this development, it appears that trust has now completely broken down on both sides.

Further heightening tensions was a report from Reuters that the Chinese Foreign Ministry had refused to respond to multiple questions and did not issue any denial as to the veracity of the Americans’ claims. This is consistent with Chinese Defense Minister Wei Fenghe’s refusal, at June’s Shangri-La Dialogue in Singapore, to give a direct answer when questioned as to whether China was seeking a future military presence in Cambodia.

However intended, China’s response only adds credibility to the claims put forward by the American side. The question every analyst is asking is quite simple: If the draft does not exist, why won’t Beijing make a clear denial? The logic behind Beijing’s hesitancy is quite understandable.

Assuming the draft agreement exists, an easily disproven denial from the Chinese Foreign Ministry (that could be confirmed by the existence of the draft in question) would further aggravate tensions in Sino-US relations, which are already at their lowest point in decades. This could open the door to an easily triggered President Donald Trump finally applying the remaining tariffs the United States could deploy against US$300 billion worth of Chinese exports. Such a move would hit Chinese near-term growth hard, just as the country is beginning to feel the negative employment effects of the current trade war.

It is certainly in China’s interest to avoid any further escalation in the existing economic conflict, raising the question: Has China just publicly thrown Phnom Penh under the bus to protect its own relationship with the United States? It certainly appears so, as an official denial by Beijing would go a long way to support the view stated by Phnom Penh.

For Cambodia, the consequences of such a pact existing would be extreme as regards the future of the country’s relationship with the United States. Only last week did the US House of Representatives pass the Cambodia Democracy Act, legislation that would deploy targeted sanctions against various upper-ranking Cambodian People’s Party officials and their families. While similar legislation passed the House in a previous session, it died upon reaching the Senate.

This new development significantly raises the likelihood of the Senate Foreign Relations Committee taking up the Cambodia Democracy Act after the summer recess and also increases the probability of passage by the full Senate. The trajectory of that legislation, with the skids now greased by this draft document, is now significantly clearer.

The alleged draft military pact and China’s lack of official denial thereof will be cited constantly by those in Washington who view Cambodian relations entirely through the lens of Sino-American competition for hegemony in the region. This could easily re-frame the legislation as less an issue of an American response to Cambodian internal politics, but rather as a measure designed to contain China and to signal to other states the consequences of moving too close into Beijing’s orbit.

A Sino-Cambodian pact allowing for the future presence of a Chinese military base in Cambodia would have significant consequences as regards US military operations in the South China Sea. Moreover, there are distinct impacts directly related to US responsibilities for Taiwanese security as codified under the 1979 Taiwan Relations Act. In sum, passage of the legislation is now much more likely, as is the probability of its signed by Trump.

In order to avoid a continued downward spiral, it is vital that both sides take a step back and establish new trust-building measures. Absent some sort of reset in the relationship, US-Cambodian relations will only continue to worsen in the near term, potentially leading to a permanent rupture.