The period from 1989 through the middle of 1993 was a time of transition. Dramatic changes in the international context and important shifts within the country eventually allowed for the signing of a peace agreement and the staging of elections. The momentum for peace negotiations began in December 1987, when Norodom Sihanouk met with Hun Sen, the Prime-Minister of the PRK, outside Paris. Talks among the four Cambodian factions were held in Jakarta in July 1988 and again in February 1989. In July-August 1989 representatives of the factions and nineteen countries met in Paris, where the talks stalled.

These steps coincided with dramatic changes on the international stage. The collapse of communism in the Soviet Union and Eastern Europe meant a reduction in aid for Vietnam and Cambodia and the withdrawal of Soviet advisers. As far as Cambodia was concerned, changing relationships between Russia, China and the United States meant that all three powers were looking for ways to end their support for the different Khmer factions. These changes put pressure on Vietnam, which withdrew its military forces from Cambodia in September 1989.

The peace talks were revived in 1990 with the introduction of an Australian plan that included a role for the United Nations in supervising and controlling the administration of the country during the transition period until elections could be held. This plan eventually became the basis for the Paris Peace Agreements that were signed in October 1991 by the four factions and nineteen other countries, including the members of the UN Security Council and the countries of ASEAN.

In early 1989, even before the withdrawal of Vietnamese troops, the PRK had begun making changes within the country. A series of reforms, some relatively cosmetic and some more substantial, were designed to improve the PRK’s image abroad as well as to rally popular support. The name of the government was changed to the State of Cambodia (SOC), and a new national flag and anthem were adopted. Buddhism was reinstated as the state religion. Most importantly, collectivization was ended and people were given the right to buy and sell land and to pass it to their children. Although the government retained tight control of the economy in principle, free market trade flourished, and black market goods flowed in from Thailand, and across Cambodia from Thailand to Vietnam. Overseas Khmer began returning to visit their relatives, bringing much needed cash. The reforms were extremely popular and there was a surge of optimism within the country.

But if SOC was willing to loosen its hold on the economy, it stood firm on the issue of one party rule. When a group of government officials began meeting to discuss the formation of another political party, they were arrested in June 1990 and imprisoned for counterrevolutionary activities.

While the SOC political structure remained essentially unchanged, some fissures began to appear as the movement towards a peace agreement raised the specter of political change. Corruption skyrocketed as ex-PRK political cadres faced the prospect of losing their jobs after elections. Logs, gems, rubber and other goods began to be exported in large quantities with the revenues benefiting individuals, including military commanders, without any of the profit from these sales reaching SOC state coffers.

Some ministries almost ceased to function as staff busied themselves selling off state resources, from agricultural implements to medicines to the desks in their offices (see Marston 1997). Those who did not participate were not viewed as patriotic or loyal, but simply stupid. Civil servants saw themselves as having struggled to rebuild the country since 1979; now was their only chance to show some material gain for their efforts. At the central level the corruption included the sale of state owned buildings for individual gain. It was one such incident that set off a series of demonstrations by students in December 1991.

Between December 17 and 22, 1991 a series of demonstrations broke out in Phnom Penh focused on the issue of corruption. Participants from several different ministries accused their superiors of selling off factories and other state properties and not sharing the profits from these sales with ministry employees. On December 21, the arrest of a group of students set off a series of marches on police stations and the National Assembly that escalated into stone throwing by the students. Eventually police and military forces answering with gunfire. An Amnesty International report, written by investigators who were on the scene, estimate that at least eight people died in the confrontations (see Amnesty International 1992, Thion 1993:186-210). These actions were the first time since 1975 that students had openly participated in protests against a Cambodian government.

The shift in policy by the government in two other areas, however, demonstrated significant change. The first was the opening up of religious freedoms. In early 1989 the restriction was lifted on the ordination of men under 50 years old. In 1990, the Venerable Tep Vong reported that membership in the sangha had reached 16,400, of whom some 40% were novices. This was up from the 6,500-8,000 monks variously estimated between 1985 and 1989 (Keyes 1994:62-63). The government also removed restrictions that had required that donations for temples first be used for state projects such as schools.

Since Buddhism was reinstated as the state religion, a tremendous resurgence has occurred. Temples are being rebuilt across country as communities acquire the resources to do so. Many overseas Khmer send funds for the reconstruction of temples. Buddhist education has been reinstituted in Pali, and a publications program with funding from Japanese and German sources is reprinting classic Buddhist texts. The Buddhist Institute has been reopened in a spacious new building with a new library.

The second set of changes began taking place in the area of ethnic relations. Under the PRK, ethnic Vietnamese were allowed greater protection than under any previous Cambodian regime, and there were significant opportunities for people with bilingual skills. After the Vietnamese troop withdrawal in 1989, many Vietnamese civilians also returned to Vietnam. In part this reflected their lack of confidence that the PRK would be able to hold off the Khmer Rouge on its own. It also reflected their loss of status and the loss of business opportunities for those who conducted commerce with the military. But the more stable communities of ethnic Vietnamese, including people who had been born in Cambodia and who had fled to Vietnam in the 1970s, stayed on. These included communities of fishermen around the great lake and craftsmen in Phnom Penh (see Jordens 1996). Large numbers of Vietnamese returned to Cambodia, or came to Cambodia for the first time, during the UNTAC period to take advantage of the job opportunities in the construction and entertainment booms that came with the UN mission.

The ethnic group for whom dramatic improvements occurred after 1989 was the Chinese. The series of restrictions placed on them during the PRK were gradually reduced. In December 1990 permission was given for the formation of the first overseas Chinese association since 1975. The SOC restored the rights of ethnic Chinese to observe their religious customs and celebrate Chinese festivals. The first Chinese language schools were reopened that year, and in 1991 Chinese New Year was officially celebrated for the first time since 1975. Over the next five years, the Chinese community has undertaken what Edwards and Sambath have referred to as a "massive renaissance of Chinese cultural identity" (Edwards and Chan 1996:81-82). This has included the reopening of Chinese temples, schools, businesses specifically identified as Chinese, the publication of Chinese newspapers and the reemergence of Chinese as the language of business in Cambodia.