Significance: The border clashes are the worst the two countries have seen for years and come amid heighted bilateral tensions following the sentencing of two Thai nationalists for espionage and illegal entry in Cambodia last week.

Implications: The deadly clashes illustrate the extent to which nationalist sentiments in both countries can flare up over outstanding border disputes and domestic political considerations take over international and economic considerations.

Outlook: While there has been no fighting since yesterday morning, tensions are running high on both sides of the border. While the development of hostilities into full-scale armed conflict is in no-one's interest and both countries have generally taken measures to prevent the recurring dispute, it is also certain that the prospects for a permanent solution to the dispute are also bleak with more fighting in prospect.

Heightened International, Domestic Tensions

Tensions remained high today at the disputed Thai-Cambodia border after four days of consecutive fighting. Since last Friday (4 February), when machine-gun fire, firing of rockets, mortars and artillery started, at least five Cambodian nationals and two Thais, including two civilians from both sides have died, nearly 50 others have been injured and thousands evacuated on both sides. While the Cambodian and Thai troops have held their fire since early yesterday morning, troops remain on alert today according to unnamed Cambodian sources. Yesterday, the United Nations (UN) Secretary General's office also announced the UN chief was "deeply concerned" about the confrontation and called both sides to "exercise maximum restraint". The call was echoed by the United States, China, Singapore, and Malaysia. Indonesia, the current head of the Association of Southeast Asian Nations (ASEAN) to which both Thailand and Cambodia are members, also called Phnom Penh and Bangkok to return to the negotiating table over the long-running dispute.

This is the latest clash in a series of skirmishes in the disputed border over the 11th-Century Preah Vihear temple and the ground surrounding it, which has intensified since July 2008 when the temple was granted UNESCO World Heritage status from Cambodia's request. The issue of sovereignty over the temple remains an emotive and complicated issue between Cambodia and Thailand despite a ruling in 1962 that it belongs to Cambodia, as the dispute over it dates back to South-East Asia's pre-colonial times and the poorly demarcated border makes any final judgments difficult.

At this point it is yet unclear what has triggered the latest fighting. Both Thailand and Cambodia have blamed each other for starting the firing on Friday and breaching the truce reached over the weekend . What is clear however is that the latest spat comes amid heighted bilateral tensions and appears to be tied to Thailand's domestic political situation following the jailing of two key Thai activists of a nationalist movement for espionage, illegal entry and trespassing in a military zone in Cambodia last week . The two activists were part of a group of seven Thai nationals arrested on 29 December last year in north-western Cambodia in the Khok Sung district of Sa Kaeo province where they were examining the border area. Their sentencing triggered mass demonstrations in Thailand, placing increased pressure on Prime Minister Abhisit Vejjajiva who is preparing to hold national elections later this year and has been counting on the nationalist Yellow Shirts support to win the tight race . While it is unclear what triggered the latest fighting, both countries have in the past played the nationalist card in emotive border disputes to win domestic political points and it cannot be ruled out that the fighting is aimed at domestic audiences to demonstrate the government’s strong stance against Cambodia as requested by the pro-establishment Yellow Shirts.

Tensions have also been running high between Thailand and Cambodia amid the war of words over the removal of the Cambodian pagoda and the national flag on the disputed border, as demanded by Bangkok.

Outlook and Implications

While the sporadic clashes at the bitterly disputed border and the area around the temple are nothing new, the intensity of the latest fighting, heated nationalist rhetoric, and underlying distrust on both sides have raised fears the situation could spin out of control. It is however unlikely that the clashes would develop into full-scale armed conflict, as both countries stand to lose too much from a war, not least given their growing economic ties and the context of ASEAN. In any case it is clear that the conflict has once again undermined Thai-Cambodia bilateral relations and the prospects for any long-term permanent resolution of the conflict are currently bleak.

• Prospects for International Mediation: Cambodia has repeatedly been seeking international arbitration for the dispute. On Sunday (6 February), Cambodia's Prime Minister Hun Sen called the United Nations (UN) Security Council to intervene for Thailand's "repeated acts of aggression", which Thailand however disregarded. With Thailand against international arbitration and having made it clear time after time that the conflict should be resolved bilaterally, bringing a third-party negotiator in remains a distant possibility.

• Prospects for Bilateral Agreement: Both governments are aware of the possible negative effect the conflict has on the investment climate and economy and have generally taken measures to prevent events deteriorating into anything more serious. As such they are likely to adopt conciliatory rhetoric in the short-to-medium term in particular, with pressure coming from the international arena. Nevertheless, domestic sentiments in both countries leave little room to manoeuvre bilaterally, meaning that negotiations are unlikely to progress significantly. Thailand will be unable to make concessions as any compromise will be seen as a weakness of an already embattled government, and give further strength to the Yellow Shirted People's Alliance for Democracy (PAD) movement. Meanwhile, Cambodia cannot be seen to make concessions to the Thais either given the historic enmity, due to the perceived historical domination of Cambodia by Thailand.

Looking further, prospects for resolving the dispute over the Preah Vihear temple and territory surrounding are bleak now that the distrust is at its heights. Sporadic disturbances are set to continue in future.