A Lesson Dam Lobby Looks Set to Ignore

Shi Jiangtao,
Thursday, October 20, 2011

Originally published in South China Morning Post (sub req'd)
Republished at Hydroworld.com

Halt to construction of a barrage in Myanmar should be an eye-opener for its Chinese builders, but it's unlikely to give dam boosters pause for thought 

China's growing ambition to tap into the latent power of international rivers hit a major snag when one of its largest hydropower projects abroad was unexpectedly halted in Myanmar late last month.

The suspension of the Myitsone dam project on the Irrawaddy River was seen as a rare victory in a nation long ruled by an authoritarian military regime. It was also read as the latest step in a diplomatic balancing act by Myanmar aimed at wooing the West and its Southeast Asian neighbours by showing the country is no longer so dependent on China.

The controversy should sound all too familiar to mainlanders, aside from the relatively happy result - for the moment - in the Myanmar case. But what lessons should be learned from the dispute over the Myitsone dam?

The fact that China has been snubbed by a long-time political ally that was once dependent on its political and financial support is extremely telling for environmentalists about how unpopular China's reckless push for big dams and its keenness to flex its economic muscle beyond its borders have been.

Myanmar's new president, Thein Sein, who visited China just five months ago after taking office in March, announced the decision to halt the US$3.6 billion project on the eve of China's National Day, saying the dam was "contrary to the will of the people".

The Myitsone dam, as part of a hydropower development deal including a further six mega dams on the Irrawaddy and its tributaries, was reportedly initiated in 2005 between Myanmar's then junta chief, Than Shwe, and President Hu Jintao .

At a cost of US$20 billion and with a total capacity of 20,000 megawatts, the dams, being built or planned by China Power Investment Corporation (CPIC), were seen as a symbol of China's growing regional influence. Mainland media dubbed them China's overseas Three Gorges Dam project. But the Myitsone dam, in the ethnic Kachin region near Myanmar's northern border with China, has long been a magnet for criticism, protests and even violence by local people and green groups.

Apart from concerns about potential ecological destruction on the Irrawaddy and the resettlement of 10,000 people, locals were aggrieved that 90 per cent of electricity generated by the dam was supposed to go to power-hungry China.

The dam, with a capacity of up to 6,000 MW, was allowed to go ahead in 2009 despite the CPIC and Beijing allegedly giving the cold shoulder to various local concerns.

Home to roughly half of the world's biggest dams, China is the world's largest producer of hydropower and the largest dam builder in the global market, according to International Rivers, a US-based NGO.

However, China's dam builders and financiers - usually power companies with a national monopoly and banks that are often criticised at home for their blind pursuit of economic profits at the expense of environmental and community welfare - seem to have made little, if any, progress when it comes to business dealings abroad.

Such insensitivity to local needs and environmental concerns, as well as a lack of transparency about dam construction projects on rivers that cross China's borders and in political hot spots, have not only provoked hard feelings that threaten to ruin their business opportunities but have also made China the unwanted focal point of numerous controversies in recent years.

Environmentalists have warned that China's global image and its friendships with affected countries, such as Myanmar - friendships that are often the result of years of political patronage - are also at stake.

Last year, the Industrial and Commercial Bank of China, one of China's Big Four state banks, made international headlines with its plan to help finance the controversial Gibe 3 dam in Ethiopia, the largest hydropower project in sub-Saharan Africa.

China's plan to build a cascade of eight dams on the upper reaches of the Lancang (Mekong) River in Yunnan , four of which are already in operation, has long been a source of tensions with downstream countries such as Thailand, Laos, Vietnam and Cambodia.

These countries have often accused China of manipulating water flow with its dams, which they blame for severe droughts in recent years, and say the Chinese dams are killing their mother river.

"The authoritarian government in Myanmar has taught China a lesson, as they appear to be willing to heed public concerns," Professor Yu Xiaogang , founder of the Yunnan-based Green Watershed NGO, said.

He noted that Chinese companies were used to pouring investment mainly into undemocratic countries, where they could focus on forging ties with authoritarian governments while ignoring environmental and social costs and public opinions. Yu said: "Things have changed a lot with the rising environmental awareness, and this type of business strategy has been subject to mounting challenges and is doomed to fail."

With increasing publicity and awareness about the grave risks inherent in the building of large dams, best exemplified by the Three Gorges Dam, dam construction has been one of the most contentious issues on the mainland in the past decade. Although it has slowed since 2004, Beijing has renewed its push for big dams to be built in the coming decade as hydropower has gained in importance as the pillar of China's clean-energy drive. As a result, hydropower capacity is expected to rise by half to 300,000 MW by 2015.

Despite growing public support, environmentalists have been largely unable to influence the decision-making process or help those affected make their voices heard.

Liu Shukun , a professor of hydraulics at the China Institute of Water Resources and Hydropower Research, said that unlike Myanmar, China was unlikely to see a victory of public opinion in the debate over hydropower, given the development-minded government and powerful interest groups.

"The Myanmar case is encouraging, but I don't think it can be replicated here in China or help prevent the social and environmental havoc, given the damage already caused by the damming of rivers," he said.

"We are good at talking about sustainable development, but it remains a question whether it has turned into reality."