Analysis: Sold down the river

Jamil Anderlini
Thursday, November 1, 2007

Financial Times

Taming China's longest river has been the dream of emperors and dictators for centuries. The first water diversion works on the Yangtze were built during the Han Dynasty more than 2,000 years ago and the Three Gorges dam was first proposed by Sun Yat-sen, the revolutionary father of modern China, nearly 100 years ago as a way to mitigate the river's frequent and devastating floods. The project was championed by Mao Zedong in the 1950s but decades of disastrous political blunders and fierce domestic opposition meant it would take another 50 years and the crushing of a nascent democracy movement before Mao's dream of building the world's largest hydropower station could be realised.

When the river's flow was cut and the Three Gorges reservoir filled in 2003, the Chinese government hailed the project as an engineering marvel that would boost the region's economy, improve the environment and raise living standards for the 1.3m forced from their homes to make way for the rising water.

But in recent months, senior officials have publicly admitted for the first time the Three Gorges region faces an environmental catastrophe if urgent action is not taken. In interviews they have also acknowledged that rising discontent among the dam's refugees will be resolved only with huge new investment. In mid-October the Financial Times travelled the length of the reservoir and spoke to numerous officials and residents to check on reports of an environmental and humanitarian disaster in the making.

From the beginning, the project faced intense criticism from international and domestic activists and even from many within the Communist party. A classified feasibility study conducted in the early 1980s for China's cabinet found that the project was uneconomical, would produce more electricity than the country could use at that time and, when it came to disturbing the natural environment, there were "positives and negatives but the negatives outweighed the positives". At the end of the 1980s Beijing announced it was putting the project on hold.

But after the 1989 Tiananmen crackdown everything changed. Opposition to the dam had been adopted as a cause célèbre by the pro-democracy movement and with many of its members shot or imprisoned, the back of resistance was broken. One of these activists was Dai Qing, a former guided missile engineer and daughter of a revolutionary Communist martyr who was imprisoned in Qincheng, the country's most infamous political prison. Ms. Dai had been counted as a member of the party elite until she began her vocal campaign against the Three Gorges project, which continues despite constant harassment from the government since her release from prison in late 1990. "The party refers to me as a 'daodan zhuangjia' which can mean both 'guided missile expert' and 'professional troublemaker'," says Ms. Dai.

In the wake of the crackdown, officials commissioned a new feasibility study with the backing of then-premier Li Peng (widely regarded as the man who ordered the tanks in to Tiananmen Square), which reversed the previous verdict. To this day, the party's line on the Three Gorges dam is: "There are positives and negatives but the positives outweigh the negatives."

Tan Qiwei, vice-mayor of Chongqing municipality, lists a series of environmental "challenges" ranging from dangerous erosion along the length of the reservoir to a profusion of toxic algal blooms caused by a mixture of chronic industrial, agricultural and municipal pollution and the slowing of the river's flow.

"In some places the blooms are so bad drinking water for humans and livestock has been contaminated," Mr. Tan says. He adds that the local government has already spent more than Rmb10bn ($1.3bn, £650m, ?930m) of its migrant relocation budget on environmental clean-up efforts and shoring up saturated hillsides that began collapsing soon after the reservoir was raised from 66 metres to 139 metres above sea level in 2003.

The dam destroyed the ecosystem of China's largest river, cutting the Yangtze's flow to a fraction of its former speed and causing sediment in the famously muddy water to settle on the riverbed. Travelling downriver towards the dam, the water perceptibly changes from its usual muddy brown to a clear green, revealing the huge amounts of debris and waste dumped into the reservoir or submerged when the area was flooded.

Sedimentation causes huge problems for the operation of the dam and could eventually make parts of the reservoir impassable to large ships, negating one of the key reasons for building it in the first place. The decreased flow has also damaged the river thousands of kilometres downstream from the dam. In the estuaries around Shanghai, where the Yangtze meets the East China Sea, seawater is rapidly encroaching upriver, threatening water supplies and destroying large areas of arable land.

In the newly-built towns along the banks of the Three Gorges reservoir, political slogans have been pasted on the sides of buildings that already look run-down, just four years after they were built. "Construct a power station, boost the economy, improve the environment and bring happiness to the lives of the relocated people," the billboards proclaim. The slogan provokes a bitter laugh from Mrs. Zhou, 69, a resident of Fengjie town, about 300km upstream from the dam. She and her 81-year-old husband, a retired minor official and life-long Communist party member who refused to give his name for fear of reprisals, were moved to a new town on higher ground to make way for the flood. Instead of being compensated, they had to pay the government because their new house was slightly larger than their old one.

The couple's daughter cannot find a job because much of the agricultural and mining industry the region relied on has been submerged. Since the water level rose they can no longer drink the water from their local reservoir because it is too dirty.

"Our lives have been ruined by the dam while the big officials got their fruit and filled their wallets," says Mrs. Zhou's husband. The unusually strong words from a former official indicate just how disgruntled many resettled citizens are. But the couple say the situation is much worse for displaced peasant farmers, many of whom received just a fraction of the compensation they were promised.

One such farmer is Fu Xiancai. Mr. Fu grew up in the rural county around Maoping village, just 2km upstream from the site of the Three Gorges dam and in 1992 his family was one of the first to be moved to make way for construction. Like many of those displaced, Mr. Fu's family did not want to leave their ancestral home but grudgingly agreed because the government promised around Rmb30,000 in compensation. In the end they received just Rmb5,000.

Mr. Fu began travelling to Beijing in the late 1990s to petition the central government to investigate where his money had gone. He was convinced the funds provided by Beijing to compensate him and his fellow villagers had been stolen by local officials.

"The provincial government stole some and the city government took some but the majority went to the county and town officials," Mr. Fu says. He and his neighbours describe how factories built to provide urban jobs for farmers moved off their land were managed by local officials' relatives and most were declared bankrupt before they even started operating.

"The money went straight into their wallets," Mr. Fu says.

With just three years of primary education himself, Mr. Fu sent his son to study law in Beijing in the hope that the family could fight its case in the courts. But after years of frustration, he has decided that law is useless. "The legal system is just meant to trick the people and put on a show for foreigners," he says. "Might is right in China and even the country's constitution can be overruled by one word from the county party secretary."

After nearly a decade of campaigning, Mr. Fu finally found hard proof to back up his accusations. A sympathetic lawyer passed on a classified government document clearly stating the exact amounts provided to local officials for the Three Gorges project in his region, including details of relocation compensation. Armed with this evidence he continued to petition officials in Beijing and eventually took his case to foreign journalists. Branded a "troublemaker" by the government, he was increasingly harassed, threatened and detained by local officials and police.

Then, on June 8 2006, as he was walking home from reporting to local security officials, he says he was hit in the leg by someone wielding a large stick. He turned to face his attacker but before he could react he was hit in the back of the neck and knocked unconscious.

When he awoke he was paralysed from the neck down. He is convinced his attacker or attackers (he only saw one person) were hired thugs acting on the orders of local officials and police who wanted to silence him -for ever, or at least teach him a -lesson. The official verdict, reached by the same police and officials he accuses of arranging the attack, is that the injuries were self-inflicted, the result of carelessness that caused him to slip and break his neck.

The attack provoked an international outcry, particularly in Germany, where his case had been widely reported. The German government registered a formal protest, paid for him to be moved to Beijing from his local hospital (where he says officials had ordered medical staff not to treat him) and now provides him with Rmb5,000 a month for medical and living expenses.

Mr. Fu's case is an extreme one but across the Three Gorges reservoir region dissatisfaction is growing among the dam's refugees. Even those who did receive the promised compensation feel their lives have not improved.

The situation has forced Beijing vastly to increase the dam's resettlement budget because of the threat to "social stability" if discontent among migrants should boil over. Fixing or even just mitigating the dam's mounting environmental problems will also cost enormous sums.

In interviews with the press, the Communist party officials in charge of the dam's construction must stick carefully to the official line that the entire Three Gorges project is expected to cost Rmb180bn, Rmb20bn less than the original budget. But when they discuss the areas under their direct control, the common theme is of costs spiralling. Wang Chuanping, the man in charge of preserving and relocating cultural relics in the Three Gorges area, says his budget has increased five-fold. Chongqing officials in charge of relocation say they will need huge additional funds to pay for the social welfare benefits that have been promised to migrants.

"Public records show the real cost of the dam will be at least three times the official budget and we think the eventual bill could exceed Rmb1,000bn," Ms. Dai says.

With the budget ballooning out of control, local officials have begun lobbying for their share of the clean-up funds. Mr. Tan, the Chongqing vice-mayor, rattles off a list of projects intended to address the environmental problems, each of them more expensive than the last, which the central government will be expected to pay for. Opponents of the dam say the newfound concern for its environmental consequences is a cynical ploy to attract new funds that will be siphoned off by corrupt officials. They point to a Rmb40bn grant Beijing gave to Chongqing to clean up the reservoir area prior to its flooding in 2003, which was spent on sewage treatment plants that now stand idle much of the time because the government says they are too expensive to run.

In the early 1990s Beijing hoped to convince organisations such the World Bank to foot at least part of the bill but was rebuffed because of the unrealistic budget and the controversy that surrounded the human and environmental consequences of the dam. In 1995 the Clinton administration weighed in, advising America's main export credit agency not to lend to the project because of concerns over its financial viability and because "it would be unwise for the US government to align itself with a project that raises environmental and human rights concerns on the scale of the Three Gorges". In the end, the project was funded almost entirely by direct investment from Beijing (ie by the Chinese taxpayer) and by cheap loans from state-owned banks.

The international organisations that refused to be associated with the dam have been vindicated now as the budget spirals out of control and officials at every level acknowledge the many problems associated with uprooting more than a million people and destroying the Yangtze's delicate ecology. But for long-time opponents of the dam, the government's belated admissions of failure are a Pyrrhic victory at best.

"All the problems opponents like me warned about are now coming true," Ms. Dai says. "And the officials responsible for building the dam who now admit its problems are just like thieves yelling 'stop thief'."

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