Myanmar to Stop Construction of Controversial Dam

WSJ Staff Reporters
Friday, September 30, 2011

Originally published in The Wall Street Journal

Myanmar's president called Friday to suspend construction of a controversial China-backed hydroelectric dam that would have flooded an area the size of Singapore, marking the latest-and potentially most significant-sign of warming relations between local dissidents and Myanmar's new civilian government.

The move is also a snub to China, which is widely seen as Myanmar's most important patron but whose investments in the country are increasingly unpopular.

President Thein Sein said in a note read in Myanmar's Parliament that the project is against the will of the people. He stated that work at the $3.6 billion Myitsone dam project-affecting the Irrawaddy River in Kachin state-should halt for the duration of his term, at least until 2015. The note amounts to a notice of suspension because of the government's overwhelming majority in the legislature.

The move is the latest in a flurry of government actions in recent weeks that some analysts and residents believe signal major reforms under way in the resource-rich Southeast Asian nation, which languished for decades under harsh military rule.

Late last year, an army-backed civilian government was installed in an election widely decried by Western governments as a sham. Since then, Myanmar's new leaders have loosened press restrictions, expanded access to the Internet, allowed small-scale public rallies for the first time in many years, and sought outside advice on ways to reform the country's economy, including possible changes to its foreign-exchange system. That system involves multiple exchange rates, the complexity of which has deterred foreign investment.

Authorities also have launched a dialogue with dissident and former political prisoner Aung San Suu Kyi, who was released late last year after seven years of house arrest. On Friday, she met for a third time with Labor and Social Welfare Minister Aung Kyi, after which she said she welcomed Mr. Thein Sein's statement on the mammoth Myitsone dam.

"All governments should listen to the voices of the people," she said, according to the Associated Press.

Dissident groups, nevertheless, are split over the latest changes in Myanmar. Some say the moves may just be cosmetic steps aimed at getting the U.S. and other Western governments to ease economic sanctions imposed since the late 1990s, while enhancing Myanmar's international standing.

They point out that Myanmar's government has flirted with reform in the past, only to reverse course and clamp down hard on dissidents after. There also are many other projects in Myanmar-including a controversial energy pipeline to China-that activists say involve human-rights abuses or environmental degradation, and weren't included in Friday's announcement.

Either way, the decision to stop construction of the Myitsone dam for now represents a surprising victory for environmentalists in a country where officials have routinely ignored public opinion over the years.

Friday's announcement is "very welcome news" that will "help sustainably manage the biodiversity of the region," said U Ohn, vice-chairman of the Forest Resource Environment Development and Conservation Association, a conservation group in Myanmar.

A spokesman for Myanmar's government said Mr. Thein Sein called for the suspension of the dam project "because he was elected by the people and therefore has to act according to the desire of the people. This is yet again another proof that Myanmar is changing," said the spokesman, Ye Htut, director general of the Information and Public Relations Department of the Ministry of Information in Myanmar.

Environmental campaigners say Mr. Thein Sein's decision might in part be directed at outflanking a strengthening green lobby in Myanmar after Ms. Suu Kyi in August joined calls to scrap dam projects designed to provide power to China's energy-hungry economy.

In other countries in the region, such as Vietnam, political dissidents have flocked to environmental issues as a means of protesting their governments, and the Myitsone plant in Kachin state in northern Myanmar has been a source of vulnerability for Myanmar's leaders.

There is deep opposition across Myanmar to the project, which was conceived as the largest of several dams along the length of the Irrawaddy River and would submerge key historical sites, including areas many academics consider the cultural birthplace of Myanmar.

Opposition is particularly strong in Kachin communities, where residents view the construction as a means of resettling and containing ethnic Kachin residents while upsetting the region's fragile ecological balance. Kachin guerilla groups have clashed repeatedly with Myanmar armed forces since June, forcing thousands of refugees toward the border with China. Fighting intensified over the past week, according to dissident media reports.

Ms. Suu Kyi's opposition to the dam project, meanwhile, complicated the government's task of winning over popular support in big cities like Yangon and Mandalay, especially as resentment among everyday citizens rises over Chinese investments.

Around 90% of the power generated by the 6,000 megawatt plant was earmarked to go to China, with state-run China Power Investment Corp. earning about 70% of its profits, according to International Rivers, a Berkeley, Calif., advocacy group. It was scheduled to go online in 2018.

"There's a lot of Chinese investment in the country, not just in this project but many others and it's quite unpopular," said Pianporn Deetes, a Bangkok-based campaigner at International Rivers.

China's foreign ministry declined to comment on Mr. Thein Sein's announcement. Officials at China Power Investment Corp. couldn't be reached for comment.

It's also unclear how other countries will respond to the latest developments in Myanmar. U.S. officials have signaled they don't intend to ease sanctions unless more significant steps are taken, especially the release of an estimated 2,000 political prisoners. Myanmar officials have said they intend to release more prisoners soon.

Many people in Myanmar, which is also known as Burma, said they were modestly hopeful about Mr. Thein Sein's statement, though some said they doubted the work stoppage would be permanent.

"The president has proved that he actually listens to people's voices," said one Yangon-based businessman. But a lawyer working in the city said he thought it was still possible the project would be revived in the future.

Environmental activists say Myanmar must go even further to safeguard against the potential ecological damage of hydropower projects by suspending other projects on the Irrawaddy and elsewhere in Myanmar.

"The authorities need to consider the impact on the central rice-growing parts of the country, and especially the sensitive area around the Irrawaddy delta. These projects have an enormous capacity to disrupt the entire ecology of the country," said Ms. Pianporn at International Rivers.

Celine Fernandez in Kuala Lumpur and Brian Spegele in Beijing contributed to this article.

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