Laos Plunges Into Choppy Political Waters

LAOS, one of Southeast Asia’s poorest countries, is rarely in the role of power player in the region. The landlocked nation draws easy comparisons to a diplomatic backwater when set against Thailand, its more economically robust neighbour to the west. It is also overshadowed by Vietnam, a politically assertive eastern neighbour, which, like Laos, is ruled by a communist party.

Yet what happened last Monday on Mekong River — the region’s largest body of water shared by six countries, including Laos, Thailand and Vietnam — suggests a shift in the political currents. A flotilla of 45 fishing boats, with Thais from local communities displaying banners, mounted a last-ditch protest against Vientiane. They wanted to stall the building of a controversial hydropower dam.

The grassroots objections were to no avail. On Wednesday, Laos held a groundbreaking ceremony in Xayaburi, an idyllic hill setting north of the country, to plunge ahead with the 1,260mw hydropower project. The US$3.5 billion dam will be 32m high and 820m wide.

It is not only green groups and local fishing communities who are railing against Vientiane. Laos is also testing the region’s political waters, given the special bond it shares with its ideological twin Vietnam. Hanoi has long opposed the Xayaburi dam in behind-the scenes meetings and through press statements.

On Oct 22, Vietnam’s Natural Resources and Environment Minister Nguyen Minh Quang met Lao Prime Minister Minister Thongsing Thammavong to request a further delay of the Xayaburi dam till more studies were conducted on the impact this mega-hydropower project will have on countries that share the Mekong, according to sources.

Hanoi’s recent sentiments echoed a public statement made in March 2011. “If built, Laos’ Xayaburi dam will greatly affect Vietnam’s agriculture production and aquaculture,” Deputy Minister of Natural Resources Nguyen Thai Lai said at the time in a rare burst of criticism that went against the spirit of a 1977 treaty of friendship and cooperation that binds the region’s communist pair. This “special relationship” followed the communist triumph against US troops in the Vietnam War in the mid-1970s.

Even Cambodia, which shares the Mekong, along with Myanmar and China, has been lukewarm towards the controversial dam. Phnom Penh has also urged Vientiane to conduct more environment and social impact assessments before permitting the construction of the dam.

“The Laos government’s determination to proceed with the project has resulted in a remarkable assertiveness towards neighbouring countries, testing regional cooperation and environmental diplomacy,” says Carl Middleton, a Mekong River expert at Bangkok’s Chulalongkorn University. “Unless the Lao government can broker agreements with each neighbouring government, given the importance of Mekong River to local economies and livelihoods, it risks creating cross-border grievances that could have repercussions for the politics of the region for years to come.”

But Laos’ power play has received a shot in the arm from an important ally. Thailand has waded in to support the project. “The Lao government has already conducted studies that show there would be no impact on the environment and fisheries,” Thai Foreign Minister Surapong Towichukchaikul told reporters last week in Vientiane on the sidelines of the Asia-Europe Meeting (ASEM).

Bangkok’s support, however, is hardly surprising. Ch. Kamchang plc (CK), one of Thailand’s largest infrastructure builders, owns 57% of the shares in Xayaburi Power, the dam’s developer. The rest of the stakeholders include Thailand’s state-owned energy company PTT Pcl, with a 25% stake, and the state-run power utility Electricity Generating Authority of Thailand (EGAT), which has 12.5%. equity interest.

What is more, 95% of the power to be generated when Xayaburi’s turbines come to life in 2019 will be bought by Thailand to meet its growing demand for power. The Southeast Asian kingdom’s search for energy supply from its neighbours (including natural gas from Myanmar) stems from a forecast of the country’s power needs, spelt out in a national power development plan (PDP).The country’s energy demands will rise from the 2011 peak of 26,355mw to an expected 70,847mw by 2030, the PDP revealed this year.

Thailand’s dependence on Laos for hydropower has already been cemented in the Nam Theun Two (NT2) dam, the largest hydropower project to be completed. The US$1.5 billion project came to life in March 2010. Over 90% of the electricity generated by the 39m high dam, with its 1,000mw output, flows to Thailand.

NT2, which had the backing of the World Bank as a risk guarantor and was built by a company that drew investors from France, Thailand and Laos, was also dogged by controversy. Green activists and grassroot groups protested at the environmental and social costs.

But the Lao government took a different view in its quest to tap the network of rivers that tumble down its mountainous terrain to become the “battery of Southeast Asia”. Vientiane wants to use this rich vein of foreign exchange in the billions of dollars to alleviate poverty. Currently, a third of its 5.8 million people live below the poverty line.

Yet what has made the Xayaburi dam a greater environment and political flashpoint is its location. Unlike the NT2, which is inside Laos, the new dam is being built on the mainstream of Mekong River, threatening the lives of 60 million poor people who live in the river’s basin in Cambodia, Laos, Thailand and Vietnam.

The economic impact on the region could be irreparable, warn scientists, given that the fish harvested from the Mekong fetches between US$2.2 billion and US$3.9 billion annually — close to a quarter of the world’s annual catch.

Furthermore, the Xayaburi dam is only the first of 12 being planned on the lower stem of the Mekong, 10 of which will be located in Laos and two in Cambodia. “The Xayaburi dam is the first of a cascade of devastating mainstream dams that will severely undermine the region’s development efforts,” says Ame Trandem, Southeast Asia programme director of International Rivers, a US-based green lobby. “The food security and jobs of millions of people in the region are now on the line.”

Others warn that the Xayaburi project could imperil the Mekong River Commission (MRC), an intergovernmental body of the four riparian countries created in the mid-1990s to manage the river basin. By pushing ahead, Laos has already turned its back on the MRC’s prior consultation process. Under this mechanism, member countries have to conduct impact assessment studies if a hydropower project has a cross-border impact.

The shared governance of the Mekong has troubled river-based communities ever since China — not a member of the MRC, hence not subject to agreements with its Mekong neighbours — built dams that straddle the mighty river. The Asian giant has built four out of a planned eight dams in the upper stretches of the 4,880km-long river, which flows from the Tibetan plateau, through southern China, touches Myanmar and snakes through the Mekong basin before emptying out in the South China Sea in southern Vietnam.

The changes in the river’s ecosystem since the Chinese dams have served as a warning about the fate that awaits millions of fishing communities with the looming spectre of the Xayaburi.

“The impact of the Chinese dams has been felt by fishing communities in northern Thailand,” says Premrudee Daoroung, a Thai environmentalist. “It will be worse for communities further south with the Xayaburi, which will permanently change the river and its biodiversity as we know it.”

Source: Yahoo News

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