Laos Draws Ire of Neighbors With Mekong River Dam Plans

By Bloomberg News Jun 4, 2014

At a makeshift port on the Mekong river in Northern Laos, traditional wooden boats at... Read More

Laos will push ahead with its ambition to become the “battery of Southeast Asia,” planning a Mekong River dam that has drawn opposition from neighbors and threatens to involve China and the U.S.

Four Mekong River nations are scheduled to meet June 26-27 in Thailand to discuss matters including Laos’ plan to build the Don Sahong dam. The Xayaburi dam has broken ground and construction on the new structure may start as soon as this year, with Cambodia and Vietnam seeking to delay the project.

“Laos remains committed to exporting hydropower and becoming the battery of Southeast Asia,” said Viraphonh Viravong, the country’s vice minister of energy and mines, in e-mailed comments. “Hydropower is a natural choice for Laos.”

Some diplomats have described the Mekong River, which has its source on the Tibetan plateau, as “the next South China Sea,” the Center for Strategic and International Studies in Washingtonsaid in a paper in April. The report cited the risk of disregarding international rules and norms, as well as the expansion of Chinese political influence in the region.

“Laos believes it has few options to building up foreign exchange other than building dams and exporting electricity,” said Milton Osborne, a non-resident fellow at the Lowy Institute for International Policy in Sydney and the author of a history of the Mekong.

Chinese Influence

Vietnam and Cambodia objected to the first dam, and both countries want a delay in the second until at least the end of 2015, Vietnamese Minister of Natural Resources Nguyen Minh Quang said in April. Political relations between Vietnam and Laos have weakened as China’s influence has grown in Laos, according to Martin Stuart-Fox, an emeritus professor of history at Australia’s University of Queensland.

“The dominant strategic position of Laos has been that you balance all of your powerful neighbors,” said Stuart-Fox. “From the Vietnamese side, they would have to be very reluctant to put too much pressure on Laos out of concern it would just push them into the arms of the Chinese.”

China, which has already built dams further upstream on the Mekong, said at an April summit in Ho Chi Minh City that hydropower development on its portion of the river “does not compromise water consumption” and instead helps balance water resources between rainy and dry seasons.

Laos is a major recipient of Chinese infrastructure development aid, according to a 2012 paper by the Stimson Institute in Washington.

More Water

The Mekong River’s length of about 3,000 miles flows through southern China, along the Laotian border with Myanmar and Thailand, and through sections of Laos. It then snakes its way through Cambodia and Vietnam until it empties into the South China Sea.

China, which opened its first dam on the Mekong about two decades ago, has seven dams along the waterway that are either in operation, under construction or planned, according to the Mekong River Commission.

“Most of the dams in Laos that are being planned are based on the assumption that China will put more water in the river during the dry season,” said Richard Cronin, director of the Southeast Asian program for the Stimson Institute, who cited Laotian plans to build as many as nine dams on the Mekong.

Malaysia’s Mega First Corp. (MFCB) agreed in 2008 to build and operate Don Sahong and said in April that construction of the dam is expected to start this year and finish in 2019. China’s Sinohydro Corp. agreed in 2007 to build a dam called Pak Lay on the Mekong, according to the Mekong Regional Commission website.

‘China’s Backyard’

The developments in Laos come as China and the U.S. vie for influence in Southeast Asia, whereJapan is among the biggest investors. China is increasingly asserting its rights in the South China Sea and East China Sea, escalating tensions with Vietnam, the Philippines and Japan.

“The U.S. wants this region to remain autonomous and not become China’s backyard,” said Phuong Nguyen, a research associate at the Washington-based Center for Strategic and International Studies.

During Vietnamese President Truong Tan Sang’s visit to Washington last year, the countries said they would work together “to ensure the long-term health and sustainability of the Mekong Delta and Lower Mekong River Basin.”

Decisions related to building dams in the region have to be made carefully, U.S. Secretary of StateJohn Kerry said in December during a visit to Vietnam’s Mekong Delta.

“No one country has a right to deprive another country of the livelihood and the ecosystem and its capacity for life that comes with the river,” Kerry said. “Without careful planning, some clean-energy development, like hydropower, can wind up having negative impacts.”

Notification Only

Vietnam will “carefully study” the environmental impact of the Don Sahong dam, Le Hai Binh, a foreign ministry spokesman, said June 2. Vietnamese minister Quang said in April that Don Sahong requires prior consultation with members under Mekong River Commission agreements.

Laos says the Don Sahong dam will be built on a tributary of the Mekong, and it is in compliance with Mekong River Commission accords regarding the notification and consultation process.

“We are confident that the proposed project will cause no significant impact to the full mainstream flow of the Mekong, nor will it affect fish migration or sediment passage to any degree that would harm downstream communities,” said Lao vice minister Viravong.

Vietnamese Prime Minister Nguyen Tan Dung said in April that the Mekong faces “serious flow reduction,” causing salinity intrusions. Vietnam was the world’s fifth-biggest rice producer and third-biggest exporter of the grain last year, according to the U.S. Foreign Agricultural Service.

‘Rice Basket’

“Vietnam’s foundation and development process has always been associated with water rice civilization,” Dung said. The Mekong River is “essential to our socioeconomic development, and regional food security is also at stake,” he said.

Vietnam’s “rice basket,” the Mekong Delta region, may be “wiped out in coming decades by the combined effects of rising sea levels and upstream damming,” wrote Nguyen of the Center for Strategic and International Studies.

About 10 percent of the estimated hydro-electrical potential of the Lower Mekong Basin is being exploited, according to a conference brief prepared for the Ho Chi Minh City meeting.

Hydropower projects “will always have proponents and opponents,” and Laos is open for more talks and would support joint monitoring of the project’s impact, Viravong said.

Compromises are possible at the meeting planned for this month in Chiang Mai, Thailand, said Hans Guttman, chief executive officer of the Mekong River Commission Secretariat.

“They could come to some understanding that they should do a limited investigation and joint work on how the impacts can be mitigated and how they would work with impacts on fisheries,” Guttman said. “There’s still an opportunity for coming to an agreement.”

To contact Bloomberg News staff for this story: Jason Folkmanis in Ho Chi Minh City atfolkmanis@bloomberg.net