Monday, October 3, 2011

China Warns of Legal Action Over Myanmar Dam

China Warns of Legal Action Over Myanmar Dam
By Brian Spegele, 4 October 2011
Wall Street Journal

BEIJING�The head of a major Chinese company behind a controversial dam
in Myanmar said the project's suspension by the Myanmar government last
week was a surprise that could prompt legal issues, in the latest sign
of frayed relations between the two countries.

China Power Investment Corp. President Lu Qizhou, in an interview with
the state-run Xinhua news agency on Monday, said halting construction on
the $3.6 billion Myitsone dam project "will lead to a series of legal

Mr. Lu said he learned about the suspension "through the media and I was
totally astonished."

The comments suggest the dispute could linger even as China seeks
projects in Myanmar, an ally with strategic importance to Beijing,
although it isn't clear how the company would press claims, given the
weak legal systems in both countries. Officials of the two governments
couldn't be reached to comment.

On Sunday, a spokesman for China's foreign ministry said Myanmar's
government should protect the rights of Chinese companies there.

The dam, affecting the Irrawaddy River in Myanmar's north, would have
flooded an area roughly the size of Singapore.

The project has been unpopular. In communities in Myanmar's Kachin
state, guerrilla groups have clashed recently with the country's armed
forces, and the Myitsone dam was viewed by local residents as a way for
the government to resettle ethnic groups.

President Thein Sein on Friday said construction should be suspended,
saying the project was against the will of the people�a decision that
came as a surprise to many observers, given its potential to anger
China, the politically isolated Myanmar government's most important
strategic ally.

China needs the alliance in part because of Myanmar's geographic
closeness with regional rival India and for its access to the Bay of
Bengal. China and Myanmar are building an oil and gas pipeline through
Myanmar and into southwest China, in an effort by Chinese officials to
diversify fuel sources.

The episode suggests Myanmar may be willingness to move out of China's
shadow as it seeks greater favor among Western governments.

A new Myanmar government was put in power last year, in the nation's
first multiparty election in two decades, though foreign governments
widely considered the vote to be a fraud. Myanmar has been trying to
convince foreign leaders it is on a path of democratic reform.

Large infrastructure projects are a common way Beijing looks to win
diplomatic favor in the developing world, and its companies are building
hydroelectric dams in Southeast Asia, Africa, and elsewhere.

In the interview, Mr. Lu defended hydroelectric power, going as far as
to mention the Hoover Dam powering the city of Las Vegas as an example
of the power source's success.

Separately Monday, state-run China National Petroleum Corp. donated
$1.32 million to build schools in regions along its oil and gas
pipelines to China, according to Xinhua.

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