Tuesday, October 4, 2011

Myitsone: Implications for China-Burma relations and Burma Rivers Network's response

[Below is a response from Burma Rivers Network to the China Media
interview with
President Lu Qizhou of China Power Investment. The original interview
can be found here:
http://www.chinadaily.com.cn/china/2011-10/03/content_13835493.htm. Also
included is "Analysis: Myanmar dam suspension tests vital China ties" by
Ben Blachard at Reuters]

Analysis: Myanmar dam suspension tests vital China ties

By Ben Blanchard and Aung Hla Tun

BEIJING/YANGON | Tue Oct 4, 2011 10:09pm BST

(Reuters) - The surprise decision by Myanmar's new civilian government
to suspend a controversial, Chinese-backed dam is straining relations
between the erstwhile allies, but neither is likely to risk lasting damage.

China is pressing for an "appropriate solution" to the shelving of the
$3.6 billion Myitsone dam, a moved hailed by its opponents who had
warned of the scheme's environmental damage and forced relocation of

For Myanmar, under wide-reaching sanctions by Western countries for
human rights issues, China is its most important diplomatic and economic

And for China, the country formerly known as Burma provides access for
its landlocked southwestern provinces to the Indian Ocean. China is
building gas and oil pipelines across Myanmar to avoid the Malacca
Strait choke point.

"Overall the relationship will be there, as the two countries have a
very close relationship economically," said Zheng Yongnian, director of
East Asian Institute at the National University of Singapore.

"Myanmar relies on the Chinese side. Other countries, like India or the
United States, are becoming actors. But China has geopolitical and
economic advantages."

The ruling Communist Party's official newspaper, the People's Daily,
noted that Myanmar's government had said it would talk to China about
the dam project "to avoid damaging bilateral ties and friendship."

China is unlikely to give in easily over the project, which is part of a
broader scheme to build seven dams, the majority of whose power will
feed its booming economy.

The military junta proposed the dam in 2006, and in 2009 contracted
Myanmar's military-backed Asia World Company and China Power Investment
Corp to build it.

The Chinese-state owned firm has expressed shock at the Myanmar
government's decision to suspend the project and warned of legal

"Given everything that China Power Investment has put into this project,
it would be unlikely for them to walk away without first sitting down
and pledging to do more environmental impact studies and so on," said
Grace Mang, China Global Programme Coordinator at International Rivers.

"It's still too early to tell, but I don't think it's just as simple as
Myitsone is canceled."

China will likely now worry about another huge investment project it has
in Myanmar, an oil pipeline being built into southwestern China by China
National Petroleum Corp, which says work is continuing.

"The Chinese government is wise enough to handle this issue amicably
with great care after taking into considerations other strategic
interests like their seeking access to the Indian Ocean through us," a
retired senior Myanmar diplomat said, referring to the pipeline and
other rail and road projects.

"In fact, it was a big blunder of them to have made secret deals with
such an illegitimate government for such strategic mega projects," added
the retired diplomat, who asked not to be identified citing the
sensitive nature of the subject.


Despite their reputation for being close, the two have deep mutual

China's growing economic role in Myanmar has caused considerable popular
resentment. Myanmar historically has feared being dominated by its much
larger neighbor, while China worries about instability along its vast

Beijing frets that Myanmar's civilian government may try and cozy up to
the United States, adding to Chinese concerns about being "encircled" by
hostile forces, such as the U.S. military bases in Japan and South Korea.

"I know historically there's been some issues of distrust with China but
in general terms, I guess relations have warmed a lot and Myanmar still
needs quite a bit in terms of trade in terms of gas and oil pipelines in
2013," said Christopher Roberts, a Myanmar expert at Australian National
University, calling the move a gesture to show it was being accountable.

"But from Myanmar's perspective, I suspect something like the suspension
of a dam is not a relationship-breaker like say the suspension of a gas
plant or an oil pipeline. So I think strategically this is something
that wouldn't put a significant dent in the relationship with China."

Economic relations are booming. Bilateral trade rose by more than half
last year to $4.4 billion, and China's investment in Myanmar reached
$12.3 billion, Chinese figures show. There is a strong focus on natural
resources and energy projects.

"China and Hong Kong reached the top of the list of foreign investors
just because of a few giant hydro power, oil and gas pipeline and mining
projects. In fact, China has not invested much in the labor intensive
manufacturing sectors," a senior official from Myanmar's Federation of
Chambers of Commerce said.

"Since the Chinese bring thousands of workers, including manual
laborers, their projects do not benefit local people much," he added,
also asking not to be identified.

Ethnic minorities in Myanmar see the construction of Chinese-built dams
as expanding military presence into their territory. Some analysts say
Kachin rebels may be trying to hold the dams hostage in return for a
share of the revenue from the projects.

The dam decision was a rare rebuke of China by Myanmar, especially as
Beijing has gone out of its way to cultivate the new leadership.

Thein Sein's first major foreign visitor since taking office in February
under Myanmar's "road map" back to democracy and civilian rule was the
Chinese Communist Party's fourth ranked leader, Jia Qinglin.

During a visit to Beijing in May, Thein Sein praised the Chinese as a
trustworthy, selfless ally, and received a line of credit worth 540
million euros.

Ultimately, observers expect Myanmar to compensate China somehow for the
dam, but Beijing would become warier about future projects.

"The moral of the story is I think the Chinese side should now think,
whatever the investments or the projects they'd like to do with Burma,
they should look long-term," said Zaw Oo, director of the Chiang Mai,
Thailand-based Vahu Development Institute.

"They should not consider or conceive any projects just for the sake of
short-term benefits. (The Myitsone project) for the long-run is not
going to be very positive for the development of Myanmar."

(Editing by Jonathan Thatcher)
Burma Rivers Network response to China Power Investment Corporation
comments on Myitsone dam, October 4, 2011


On October 3, Chinese media interviewed Lu Qizhou, the President of
China Power Investment Corporation, about Burma�s Myitsone hydropower
project. Below is a response to key points in the interview by the Burma
Rivers Network.

Lu Qizhou: I also learnt about this through the media and I was totally
astonished. Before this, the Myanmar side never communicated with us in
any way about the "suspension."

BRN: The villagers at the dam site, numerous political and community
organizations, international human rights organizations have attempted
to contact CPI and discuss the concerns about the impacts and process of
the project. Even though CPI never responded to all these attempts at
dialogue, they cannot claim to be unaware of the feeling about this
project by the people of Burma.

It is impossible that CPI could not have been aware that Burma is in the
midst of civil war and that the Irrawaddy-Myitsone dams project is in an
active conflict zone. The armed ethnic group in this area, the Kachin
Independence Organisation, had directly warned the Chinese government
that local people were against the project earlier this year and that
proceeding with the dams could fuel further fighting.
Without national reconciliation and peace, all investments in Burma face
these types of risks.

Lu Qizhou: "Ever since CPI and Myanmar Ministry of Electric Power No. 1
"MOEP (1)" signed the MOU in December 2006, CPI has always followed the
principle of mutual respect, mutual benefit and win-win result"

BRN: Up to now all major investment projects in Burma are negotiated by
Burma�s military government and the main benefit have gone to the
military. Any win-win result has only been for the military and this is
resented by the people of Burma. The lack of transparency by the
military and foreign investors increases this resentment. The role and
share of the Burmese companies should also be disclosed, including the
benefits to Asia World Company and whether military holding companies,
the Union of Myanmar Economic Holdings Ltd. (UMEHL) and the Myanmar
Economic Corporation (MEC), are involved.

Lu Qizhou: We hired topnotch hydropower design institutes, research
institutes, consultancies and authoritative experts in China to carry
out planning, design, specific study, consultation and supervision for
the upstream-Ayeyawady hydropower project.

BRN: The impact assessment jointly carried out by the Chinese Changjiang
Institute and the Burmese BANCA stated very clearly that the Myitsone
dam should be scrapped and that the majority of the local people were
against this project. Why did CPI hire "topnotch" institutes and then
not follow their advice? The original EIA was completed in October 2009
which was only leaked earlier this year. CPI has just released an edited
version of the EIA and dated it March 2010 which has deleted the key
findings and recommendations.

Although it was recommended, the original assessment did not include a
social impact assessment or an assessment of the impacts on the entire
river, particularly downstream.

In the current political context, where there is civil war and where
communities fear retribution by Burma�s military government, assessors
are unable to genuinely access affected communities or collect reliable

Lu Qizhou: In February this year, Myanmar's Prime Minister (Thein Sein)
urged us to accelerate the construction when he inspected the project
site, so the sudden proposal of suspension now is very bewildering.

BRN: Thein Sein should explain his actions if he indeed wanted to
accelerate the project. In addition the Burmese military government
must disclose all agreements signed with CPI so that this is a
transparent process for everyone to see.

Lu Qizhou: the upstream-Ayeyawady hydropower project is located near the
China-Myanmar border, developing hydropower resources here not only can
meet Myanmar's power demand for industrialization, but also can provide
clean energy for China. It is based on this consideration that we
decided to invest in this mutually beneficial and double winning
hydropower project.

BRN: We understand that this is a double winning project for China as it
can receive 90% of the energy from this dam while Burma has to bear all
the social and economic costs.

Lu Qizhou: Myanmar government will gain economic benefits of USD54
billion via taxation, free electricity and share dividends, far more
than CPI's return on investment during our operation period.

BRN: Over the past several years Burma�s military government has
received billions in revenues from the sale of natural gas to Thailand,
yet the country remains impoverished with some of the worst social and
economic indicators in the world. The "economic benefits" therefore do
not reach the broader public and do not contribute to the genuine
development of the country.

Lu Qizhou: As far as I know, in the more than 100-year history of
hydropower development, no flood or destructive earthquake has ever been
caused by dam construction. We are able to ensure the safety of dam

BRN: Given the increasing frequency and severity of earthquakes, there
cannot be a guarantee of safety. No studies about the safety of the dam
or about disaster preparation have been disclosed to the public.
The world�s worst dam disaster occurred in Henan Province in central
China in 1975. Twenty years after the disaster, details started emerging
that as many as 230,000 people may have died.

Lu Qizhou: It has become a common consensus that hydropower is the only
renewable energy suitable for large-scale development now.

BRN: Rural communities in Burma and Kachin State are utilizing the
appropriate technology of small hydropower to realize their electricity
needs on their own. The Kachin capital of Myitkyina is one of the few
cities in Burma that currently receives 24-hour electricity due to an
existing small hydropower project. Decentralized management and the
right of local people to manage and utilize the electricity generated by
small hydro needs to be promoted in Burma, not large scale projects that
are environmentally destructive and export electricity rather than using
it domestically.

Lu Qizhou: The Myanmar government attaches significant importance to
resettlement for the upstream-Ayeyawady hydropower project, and has
effectively led and organized the planning, design and implementation of
resettlement� According to the agreement, we assisted in the
resettlement work and proactively fulfilled our social responsibilities
and obligations, while fully respecting local religion, ethnic customs
and the wish of migrants.

BRN: Villagers fear for their lives if they complain or resist
relocation at the hands of armed military personnel and have thus been
forced to give up their farmlands, accept inadequate compensation, and
be herded into a relocation camp where there is not enough farmlands and
water for livelihoods. People now either have no jobs or low-wage
temporary jobs and they cannot continue cultural practices linked to
their original homelands. Villagers living in the relocation camp are
restricted in movement and are constantly under military surveillance.

Over 60 villages, approximately 15,000 people, will eventually be
permanently displaced from their homelands due to the Irrawaddy Myitsone
project. This dislocation will cause many secondary social problems
including conflicts over jobs and land, and an increase in migration and
trafficking to neighboring countries. Women will be particularly impacted.

Lu Qizhou: When Myitsone Hydropower Station is completed, it will
effectively control and reduce the flood peak, raise the anti-flooding
standard in downstream area, and reduce life and property losses caused
by downstream flood on people living on both banks.

BRN: Water releases from hydroelectric dams are entirely dependent on
the electricity generating needs of the electricity buyer. In this case,
all seven dams of the Irrawaddy Myitsone project will serve China�s
electricity needs, not the downstream agricultural, transportation or
health needs of Burma. Chinese engineers running the dams will decide
how much water to release downstream according to orders from Beijing,
not Naypidaw. As seen with the Mekong, this can cause unexpected and
devastating water surges and shortages.

Ah Nan - +66-848854154
Sai Sai - +66-884154386
Website - www.burmariversnetwork.org


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