On Friday, the government of Myanmar ordered the suspension of a controversial Chinese-backed dam project on the Irrawaddy River. In a rare move following civil-society protests, president Thein Sien announced that the US$3.6 billion Myitsone dam would be put on hold until 2016 because it was “contrary to the will of the people”.
The state-owned China Power Investment Corp involved in the project expressed shock at the decision. In an interview with China News Service, company manager Lu Qizhou warned of legal consequences and “immeasurable losses” for both sides if construction does not resume.
In the same interview, as reported by Reuters, Lu reproached western environmental groups for interfering by putting pressure on Myanmar’s government.
Last week’s announcement may have come as a surprise to some observers, but it represents the culmination of escalating domestic tensions over Chinese-financed infrastructure projects in Myanmar. Myitsone – one of many dam, mining and other infrastructure projects in the country — has become a focus for those who fear China’s growing influence in the country. China’s most ambitious project is the oil and gas pipeline network that will take gas from Burma’s offshore Shwe field into China’s Yunnan province, avoiding the Strait of Malacca.
The construction of the Myitsone dam has been particularly divisive in the ethnic Kachin state in the north of the country, bordering China. Last year several bombs exploded at the dam site, killing Chinese workers, and this year Kachin rebels warned that if the dam were not stopped, the construction would lead to civil war. Since June, Kachin armed forces have clashed with Myanmar’s military despite a notional ceasefire.
Environmental and pro-democracy campaigners in Myanmar argue that the dam will have devastating environmental effects on the Irrawaddy, the country’s most important river, and displace around 15,000 people. Ninety per cent of the power generated would be exported to China and none of the benefits would reach local communities, according to the activist group Burma Rivers Network. Until now, the Chinese power company has swept aside the findings of an environmental-impact assessment commissioned by authorities in both countries, which called for the project to be scrapped.
China, Myanmar’s leading foreign investor, has a lot at stake. The Chinese foreign ministry has urged Myanmar to “guarantee the legal and legitimate rights of Chinese companies”. But the Myitsone dam will fuel the ongoing debate over the social and environmental impact of China’s investment in south-east Asia and beyond. Only last month, two Chinese state-owned companies were forced to pull out of controversial infrastructure projects in Cambodia following local protests.
But rather than address these issues, China Power Investment Corp has issued a public statement asserting that the Myitsone dam is “mutually beneficial” and work should be resumed.