: Super User; Region; 04 May 2011; Hits: 1103

Mekong dam: Changing the flow of Indochina ties

PLANS for the first of a series of dams across the lower Mekong River are putting Laos on a collision course with neighbouring Vietnam and Cambodia, in a way that could trigger important geopolitical realignments in Indochina.

Laos, a traditional ally of Vietnam in the battle for influence in the sub-region, wants to construct a S$4.3 billion dam at Xayaburi, in the north of the country. The idea is to produce cheap hydroelectricity, which it can then sell to Thailand and thus reduce the economy’s heavy dependence on foreign aid and agriculture. Vietnam, in particular, is strongly opposed to the idea, fearing that the dam would directly affect water flows to its rice-growing southern delta region.

Should the construction of this and other dams go ahead, Vientiane’s relations with Hanoi could be severely strained, forcing Laos to develop closer ties with China and Thailand instead. Located in the northern part of the country, the Xayaburi Dam is a mostly Thai-led project. Another proposed dam located not far away – the Paklay Dam – is to be financed by China.

The close relationship between Vietnam and Laos has its roots in the Vietnam War of the 1950s and 1960s, when communist Laotian and Vietnamese forces fought side by side against the French and, later, the United States-backed regime in the south. Soon after the war ended in 1975, the two countries signed a 25-year friendship and cooperation agreement. This treaty lapsed in 2002, but relations have remained cordial, with state-run media in both countries carrying regular reports about bilateral economic, cultural and military cooperation.

A Vietnamese media report last month, for example, spoke of Vietnamese doctors travelling to Laos to carry out eye operations. A few days later, the Laotian Defence Ministry announced it had allocated land in Vientiane to the General Association of Overseas Vietnamese to build its headquarters.

In recent years, however, Laos has been looking for ways to reduce its dependence on Vietnam and to broaden its diplomatic ties. Relations with China were normalised in 1989, following a sharp deterioration in ties after the border clashes between Vietnam and China in 1979. Laos also expanded its relations with other nations such as Australia, France, Japan, Sweden and India, and became a member of Asean in 1997. Trade relations with the US were normalised in 2004. It was also represented at the inaugural East Asia Summit in 2005.

Chinese attempts to gain influence in Laos have included financing important infrastructure projects such as the S$8.6 billion Laos-China railway, completing joint border demarcation exercises and inviting young Laotian leaders to China for vocational, ideological and military training. But China has not had it all its own way. Last year, then Laotian Prime Minister Bouasone Bouphavanh was forced to quit his post amid what some experts described as a power struggle between rival pro-Vietnam and pro-China party camps in Vientiane.

Relations with Thailand have been similarly rocky at times. Thailand is Laos’ principal means of access to the sea and its primary trading partner. But despite strong economic and cultural links, border clashes, such as those that took place in 1987, have strained diplomatic ties. In 2006, a sports comedy film made in Thailand entitled Lucky Loser appeared to present Laos in an unfavourable light. It was quickly withdrawn and re-edited after Laotian officials expressed concern.

The dam controversy, however, could alter this picture quite markedly. Indeed, the proposed dam has already become an important test for a 1995 agreement signed by Laos, Thailand, Cambodia and Vietnam to share the river’s resources. Under the pact, all countries agreed to consult one another on all actions affecting the river.

An official decision by the quartet on whether to go ahead with the dam has been put off twice. The first was in March, after 263 non-governmental organisations wrote an open letter to the Mekong River Commission expressing concern about the environmental impact of the dam. A subsequent meeting on April 19 was similarly indecisive, with the representatives of Thailand, Cambodia and Vietnam recommending that the decision be referred to the ministerial level.
Within Thailand, the dam has become controversial, with local environmentalist groups campaigning against its construction. The Thai government, however, remains a strong supporter of the project.

Thai Energy Minister Wannarat Charnnukul recently declared his intention to proceed with signing the power purchase agreement with the project’s developer, Xayaburi Power.

The Bangkok Post also reported early last week that more than 30km of roadways leading to the dam site were already under construction, and that some villagers had been told they would be provided with new homes and compensation after being evicted.

All this suggests that policymakers in Vientiane have already made up their minds. If so, new geopolitical alignments in Indochina are only a matter of time.

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Key Political Risks

Asia is the fastest growing region in the world, and is likely to remain so in 2013. However, a number of risks cloud the picture.

The good news is that domestic demand in the region remains strong and should continue to cushion the impact of weaker external demand on overall economic growth. The completion of national elections in Japan and South Korea in December 2012 should also help reduce political uncertainties.

But Asian governments will need to guard against the adverse impact of prolonged easy financial conditions on inflation.

Rising inequality also continues to threaten social stability. Ethnic and religious rivalries remain just below the surface in many countries. When combined with government corruption and (in some countries) high youth unemployment, this could become a deadly mix. This seems particularly true of China.

Territorial disputes also require close monitoring. Much diplomatic activity in the new year is likely to be centered on finding ways to reduce tensions over resource-rich islands in the South China Sea, where Beijing's claims overlap with those of Japan, Vietnam and other Southeast Asian states. South Korea and Japan also have rival territorial claims.

North Korea remains the wild card. Inclined to believe its own propaganda, Pyongyang's new leadership could miscalculate, making belligerent moves that plunge the region into a military conflict that nobody wants.