The Standoff Over the Myitsone Dam Project in Myanmar: Advantage China

Introduction—China’s Stalled Dam Project in Myanmar

On January 12th, the Embassy of the People’s Republic of China (PRC) in Myanmar issued a statement warning Myanmar that if it failed to resolve the dispute over the stalled Myitsone Hydropower Dam project in Myanmar’s northern state of Kachin, “confidence of Chinese entrepreneurs in investing in Myanmar” would be “seriously hurt” (Global Times, February 21). A fortnight prior to this statement, the PRC Ambassador to Myanmar, Hong Liang, visited the Kachin capital of Myitkyina, where he met local Kachin groups and religious leaders to win their support for revival of the controversial Chinese-backed dam project. Hong reportedly warned them against opposing Chinese projects, including the Myitsone project, in the Kachin state (The Irrawaddy, January 9). PRC officials have reportedly been visiting the homes of Kachin villagers to canvass support for the project (The Irrawaddy, September 13, 2018).

The $3.6 billion Myitsone dam project is a Sino-Myanmar joint venture: Myanmar’s Ministry of Electric Power and a domestic conglomerate, Asia World, as well as the PRC’s state-run China Power Investment Corporation, signed a memorandum of understanding in 2006; work on the project began subsequently in December 2009. In September 2011, amid protests over the Myitsone Dam’s social and environmental costs, Myanmar’s then-President Thein Sein announced the suspension of the project, citing the “will of the people” (Mizzima, September 30, 2011). Since coming to power in January 2016, Myanmar’s ruling National League for Democracy (NLD) has avoided making a decision on the project’s future. But with State Counselor Aung San Suu Kyi due to meet Chinese leaders on the sidelines of the upcoming Belt and Road Forum in Beijing, where the Myitsone project is bound to come up for discussion, the NLD government will need to decide the fate of the project before Suu Kyi leaves for Beijing (The Irrawaddy, April 5). This will not be an easy decision, as the government is caught between mounting pressure from the PRC and calls from the people of Myanmar to cancel the project.

Concerns and Controversies Surrounding the Myitsone Dam Project

The Myitsone project envisaged construction of a dam around 3.2 kilometers south of the confluence of the Mali Hka and the N’Mai Hka Rivers, where the River Irrawaddy originates. The dam was to have an installed capacity of 6,000 megawatts (MW). [1] Under the initial agreement, 90% of the electricity generated was to be sold to China and the rest would be available for Myanmar’s use, free of charge (Frontier Myanmar, November 29, 2018). The deal has been strongly criticized in Myanmar: according to Khin Khin Kyaw Kyee, lead researcher at the Institute for Strategy and Policy–Myanmar, many Myanmar citizens see it as a “one-sided” deal that is tilted overwhelmingly in China’s favor, with few benefits for Myanmar. Concern also existsthat China will gain control over one of Myanmar’s “main water sources”, which will leave the country “more vulnerable” to Chinese pressure. [2]

Besides, there are concerns over social and environmental costs that the local population has to bear. The mega-dam is expected to flood 766 square kilometers (km) of territory in the Kachin state, and over 15,000 people are likely to be displaced and deprived of their livelihoods. The flooding will destroy the rich biodiversity of the area, as well as disrupting agricultural lands and fisheries in both the immediate area and downstream. Of additional concern, the dam is located in an earthquake-prone area—and damage to the dam in the event of an earthquake could result in flooding of Myitkyina, situated 40 kilometers downstream (Kachin Development Networking Group, September 12, 2016).

Resistance to the Myitsone project is widespread within Myanmar. A 2017 poll conducted by the Yangon School of Political Science found that 85% of people in Myanmar oppose the building of the dam (Myanmar Times, January 3, 2017). Opposition to the project became a nationwide campaign as early as 2011. [3] Several reasons exist for the dam becoming a nationwide concern. For one, it was Myanmar’s military junta that decided in favor of the project, and details of the deal were never made public. The Myitsone project became an item on the agenda of the pro-democracy movement, and thus garnered support across the country. Additionally, the location of the dam has raised cultural concerns: it is situated close to the origin of the River Irrawaddy, Myanmar’s lifeline and the heart of its culture. The people of Myanmar revere this area as the birthplace of their country and its civilization (Kachin Development Networking Group, September 12, 2016). This cultural connect with the Irrawaddy evokes strong emotions among all of Myanmar’s people, and has evoked resistance from citizens all across Myanmar against the dam project.

Additionally, the PRC’s intimidation of Myanmar on the Myitsone project has not only angered the people of Myanmar; it has also transformed opposition to the project from a movement revolving around environmental and social costs, to one that is concerned about the project’s implications for Myanmar’s sovereignty (The Irrawaddy, April 1). Thus, it is not just the Kachin community that is opposing the Myitsone project. Its opponents include people from “more than one ethnicity or group of people”—people from all walks of life, with diverse ethnicities and from different geographical locations, are resisting the dam project. [4] In recent months, Myanmar’s civil society has been working towards unifying the anti-dam campaign. On April 1st, for instance, civil society activists, writers and environmentalists from across the country converged at Yangon to strategize their opposition to the dam project. They formed a national committee to coordinate the campaign, and have warned the government of nation-wide resistance if it decides to go ahead with the controversial project (The Irrawaddy, April 1).

China’s Interests in the Myitsone Dam Project

It was the Myitsone Dam’s hydropower capacity and its value to China’s Yunnan Province that initially drew the PRC to pursue the project. Electricity generated by the dam was seen to be useful for the industrialization and development of Yunnan. However, in recent years Yunnan has developed a greater electrical production capacity, and is even exporting its surplus. According to Chinese analysts, there is waning interest in the PRC in Myitsone’s hydropower—and Beijing has therefore reportedly adopted a “softened position” on the dam project’s revival. Apparently, it is keen to pursue Myanmar “for compensation for reneging on the terms of the contract rather than simply resuming the project” (IPP Review, April 1).

Why has China then stepped up pressure on Myanmar in recent months? According to an Indian businessman in Yangon, the Myitsone project is now useful to China as a “bargaining chip.” By pressuring Myanmar on the Myitsone project it is hoping to “secure concessions on other projects in Myanmar,” including the Kyaukphyu Deep-Sea Port and a number of smaller hydropower projects. [5]

The suspension of the Myitsone project upset the PRC not so much on account of “the loss of access to hydropower as because of the loss of face it suffered.” Beijing has been rankled that Myanmar, despite its “extreme dependence” on China, “dared to snub” its patron by cancelling a Chinese-backed project.  The importance of this “loss of face” factor has grown in recent years, especially in the context of the Belt and Road Initiative (BRI), as China does not want “other BRI members to believe that they can suspend or cancel a project without serious consequences.” [6]

The Dilemma Faced by Myanmar’s Government

Back in 2010-11, when the Kachin campaign against the dam was gathering momentum, it was not difficult for the NLD to take a position on the controversial Myitsone project: it was then a party struggling against military rule, and it swiftly joined hands with Kachin activists to demand the project’s cancellation, targeting the government’s unpopular policies and opaque decision-making. However, since the NLD came to power in 2016, it has neither cancelled the project nor clarified its position. Indeed, it has not even made public the findings of a report of a 20-member commission it set up to review the dam project and its implications (The Irrawaddy, March 14).

The NLD government is in a quandary: if it cancels the Myitsone project, it will be liable to pay $800 million to China, and it would face China’s ire. It would also weaken investor confidence in Myanmar, and possibly affect the country’s economic revival (Global Times, February 21). Myanmar’s dependence on China, which had declined in the wake of its democratization and subsequent improvement of relations with Western countries, has surged over the last couple of years in the context of the Rohingya conflict. Western countries are criticizing the NLD government’s handling of the Rohingya conflict, and Myanmar needs China’s support to fend off Western criticism and actions in global forums like the United Nations Security Council. Given this dependence, Myanmar’s government cannot afford to anger Beijing by cancelling the Myitsone project.

Green-lighting the revival of the Myitsone project, on the other hand, would make the NLD government unpopular in Myanmar. Going against the will of the people will put the legitimacy of the government at risk, and could affect the NLD’s electoral performance in next year’s general elections. Protests against the decision can be expected to erupt across the country, impacting Myanmar’s stability. Importantly, reviving the project is “very likely” to trigger “another wave of anti-China sentiment” in Myanmar, impacting the future of BRI projects in the country. [7]

China’s Calculations

Signs are emerging that the NLD government is considering a change in policy: in late January U Thaung Tun, Myanmar’s Minister of Investment and Foreign Economic Relations, said that his government was considering downsizing the dam and relocating it, or offering China an alternative project (Mizzima, January 30). However, he did not clarify the government’s preference.

The NLD government appears to be preparing the public for its decision. On March 14, Suu Kyi appealed to the people to be more open-minded, and to view the Myitsone project from a wider-perspective. Speaking to residents of Pyay in the Bago Region, she said that the government would make a final decision on the project after considering political, social, economic and environmental concerns. Looking at it from just one viewpoint would result in a flawed decision, she said. Importantly, Suu Kyi stated that her government would not cancel a project approved by its predecessor simply because that project did not comply with the current administration’s policies (The Irrawaddy, March 14).

It is evident that the government is considering reviving the Myitsone project, perhaps with alterations in its size and location to address public apprehensions. While the changes may go some way in assuaging local fears, it is unlikely that this will blunt widespread opposition to the project. Any decision to go ahead with the project will be seen in Myanmar as caving in to Chinese pressure—and hence, undermining Myanmar’s sovereignty. Kachin activists have also repeatedly said that they will accept nothing less than a full cancellation of the Myitsone project.

The question remains as to whether the PRC still wants to go ahead with the Myitsone project. Its need for Myitsone’s electricity in Yunnan having fallen, it could reject Myanmar’s compromise offer on Myitsone. China may have calculated that while Myitsone could provide it with more electricity, a larger Chinese role at the Kyaukphyu Port would boost its strategic and economic interests—in which case, it can be expected to demand monetary compensation for the stalled dam project, even as it presses for concessions on the Kyaukphyu project. Regardless, it is still “Advantage China” in the Sino-Myanmar standoff over the Myitsone project.

Dr. Sudha Ramachandran is an independent researcher and journalist based in Bengaluru, India. She has written extensively on South Asian peace and conflict, political and security issues for The Diplomat, Asia Times and the Jamestown Foundation’s Terrorism Monitor.

Notes:

[1] The Myitsone dam is one of seven dams, and the largest planned on the Irrawaddy River and its tributaries. The seven dams will have a total installed generation capacity of 21,600 megawatts.

[2] Author’s interview with Khin Khin Kyaw Kyee, lead researcher at the Institute for Strategy and Policy–Myanmar, April 12.

[3] Ibid.

[4] Ibid.

[5] Author’s interview with an Indian businessman based in Yangon, April 12.

[6] Ibid.

[7] Khin Khin Kyaw Kyee, n. 2.