Category Archives: ASEAN

Not a Repeat, but an Echo: ASEAN’s Retracted Statement and the Specter of the 2012 Joint Communique Failure

Chinese Foreign Minister Wang Yi and ASEAN foreign ministers at special foreign ministers' meeting in Kunming / AFP PHOTO

Chinese Foreign Minister Wang Yi and ASEAN foreign ministers at the special China-ASEAN foreign ministers’ meeting in Kunming / AFP PHOTO

The South China Sea was anticipated to be one major topic of discussion during the Special ASEAN-China Foreign Ministers’ Meeting in Kunming on June 14, but the outcome—the retraction of an ASEAN statement only three hours after being sent to the media—has made divisions over the South China Sea the only talking point emerging from the meeting on broader ASEAN-China bilateral relations. The statement was stronger than most previous commentary from ASEAN, including specific references to land reclamation and an implied reference to the Philippines’ ongoing legal case at the Permanent Court of Arbitration. The statement also notably confirmed that the issue is relevant to ASEAN-China bilateral relations, countering the long-time stance of China that South China Sea disputes are a bilateral issue between claimants. Since the retraction, there have been a plethora of contradictory statements and no revised statement has been released.

While divisions over the South China Sea are not new to ASEAN, the lack of a coordinated response raises serious questions about ASEAN’s ability to effectively respond as tensions over the South China Sea continue to rise. The emergence of numerous reports that consensus on the statement was withdrawn after-the-fact due to China pressuring Laos appears to many observers a repeat of ASEAN’s failure in 2012 to reach consensus on a joint statement during the ASEAN Summit in Cambodia.

Cambodia’s failure to cajole consensus from the group in 2012 was also due to disagreement over how to handle the South China Sea disputes, the first time that such a thing happened in ASEAN’s then 45-year history. The failure was blamed squarely on Cambodia’s for allowing its close relationship with China to challenge ASEAN centrality and interfere with ASEAN policy decisions. The question moving forward is whether this will be a repeat of 2012’s failed joint communique or whether Laos as ASEAN Chair for 2016 will be able to successfully coordinate a joint statement from this year’s ASEAN Summit.

The differences in China and ASEAN’s characterizations of the meeting are stark. Where China’s Minister of Foreign Affairs Wang Yi noted in his public remarks that “this [the South China Sea dispute] isn’t an issue between China and ASEAN” and emphasized that there had been few disagreements, the ASEAN statement was clear that “[ASEAN] also cannot ignore what is happening in the South China Sea as it is an important issue in the relations and cooperation between ASEAN and China.” Singapore’s Foreign Minister Vivian Balakrishnan, who co-chaired the meeting in Kunming, failed to appear alongside Chinese Foreign Minister Wang Yi at a planned press release in Kunming and instead echoed the retracted statement’s language in a separate press release in Singapore. On June 16, spokespeople for Indonesia and Vietnam stated that there had been consensus over the contents, though Indonesia noted that the statement was intended to be a media guidance statement rather than an official joint statement. The Philippines seconded that there had been consensus among ASEAN foreign ministers when their meeting ended and that Malaysia’s release of the statement had not been in error.

Like Cambodia and Myanmar, Laos is a least-developed country and is considered one of the region’s most vulnerable to Chinese pressures over the South China Sea given its non-claimant status and relative economic dependence on Chinese investment, trade, and loans. And unlike Myanmar, Laos has not recently received an influx of economic assistance from other countries that provide it with development alternatives if China’s assistance were taken away due to political disagreements.

At first glance, it seems that China has “won” by once again disrupting a unified ASEAN statement on the South China Sea. Prashanth Parameswaran’s excellent Diplomat piece on the fiasco correctly questions this conclusion, pointing out that the statement’s release and the following media frenzy show that China successfully blocked an official statement but failed to establish its preferred narrative framework for debate on the issue. Blocking a unified ASEAN statement is not as ideal for China as preventing ASEAN from forming a consensus in the first place, but it may be good enough to prevent action on the issue for the rest of Laos’ ASEAN Chairmanship.

After all, China’s activities in the South China Sea are only partly about changing the short-term narrative; the more central goal is to slowly alter the status-quo in China’s favor. This is visible in China’s establishment of military bases on created islands and regular presence of its Coast Guard vessels in the region, which change the on-the-ground calculus and make it increasingly hard for other claimants to push back against Chinese intrusions.

This episode has shown us two things: first, that China’s aggressive behavior has in fact pushed countries in the region that previously preferred to stay away from conflict, such as Singapore and Indonesia, to take a stronger stance against disruptive behavior and in favor of international law. Second, that China is still fully capable and willing to use its role as a regional financier, trading partner, and neighboring behemoth to ensure that the ASEAN bloc cannot effectively act against its interests even in the face of growing regional discomfort over China’s behavior.

The most important question moving forward is not which side has “won” or “lost” in this round of discussion over the South China Sea, but what will happen during the latter half of Laos’ ASEAN Chairmanship in 2016.

Prior to this incident, indications were that Laos would follow the steps of Malaysia (Chair in 2015) and Myanmar (Chair in 2014) in balancing between meeting Chinese pressures to avoid the issue and meeting pressures inside ASEAN from other claimant states to address it. Laos Prime Minister Thammavong indicated to US Secretary John Kerry in January 2016 that he sought a unified ASEAN stance and would seek to counter Chinese militarization and assertiveness on the South China Sea issues.

Earlier ASEAN statements expressed concerns over recent developments on the South China Sea issues without being overly specific. The outcome of the US-ASEAN Sunnylands Summit—while failing to specify concerns over China’s activities—hinted at China’s role by highlighting the principle of ASEAN centrality and the need for countries to respect diplomatic processes in the peaceful resolution of maritime disputes. China’s announcement in April 2016 that it had reached consensus with Laos, Cambodia, and Brunei, while criticized due to Laos’ role as ASEAN Chair, was ultimately not a great departure from Laos’ previous statements on the issue.

Laos has many motivations to balance between ASEAN and China: for one, Laos’ recent leadership transition led to the ouster of leaders viewed as particularly pro-China, likely linked to numerous investment deals with China that are now recognized as having few benefits for the country as a whole. The installation of Prime Minister Thongsing Thammavong, who is considered to be relatively pro-Vietnam, opens the door to a foreign policy that will better balance China’s influence. Second, there is significant pressure from other ASEAN claimants to avoid giving China’s position too much deference. Cambodia’s failure in 2012 reinforced outside views of the organization as a talk-shop unable to stand up to pressure from China and raised serious questions about the region’s real commitment to ASEAN Centrality.

Despite being (by most measures) less developed than Laos and having only recently emerged from being a regional pariah, Myanmar was fairly successful at maintaining the balance during in its 2015 Chairmanship. For Lao elites’ who are seeking to graduate beyond the label of a least-developed country and who are eager to avoid being viewed as less capable than their neighbors, Myanmar’s success poses an additional motivation for Laos to avoid a similar failure.

Based on the ire poured on Cambodia after its 2012 failure to get a joint communique, it is likely that the emerging debate over the retracted media guidance statement will only add to the pressure on Laos to ensure that there is a joint communique from the ASEAN Summit later this year. By flexing its muscles to force a retraction after the Special Meeting and raising the specter of its influence over individual ASEAN states, China may well have primed other ASEAN members to spend more time and diplomatic capital fighting for the inclusion of something similar in the ASEAN joint statement later this year.

The recent statement fiasco raises questions about how effectively Laos can stand up to pressure from China, but the leadership transition means that greater engagement from Vietnam and other ASEAN countries on controversial issues ahead of time may be welcome. China may have attained its goal to dissuade a joint ASEAN statement critical of China’s behavior emerging from a meeting hosted on its own ground, but in doing so it may have reminded ASEAN countries of their need to stick together in the face of powerful neighbors and made it harder to win future battles on the subject.

Leave a Comment

Filed under ASEAN, Cambodia, China, Current Events, FEATURES, Regional Relations, SLIDER, South China Seas

Looking ahead to Obama’s September visit to Laos

obama-on-air-force-one

As the Obama Administration looks to add the finishing touches to its five year Rebalance to Asia, it is likely to continue to capitalizing on building ties to the 10-member Association of Southeast Asian Nations (ASEAN).  The Obama Administration has worked tirelessly, particularly over the last four years, towards improving bilateral and multilateral ties with ASEAN.  It has sent more high-level visits to ASEAN member states than its predecessors, had a visible presence in improving security relations with most ASEAN countries, and held the first U.S.-hosted ASEAN summit in Sunnylands last February.  And as a final feather in Obama’s cap, he’ll be the first president to visit to Laos this coming September

The visit to the small Southeast Asian country may seem minor in the current geopolitical climate; however, it is far more important in the long run.  Laos is tiny with only 6 million people earning on average just over $1000 per year, but the premise of the U.S. Rebalance has always been to re-engage with Asian countries wholesale in an effort to bolster the region.  Through Laos, the Obama Administration can solidify its objectives and spur a more holistic relationship with ASEAN.  In other words, the President’s upcoming visit to Laos represents the essence of the U.S. Rebalance to Asia as a whole.

On the surface, improving relations with Laos seems daunting.  Laos is beset by many problems in addition to economic development challenges, ranging from a lack of infrastructure to being a central thoroughfare for the region’s illicit trade network.  Historically, the U.S.-Lao bilateral relationship has been rather rocky.  Traditionally, policymakers have worked to curb relations with Laos’s Communist government that was deigned partially responsible for the U.S.’s defeat in Vietnam.  US Congress protested Laos’s entry to the WTO and criticized the Lao government’s lack of good policies to protect the Hmong minority, whose diaspora forms key constituencies in congressional districts in states like California and Minnesota.

Yet, it is because of these hurdles in the U.S. bilateral relationship that make Laos an ideal candidate for furthering the regional pivot.  The U.S. Rebalance is concerned with building bridges and opening channels to promote greater collusion between the U.S. and the whole region.  This entails reaching out to all of Asia and finding chains that can potentially help the U.S. and intra-Asian growth.  Properly mending relationships to promote a greater relationship promotes a sustainable future.  Furthering U.S. engagement with Laos will ensure the legacy of the Rebalance beyond the current administration.  To do so, the President should confront two significant regional issues: food security and UXO.

First, in conjunction with the President’s September visit, the Administration should establish new policies to improve Laos’ food security.  Laos experiences some of the highest nutritional deficiencies, child mortality, and maternal mortality in Southeast Asia. To assist with Laos’s food security problem, the Administration could build on successful frameworks for cooperation already in place.  Thus, USAID provides programs to supplement good nutrition and improve regional capacity building through the Lower Mekong Initiative (LMI).  A joint effort from the Department of Defense, the Oregon Health Science University, and the Lao University of Health Sciences created the Lao American Nutrition Institute (LANI).  LANI hopes to revitalize agricultural growth knowledge and practices in Laos.  In spurring this effort, the Obama Administration can establish sustainable development policies and build capacity within the Lao government on programs that benefit the whole of Laos’ population.

Second, it is paramount for the Obama Administration to resolve the long debilitating unexploded ordnances (UXOs) in Laos.  The small munitions left over from the U.S.’ Secret Bombing Campaign over Laos (1964-1973) still saturate much of the countryside and pose a threat to the country’s agriculture and young, vulnerable population.  UXOs have been a front row issue in the prior visits by high profile Cabinet members.  Ben Rhodes, Obama’s Deputy National Security Advisor for Strategic Communications, highlighted the UXO issue during his visit in November 2015.  As a Vietnam veteran, Secretary John Kerry expressed his sincerest wishes towards properly handling the issue and bringing closure to the UXO issue during his visit to Laos in January 2016.  Obama would benefit from boosting UXO removal efforts as prescribed by lawmakers.  Sen. Patrick Leahy (D-Vermont), has promoted responsible and effective strategies in removing UXOs as well as a deep concern that the U.S. owns up to the Secret Bombing Campaign over Laos by seeing that the country becomes completely UXO free.  Regardless of the approach, Obama should set a definite tone over UXOs in the upcoming visit.  Taking responsibility to end the UXO threat for good improves the U.S.’ standing in the region and will move the agenda of the Rebalance forward.

In his final months, President Obama will be setting the finishing touches on what has been a major foreign policy effort.  Above all, Obama would like to set the tone of being invested in improving the whole of Asia, exemplified through a serious responsibility to improving Laos’ development and correcting past US foreign policy decisions that proved detrimental to the region.  Laos will be Obama’s chance to set the record straight and cement a sturdy framework for constructive engagement with the region.  With this framework, future presidents will be encouraged to do the same: embrace Asia as a whole and continue an approach toward capacity building that ensures a brighter future.

Leave a Comment

Filed under ASEAN, Cold War, Food, Laos, Regional Relations, SLIDER, US Rebalance, USA

Lancang-Mekong Cooperation Overlooks the Real Key to Peace and Prosperity: Mekong People

When I first heard the Lancang-Mekong Cooperation Mechanism (LMC) last year, the name of the river stood out. I initially thought it was only a mechanism for water management among the six countries that share the longest, mighty river in Southeast Asia. I was not completely wrong, but water management is only a tiny bit of the whole deal.

At the public forum “The Lancang-Mekong Cooperation: Challenges, Opportunities and Ways Forward” organized on April 28 by the Institute of Security and International Studies (ISIS), Mr Yang Yi, secretary general of the Chinese Institute of International Studies repeatedly asserts that the LMC is a mechanism to enhance the idea of “Shared River, Shared Future” among the six Mekong countries. It entails a platform to seek peace and prosperity via three cooperation pillars —political and security; economic and sustainable development; and social, cultural and people-to-people exchanges. It is no accident that these three pillars coincide with ASEAN three pillars of the same name because the LMC aims to pave way for China to strengthen its political and economic influence in ASEAN.

Water resource ranks among the top five priorities of the LMC. Of the 26 measures specified in the declaration to outline the activities of connectivity, production capacity, cross-border economic cooperation, water resources and agriculture and poverty reduction, only one is dedicated directly to water resources management. It lists the establishment of centers for technical exchanges, capacity building, data and information sharing, and joint research projects . The majority of the measures, however, focus on various investment and trade opportunities such as the Belt and Road Initiative, ASEAN+3 partnerships, financial assistance for infrastructure development which opens the door for China to invest in the region.

Other panelists, Cambodian Ambassador Pou Sothirak and Professor Dao Trong Tu, criticized China’s previous lack of engagement in the Mekong River Commission, an organization is set up to promote sustainable development and water management among Mekong countries. Nonetheless, they agreed that the LMC could lead to more discussion potentially on a water treaty, which clearly delegates how the shared international river could be managed—something MRC has failed to do.

But I don’t think it is going to be that simple when China never admits that its upstream projects have destroyed the ecological harmony of the Mekong River.

In the middle of the dry season, between January and February 2016, the Chiang Khong riverbank community, located in Thailand’s Chiang Rai province, 200 kilometers downstream of Jinghong Dam, suffered from the abrupt rise of the Mekong River. This is the time when local villagers tend river gardens and reap dry season harvests due to the robust sediment deposited along the river bank during the monsoon season. But this year, the fluctuating water level caused locals to shake their heads when their source of food and income submerged under water.

LMC_01

Further down in Loei, a fishery network lamented for the decreasing catches and damaged fishing equipment due to the “Water Tsunami.” In Bung Karn Province, 200 kilometers downstream from Loei, the Mekong level rose 2 meters and flooded locals’ riverbank gardens. Some gardeners had to pick up remaining scallions and corns.

In March 2016, the Mekong River at Nakhon Phanom, Thailand rose rapidly again and showing no sign of subsiding. It was officially the beginning of summertime and a month away from Songkran, Thailand’s traditional new year and the most important family gathering occasion in the country. Religious sites that usually submerged under Mekong River in rainy season would appear for Thais and Laotians as well as tourists to revere for the annual special occasion. Locals usually set up restaurants and leisure rest spots for tourists on the riverine sand bars in the middle of the Mekong River. But this year, sand bars were inundated; religious sites remained underwater. Less tourists showed up.

On April 13, 2016, the first day of Songkran, the water still remained high. Subsequently, district chief of Woen Phra Baht in Nakhon Phanom cancelled the annual Buddha footprint ceremony, an ancient religious ceremony that attracts local Thais and Laotians for centuries. The new year became a quiet time by the Mekong River. Restaurant owners indicated that they usually earn between 500,000 to 1,000,000 baht (15,000-30000 USD) during the December to April dry season (December-April), but that income had been unstable and decreasing over the past several years due to fluctuating Mekong flow.

OLYMPUS DIGITAL CAMERA

The Mekong River first meets Thai border at a river town called Chiang Saen in Chiang Rai province. Here, the Mekong River Commission set up a hydrological station as part of its effort to contribute data for better-practice water management among the four downstream Mekong countries, namely Thailand, Laos, Cambodia, and Vietnam. Chiang Saen Hydrological Station shows the water flow rate between March and April in 2016 remained high around 2,000 cubic meters per second and dropped to 1,000 cubic meters per second within a couple of days. After a week, the graph climbed up to near 1,500 cubic meters per second. What happened?

On March 16, Xinhua reported that China would release water from its dam following Vietnam’s request. Ministry spokesman Lu Kang stated 2,000 cubic meter of water will be discharged from the dam every second between March 15 to April 10. In response, Pham Binh Minh , Vietnamese deputy prime minister at the time, congratulated the positive move to alleviate drought. Thailand’s coup leader Gen. Prayuth Chan-o-cha  cheered happily for China’s considerate move. Cambodian prime minister Hun Sen  joined the acclaim. Laos took a step forward and announced that it too would discharge water to help relief devastating condition downstream.

Looking back at the hydrological data, the Mekong flow rate has been fluctuating for the past few years when, naturally, the volume ought to be decreasing in dry season. Comparing the flow rate between 2014, 2015 and 2016, the number remain around 2,000 cubic meters between March and April for second for all three years. Simply said, China’s altruistic move is actually turning into an annual practice. But locals are not aware of this change unless China announces its plan and notify Mekong downstream authorities to spread the news. Nonetheless, by the time the notification reaches riparian communities, the fish are already gone and the riverbank gardens are already submerged.

LMC_03

The Lancang River contributes nearly 70 percent of total Mekong catchment area at Chiang Saen in wet season. The number jumps closer to 100 percent in dry season. For this reason, downstream communities will feel any changes happening upstream. It also means that China is in control of how the river flows.

LMC_05_dryseason LMC_04_wetseason

As of 2016, China has already built at least six mega-dams on the Lancang with a total capacity over 15,000 megawatts. The closest dam to lower Mekong countries is the Jinghong dam located in Xishuangbanna, Yunnan less 100km from China’s border with Laos and Myanmar.  This dam is often mentioned in China’s media release on water discharge. The Jinghong dam is China’s water gate, thus China has complete control over when it shall open or close.

Downstream riparian communities have been asking China for prior notification on dry season  discharge from Lancang dams and to share hydrological information for many years already. Nonetheless, China never taken full responsibility.

“It becomes politics when China announces its discharge,” said Montree Chantawong, a researcher who has been monitoring the Mekong flow for more than a decade now. He illustrates the water flow graph to show that China’s dam discharge is nothing new. The higher volume aims to facilitate Chinese large cargo ships during the dry season. The discharge also helps to generate electricity and make way for new water in the reservoir during the rainy season. What’s new is China’s approach to talk about Mekong water management through the LMC mechanism.

China’s altruistic move came before the release of Sanya Declaration at the first LMC summit on Hainan Island on March 23-24 . The two-day meeting marks the official beginning of cooperation among Mekong countries. However, Kavi Chongkittavorn, senior fellow at ISIS and one of the panelists at the LMC public forum, left the audience with a note to think about China’s spatial location and subsequent posture towards Mekong downstream countries. “If China sees its neighbors as the front yard, it would treat its neighbor with respect. If it sees it as its backyard, then the treatment would be different.”

LMC_06

On the same day that leaders gathered in Sanya, the Network of Thai People in Eight Mekong Provinces released a statement to the same leaders. The call was simple: admit the transboundary impacts caused by development projects, mainly dams and rapids blasting. The impacts of Chinese dam discharge on Mekong downstream ecosystems and livelihoods were immense in the beginning of 2016—a clear example of transboundary impacts of dams.

The network further emphasized the need for respect and involvement of Mekong grassroots communities . As many riparian communities still depend deeply on Mekong fluvial ecosystems to sustain their livelihoods and nourish their cultures, the Mekong governments ought to take this into account when they design development plans for their countries. To ensure that the needs of the people are met, it is crucial for all Mekong governments to recognize the importance of grassroots riparian communities and respect their indigenous knowledge for the river they depend on for their livelihoods, cultures and economy. A democratic process is more than ever necessary to leverage the voice from the ground to be heard at the international geopolitical platform especially in the region where grassroots participation increasingly become restricted while dictatorship flourishes in the region. In addition, the statement calls Mekong governments to take responsibility to provide mitigation for damages and losses caused by dams and navigation projects. An accountable and participatory water management mechanism must be assured and enforced to prevent further negative environmental and social impacts on downstream communities, rather than transforming a mother river to a dead river.

While the leaders smile and hold hands tight for an unprecedented moment in history that could lead to sustainable water governance in the Mekong Region, grassroots riparian communities suffer from unnatural flow of the Mekong River. The applause for China’s move towards regional peace and prosperity will only be a façade if the Mekong leaders never take a moment to seriously promote public participation. It will only set up the beginning of a countdown to water conflicts.

Four numbers of the Sanya Declarations: 6, 3, 5 and 26.

  • 6 indicates the six member countries in the Mekong Region.
  • 3 points at the three cooperation pillars: political and security, economic and sustainable development and social, cultural and people-to-people exchanges. The three pillars coincides with ASEAN’s three cooperation pillars. This is no accident. The Sanya Declaration paves way for China to strengthen its political and economic partnership with ASEAN.
  • 5 is the key priorities during the initial stage, namely connectivity, production capacity, cross-border economic cooperation, water resources and agriculture and poverty reduction. Simply put, these are the main programs China hopes to implement and enhance its domination over other members.
  • 26 means the twenty-six measures detailing the five key priorities. Most of them map out how to place downstream countries in China’s “go global” economic policies like the Belt and Road Initiative and affirms its influences in ASEAN+3 partnership.

 

Leave a Comment

Filed under ASEAN, China, development, FEATURES, Lancang Mekong Cooperation, Mekong River, Regional Relations, SLIDER, water release, Yunnan Province

From Savannakhet to Somerset: United by controversial EDF megaprojects

Two controversial energy infrastructure megaprojects located on opposite sides of the world, one in Western Europe and the other in Southeast Asia, are linked in more subtle ways than the most obvious bond i.e. they share the same main project developer. Hinkley Point C (HPC) nuclear power station, proposed to be built in the English county of Somerset and the Nam Theun 2 (NT2) Hydropower Project in operation since 2010 in central Laos are both megaprojects awarded to the French state-owned power utility, Électricité de France (EDF) as the main developer and shareholder in the respective project consortia.

Both projects are touted by their proponents as low-carbon energy alternatives to fossil fuel burning power plants that are designed to economically supply perceived unmet energy demands; both represent the biggest infrastructure projects the respective host nations have built at the time of construction; both projects have considerable externalities not being shouldered by the developers due to taxpayer subsidised risk guarantees; and both are mired in complex multi-stakeholder debates over their socio-economic and environmental sustainability credentials.

Beyond these similarities, both HPC and NT2 share a common pattern of politicisation at the highest levels of government, both at home and abroad, as vested interests clamour for each project to proceed at whatever the cost (both financially and politically). This situation inevitably leads to some serious political and economic distortions and inherent risks that emerge with time, that could have been avoided had less high profile, cheaper, smaller, more accountable, devolved and transparent energy projects been developed. Thus, it might be an interesting exercise to compare these two megaprojects and see if any wider lessons can be drawn from the common linkages discernible, despite the significant physical distance and domestic development context that separates them.

Nam Theun 2 – a dam too far for EDF and the Banks?

As the historically older case, this hydropower project had an extended period of gestation between initial development plans being proposed and eventual construction many decades later. A pre-feasibility study was first conducted in 1986, although basin planners with the multi-lateral river basin organization, the Mekong Committee, had already identified the dam site as holding potential for hydropower generation in the 1960s[1]. With the Indochina War being expedited across Laos (as “the other theatre”) and eventual 1975 regime change in Laos ushering in a one party communist state, geo-political conditions were not conducive for the project to be resurrected until the early 1990s, when the plans were dusted off once more by international actors.

The 39 m high Nam Theun 2 dam under construction in 2008. Much of the work was sub-contracted out to Thai construction companies and the cement was sourced from over 600 kms away in Saraburi, Thailand (Source: International Rivers)

The 39 m high Nam Theun 2 dam under construction in 2008. Much of the work was sub-contracted out to Thai construction companies and the cement was sourced from over 600 kms away in Saraburi, Thailand (Source: International Rivers)

It took ten years in the appraisal and preparatory stage from 1995 before final approval by the World Bank’s Executive Directors in lending countries was granted, thereby rubber-stamping the proposed social and environmental safeguards to mitigate and compensate for project impacts. This approval followed a year long period of “public consultations” and “participatory workshops”, conducted both internationally and domestically (though it was widely acknowledged that no meaningful participation was possible in the Lao context). In no reasonable sense could the developer claim to have gained broad public acceptance or employed a “fair, informed and transparent decision-making process”, according to World Commission on Dams principles, given the depth of opposition expressed by civil society globally.

I attended the Bangkok leg of the “technical consultations” held in August 2004, at which numerous civil society actors and dam-impacted villagers from Thailand, including a handful of impactees from the World Bank-funded Pak Mun dam, gave a series of heartfelt and well-reasoned arguments why it was an ill-conceived idea to build the NT2 dam project. The Pak Mun dam in Northeast Thailand became infamous for the multiple impacts it caused to fisheries and aquatic resources based livelihoods, sparking local protests and wider social conflict that still simmers today. But the Bank officials brushed off the objections with their own technocratic arguments as to why constructing the project was Laos’ only option to deliver it from abject poverty through electricity revenue generated and develop economically based on a rational utilisation and export of its natural resource asset base. At all the other consultations worldwide, voices of opposition outweighed those in support both in terms of numbers and credibility of the arguments presented. However, it was clear the decision to proceed had been taken long before the consultations were held and the World Bank was more interested in issuing a “blank cheque” to the developers, as maintained by David Hales of the Worldwatch Institute who chaired the public workshop on NT2 in Washington in September 2004.

The NT2 Hydropower Company (NTPC) that built, owns and operates NT2 is itself a consortium of three main shareholders, namely EDF International (40 %), the Electricity Generating Public Company of Thailand (EGCO) (35 %), and the government of Lao PDR’s Laos Holding State Enterprise (25 %). NTPC sell 90 % of the power generated from the 1,070 MW installed capacity plant to the Electricity Generating Authority of Thailand (EGAT), with the remainder consumed domestically in Laos.

Construction officially began in November 2005 and NT2 was commissioned in March 2010, having cost about $1.45 billion, with funding derived from multiple sources, including France’s Coface, Sweden’s EKN, Norway’s GIEK, the ADB, Multilateral Investment Guarantee Agency, the World Bank, the French Development Agency, the Export-Import Bank of Thailand, Nordic Investment Bank, nine international banks and seven Thai banks. The Lao government’s equity share in NTPC was financed chiefly by a loan from the European Investment Bank (EIB) and Asian Development Bank (ADB), with the multi-lateral banks providing political risk guarantees to the developers and private lenders, in effect, thus placing the main burden of risk on taxpayers in the contributing countries and into the future, with the Lao people.

Due to its size, prestige and symbolic nature, NT2 neatly embodied for all representatives of the temporarily thwarted dam building industry (domestically and internationally) a significant step towards the realisation of the popular narrative created that Laos could become the “Battery of Asia” or “Kuwait of Southeast Asia”, if the slumbering nation could only maximise the development of its hydropower potential. Technically, the dam project appears to have performed reasonably, but socially and environmentally the dam has been a predictable disaster, with the impacts falling particularly heavily on the downstream riparian people living along the Xe Bang Fai river in Khammouan and Savannaket provinces.

The downstream channel constructed below the power station takes 350 m3/s of turbinated water down to the Xe Bang Fai river, adding significantly to its normal background flows and seriously impacting the aquatic ecology and river-dependent livelihoods (Source: Aurecon Group)

The downstream channel constructed below the power station takes 350 m3/s of turbinated water down to the Xe Bang Fai river, adding significantly to its normal background flows and seriously impacting the aquatic ecology and river-dependent livelihoods (Source: Aurecon Group)

A significant, but invariably overlooked, historical feature of NT2 and the manner in which funding approval was granted by the multi-lateral banks, relates to the highly politicised nature of the campaign pushing for its development,  that included being able to harness the support of national leaders at critical moments. At one point in late 2004, it seemed like commitment was wavering from several crucial parties to backing the project, including some ambivalence on the French and American sides as to whether this was a worthy project to be involved in, given the patently high social and environmental impacts that would result and rising voices of opposition. Seemingly in a carefully calculated bid to sway any doubters of the project’s strategic importance, proponents started playing the “China card”, suggesting that if the Western institutions failed to back it, then China would fill the gap in a trice and takeover the project. This scare tactic seemed to do the trick, because French President Jacques Chirac was understood to have intervened and secured European loans and grants to secure EDF’s central involvement, a fact tacitly acknowledged by the French Ambassador to Laos at the project’s powerhouse construction inauguration ceremony in November 2005. The ceremony was also attended by the Lao Prime Minister, Bounnhang Vorachit and then Thai PM, Thaksin Shinawatra, representing the country likely to benefit most from the project in terms of immediate construction contracts, subsidised imported energy and externalisation of socio-ecological costs. Building large dams in Thailand has been controversial since the early 90s, thanks to an active civil society and relatively free media.

The Nam Theun 2 Hydropower Project (NT2) in central Laos and relative position of Savannakhet, where the bulk of the project’s power leaves Laos for the Thai market (Source: Baird and Quastel, 2015)

The Nam Theun 2 Hydropower Project (NT2) in central Laos and relative position of Savannakhet, where the bulk of the project’s power leaves Laos for the Thai market (Source: Baird and Quastel, 2015)

There were strong suspicions amongst civil society observers and energy analysts that the World Bank doctored its figures and used incorrect assumptions in order to make the economic argument for the dam stack up, prior to final appraisal in March 2005. Civil society critics had always argued that there was no credible economic case for the NT2 project going ahead, above and beyond its poor social and environmental score sheet, as the amount of electricity it was supposed to produce for export could easily be covered by demand side management in the Thai energy market. At least 153 NGOs recorded their opposition to the dam project going ahead during the evaluation phase.

In 2011, the World Bank published a report entitled “Doing a Dam Better: the Lao People’s Democratic Republic and the story of Nam Theun 2”, in which it is claimed the story of NT2’s development would provide “valuable insights and lessons that can be applied in future projects of similar size, scope, and complexity”. It was also held up as “strong evidence” of the Bank’s re-engagement in and commitment to supporting the large hydropower sector, after a decade-long hiatus prior to and after the seminal World Commission on Dams (WCD) report. Thus, the NT2 project fulfilled many functions for the dam lobby, not only in terms of Laos but worldwide, as a harbinger of renewed lending for “high risk, high reward” hydraulic development projects. And sure enough, it did open up a flood of cheap finance, subsidies and externalisation of risk for the ever-thirsty industry across Asia, Africa and Latin America.  The World Bank’s storyline of success with the project has continued since, despite the many reports issued that challenge this stale narrative with compelling evidence, including those from the project’s own Panel of Experts (PoE), but also numerous civil society studies conducted.

The project is expected to generate total revenue of $1.9 billion over the course of its 25 year concession period, of which some 25 % should, in theory, make it into Lao government coffers to help fund rural poverty alleviation programmes. However, because the project’s financial arrangements are so murky, particularly on the Lao government side, there is no guarantee in place that the funds generated will be spent where they were originally intended. Due to a culture of intense secrecy and unaccountability within the heart of Lao state governance, it is uncertain to what extent dividends, taxes and royalties from NT2 have been directed towards social security, education or health programmes. Without an independent audit, suspicions remain that revenues are just co-mingled with other public resources or even mis-appropriated, calling into question any claims by the Banks of a “model project” in water or energy governance. Tellingly, a spate of subsequent hydropower projects in Laos have ignored the long list of “safeguards” touted as the new standard by the NT2 proponents and fast-tracked dam construction without even basic public consultations. In Transparency International’s 2015 Corruption Perception Index, Laos was ranked 139th out of 168 nations worldwide.

Children bathe in the dam’s 450 km2 Nakai reservoir near a resettlement village. Despite assurances by the developers to remove all vegetation prior to flooding, much of it was left and is slowly rotting in the water (Source: FIVAS)

Children bathe in the dam’s 450 km2 Nakai reservoir near a resettlement village. Despite assurances by the developers to remove all vegetation prior to flooding, much of it was left and is slowly rotting in the water (Source: FIVAS)

Meanwhile, most of the goals of the social and environmental mitigation programme remain unmet, while many of the impacts identified by critics (and some additional ones) have been borne out in practice. Resettled families have not been made demonstrably better off and many are still reliant on dwindling material handouts from the NTPC and Lao government to survive, while downstream along the Xe Bang Fai recipient river in Khammouan and Savannakhet provinces, fish populations have crashed and riverside vegetable gardens lost amongst a catalogue of impacts, impoverishing the livelihoods of the tens of thousands of people that once relied on them. Rainy season flooding has been exacerbated by the power station additional flows, further eroding the sustainability of local livelihoods through destruction of rice crops. Meanwhile natural forests have been destroyed and wildlife decimated in the “protected area” in the headwaters of the NT2 reservoir, despite the assurances of the dam proponents that the project’s development would ensure their protection.  As Professor Thayer Scudder, an eminent global expert on the social impact of dams, Commissioner for the World Commission on Dams and one of the three person Panel of Experts for the NT2 project, commented in a New York Times article in August 2014, after nearly two decades spent closely monitoring the dam’s development process, “Nam Theun 2 confirmed my longstanding suspicion that the task of building a large dam is just too complex and too damaging to priceless natural resources”.

 

Hinkley Point C – more economic madness?

Nuclear power was first developed in the United Kingdom during the 1950s and 60s with the somewhat cornucopian promise of abundant clean, cheap and reliable energy for present and future generations to benefit from. The British public generally believed the claims made by the industry and politicians, so little overt opposition to nuclear energy (unlike nuclear weapons) appeared until the first large-scale nuclear accident occurred at Three-Mile Island in 1979 followed six years later by nuclear meltdown disaster at Chernobyl. These events and various setbacks within the industry prompted a much wider debate about the technology with a resulting fall in public support. At its peak in 1997, nuclear power generated 27 % of the nation’s electricity, but this has subsequently declined to about 18.5 % (in 2012) from 15 nuclear reactors, as the original fleet of power stations has been gradually retired for decommissioning and not been replaced. Based on rhetorical concerns about future energy security and pressures to reduce national emissions of carbon dioxide, the UK government announced in 2008 that it had given the go-ahead for a new generation of nuclear power stations to be constructed, with eight potential sites announced the following year, one of which was Hinkley Point.

This move proved controversial, with many NGOs, including Greenpeace, Friends of the Earth, the Campaign for Nuclear Disarmament and the World Wildlife Fund opposing the shift back to nuclear power solutions, on the basis of uncertain cost-benefit appraisal, the opacity of the planning process and environmental concerns. By marked contrast with NT2, nuclear plants like HPC do not require the resettlement of 6,500 households nor do they have the same direct negative impacts on the livelihoods of tens or hundreds of thousands of people, so the short term social and environmental impacts could be said to be more limited and manageable. However, the long term environmental and health impacts and risks posed are less favourable, due to the problems of nuclear material transport to and from site, safe disposal of radioactive waste and plant decommissioning issues passed on to future generations to resolve.

After a long period in the consultation and planning stages, a third reactor is scheduled to be built alongside two existing plants at the Somerset coastal site, namely Hinkley Point A (Magnox reactor) and B (Advanced Gas-cooled Reactor). The landscape-dominating plants occupy a low-lying, rural spot barely above sea-level next to the Bristol Channel, famed for having the second highest tidal range in the world after the Bay of Fundy, eastern Canada. This fact is material, when considering the United Kingdom’s energy futures in an era of awareness of the need to build alternative, safe and sustainable energy sources to mitigate predicted climate change. The UK government is legally committed to a gradual decarbonisation of the nation’s energy production mix up to 2050.

A view across Bridgwater Bay to the Hinkley A and B power station site. HPC will be developed alongside, at an estimated cost of £ 18 billion (David J.H. Blake)

A view across Bridgwater Bay to the Hinkley A and B power station site. HPC will be developed alongside, at an estimated cost of £ 18 billion (David J.H. Blake)

While the original A plant closed in 1999 and is being decommissioned, Hinkley B is still operating under EDF ownership and is not expected to cease operations until at least 2023. The entire site is vulnerable to future increases in sea levels, something that was not well understood when Hinkley A and B were built, but should be a high priority for HPC planners. In 1607, a major tsunami is recorded as engulfing much of this coastline and killing an estimated 2,000 people, but neither this historical event nor future predicted sea level rises of at least two metres by the end of this century and more severe weather events precipitated by climate change seems to have dampened the appetite of the proponents to push ahead with HPC, regardless of potential risks. When I visited the site in early April 2016 at high water on a spring tide, the sea was already lapping over the first line of concrete defences around the existing reactors (see picture). I can foresee extra marine erosion and flood protection measures, adding further to the costs of the project in the foreseeable future.

The coastal perimeter of the HPC site is threatened with coastal erosion, expected to worsen in future under conditions of rising sea levels, stormier weather and an underlying soft geology (David J.H. Blake)

The coastal perimeter of the HPC site is threatened with coastal erosion, expected to worsen in future under conditions of rising sea levels, stormier weather and an underlying soft geology (David J.H. Blake)

HPC was originally proposed by the government as an ideal solution to “keeping the lights on” in a climate change challenged world, able to supply 7 % of the UK’s present energy needs at a single location, through a 3,200 MW installed capacity and reliably high plant load factor[2]. The trouble is, the European Pressurized Reactor (EPR) design EDF have proposed to use is thus far unproven technology and at the four other sites where a similar nuclear reactor type is being constructed in France, Finland and China, the projects have been dogged by unforeseen technical problems leading to steep cost and time overruns.

During a spring tide in early April 2016, the sea breached the first line of sea defences near the plant. In 1607, this coastline was struck by a major tsunami that swept many miles inland and drowned thousands (David J.H. Blake)

During a spring tide in early April 2016, the sea breached the first line of sea defences near the plant. In 1607, this coastline was struck by a major tsunami that swept many miles inland and drowned thousands (David J.H. Blake)

As a political party, the incumbent Conservatives have traditionally offered strong support for nuclear power, although up until a few years ago the leadership insisted that it should not be subsidised by the taxpayer but subject to normal market forces and open competition. However, this stance shifted under the Conservative-Liberal Democrat coalition government (2010-15), when ministers decided that the UK should pursue a nuclear-fuelled future, with the provision of state subsidies to sector investors, riling both free-marketeers and renewable energy campaigners alike. This policy position remained unchanged even after the sobering wake-up call of the potential dangers surrounding nuclear power delivered by the March 2011 Fukushima disaster. Yet the British public have proven far less averse to nuclear power than the German population, perhaps partly because the former have been fed a regular line from the government that without further nuclear development the UK may be looking at future brown-outs. Such a fear-invoking narrative was recently admitted to be a myth by the government’s own Secretary of State for Energy and Climate Change, when Amber Rudd publicly stated that the nation’s lights would not go out if it was not developed, as had been claimed by her predecessors.

Such admissions are grist to the mill for the national and local civil society opposition to Hinkley, movements like Stop Hinkley which have doggedly campaigned against the project for many years, long before HPC was proposed. Although such citizen groups are ideologically opposed to nuclear power development in principle, their economic arguments against the project have been given added weight in recent years by a number of studies by financial and economic analysts, such as Liberium Capital which described the strike price as “economically insane” and “as far as we can see this makes Hinkley Point the most expensive power station in the world.”

Despite the generous government guarantees provided by a strike price (at £92.50 per MW/h) for the electricity produced of over twice the current wholesale price for electricity in the UK, the parlous state of EDF’s finances and massive debt mountain mean that HPC is a risky proposition for the utility. Its own workers’ union opposes the project and in February 2016, Thomas Piquemal, EDF’s chief financial officer resigned, warning that building HPC could ruin the company. As a result, the French government has said it plans to provide financial support to EDF, a move that will likely fall foul of EU legislation to ensure fair competition in the energy market and disallow unfair state aid to individual companies, something that the UK government is already being challenged on in the European courts by the Austrian government. With national pride and the reputation of French nuclear technology potentially at stake (EDF is also looking to invest in China and other countries), a decision from the French government on whether to bailout EDF has been delayed time and again, and a decision is not now anticipated until at least September 2016.

One remarkable point of difference between NT2 and HPC is that with the former, China was portrayed by some as a threat to EDF and Western venture capital’s regional interests, had it been allowed to gain a stake in the dam project. With the benefit of hindsight, China was poised to build dozens of other dams in Laos, with or without EDF’s involvement. But now China is actively courted as a nuclear investment partner, both for the injection of funds it can offer, but also, potentially for its technological expertise. Indeed, the China General Nuclear Power Corporation has taken a one third stake in HPC, with the deal inked just hours before the state visit of President Xi Jinping to London in October 2015. Much to the chagrin of human rights groups, the President was afforded the red carpet treatment for his visit, with PM Cameron and Chancellor Osborne hoping HPC would be the springboard for further Chinese investment in nuclear power stations in Essex and Suffolk.

With the latest twist in the Hinkley saga looking like a legal challenge will be launched against the UK and French governments, one Southwest region Green MP referred to HPC as an uneconomic “white elephant” which is being pushed regardless, because there is “now a political battle where the stakes for both the UK and France are just too high to admit failure”.

Both NT2 and NPC would qualify as prime examples of what Danish economist Bent Flyvbjerg refers to as “Machiavellian Megaprojects”, which are shown to follow a time-honoured formula:

(underestimated costs) + (overestimated revenues) + (undervalued environmental impacts) + (overvalued economic development effects) = (project approval)

As Flyvbjerg stresses in his analysis of such megaproject development by a relatively few societal elites, the monomaniacal pursuit can frequently lead to the deception of “parliaments, the public and the media about the costs and benefits of the projects”.

It seems there is more linking the development paradigm of Savannakhet and Somerset than citizens in both the U.K and Laos may fully appreciate. There is still a glimmer of hope, however, that commonsense may prevail in London and Paris, and the HPC case of folie de grandeur may be stopped in its tracks. In the case of NT2, Laos has now been locked into a project with multiple negative social and environmental consequences, many irreversible such as permanent loss of valuable terrestrial and aquatic biodiversity, that will ultimately cost its citizens and the wider Mekong basin populations dearly into the future.

[1] Interestingly, in the address given by Pierre Lellouche, Minister of State with responsibility for Foreign Trade at the Nam Theun 2 project’s inauguration ceremony on 9 December 2010, he claimed that the site was first identified back in 1927 by an engineer, presumably of the French Indochina colonial government.

[2] The plant load factor is the ratio between the actual energy generated by the plant to the maximum possible energy that can be generated with the plant working at its rated power over the duration of a year.

Leave a Comment

Filed under ASEAN, Current Events, Energy, Environment and sustainability, FEATURES, Governance, Laos, Mekong River, SLIDER, Thailand, Uncategorized, water

An alternate past/future for Mekong River dams under the UN Watercourses Convention: Part 1

This article is the first in a three part series looking at dams in the Mekong. 

Damming the Mekong: Unprecedented threats to the river and its people

The lifeblood of the region, the Mekong River (known as the Lancang in China) and its many tributaries flow through six countries: China, Myanmar, Laos, Thailand, Cambodia and Vietnam. Its resources affect the lives of over 70 million people who rely on it daily for food and/or work, but these livelihoods are facing growing threats.1,2,3 Today, the mighty Mekong is at an unprecedented juncture in its ongoing survival, particularly from hydropower dam development.

Much of the focus of the Mekong is divided between the upper Mekong, which includes China and Myanmar, and the Lower Mekong, encompassing the remaining four states. Eleven dams are being planned or built on the Lower Mekong Basin’s mainstream with many more anticipated along its extensive tributaries.4,5 Most of these dams come with significant social and environmental impacts.

Source: WWF

Most dams trap fluvial sediment, creating erosion and reducing nutrients in the river, directly affecting agricultural production, so each additional dam means less rich soil downstream.11 Agricultural outputs from Vietnam’s Mekong Delta, particularly rice, have already been severely impacted via China’s Lancang dams scheme.12 The situation has become so critical that Vietnam recently went to the extent of asking China to discharge water from the Jinghong Dam on the Lancang in Yunnan Province to help alleviate conditions in the Delta and seems intent on requesting other upstream states to do similarly regarding river flows.13,14 Thailand’s need for water during the current drought has led it to set up temporary pumping stations to divert 47 million cubic metres of water from the Mekong, causing concern for other downstream countries.26 Additional Mekong dams, compounded by ongoing drought and rising sea levels due to climate change, will only exacerbate these issues.11,15

While some riverine communities may be displaced as their fishing or farming lifestyles become unsustainable, other communities, often indigenous peoples with a strong cultural connection to their ancestral land, are being relocated to make way for dam reservoirs.16,17

Thus, it is no wonder that disputes have emerged between various Mekong basin states as to the domestic, transboundary, environmental, and social impacts of certain dams. Part 1 of this three-part article examines the existing legal framework for regulating dam development in the Mekong and how its legal gaps and ambiguities have led to ongoing disputes, specifically regarding the Xayaburi Dam under construction in Laos.

1995 Mekong Agreement and MRC

Entering into force on 5 April 1995, the Agreement on the Cooperation for the Sustainable Development of the Mekong River (Mekong Agreement) for the Lower Mekong Basin states of Cambodia, Laos, Thailand, and Vietnam was the celebrated river basin treaty of its time and a major legal milestone.

Divided into six chapters, the Mekong Agreement’s provisions broadly set out the roles and responsibilities of riparian – being ‘of the river’ – states in governing the seasonal flows and major uses of the Lower Mekong Basin. It is accompanied by the Procedures for Notification, Prior Consultation and Agreement (PNPCA), which sets out key timeframes, standards, and processes for states regulating dam development. It contains separate procedures for projects on Mekong tributaries, plus intra-basin uses on the mainstream (proposing states are only required to notify fellow riparians of planned projects) versus inter-basin and other mainstream developments (proposing states must submit the project for prior consultation with MRC member states with the aim of reaching an agreement on any contested aspects). The PNPCA Guidelines elaborate further on implementing these processes. Both the PNPCA and Guidelines are not ‘international treaties’ in the strict legal sense as they are supplementary to, and thus sit outside of, the Mekong Agreement ratified by MRC member states.18,19

The Mekong river. Photo: Remy Kinna

The Mekong river. Photo: Remy Kinna

As Bearden (2010)18 aptly suggests, the Mekong Agreement and the MRC have successfully epitomised what a transboundary watercourse agreement and river basin commission should be in many respects, especially given the ever-changing geo-political and environmental contexts of the basin and its member states. However, twenty years later, the Mekong Agreement and PNPCA have collectively shown identifiable legal weaknesses.The Agreement also established the MRC as an inter-governmental institution with the aim to foster cooperation between basin states to effectively manage river usage. Having not yet decided to join, China and Myanmar hold official observer status as MRC ‘Dialogue Partners’.

Legal gaps and limitations for governing dams

The following critical legal gaps in the Mekong Agreement and the PNPCA have led to varying interpretations on its basic standards, timeframes, and processes for dam construction thus fostering subsequent disagreements among MRC states:

  • Lack of clear specifics for key processes under the Agreement and PNPCA’s standards, timeframes, and procedures thus leading to inconsistency in their practical application;
  • Exclusion of tributary dams from ‘prior consultation’ regulations under the PNPCA; and
  • PNPCA and Guidelines being widely perceived as not legally binding on states.2,18,19,20,21

Another significant limitation of the Mekong Agreement and the MRC is its circular mechanism for dispute resolution. As it stands, the Agreement requires states to peacefully resolve disputes or, when necessary, to refer the dispute to the MRC for further negotiation. However, the MRC refers unresolved matters back to states to use diplomatic means unless, as a last resort, they chose to invite third party involvement. Eventually, if no resolution is reached, states can essentially ‘agree to disagree’ as has occurred with the Xayaburi Dam and its PNPCA process (explored in Parts 2 and 3 of this article). Such stalemates often leave the disputing parties dissatisfied and can breed distrust for future processes.

Frustrated at the perceived inability to efficiently resolve disputes and clarify processes for dam developments, including the PNPCA, bilateral ‘Development Partners’ have considerably reduced their funding to the MRC for the 2016-2020 budget.22,23 Large-scale restructuring is scheduled and relocation of the Secretariat headquarters from Laos has even been suggested as a possibility.22,24 After years of calls for greater transparency and improved efficiency, the MRC is currently undergoing such significant changes that its ability to effectively govern the river’s resources long-term is at stake.24,25

Mekong in 2016: A basin under threat, agreement under scrutiny, institution undergoing change

As dam construction on the Mekong rapidly accelerates, states’ legal obligations under the Mekong Agreement and PNPCA, as well as the mandate of the MRC to help guide and resolve disputed procedural matters, need clarifying and strengthening to evolve and cope with these challenges.

Given the issues outlined above, Part 2 of this three-part article will next investigate the practical implementation of the Mekong Agreement and PNPCA via the Xayaburi Dam ‘prior consultation’ process, examining the specific contested procedural and legal elements. The potential benefits of the 1997 United Nations Convention on the Law of the Non-navigational Uses of International Watercourses (UNWC) – the most authoritative global treaty concerning management of international rivers – being applied to the Lower Mekong Basin are subsequently explored.

References:

  1. Vidal, J. (2015, November 26). Mekong: a river rising. The Guardian. Available from:http://www.theguardian.com/environment/ng-interactive/2015/nov/26/the-mekong-river-stories-from-the-heart-of-the-climate-crisis-interactive
  2. Hirsch, P. (1999). Nature beyond the nation state symposium: beyond the nation state – natural resource conflict and “national interest” in Mekong hydropower development. Golden Gate Law Review, 29, 399
  3. Osborne, M. (2004). River at risk: The Mekong and the water politics of China and Southeast Asia. Lowy Institute for International Policy Paper 02. Longueville Media, New South Wales, Australia
  4. Goichot, M. (2016, January 14). UN convention could help solve Mekong pact’s weaknesses. Phnom Penh Post. Available from: http://www.phnompenhpost.com/analysis-and-op-ed/un-convention-could-help-solve-mekong-pacts-weaknesses
  5. International Rivers (2015, November 15). Guest Blog – Dams: Don’t Risk What You Can’t Afford To Lose. Available from: http://www.internationalrivers.org/blogs/263/guest-blog-dams-don-t-risk-what-you-can-t-afford-to-lose
  6. Than, K. (2011). New Mekong Dam a Go, and a Blow to Megafishes? National Geographic. Available from:http://news.nationalgeographic.com/news/2011/03/110324-mekong-river-endangered-megafish-xayaburi-dam/
  7. Gaworecki, M. (2016, January 12). Scientists sound alarm over hydropower’s impacts on tropical fish biodiversity.Mongabay. Available from: http://news.mongabay.com/2016/01/scientists-sound-alarm-over-hydropowers-impacts-on-tropical-fish-biodiversity/
  8. Turton, S. (2015, October 22). Mekong dams will wipe out fisheries, study says. The Phnom Penh Post. Available from: http://www.phnompenhpost.com/national/mekong-dams-will-wipe-out-fisheries-study-says
  9. WWF (2012, August 27). Mekong dams could rob millions of their primary protein source. Available from:http://cambodia.panda.org/news_cambodia/press_releases/?uNewsID=206032
  10. Henderson, S. (2013, December 3). Mekong Dams a Long-Term Risk to Food Security. Cambodia Daily. Available from: https://www.cambodiadaily.com/archives/mekong-dams-a-long-term%E2%80%88risk-to-food-security-48415/
  11. Khadka, N.S. (2015, October 20). Climate Change: Mekong Delta heads for troubled waters. BBC News. Available from: http://www.bbc.com/news/science-environment-34407061
  12. Gillet, K. (2011, August 21). Vietnam’s rice bowl threatened by rising seas. The Guardian. Available from:http://www.theguardian.com/environment/2011/aug/21/vietnam-rice-bowl-threatened-rising-seas
  13. Tiezzi, S. (2016, March 16). Facing Mekong Drought, China to Release Water From Yunnan Dam. The Diplomat. Available from: http://thediplomat.com/2016/03/facing-mekong-drought-china-to-release-water-from-yunnan-dam/
  14. Viet, D. (2016, March 16). Vietnam takes urgent action to rescue Mekong River Delta. VietNamNet Bridge. Available from: http://english.vietnamnet.vn/fms/environment/152461/vietnam-takes-urgent-action-to-rescue-mekong-river-delta.html
  15. Choonhavan, K. (2014, April 30). Vietnam screams for halt to Mekong dams as delta salts up. The Nation. Available from: http://www.nationmultimedia.com/opinion/Vietnam-screams-for-halt-to-Mekong-dams-as-delta-s-30232520.html
  16. IRIN. (2011, July 29). LAOS: Villagers brace for relocation as dam project moves forward. IRIN. Available from:http://www.irinnews.org/report/93355/laos-villagers-brace-for-relocation-as-dam-project-moves-forward
  17. Titthara, M. (2016, January 7). Trapped between two dams. Mekong Eye. Available from:http://www.mekongeye.com/2016/01/26/trapped-between-two-dams/
  18. Bearden, B.L. (2010). The legal regime of the Mekong River: a look back and some proposals for the way ahead.Water Policy. 12, 798
  19. Rieu-Clarke, A. (2015). Notification and consultation procedures under the Mekong Agreement: insights from the Xayaburi controversy. Asian Journal of International Law. 5(1), 143
  20. IUCN. (2016). A window of opportunity for the Mekong Basin: The UN Watercourses Convention as a basis for cooperation (A legal analysis of how the UN Watercourses Convention complements the Mekong Agreement): IUCN. 27pp. Available from: http://www.3sbasin.org/publication/download-documents.html?download=99:a-window-of-opportunity-for-the-mekong-basin-the-un-watercourses-convention-as-a-basis-for-cooperation
  21. Kinna, R. (2015, November 24). UN Watercourses Convention: Can it revitalise the Mekong Agreement 20 years on?. Mekong Commons. Available from: http://www.mekongcommons.org/un-watercourses-convention-can-it-revitalise-mekong-agreement-20-years-on/
  22. Cox, J. (2016, January 13). Forecast Stormy for Mekong, Commission Says. Khmer Times. Available from:http://www.khmertimeskh.com/news/19880/forecast-stormy-for-mekong–commission-says/
  23. Turton, S. (2015, June 25). Mekong body risks losing funds: donors. The Phnom Penh Post. Available from:www.phnompenhpost.com/national/mekong-body-risks-losing-funds-donors
  24. Hunt, L. (2016). Mekong River Commission Faces Radical Change. The Diplomat. (22 January, 2016). Available at: http://thediplomat.com/2016/01/mekong-river-commission-faces-radical-change/
  25. International Rivers (2008, March 27). MRC’s crisis of legitimacy and relevancy challenges new CEO: Regional Groups. Available from: https://www.internationalrivers.org/resources/mrc-s-crisis-of-legitimacy-and-relevancy-challenges-new-ceo-regional-groups-3177
  26. Lee, G. & Scurrah, N. (2009). Power and responsibility – The Mekong River Commission and Lower Mekong mainstream dams. A joint report of the Australian Mekong Resource Centre, Sydney University and Oxfam Australia. Available from: http://sydney.edu.au/mekong/documents/power_and_responsibility_fullreport_2009.pdf
  27. Cochrane, Liam. (2016, March 17) Mekong River diverted into Thailand’s waterways, worrying drought-stricken neighbours like Vietnam ABC News. Available from: http://www.abc.net.au/news/2016-03-18/mekong-river-thailand-diverts-worries-neighbours/7256678

This article was first published here on the website of the Global Water Forum. It is reprinted with permission of the author and Global Water Forum. 

Rémy Kinna is an Australian international water law, policy and governance specialist and Principal Consultant with Transboundary Water Law (TWL) Global Consulting (www.transboundarywaterlaw.com) currently based in Phnom Penh, Cambodia. He is an Honorary Research Associate with the Institute of Marine and Environmental Law at the University of Cape Town, South Africa, and an Expert – International Water Law and Policy with the London Centre of International Law Practice’s Centre for International Water Law and Security. Rémy can be contacted via email (remy@transboundarywaterlaw) or found on TwitterAll views and errors remain those of the author and do not represent those of the states, organisations and individuals mentioned in this piece.

Leave a Comment

Filed under ASEAN, Cambodia, Current Events, Economic development, Energy, Environment and sustainability, Foreign policy, GMS, Governance, Mekong River, Regional Relations, SLIDER, Thailand, Vietnam, water

Regaining Thailand: An Inevitable Challenge for US Policymakers

This article focuses on the political situation in Thailand and the current state of U.S.-Thai relations. Due to the recent Thai military coup in 2014, the relationship between the United States and Thailand has deteriorated in various aspects to the extent that the ex-ASEAN frontrunner seems to have lost its position as a vibrant democracy and human right advocate and a relatively strong U.S. ally in the Asia-Pacific region. Although it will be an inevitable challenge for U.S. policymakers, to assist Thailand in regaining such position, it is believed that the United States must reverse its policy on the cutbacks in cooperation with Thailand and work with Thai authorities in an attempt to stabilize the political situation and consequently restore democracy to the country.

In elaboration of the above standpoint, this article is divided into three sections. The first section provides background to how the Thai military coup has come to power and of the present state of U.S.-Thai relations followed by a section which describes the significance of Thai political situation to the United States. The last section will be an illustration on a step-by-step procedure recommended to be taken by the United States in order to take Thailand back to its former self as a democratic nation and a U.S. ally.

Background Information

In May 2014, General Prayuth Chan-ocha seized power in what is now Thailand’s fifth military coup under its current monarch of King Bhumibol Adulyadej. Although coups have been frequent in Thailand’s turbulent modern history, the crucial timing and the severity of the junta’s subsequent actions suggest a subterranean ratcheting up of tensions. The backdrop of the coup was six months of street protests by “yellow shirts” which paralyzed the democratically elected government of Yingluck Shinawatra, the youngest sister of the former Prime Minister Thaksin Shinawatra.

Thaksin Shinawatra is undoubtedly considered a controversial figure in Thailand. During his administration, his populist policies worked in favor of his supporters mostly the lower-class who make up the majority of the Thai population. Despite various attempts by the elites to rid Thaksin of his influence, it was him and his allies that had always won elections on consecutive occasions over the past. Coming with the party’s gain in its popularity among the destitutes was the ascending despite from the the urban middle class, elites and especially the royalists who saw the party and its leader’s popularity and policies as cunning approaches to consolidating power. For the royalists, Thaksin’s legacy and influence was also seen as a threat to the monarchy, who has always maintained outright supremacy in modern times.

A loose group comprising royalists, ultra-nationalists and the urban middle class who disliked Thaksin is known as the People’s Alliance for Democracy (PAD) or the “yellow shirts”. It is well known for its constant rallies of political movements against Thaksin and his allies in politics including his own sister the last democratically elected prime minister Yingluck Shinawatra. They were behind the huge street protests that led up to both the 2006 military coup, which ousted Thaksin and sent him into exile overseas, as well as the recent one, which deposed his sister from the state’s premiership in similar ways. They are renowned for opposing stance against the “red shirts,” who sided with Thaksin and protested against unelected governments that toppled over him and his successors. For the “yellow shirts” and royalists, the coup was therefore seen as  a showcase of their own achievement after repeated prolonged efforts to eliminate prospects of Thaksin and his successors’ repeat victories in general elections and their returns to political power.

Upon taking power, Prayuth promised to Thai people in what described as return of “sustainable happiness” and laid a “roadmap” to returning the country the democratic ruling

whilst in reality all he and the junta has been committing seems to be of undemocratic nature and against its originally proclaimed plan. To name a few, Prayuth has suspended the democratic constitution, imposed martial law, and dialed back civil liberties such as freedom of speech and assembly. Over the past year, more than 1,000 politicians, academics, and journalists have been detained or sent to Thai military facilities for what is called “viewpoint adjustments”, while Yingluck has been put on trial for criminal negligence over alleged graft in a rice subsidy scheme. In April 2015, the junta released the first draft of its new constitution, the real aim of which was branded undemocratic in that it appeared to work against return of  electoral power once wielded by Thaksin Shinawatra to the Thai population. The draft was so unpopular and untrustworthy that it was rejected by the National Reform Council and surprisingly faced opposition from both the Phua Thai and Democrat Parties, the longstanding rivals in Thai politics. In January 2016, the second constitutional draft was launched to the public amidst fear of Meechai Ruchupuan, the official in charge of drawing it up, that it might not resolve long-running troubles and even produce weak civilian governments under the hidden influence of the military. Criticism of the new draft has demonstrated significant flaws in its content which once again bleak the potential of real democracy being returned to the nation. Notwithstanding masses of criticisms, Prime Minister Prayuth Chan-ocha remained adamant that the referendum for the draft constitution be held in mid-2017 even without solid guarantee.

As the United States’ oldest ally and a strategic hub to U.S.’ interests in the Asia-Pacific, Thailand’s regressive path cannot be ignored. Thailand is at present a military regime that lacks guarantee of when it will return to civilian rule. Further, it must be noted that elite interests are divergent from the United States’. While the United States, in collaboration with the Asia Pacific region, are expected to strive for bringing back the democratic state in Thailand, the royalists are dreading return of an electoral democracy that brought Thaksin and his successors into power over the past decade. Moreover, they become increasingly hostile with the United States’ signs of growing disapprovals and reactions shown in their curtailment of cooperation with Thai authorities. After Kristie Kenney, the US Ambassador to Thailand, criticized the coup, Thai royalists began a social media campaign calling for the ambassador to be recalled to Washington. Khunying Songsuda Yodmani, the daughter of former pro-US military dictator Thanom Kittikachorn, blasted the United States for ‘meddling’ in Thailand’s affairs and called on the U.S. State Department to “respect its allies and treat them as equals rather than its colonies.”

In the areas of defense and security, the Obama administration suspended more than $4.7 million worth of the unspent FMF and IMET assistance for Thailand. It cancelled high-level engagements, exercises, and a number of training programs with the military and police. Every year, the United States participate in the Cobra Gold, the largest Asia-Pacific military exercise held in Thailand. In the past, the exercise involved many thousands of U.S. and Thai troops and included high-end military operations. In 2015, however, the U.S. military scaled down the Cobra Gold, reducing U.S. troops to just 3,600 and cancelling a large-scale, live-fire exercise associated with amphibious landing. This is not surprising as under prohibitions in U.S. laws, American forces are limited in what exercises they are permitted to conduct with a nation that had overthrown a democratically elected government.

Nevertheless, Thailand, trying to prove its prevailing independence from Western sanctions is embarking on its journey to pursuing bilateral ties with China. To begin with, Thailand’s military junta favors China’s stance on the country’s internal situation. According to the conservative Thai newspaper Naew Na, sources in the Ministry of Defence noted that, “China regarded Thailand’s political problems as an internal issue, and that China would not interfere.” Due to the lack of ideological differences between Thailand and China’s current regimes, Thailand has been working more closely with China. On June 6, 2015, General Prayuth Chan-ocha announced that Thailand was now a “partner of China at every level.” Moreover, in January 2015, China’s Defense Minister Chang Wanquan embarked on a visit to Thailand aimed at boosting Sino-Thai defense relations. For Thailand, securing relations with China is the ruling junta’s way to show Washington that there are alternate partners who are willing to do business with, without fretting about the legitimacy of its rule.

Economically, Thailand’s ruling junta is boosting ties with China as a way to reverse its sluggish growth. In December, Thailand welcomed Chinese Premier Li Keqiang, the most prominent foreign leader to visit the country since the military seized power on May 22. It was a good opportunity for Thailand to show that Thailand’s political problems are not obstacles to trade, especially since the West has reduced trade ties with Thailand following the coup.

Why Does This Matter?

As the oldest ally to the United States in the Asia-Pacific, Thailand acts as a crucial determinant to the U.S. pivot to the Asia-Pacific region. While U.S. relations with most countries in Southeast Asia are warming, the United States’ ties with its oldest partner in the region are a critical outlier.

Although it is true that the military junta purposefully took control of Thailand, it must be understood that there is a looming royal succession coming up due to the ailing 87-year-old Thai King Bhumibol Adulyadej’s ill-health. For now, the Thai military has assumed political control to ensure it manages the royal succession, whenever that takes place. King Bhumibol guided his people through the tumult that was the second half of the 20th century until today. His death will shake Thailand like nothing has in its modern history, and the Thai military wants to be firmly in charge when that happens, and it is that simple.

In responding to Thailand’s political crisis, the United States must walk a tightrope, balancing consistency in U.S. foreign-policy tenets supporting democracy, human rights and freedom of speech with readiness to deal with deep-rooted consequences of Thailand’s political transition that may arise in the near future. It risks losing serious geopolitical ground if it fails to manage this difficult chapter in Thailand’s political evolution.

Whether or not the junta succeeds in this aim, Prayuth’s “democracy with Thai characteristics” may struggle to bridge his country’s deep political and social divides. American academic David Streckfuss has described his rule as a throwback to Thailand’s “golden age of military dictatorship” during the Cold War. Particularly, it overlooks the rising political expectations of the Thai people. “This is not the same Thailand as 1958, 1976, or 1991,” Streckfuss writes. “And neither are the Thai people the same. Democracy in Thailand may not be inevitable, but its chances are considerably higher than successfully putting the genie of political consciousness back in the bottle.” In other words, Prayuth may find the Thai people growing restless provided that not much has been done to bridge the divides. Meanwhile, the United States has an interest in seeing democracy return to Thailand as rapidly as possible. The U.S. must therefore act as a mediator ready to handle the consequences that may arise from Thailand’s political crisis.

What Should The United States Do?

For now, it is unlikely that Thailand will have real elections until the succession has taken place, which could be several years from now. Moreover, the draft constitution currently being circulated falls short of what would be considered as democratic. The presented charter contains provisions for a new senate where the junta would appoint all 250 members and leave six seats open for the heads of the armed forces. This appointed senate would also check the power of lawmakers during the five-year transitional phase, which allows the junta, and not civilians, to both determine both the senate body and the laws. Further, the new prime minister could be selected if over 250 members of parliament support the motion and if it subsequently approved by a joint session of the lower house and the appointed senate. This would allow the junta-controlled senate, and not the citizens to choose their leader, and would arguably allow junta leaders like Prayuth to prolong his premiership. In addition, the revamped constitution may allow a planned National Strategic Reform and Reconciliation Committee – nicknamed the “crisis panel” – to seize all executive and legislative power from the government and parliament in an emergency. An unelected “outsider” could become prime minister, endorsed by parliament, if a “crisis” arises, and critics fear that pro-junta outsiders will be boosted to become premier. Additionally, the Constitutional Court will continue to decide the fates of politicians who fall afoul of the charter’s laws or if a “crisis” remains unresolved. During the past decade, that Constitutional Court ruled against several elected politicians, effectively ending their careers. Essentially, this constitution will provide the junta a supreme right to prevent the sort of electoral democracy that brought Thaksin and his allies to power, contrary to popular 1997 constitution that the junta canceled after a 2006 coup.

The U.S. government must be strategic. Taking lesson from the hostilities that the Americans faced after the previous U.S. ambassador Kristie Kenney staked out hardline against the coup, Washington must urge the current ambassador to Thailand Glyn Davies to be cautious, moderate and take a more nuanced approach towards protecting U.S. interests. Meanwhile, Davies must be urged to continue negotiating with Thai authorities. His team should consult with the military and various stakeholders, in order to deepen understanding of U.S. concerns and listen to perspectives of the key players in the political drama that has engulfed the kingdom. Further, to restore democratic hopes, Davies’ team must also pressure the junta to amend the new draft through diplomatic pressures and negotiations. It must uphold the principle that the constitution follows international guidelines, respects the choice of citizens and not the military officials over their premier. At this point, there were numerous politicians and civilians who were detained over their criticisms of the new draft; the U.S. government must assert the fact that their opinions must be respected. Beyond that, it should pressure the Thai government to end the use of military tribunals to try civilians, and amend or revoke the penal code article 112 on lese-majeste and release those who are convicted under that article.

Thailand’s relations with China have long been strong and it seems that Beijing incrementally steps up its ties with the Thai military every time Washington pulls back. Washington must therefore find ways to demonstrate that it remains a friend of Thailand and not turn its back on the country when politics enters a rough patch. One idea would be to establish a private eminent persons’ group of senior former U.S. foreign-policy officials, experts and business leaders that could meet influential Thais on a regular basis to discuss the future of Thai-U.S. relations, for example, five years down the road.

In the areas of defense and security, Washington can reverse its cuts to military cooperation, but with limits. First, it can continue its full complement of joint military exercises. Second, the U.S. should prepare to hit the ground running with resumption of full military-to-military contact, to include the doubling of IMET assistance. Nonetheless, Washington should also condition that Thailand will only receive full military cooperation if it is progressing towards the democratic path and take into account the human rights of its citizens, through Ambassador Davies’ use of continued diplomatic pressure and negotiations. This way, the U.S. will be able to both improve its ties with Thailand and at the same time ensure that Thailand is walking the right way.

Bangkok hosts one of the largest U.S. embassies in the region, and this serves as the base for a raft of U.S. activities in Southeast Asia including regional headquarters for narcotics addiction, U.S. Agency for International Development, and the Federal Bureau of Investigation. If the military continues to delay elections and tighten control on civil society, it would not be safe for these institutions and operations to be solely based in Bangkok, as it would allow the junta to jeopardize U.S. interests, institutions and operations. However, rather than completely relocating these activities, which would strain U.S.-Thai relations even further, a good option will be to disperse these interests throughout Southeast Asia, which would not only protect U.S. interests, but would also allow it to better deal with Thailand. For example, the U.S. could enlarge its embassies throughout the region and establish second offices for these activities in countries such as Vietnam and Singapore, for a different set of reasons. U.S.-Vietnam relations in recent times have been improving and strategic; establishing offices in Vietnam will not only allow the U.S. to handle more closely mainland Southeast Asian issues, but will also increase its leverage over the ongoing disputes with China in the South China Sea, a sea crucial to maritime trade. As for Singapore, the island nation’s political stability, development and hub location in Southeast Asia allows it to serve as a haven for U.S. interests to be well-maintained and not be threatened.

Moreover, an important way to regain Thailand is by increasing engagement with nearby countries, which has already been happening. For example, the U.S. could work towards the development and democratization of Thailand’s neighboring countries Lao, Cambodia and Myanmar, in case it will have any spillover effects to Thailand in the future. Having recently gone through a dramatic political transition from a military dictatorship to a democratic regime, working with Myanmar will give hope. Another very important country the U.S. should work very closely with is Indonesia, a regional leader, stable democracy and home to the headquarters of ASEAN, the political and economic organization of ten Southeast Asian countries. First, more diplomatic activities in Indonesia will allow the United States increased presence over ASEAN regional institutions to influence the dynamics and affairs of Southeast Asia as a region. Second, with Indonesia on its side, the U.S. will be able to utilize Indonesia’s power in Southeast Asia to push Thailand and other countries in the region to embrace democratic transitions and human rights. It would not be a quick process, but working with neighboring countries will gradually press Thailand to democratize in the long-run.

After all it is worth noting that there exists remarkable prospect of Thai’s current political status being overlooked by the United States amidst the rising of some neighboring countries on the ASEAN political and diplomatic platform. There also arises a concern that this may steer away the United States’ attention from assisting Thailand in gaining back democracy and basic human rights. Among a few countries is Myanmar which has recently gone through a massive political upheaval from the dictatorship to democratic regime and coming with their newly-acquired democracy is evidence of China’s attempt to secure the top alliance position via its economic collaboration plan and policies with the country. Confining its attention to a small group of the Asia Pacific countries may do the United States more harms than goods. Hence it is crucial that the United States never loses sight of maintaining a good balance of power through its public relations and diplomatic exercises throughout the Asia Pacific region.

This op-ed, written by a concerned Thai citizen, is posted anonymously.

Leave a Comment

Filed under ASEAN, SLIDER, Thailand, Uncategorized

Thailand bets on China-led AIIB to finance massive infrastructure needs

Will China's AIIB-backed 'railway diplomacy' be enough to jumpstart Thailand's lagging economy?

Will China’s AIIB-backed ‘railway diplomacy’ be enough to jumpstart Thailand’s lagging economy?

On January 26, Thailand’s cabinet approved a budget of 52.82 billion baht (US$1.47 billion) to join the China-led Asian Infrastructure Investment Bank (AIIB).

Thailand will hold around a 1.43 percent share of the bank with payments beginning in five installments of 2.112 billion baht (US$58.90 million) due by the end of 2019.

“As the country [has] aggressive plans to improve its much needed infrastructures, the AIIB would offer great opportunities in terms of more loan availability” explains Nithi Kaveevivitchai, a research economist at the Bank of Ayudhya.

Thailand’s junta is attempting to revive the country’s flailing economy with an ambitious spending program of over US$100 billion that would include large-scale infrastructure upgrades for the country’s railways and roads, as well as air and seaports. Being one of the fifty-seven founding members of the AIIB, Thailand could potentially receive cheaper loan rates and more flexible lending conditions from the Beijing-based bank, compared against the US-led World Bank or the Japan-led Asian Development Bank.

The Thai government foresees it will benefit from intensified diplomatic rivalries between China and Japan. During a speech in April 2015, Thailand’s energy minister Narongchai Akrasanee, cannily asserted that “one thing we have learned is that if we welcome the Chinese, the Japanese will come running.”

Support for the AIIB in Thailand has not been unanimous, however. Kasit Piromya, a former foreign minister and current advisor to the Democratic Party of Thailand, criticized the creation of the AIIB as “part of China’s global strategy to dominate” and argued at the Asian Financial Forum that “China will be dictating terms and that will further weaken the Asean community.”

Since seizing power, Thailand’s military generals have instead sought to deepen political and economic ties to China, which is now the country’s largest trading partner. “It has been analyzed that any related projects that could benefit the supply chain network and trading routes between the ASEAN region and China would receive great attention from the AIIB,” assesses Nithi Kaveevivitchai.

The Sino-Thai railway link, which aims to transform Bangkok into the hub of China’s ambitious Pan-Asia Railway Network, appears to be a particularly likely candidate for an AIIB infrastructure loan. After months of bumpy negotiations – during which Beijing insisted on downgrading the railway from high-speed to medium-speed – the project saw a breakthrough in January 2016 when China agreed to Thailand’s demand that it slash its interest rate from 2.5% to 2%.

The Chinese government had long insisted on a 2.5% rate, arguing that Thailand was now an upper-middle income country, notes Mr. Nithi.

“Whether [the] AIIB will be used to fund this project is still too early to say… it could be seen as a good alternative for funding, especially if the development bank can offer a more competitive lending rate,” he adds.

The railway is currently facing further uncertainties due to its estimated budget of 500 billion baht (US$13.08 billion) and the Thai government is asking China to take more financial responsibility for the project.

Thai Deputy Prime Minister Somkid Jatusripitak told the Nation (Thailand) on February 5 that “Thailand was requesting that China be responsible for civil construction and related work for the 800km-plus railway track instead of just providing trains, rolling stock and related equipment, as the scheme is mutually beneficial so profits should not be the only factor for consideration.

In addition to issues of cost, critics in Thailand have asked whether the project is actually beneficial to the country, which has no mass goods in need of rail transit.

In parallel to the Sino-Thai railway link, Thai and Japanese authorities recently announced they have launched on a trial basis a train-delivery service using 12-foot long containers at Nong Pla Duk Junction in Ratchaburi province.The aim would be to eventually connect the junction to the Dawei deep-sea port in Myanmar, where Thailand has been developing a special economic zone (SEZ) with Naypyidaw since 2012. The long-delayed project was recently joined by Japan in 2015 and has the ambitious aim to become the gateway for the Mekong region to the Indian Ocean. China, however, has also expressed interest in creating a Dawei rail link, intimating a likely point of competition in the future. 

While it remains too early to be seen whether Minister Narongchai will be proven right, using the AIIB to expedite rail infrastructure loans could significantly help China  secure its fragile ascendancy over Japan in terms of ‘railway diplomacy’, as the two countries continue to compete for contracts across Southeast Asia.

6 Comments

Filed under ASEAN, China, Economic development, Regional Relations, SLIDER, Thailand

Clouds Gathering as Obama Hosts Southeast Asian Leaders at Sunnylands

ASEAN leaders gather for a family photo with U.S. President Barack Obama (5th L) after a US-ASEAN meeting at the ASEAN Summit in Kuala Lumpur, Malaysia November 21, 2015. REUTERS/Jonathan Ernst TPX IMAGES OF THE DAY

Photo courtesy aseanmp.org

On Monday and Tuesday, February 15-16, President Obama will host eight leaders and two senior alternates from the 10-country Association of Southeast Asian (ASEAN) at Sunnylands, the former estate of Walter and Leonore Annenberg in Rancho Mirage, CA.

The Sunnylands summit will be an historic development in US-ASEAN relations and a significant testament to the positive impact of the Obama administration’s Rebalance to the Asia-Pacific and its broad all-of-government reengagement with ASEAN. But amidst the bonhomie many if not most of the leaders are likely to have more questions than answers about future US initiatives towards the region.

Obama and most Presidents since Dwight Eisenhower have used the Sunnylands conference center for retreats and to host high-level foreign visitors.  Obama hosted Chinese president Xi Jinping at Sunnylands in 2013.

But even as relations with ASEAN have never been stronger, clouds are gathering over arguably the world’s most successful developing region. The most serious are blowing from China, which has followed an erratic course almost since Xi Jinping became Asia’s “man-in-a-hurry” since he took office in March 2013.

Since 2000 the ASEAN countries have averaged GDP growth of more than 5 percent, though per capita income and living standards still vary widely.   McKinsey & Company judged ASEAN collectively to rank the lowest among the world’s largest economies in GDP growth volatility from 2000-2013.

Still, economic cooperation has generally not lived up to the hopes and aspirations of most member countries.  Over nearly five decades the rhetorical bar regarding intra-ASEAN trade and investment has always been set significantly higher than actual performance.

At the time of the initiation of the ASEAN Economic Community in 2015, the ten countries were still trading much more with the rest of the world than with one other, especially if trade figures are adjusted to separate intraregional trade among Japanese and Chinese corporate shipments of parts and components for their regional supply chains.

Relations with the US have been warm throughout ASEAN’s expansion and evolution, though US preoccupation with the Middle East after 9/11 and the invasion of Iraq created significant anxiety in some capitals about the strength of American interest and staying power.   Relations have been on the upswing since the beginning of the Obama administration, though some important moves such as the Rebalance to Southeast Asia and closer engagement with Vietnam had bureaucratic if not high level political roots in the last year or so of the George W. Bush administration.

To date, nervousness about China’s increasingly assertive efforts to solidify its claim to nearly 90 percent of the South China Sea—including parts of the 200 nautical mile Exclusive Economic Zones (EEZs) of five ASEAN countries—has been the single most important reason for the positive reception in the region to the US military rebalancing to East Asia and the US’s its broader political and economic reengagement with Southeast Asia.

China’s effort to create a modern mare nostrum in the South China Sea through bullying and the deployment of overwhelming numbers of maritime police vessels, Coast Guard and PLA warships remain a continuing threat to regional peace and stability and drive other claimants closer to the US, but in recent months China’s fast slowing economy and unsettling blunders by the Central Bank have created even more imminent dangers to both to ASEAN economies  and regional stability.

The main reason has been China’s emergence little more than five years ago as the single largest market for ASEAN exports of commodities and manufactured goods. Chinese imports and fast growing American investment were twin engines of growth that supported ASEAN throughout the global recession.

Now China’s rapidly slowing growth and questions about its financial stability are imposing a serious and unexpected drag on ASEAN’s largest economies, where massive Chinese investment in mines as well as deforestation in order to create rubber and oil palm plantations and transportation infrastructure have left communities adrift in a wasteland of environmental devastation.

The falling Yuan and the Xi administration’s surprisingly clumsy handling of its financial turmoil have shaken investor confidence throughout the world.  China’s economic slowdown is likely to continue until policymakers finally make well recognized but politically difficult reforms and the economy purges itself of excess capacity and non-performing debt.  Meanwhile, the rapid fall in imports of commodities coupled with a weak and still tenuous recovery of the global economy pose a serious short and medium threat to the wellbeing of most of the ASEAN countries.

Several non-military moves of the Obama administration, including the 2009 Lower Mekong Initiative (LMI) and the Trans-Pacific Partnership (TPP), have been strongly welcomed by the relevant countries—Cambodia, Laos, Myanmar, Thailand and Vietnam in the case of the LMI and Brunei, Singapore, Malaysia, and Vietnam in the case of the TPP talks. But Thailand and one or more other countries have reason for concern that their own exports and attractiveness to multi-national investors will suffer as a consequence.

How Washington responds to the situation in the South China Sea and its overall policy towards Beijing are certain to be high on the list of talking points for the ASEAN leaders, as will a range of multilateral and bilateral development and capacity building programs under the framework of the new US-ASEAN Strategic Partnership and the LMI.

Equally if not more important will be the TPP agreement and its uncertain fate in Congress. If approved by Congress, the far-reaching agreement  will almost certainly have significant economic, financial and even domestic political impacts on both the four ASEAN signatories, as well as the six who are not. Non-signatory ASEAN countries as well as China will be disadvantaged by restrictions on third party content.  The most likely short-term disadvantage will fall on Thailand, the largest ASEAN economy after Indonesia, because of its deep integration in regional supply chains and geographic centrality astride major regional transportation networks.

In addition TPP discussions and the South China Sea tensions, concern that ISIS is establishing a foothold in the region and the best means to counter its recruitment efforts and the establishment of terrorist cells will be high on the Sunnylands agenda.  Economic and security concerns, particularly those where the root cause emanates from China, continue to drive several ASEAN states closer to the US, openly in the case of Vietnam and the Philippines and quietly in the case of Malaysia and Indonesia. It is unsurprising that these issues will drive the conversation at Sunnylands. The Obama administration and ASEAN would also be wise to begin give equal weight to conversations on climate change resilience and energy governance, two areas which ASEAN countries are lagging but are beginning to articulate the need for external partnerships.

 

2 Comments

Filed under ASEAN, China, Current Events, SLIDER, South China Seas, USA

Laos’s leadership transition raises questions over regional alliances

7109856-3x2-340x227

Bounnhang will be the leader of Laos’ ruling Lao People’s Revolutionary Party.

Laos’ Communist Party elected vice-president Bounnhang Vorachit to be its next leader last week, after a vote by the newly formed 10th Party Central Committee.

State media announced on Friday that the congress of the Lao People’s Revolutionary Party, which is held every five years, had selected a new central committee and politburo to lead the country. The 78-year-old Bounnhang is replacing Choummaly Sayasone, 79, as secretary-general and president, who is stepping down after almost a decade in power.

Some observers believe that the change in leadership signifies a tilt away from China and closer to longtime ally Vietnam, as Laos takes on the chairmanship of the Association of Southeast Asian Nations (ASEAN) regional bloc.

The secretive nature of Lao People’s Revolutionary Party, which has ruled the country since 1975, makes its internal politics difficult to understand, but the changes in the politburo offer some indications of a slight shift in the ruling elite.

The choice of Bounnhang, a senior figure of the regime who was a prominent member of the Pathet Lao armed independence movement and has previously acted as prime minister, is an unsurprising one for the single-party state.

However, few expected the departure from the party of Prime Minister Thongsing Thammavong, 71, who had been in the politburo since 1991. Speculation in Laos is rife that his exit from power is linked to the recent arrests for corruption of Central Bank Governor Somphao Sayasith and former Finance Minister Phouphet Khamphounvong.

The 70-year-old Deputy Prime Minister Somsavat Lengsavad was also reported as not having sought re-election to the central committee, where he had been been a politburo member since 2006. Though less highly ranked in the cabinet, he was notable for being the principal pro-Beijing voice within the government.

A fluent Mandarin speaker, Somsavat has shepherded many joint ventures with China and is currently overseeing the controversial Laos-China high-speed rail project, whose ground-breaking ceremony took place in early December 2015.

The 427 km railway would connect the Lao capital to the Chinese border and is expected to cost  US$6.04 billion. A Radio Free Asia (RFA) report from January 4 mentions some government officials as criticizing Somsavat for having accepted a deal unfavorable to Laos, noting that it was not the first “high-cost investment where he gave too much away as collateral for project loans with little or no payoffs for ordinary Lao citizens.

The railroad has been mired in controversy ever since it was announced in 2010. The project was alleged to have created tensions between Laos and Vietnam, whose “own relations with China were then at a standstill,” explains Ian Baird, a Laos expert and a professor at the University of Wisconsin-Madison.

Bouasone Bouphavanh, the then-prime minister, is believed to have been removed from power and replaced by Thongsing in 2010, due to perceptions that he was favoring Beijing over Hanoi. Soon after, plans were started for a Laos-Vietnam railway, but never formalized.

In recent years, Beijing has vied aggressively for influence in Laos through aid, loans and infrastructure investment.

“China is using its economic interests to get political power” says Baird. “Politically, though, Laos remains much closer to Vietnam. Most of the country’s leaders studied or trained in Vietnam, including Bounnhang. They were already in governmental positions in the 1980s when there were strong enmities between Laos and China, who were then almost at war, with no trade or real relations.”

“What the Lao are doing now is trying to balance between the Vietnamese and Chinese. They want political support from Vietnam and financial support from China…The United States is also getting closer to Laos, but has relatively low investments in the country.”

“Ultimately”, Baird concludes, “I believe that Vietnam has more power than China in Laos.

Such diplomatic balancing was already visible this week. The Associated Press reported on Monday that Thongsing had assured US. Secretary of State John Kerry that “Laos would help counter China’s assertiveness in the South China Sea.

Xinhua, meanwhile, detailed a meeting on Tuesday between Bounnhang and Song Tao, a special envoy mandated by Xi Jinping, where the former announced “he was ready to join hands with China to further develop the relations between the two parties and two countries.” Unmentioned publicly by either government was the death of two Chinese nationals in a suspected bomb attack on Sunday in central Laos, though it remains unknown whether they were individually targeted.

As this year’s ASEAN chairman and co-convenor of the upcoming Sunnylands Summit, it is likely that Laos will be trying to strengthen its own position in the regional balance, particularly in light of mounting tensions in the South China Sea.

1 Comment

Filed under ASEAN, China, Laos, Regional Relations, SLIDER, USA, Vietnam

What’s Old is New Again: Predictions for Southeast Asia 2016

Will there be more skirmishes in the South China Sea in 2016? Photo: Getty Images

Will there be more skirmishes in the South China Sea in 2016? Photo: Getty Images

Much can change in a year’s time. In January 2015, Singapore’s Lee Kuan Yew was still alive, Aung San Suu Kyi’s future as leader of Myanmar was quite uncertain and East by Southeast was not making any predictions about international affairs in Southeast Asia. But again, much can change in a year’s time.

2016 will be a critical period for geopolitics in the region, as new strategic relationships are formed and existing ones strengthened. Many experts talk of a growing polarization of the region as countries position themselves between the US and China, a trend due in large part to rising tensions in the South China Sea. The conflict will take center stage in 2016. Look for the the Netherlands-based Permanent Court of Arbitration to publish its initial findings on the Philippines’ case against China in the first half of 2016. Despite not ruling on sovereignty issues, the outcome of this case will likely anger China and lead to a more aggressive stance towards the Philippines and other claimants. As the Philippines and Vietnam rely more heavily on the US for security guarantees in the South China Sea, more US flyovers and naval patrols in the contested waters are to be expected. Look for the US Navy to begin to use Vietnam’s Cam Ranh Bay for “maintenance” purposes and to park its ships on a somewhat permanent basis  in the Philippines’ Subic Bay after joint military exercises finish in April 2016.

Conversely, look for the emerging Sino-Thai regional axis to be solidified in 2016. This relationship, despite not bringing much to the languishing Thai economy, will tighten the ruling junta’s grip on power. Thailand’s long drift towards authoritarianism will add further strains on ties with the US, its long-term external security power. Of course, the permanent white elephant in the room in Thailand is the king’s health. With his majesty in poor health, lese majeste cases will continue to multiply as the junta’s concern grows.  His death and the subsequent succession struggle would likely send the country into chaos, even with the army in control. Such a collapse of the Thai political structure would have major repercussions for the region’s stability.

Laos is also in for a tough year ahead. Its chairing of ASEAN will do more to highlight its shortcomings than celebrate its successes. With the opening of Xayaburi Dam, Don Sahong Dam scheduled to break ground in 2016 and preliminary studies beginning on a third Mekong dam at Pak Beng, there will be renewed calls from the international community for Laos to reconsider its hydropower plans for the Mekong River. The landlocked country’s lack of finesse in dealing with the South China Sea conflict will also draw criticism, all punctuated by continuing questions about the kidnapping of Lao activist Sombath Somphone.

In Cambodia, the political impasse between the ruling Cambodia People’s Party and the Cambodia National Rescue Party will continue through the first half of 2016. Expect strongman Hun Sen to find an 11th hour solution paving the way for opposition leader Sam Rainsy to return from self-imposed exile to begin preparing for the 2017 parliamentary elections.

Barring another major fracture in Thai politics, Vietnam’s National Party Congress will mark the region’s most significant political transition in 2016. Nguyen Tan Dung is likely to be selected as Vietnamese Communist Party chairman, with Truong Tan Sang staying on as president or similar role to balance Dung’s reformist tendencies. Dung’s leadership will be key as Vietnam implements the Trans-Pacific Partnership, a painful process that will force Vietnam to learn to run and walk at the same time. Dung’s princeling son, Nguyen Thanh Nhgi, will also be elevated to the Central Committee and has a bright path ahead if his father can lead the country into a new era of high economic growth and balanced relations between the US, China and Russia.

Corruption scandals will continue to keep a stranglehold on Indonesian and Malaysian politics. In Indonesia, President Joko Widodo’s efforts to prop up a sagging economy will be hampered by an unstable cabinet and nagging questions relating to 2015’s Freeport corruption scandal. In Malaysia, Prime Minister Najib Razak will continue to face intense public scrutiny over the 1MDB scandal. It is possible that Najib will use a new national security law to muffle Malaysian civil society’s calls for his resignation.

After refreshingly open elections in 2015, 2016 will be a year of political posturing for Myanmar. As Aung San Suu Kyi and her victorious National League for Democracy take power in early 2016, the military will position itself to retain many of its past privileges. Look for Than Shwe and the other generals to create a formal post in the government for Aung San Suu Kyi, who is legally barred from the presidency, in a bid to define and contain her power as head of the NLD. Those expecting radical change from the NLD government will be disappointed – there will be little structural political reform, the NLD’s foreign policy will be largely similar to Thein Sein’s, and the ethnic reconciliation process will still muddle along. However, look for the new ruling party to permanently shut down the Myitsone hydropower project and consider suspending the Salween river’s cascade of dams in order to push along the ethnic peace process.

Like 2015, this year will see a further intensification of the Rohingya refugee crisis. However, with the world’s eyes adjusted to seeing the plight of refugees, there will be more attention paid to the issue and Aung San Suu Kyi will receive pressure from both Western and Muslim-majority countries to solve the problem of Rohingya persecution in Myanmar. Another ethnic group that came to the forefront last year, China’s Uighur population will also stay in the news in 2016. Increased crackdowns in their home Xinjiang province will force more refugees into Southeast Asia, and lead to a handful of Uighur-related terrorist attacks, both foiled and executed, in Thailand and Indonesia.

The regional economy will see decreased growth in 2016 as a result of slowing growth and structural issues in the Chinese economy. Chinese money will still flow south as the One Belt One Road strategy is rolled out and the Asian Infrastructure Investment Bank officially opens for business. Contrary to some expectations, the AIIB’s first loan recipient will not be Myanmar, but either Laos or Cambodia.

On the other side of the coin, the US-led Trans-Pacific Partnership will begin the ratification process in a number of regional countries this year. Our bets on order of approval are Singapore first, followed by Brunei, Malaysia and Vietnam. Indonesia will likely commit to the TPP by the end of the year while Thailand’s economic struggles under the military junta will push it closer to joining. Much of the US-ASEAN Sunnylands conference in February will be centered on TPP ratification, along with South China Sea issues and counter-terrorism cooperation, and will serve to solidify relations between the US and the bloc. ASEAN leaders will be looking for assurances of American commitment to the region during the next administration and they will likely receive them. Of course the future of the TPP and the US Rebalance to Asia lies in the fate of the US Presidential elections and our prediction is that America’s first woman president will keep the Rebalance at the forefront of her foreign policy – after all it was her idea.

Last but not least, the Asian Economic Community will be the same on January 1, 2017 as it was at the head of this year – a half-baked dream with little hope of success.

To all of the East by Southeast readers and their families, we wish a you happy new year and much joy and success in 2016!

3 Comments

Filed under ASEAN, Brunei, Cambodia, China, Economic development, Foreign policy, Indonesia, Laos, Malaysia, Mekong River, Myanmar/Burma, Philippines, Regional Relations, SLIDER, South China Seas, Thailand, USA, Vietnam