Will Myanmar’s new govt scrap Myitsone project?

Myanmar’s geographic proximity to China and its extreme dependence on it may force the new government to take a cautious and pragmatic approach on the hydro-power project which was halted in 2011 following massive protests. China too may exercise caution as the NLD government is likely to have a pro-West tilt

As the National League for Democracy (NLD) prepares to take over the reins of government in Myanmar, uncertainty is mounting over the fate of several China-backed infrastructure projects there.

Myanmar activists rally against the Myitsone dam

Myanmar activists rally against the Myitsone dam project in 2011

Foremost among these is the $3.6 billion Myitsone hydro-power project in Myanmar’s Kachin province. In September 2011, the quasi-military government of President Thein Sein suspended the project following massive protests by Kachin activists.

The incoming NLD government will have to decide on the project’s fate.

There is little clarity on the NLD’s foreign policy. The party and its leaders were reluctant in throwing light on this during the campaign for the November 2015 general elections.

Some have drawn attention to NLD leader Suu Kyi’s proximity to western governments to argue that the NLD government will tilt towards the West and that an early fallout of this would be a decision canceling the Myitsone project.

The decision on the Myitsone project will not be easy. Myanmar’s geographic proximity to China, its extreme dependence on it as well as the potential ‘spoiler’ role that China could adopt in fueling ethnic conflagrations in conflicts along their shared border are likely to make the Myanmar government cautious and avoid drawing Beijing’s ire beyond a point.

Besides, a blanket canceling of the project would raise the hackles of the Myanmar military. Several military officials are believed to have struck deals with the Chinese in this project. The NLD will prefer avoiding their wrath as a delicate political transition lies ahead.

On the other hand, the NLD government will have to respond to public sentiment on the ground. China’s domination of their economy is deeply resented in Myanmar and the Myitsone project epitomizes everything that was wrong with the Sino-Myanmar relationship that blossomed following international isolation in the 1990s.

Over the decades, it resulted in China emerging as Myanmar’s top investor, second largest trade partner and top military supplier. The partnership brought little benefit to the Myanmar masses, however. The Myitsone project deal, for instance, envisages supply of 90% of the power generated to China. However, it is the local population that will have to bear the economic and social costs of the project, including displacement, damage to environment and ecology.

Should the NLD government give the green signal to this iniquitous deal, it will be giving its seal of approval to the asymmetric, extractive and exploitative nature of Sino-Myanmar deals and the larger bilateral relationship as well.

What position is Suu Kyi likely to take on the controversial power project?

Suu Kyi has shown herself to be a pragmatic politician. She may feel closer to the West but she is unlikely to halt projects simply because they are Chinese. As head of a parliamentary panel probing the $1 billion Leptadaung copper mine project in 2013, she recommended its reinstating, despite local opposition to it on the ground that shutting it down would turn away foreign investors.

“We have to get along with [China] whether we like it or not,” she told villagers opposed to the project.

A similar cautious approach is likely to guide her decision on the Myitsone project. She will take the middle path.

While avoiding canceling the project, the NLD government will seek re-negotiation of the contract details in a way that it is less unfavorable to Myanmar.

Last week, U Hantha Myint, the head of the NLD’s economics committee, told Agence France Presse that the NLD is considering a redesign of the project. Its proximity to an earthquake fault line is among the issues that would be addressed to reduce risk. Instead of building a dam at Myitsone, “we can build other dams upstream,” he said.

Of course, the NLD government could postpone a decision on the project’s fate. But it cannot put this off indefinitely as the interest on the disbursed capital is growing. If reviving the project on terms that are more favorable to Myanmar is not possible, the NLD government would do well to not defer the decision endlessly as the costs of cancellation are mounting.

However, given Myanmar’s importance to China’s economic and geo-strategic interests and the fact that unlike in the past 25 years when the junta had few options, the NLD government does not lack for economic suitors overseas, China will move cautiously on the Myitsone project.

With regard to the Kyaukphyu Special Economic Zone project, for instance, it is working to reduce public opposition to the project. Locals are being provided with training to make them employable on the project.

The question is whether such small steps like skill training to locals will be enough to calm the tidal wave of Myanmarese anger with China’s exploitation of their country.

Dr. Sudha Ramachandran is an independent journalist/researcher based in Bangalore, India who writes on South Asian political and security issues. She can be reached at sudha.ramachandran@live.in

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