Source: Diplopma
By Luke Hunt
March 17, 2011

A huge row is brewing in Laos, something that shouldn’t come as a surprise to anyone who has followed the merciless damming of the Mekong River over the past decade.

Vientiane, with the support of Bangkok, has announced it will construct a $3.5 billion dam at Xayaburi in a 1,260 MW hydropower project to be built by Thai construction company CH Karnchang. Thailand will buy 95 percent of the power produced by the project.

As a result, tensions between Laos and Vietnam – normally the closest of regional neighbours – are growing. Hanoi sees its farmers and fishermen in the lower Mekong Delta region as being directly affected by the project. The Cambodians are also unimpressed, environmentalists want the dam scrapped and Australia is being asked to take sides. Even the United States has chipped in with its thoughts.

The Mekong spans six countries with about 60 million people dependent upon the river for their livelihoods in Burma, Thailand, Laos and Cambodia. Their needs and environmental warnings have gone largely unheeded as dam construction along the Mekong shifts into high gear.

Since the Manwan Dam in China became the first in operation, in 1993, dozens of dams have been built or are planned for the Mekong River system, mainly in China and along tributaries in Vietnam. The Xayaburi Dam is the first of another 11 proposed hydropower developments on the lower Mekong River.

The World Wildlife Fund and International Rivers want the Xayaburi scrapped, calling it an environmental disaster that will alter the river’s patterns and impact fish catches.

Chinese dams have been blamed for droughts along the Mekong in recent years, with water shortages causing conflict within farming communities, particularly in Thailand, Cambodia, Laos and Vietnam.

Australia – a chief financial supporter of the Mekong River Commission (MRC) - has backed concerns by Vietnam and Cambodia over the project. Environmental groups are pressing Foreign Minister Kevin Rudd to pressure the MRC into declaring a suspensionon hydropower along the river.

The United States has also entered the fray, calling for a deferral of 10 years on any developments to allow for environmental impact studies to be undertaken.

Yet despite the political pressure from its neighbours, Washington and Canberra, Laos is unlikely to change its tune. There’s too much money at stake in a country that rates among the bottom of the heap on global poverty lists.

The deal was signed off in 2007 and the Laos government argues all the correct boxes regarding legal and environmental issues have been ticked. Thai banks and corporations, meanwhile, are stumping up the money and Vientiane won’t hesitate in trotting out the line popular among members of the Association of Southeast Asian Nations: At the end of the day, it’s simply none of their business.