Chinese Official Threatens Myanmar

Originally appeared in Wall Street Journal

October 4, 2011

BEIJING—The head of a major Chinese company behind a controversial dam in Myanmar said the project’s suspension by the Myanmar government last week was a surprise that “will lead to a series of legal issues,” in the latest sign of frayed relations between the two countries.

China Power Investment Corp. President Lu Qizhou, in an interview with the state-run Xinhua news agency on Monday, said he learned of the suspension of construction of the $3.6 billion Myitsone dam project “through the media and I was totally astonished.”

The comments suggest the dispute could linger even as China seeks more projects in Myanmar, an ally with strategic importance to Beijing. It isn’t clear how the company might press legal claims, however, given the limited nature of the legal systems in both countries.

Officials of the two governments couldn’t be reached to comment.

On Sunday, a spokesman for China’s foreign ministry said Myanmar’s government should protect the rights of Chinese companies there, highlighting the political nature of such a project.

The dam, affecting the Irrawaddy River in Myanmar’s north, would have flooded an area roughly the size of Singapore.

The project has been unpopular in Myanmar. In communities in Myanmar’s Kachin state, guerrilla groups have clashed recently with the country’s armed forces, and the Myitsone dam was viewed by local residents as a way for the government to resettle ethnic groups.

President Thein Sein on Friday said construction should be suspended, saying the project was against the will of the people—a decision that came as a surprise to many observers, given its potential to anger China, the politically isolated Myanmar government’s most important strategic ally.

China needs the alliance in part because of Myanmar’s geographic closeness with regional rival India and for its access to the Bay of Bengal. China and Myanmar are building an oil and gas pipeline through Myanmar and into southwest China, in an effort by Chinese officials to diversify fuel sources.

The episode suggests Myanmar may be willingness to move out of China’s shadow as it seeks greater favor among Western governments.

A new Myanmar government was put in power last year, in the nation’s first multiparty election in two decades, though foreign governments widely considered the vote to be a fraud. Myanmar has been trying to convince foreign leaders it is on a path of democratic reform.

Large infrastructure projects are a common way Beijing looks to win diplomatic favor in the developing world, and its companies are building hydroelectric dams in Southeast Asia, Africa, and elsewhere.

In the interview, Mr. Lu defended hydroelectric power, going as far as to mention the Hoover Dam powering the city of Las Vegas as an example of the power source’s success.

Separately Monday, state-run China National Petroleum Corp. donated $1.32 million to build schools in regions along its oil and gas pipelines to China, according to Xinhua.

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