Washington Needs a New Approach to the Lower Mekong—“the Next South China Sea”

President Barack Obama’s administration has touted the Lower Mekong Initiative (LMI) as a hallmark of growing U.S. engagement with ASEAN, particularly mainland Southeast Asia. For the past five years, government agencies, led by the U.S. Agency for International Development (USAID), have made inroads toward developing the LMI as the centerpiece of U.S. engagement along the Mekong River. Yet efforts on this front, along with broader U.S. economic and strategic interests in the region, could be undermined if Washington and its partners stand by while environmentally destructive dams are constructed on the mainstream of the Mekong, especially by Laos.

Secretary of State John Kerry, during last July’s LMI Ministerial Meeting and again during a December trip to Vietnam, emphasized that decisions related to dam building in the region “have to be made carefully, deliberately, and transparently.” Then-secretary of state Hillary Clinton had obtained assurances from Laos in 2012 that it would suspend work on the controversial Thai-financed Xayaburi Dam until a more comprehensive environmental assessment could be completed. Yet as the United States continues to support capacity building, healthcare, education, and connectivity in the Lower Mekong region, its calls for transparency and sustainable development have been largely ignored by the Lao government.

U.S. strategic interests in mainland Southeast Asia depend in large part on the autonomy, stability, and prosperity of countries along the Lower Mekong, home to approximately 240 million people. A stronger Lower Mekong region is critical for narrowing development gaps within ASEAN, and a strong and integrated ASEAN is necessary for the consolidation of U.S. staying power in Southeast Asia.

At the core of the controversy surrounding dams on the Mekong River is China’s role in supporting and financing the construction of dams in Cambodia and Laos. China plans to build a total of 19 large dams on the Mekong. Five are already operational in China’s Yunnan province. Nine of the planned dams will be built in Laos and two in Cambodia. The dams’ environmental effects, including damage to fish production and increased risk of natural calamities, will be felt most strongly along the Lower Mekong—in Cambodia, Vietnam, and, to a lesser extent, Laos.

Seventy million people depend on the Mekong for their livelihoods, and two of the world’s largest rice exporters, Thailand and Vietnam, are located in the Lower Mekong region. The Lower Mekong basin is one of the world’s largest inland fisheries. Future environmental degradation could devastate local and national economies, severely weakening an important part of Southeast Asia that, with the exception of Thailand, has only just begun to enjoy the fruits of stability and prosperity.

Cambodia, Laos, Thailand, and Vietnam in 1995 signed a treaty that requires the four countries to hold intergovernmental consultations before building dams on the mainstream of the Mekong. The Lao government, however, is intent on becoming the “battery of Southeast Asia” and, with financial backing from China and Thailand, has repeatedly reneged on this pledge. The massive Xayaburi Dam is about 30 percent completed, and Laos plans to launch construction on a second dam, the Don Sahong, on the mainstream of the Mekong later this year. Most of the electricity from both dams will be exported to Thailand.

The failure of regional leaders at an April 4 Mekong River Commission summit to convince Laos to take its neighbors’ long-term interests into account signals that it is time for the United States and its regional partners to adopt a different strategic approach to the Lower Mekong.

U.S. initiatives to help improve infrastructure, health, and education have not translated into substantial influence in Laos. Neither have efforts to assist with the trade reforms that allowed Laos to join the World Trade Organization last year. As is increasingly common, China’s no-strings-attached aid and loans have reduced Laos’s incentives to heed U.S. and regional calls for cooperation and transparency.

China’s record elsewhere indicates that if left to its own devices, it will pursue more aggressive tactics to expand its political influence in the Lower Mekong and propagate patterns of disregard for international rules and norms. For this reason, some diplomats and officials in the region have quietly begun to describe the Mekong River as “the next South China Sea,” which is fraught with tensions and risks because of competing and overlapping claims between China and four Southeast Asian countries. In the long run, greater economic interdependence between China, Cambodia, Laos, Myanmar, and, to some extent, Thailand could result in even more leeway for Beijing to exercise its will along the Mekong.

There are two important steps the United States should take to address these issues. First, Washington needs to refocus its policy toward Laos. Vientiane’s determination to build a series of large dams on the Mekong is based primarily on its need to generate income through the sale of hydropower; Laos’s gross domestic product is a mere $5 billion. Japan, which has been pursuing its own engagement efforts along the Mekong, has grasped this economic rationale better than the United States has.

Japan’s efforts to boost the Lao economy through investment and regional connectivity on top of its assistance programs for the Lower Mekong in general, from which Laos also benefits, are steps in the right direction and could be examples for Washington. The United States and Japan should consider joining hands in reinforcing each other’s policies toward the Lower Mekong region. With the right incentives, Lao authorities could be convinced to pursue more sustainable and constructive development strategies.

Second, the United States needs to start a serious dialogue with Thailand and Vietnam about what course development in the region and along the Mekong should take. Both rely on the Mekong, yet both (especially Thailand) continue to finance and construct dams along its mainstream and tributaries.

Vietnam has always been vocal about the dangers of recklessly exploiting the Mekong River. Its rice basket, the Mekong Delta, could be wiped out in the coming decades by the combined effects of rising sea levels and upstream damming. But it cannot name and shame its neighbors while seeking to benefit from dams itself. The United States, through USAID and its private sector, has been working with the Vietnamese government to help develop renewable energy capacity and reduce the effects of rising sea levels in the Mekong Delta. But these efforts and resources will come to naught if problems upstream are not addressed properly.

In Thailand, civil society organizations have long raised concerns about the need to protect the Mekong River, but energy needs have prompted the government and private companies to finance dams in and purchase hydropower from its neighbors. Ensuring its energy security and developing a more integrated regional energy market will be critical for Thailand in the years to come, and the United States should seek to help with these efforts.

The U.S. and Thai governments should work with their private sectors to promote energy sustainability in Thailand and throughout the Lower Mekong region. General Electric’s success in building a wind farm in the Mekong Delta, with support from the U.S. Export-Import Bank, proves that both Washington and its regional partners have much to gain from working together on this issue.

The LMI added an important pillar to U.S. engagement in Southeast Asia and is proof that the rebalance includes economic and soft-power components. However, transforming the LMI into real, sustained U.S. influence will require looking deeper into the heartland of mainland Southeast Asia, especially in increasingly strategic Laos.

(This Commentary originally appeared in the April 17, 2014, issue of Southeast Asia from Scott Circle.)
Phuong Nguyen is a research associate with the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies in Washington, D.C.

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Phuong Nguyen