The Lower Mekong Initiative & U.S.

Foreign Policy in
Southeast Asia: Energy, Environment & Power

January 24, 2013

By Felix K. Chang

Felix K. Chang, a senior fellow of the Foreign Policy Research Institute, is a co-founder of
Avenir Bold, a venture consultancy. He was previously a consultant in Booz Allen
Hamilton's Strategy and Organization practice; among his clients were the U.S. Department
of Energy, U.S. Department of Homeland Security, U.S. Department of the Treasury, and
other agencies. Earlier, he served as a senior planner and an intelligence officer in the U.S.
Department of Defense.

Abstract: Begun in 2009, the Lower Mekong Initiative (LMI) is now America’s foremost
engagement vehicle on the Indochina peninsula of Southeast Asia. From the outset, its most
concrete aim was to facilitate an integrated water management scheme for the lower Mekong River,
where plans to harness the river’s hydroelectric potential as a catalyst for economic development have
clashed with more traditional uses of the river. But more broadly, the LMI also serves a larger
American goal: to encourage regional cohesion and thereby slow the spread of Chinese influence.
Whether the LMI achieves these aims largely depends on how successful its member countries—
including the United States and all of Southeast Asia’s riparian countries—are in putting to rest
the differences over how best to balance the various uses of the Mekong River.

F rom its headwaters on the Tibetan Plateau, where the Chinese call it Lancang
Jiang, to the coast of Vietnam, the Mekong is one of the world’s longest
rivers. Millions of people live along the banks of it and its many tributaries,
which reach across much of Southeast Asia. Over the eons, the river has served
many human uses; but in the twentieth century, it came to be seen as a means of
hydroelectric power generation that could fuel economic development. After the
Cold War ended, many of the Mekong River’s riparian countries made economic
growth their main priority. But that priority has brought about mounting pressure
to develop fully the river’s hydroelectric potential.

© 2013 Published for the Foreign Policy Research Institute by Elsevier Ltd.

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Mekong River’s Hydroelectric Potential

Hydroelectric power generation is a well-understood process: moving or

falling water turns turbines, which then turn generators that produce electricity. It is
efficient, produces no carbon emissions, and easily overcomes the obstacle of
energy storage—which prevents primary reliance on solar and wind-power
technologies—by impounding water in reservoirs behind hydroelectric dams. And,

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when managed well, it can regulate a river’s water flow to reduce downstream
flooding or drought. Even so, the process has drawbacks. Dams can disrupt
fisheries and transportation as well as hinder the natural deposit of nutrient-rich
sediments on downstream flood plains. Dams can also worsen floods or droughts,
if they are managed poorly or with insufficient foresight. Such challenges are
certainly not unique to the Mekong River, but the bigger and more numerous dams
are on a river, the greater the cumulative challenges become.
Although most of the countries through which the Mekong River flows
would like to realize some of its hydroelectric potential and have built dams on its
tributaries, so far only China has built mainstream dams on the river. China’s steady
economic growth since the early 1980s unleashed an enormous demand for
electricity. As a result, the country has sought to generate hydroelectric power from
as many of its rivers as possible. China’s dam building on the Lancang Jiang is no
different. Four mainstream dams are already in operation; the largest one at
Xiaowan was completed in 2010. An even bigger dam at Nuozhadu started trial
operations two years later and is slated for completion in 2017. If the long-standing
plans for three more dams at Gongguoqiao, Ganlanba, and Mengson are brought to
fruition, China’s mainstream dams on the Lancang Jiang will collectively produce
almost 74,000 GWh of electricity every year, roughly the total electricity
consumption of Vietnam in 2008.1 (See Table 1.)
Once the reservoirs of the Xiaowan and Nuozhadu dams are filled and
become fully operational, China will be able to fully regulate the upper Mekong
River’s water flow. Yet China has pursued its dam building program without the
consultation of its downstream neighbors. Unsurprisingly, that has troubled many
Southeast Asian countries. But China’s intention to build more dams, its lack of
transparency regarding how it manages its current dams, and its seeming
indifference to the retreat of the Tibetan glaciers whose annual runoff feed the
Mekong River’s headwaters concern them even more. They worry about not only
the environmental consequences, but also how those could bring about regional
tensions if they cause the economic and social conditions of communities along the
river’s banks to worsen.2

1 Li Yingqing and Guo Anfei, “Nuozhadu hydro plant starts trial operations,” China Daily, Sept. 6,
2012, http://www.chinadaily.com.cn/business/2012-09/06/content_15739771.htm; “China becomes
hydro superpower,” Xinhua, Aug. 26, 2010; Evelyn Goh, “China in the Mekong River Basin: The
Regional Security Implications of Resource Development on the Lancang Jiang,” Institute of Defence
and Strategic Studies working paper, July 2004, pp. 2-7; Thi Dieue Nguyen, The Mekong River and the
Struggle for Indochina (Westport: Prager, 1999).
2 Parameswaran Ponnudurai, “Water Wars Feared Over Mekong – Analysis,” Radio Free Asia, Oct. 1,

2012; Allison Cameron and Luo Wei, “An Environmental Impact Assessment for Hydropower
Development in China,” Vermont Law School research paper, Jul. 25, 2012, pp. 17-23,
http://www.vermontlaw.edu/Documents/China Program/JRP FINAL_July 25_Cameron.doc;
Michael Sullivan, “At Mekong's Source In China, Past And Present Collide,” National Public Radio

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Table 1. Chinese Hydroelectric Dams on the Lancang Jiang

Hydroelectric dam Elevation (m) Water storage Installed Annual Completed
(millions of m3) capacity (MW) electricity
output (GWh)
Gongguoqiao 1,319 510 750 4,060
Xiaowan 1,236 14,560 4,200 18,990 2010
Manwan 994 920 1,550 7,805 1995*
Dachaoshan 895 890 1,350 7,021 2003
Nuozhadu 807 22,440 5,850 23,777 2017 est.
Jinghong 602 1,233 1,500 8,059 2009
Ganlanba 533 250 780
Mensong 519 600 3,380
Note: * A second phase expansion was completed in 2007.
Sources: “Manwan Hydropower Station,” Hudong, retrieved Jan. 22, 2013; “A Brief
Introduction to Dachaoshan Hydropower Project,” Chinese National Committee on Large
Dams, http://www.chinawater.net.cn/icold2000/st-a5-01.html; “Comments to the Korean
Foundation for Quality Regarding the Yunnan Gongguoqiao Hydropower Project,”
International Rivers memorandum, Jun. 28, 2011; “China becomes hydro superpower,”
Xinhua, Aug. 26, 2010; J. Dore and and Yu Xiaogang, “Yunnan Hydropower Expansion:
Update on China’s energy industry reforms and the Nu, Lancang and Jinsha hydropower
dams,” Unit for Social and Environmental Research, Chiang Mai University and Green
Watershed working paper, Mar. 2004, p. 15.

But China is not alone in harboring designs for new mainstream dams on
the Mekong River. Over the last decade, Southeast Asia’s riparian countries have
developed their own plans to construct dams on the river’s mainstream. With the
encouragement of private capital and Chinese state-owned investment companies
that want to generate more electricity for the region as well as China’s southern
provinces, proposals have been drafted to build as many as 11 mainstream dams
across the Indochina peninsula.
Among these hydroelectric schemes, none are envisaged on the Myanmar’s
stretch of the Mekong River, in no small measure because of the area’s insecurity.
Broadly known as the Golden Triangle, the region is a center of drug production
and human trafficking. Myanmar’s military periodically combats the drug cartels
and ethnic militias that hold considerable power there; the most recent case was a
weeks-long campaign against the Kachin Independence Army in January 2013.
Instead, Myanmar’s hydroelectric aspirations rest on the Irrawaddy, Mali, and N’Mai
Rivers. On the Irrawaddy River, a Chinese state-owned power company financed

Online, Feb. 15, 2010; Richard Cronin, “Mekong Dams and the Perils of Peace,” Survival Dec. 2009-
Jan. 2010, pp. 147-160; Barry Wain, “River At Risk,” Far Eastern Economic Review, Aug. 26, 2004.

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the development of a major dam at Myitsone. According to the World Bank, about
90 percent of the dam’s generated power had been expected to be transmitted to
China’s Yunnan province. But opposition to the dam within Myanmar convinced
the country’s newly-elected president Thein Sein to shelve the project, over strong
Chinese objections. 3
Further down the Mekong River is Laos, whose government regards
hydroelectric power as a major source of foreign exchange for the land-locked
country. Contributing the greatest amount of water to the Mekong River’s flow,
about 35 percent of its total, Laos hopes to emerge as the “battery of Southeast
Asia” by becoming a major electricity producer for the region. The Lao government
already identified as many as 60 potential hydroelectric power projects on the
Mekong River and its tributaries. Some ten dams on the Mekong’s tributaries are
currently under development and there are plans for at least five mainstream dams.
By 2029, the Lao Department of Electricity hopes to expand its hydroelectric
installed capacity from 1,000 MW to 30,000 MW.4
Laos intends to sell most of its hydroelectricity output to neighboring
countries whose industrializations have boosted electricity demand. Situated on a
Mekong River tributary, Laos’ 1,070-MW Nam Theun dam—one of the region’s
biggest—has exported 95 percent of its generated electricity to Thailand since its
completion in March 2010. That electricity will earn Laos more than $2 billion in
royalties, dividends, and taxes over the next 25 years. Nonetheless,
environmentalists question whether more hydroelectricity generation will bring
prosperity to Laos because, absent transmission lines to other countries, the only
customer for that electricity is Thailand’s main electric utility, which has been known
to play off power producers to secure better prices. Furthermore, economic
development based on hydroelectric power presents its own set of challenges. Since
dam construction and operation are largely capital intensive enterprises that entail
government sanction, they create relatively few jobs but plenty of opportunities for
corruption that could undermine a government’s authority. 5
Since 2011, another Lao hydroelectric power project has drawn
international attention. The 1,285-MW Xayaburi dam is slated to be the first
mainstream dam on the Mekong River south of China. Although the Mekong River
Commission (MRC)—a regional intergovernmental body that tries to mediate the

3 “Govt unilaterally declares ceasefire,” Eleven, Jan. 19, 2013; “Myitsone Hydroelectric Project,”
International Rivers briefing, Sept. 2011; “Chinese takeaway kitchen,” Economist, June 9, 2011; Michael
Sullivan, “Mekong Divides Different Worlds In ‘Golden Triangle,’” National Public Radio, Feb. 17,
2010; Anthony Davis, “Myanmar and Laos intensify efforts to improve border security,” Jane’s Defense
Weekly, Mar. 3. 2009.
4 Ravic R. Huso, “Laos: Plans for Five Large Dams on the Mekong Mainstream Advance,” U.S.

Department of State cable, Feb. 15, 2008, Wikileaks,

http://www.wikileaks.org/cable/2008/02/08VIENTIANE111.html.
5 World Bank, Second Nam Theun multipurpose development project: overview and update (Washington: World

Bank, 2012); “The sweet serpent of South-East Asia,” Economist, Dec. 30, 2003.

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river’s uses—conducted a lengthy review of the dam and its economic and
environmental impacts, the commission failed to arrive at a consensus decision on
whether to approve the project. As a result, the Lao government approved its Thai
dam builder, Ch. Karnchang, to begin work in June 2011. But six months later, the
MRC reconsidered and asked Laos to halt construction on the dam until further
environmental impact studies were completed. Many in Southeast Asia, particularly
Laos’ downstream neighbors Cambodia and Vietnam, worry that the Xayaburi dam
will pave the way for several other hydroelectric projects that Vientiane has
envisioned as well as three more Chinese dams on the Lancang Jiang. But despite
American, Cambodian, and Vietnamese appeals for Laos to abide by the MRC’s
request throughout 2012, Vientiane never asked Ch. Karnchang to suspend its
preparatory work. By November, construction on the dam began in earnest.6
Across the Mekong River in Thailand, hydroelectric power development
reached its peak between the late 1950s and early 1980s, when several large-scale
dams were built on the rivers in the country’s interior. But further development
waned after the last wave of dam construction in the mid-1990s. It was then that
the relatively small, but controversial 136-MW Pak Mun dam was built. It attracted
particularly vocal criticism from local agricultural communities and environmental
groups. They claimed that over 20,000 people were harmed when fish stocks in the
Mun River dramatically fell after the Pak Mun dam began operating and blocked
fish migration patterns. Such public controversies have dampened interest in
Thailand for dam building within its borders.7
Yet, over the last three decades, Thailand has emerged as a globally
important industrial center, manufacturing high-technology goods such as computer
accessories and motor vehicles and parts. Industry now accounts for almost half of
Thailand’s GDP and its growth far outstrips that of agriculture. But to continue
that growth, Thai industry requires reliable and low-cost electricity and so the
country—largely lacking its own fossil fuel resources and hindered from new
hydroelectric development at home—has sought out electricity from its neighbors.
The Mekong River next flows through Cambodia, a country with one of the
least developed power generation systems in the world. The country’s total installed
capacity is a fraction of what the Xayaburi dam will produce alone. About 90

6 “Vietnam and Cambodia tell Laos to stop $3.5bn Mekong River dam project,” Reuters, Jan. 18, 2013;

“Neighbors Seek Dam Scrutiny,” Radio Free Asia, Nov. 8, 2012; Daniel Ten Kate, “Laos to Start
Building Mekong Dam This Week Amid Opposition,” Bloomberg News, Nov. 5, 2012; “Laos never
ordered work on Xayaburi Dam to stop: official,” Mizzima News, Aug. 17, 2012; Patrick Barta,
“Southeast Asia Gets a Boost From Clinton,” Wall Street Journal, July 13, 2012; James Hookway, “Big
Dam Project Delayed on Mekong,” Wall Street Journal, Dec. 9, 2011; Mekong River Commission,
Minutes of the Eighteenth Meeting of the MRC Council (Session 1) (Siem Reap: Mekong River Commission,
Dec. 8, 2011), p. 3; Mekong River Commission, Proposed Xayaburi Dam Project – Mekong River: Prior
Consultation Project Review Report (Vientiane: Mekong River Commission, Mar. 25, 2011), pp. 91-99.
7 “Thailand Pushes Xayaburi Dam,” Asia Sentinel, Feb. 29, 2012,
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=4280&Itemid=437;
Teerapong Pomun, “Living River Siam: A Thai Perspective on Proposed Mainstream Mekong Dams,”
Stimson Center, Sept. 21, 2011.

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percent of that capacity is currently based on numerous unconnected systems of

diesel generators. Only 10 percent of the country’s electricity comes from
hydroelectric dams, even though it contributes 18 percent of the Mekong River’s
water flow. Cambodia’s dependency on oil-based generators makes the country
highly vulnerable to fluctuations in global oil prices. Consequently, electricity is very
expensive and few beyond the country’s urban areas have regular access to it.
Hence, Phnom Penh has been anxious to expand the country’s hydroelectric power
generation capacity. 8
In the 1990s, Cambodia contracted the Chinese Electric Power Technology
Import and Export Corporation to rebuild the 12-MW Kirirom I dam, even though
it could not operate at full capacity during the dry season. Then in 2005 and 2007,
Vientiane approved the construction of the far larger 193-MW Kamchay dam and
120-MW Stung Atay dam. The contracts to build both dams were awarded to
Chinese state-owned enterprises, Sinohydro in the former case and China Datang
Corporation in the latter. Construction on the Kamchay dam was completed in
December 2011 and work on the Stung Atay dam is slated to be finished in May
2013. But the limited protections put in place to mitigate the dam’s potentially
adverse effects have failed to inspire confidence in most local communities. More
still are worried about the impact that new mainstream dams on the Mekong River
will have on Tonle Sap—the huge lake in western Cambodia whose waters support
over half of the country’s fisheries and annual floods bring nutrients to nearby
farmlands. 9
Finally, even Vietnam—the Mekong River’s most downstream country
from which about 11 percent of the river’s water originates—has sought to benefit
from hydroelectric power generation. Though most of Vietnam’s present-day
hydroelectric development is focused on rivers in its northwest, it already built two
dams on tributaries from its central highlands that flow into the Mekong River. The
larger of the two is the 720-MW Yali Falls dam, which until recently was the
country’s second largest in terms of installed capacity. The dam was completed in
1996 and its reservoir filled by 1998. Since then Cambodian communities and
environmental organizations have criticized it for periodically causing floods and
disrupting Mekong River fisheries across the border in Cambodia.10

8 United Nations, Cambodia Energy Sector Strategy (New York: United Nations, June 8, 2011), p. 5.
9 “Workers missing as dam collapses in Cambodia,” Associated Press, Dec. 2, 2012; Simon Marks,
“Chinese Dam Project in Cambodia Raises Environmental Concerns,” New York Times, Jan. 16, 2012;
Xu Keqiang, “Sinohydro’s first overseas BOT project begins operation,” People’s Daily Online, Jan.
16, 2012, http://english.peopledaily.com.cn/90778/7706674.html; Matthew Chadwick, Muanpong
Juntopas, and Mak Sithirith, eds., Sustaining Tonle Sap: An Assessment of Development Challenges Facing the
Great Lake, (Bangkok: Sustainable Mekong Research Network, 2008), pp. 10-51; Carl Middleton,
Cambodia’s Hydropower Development and China’s Involvement (Berkeley: International Rivers, Jan. 2008), pp.
4-5, 27-36, 53-68.
10 Eric Rutkow, Cori Crider, and Tyler Giannini, “Heavy water release from Vietnam’s Yali Falls dam

floods communities in northeastern Cambodia,” Probe International, Jul. 29, 2008; “Down River: The

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Regional Hydroelectric Development Efforts

For the most part, the governments of China and the countries of
Southeast Asia believe that hydroelectric dams on the Mekong River and its
tributaries will yield substantial societal benefits: lower-cost electricity, new
industries, and higher-income employment for their citizens. But upstream dams
often have unintended consequences for those downstream. Those consequences
invariably cause friction not only between upstream countries in pursuit of
hydroelectric power and downstream countries that must contend with
ramifications, but also within countries whose industrial interests may conflict with
the livelihoods of their still mostly agricultural populations. 11

Table 2. Riparian Countries’ Priorities for the Mekong River

Country Traditional Uses of the Substitutes for the Primary Priority for
Mekong River Mekong River’s the Mekong River’s
Water Flow Water Flow
China NA NA Hydroelectricity for
industry
Myanmar NA NA NA
Laos Irrigation for Rain Hydroelectricity to
commercial and food finance economic
agriculture development
Thailand Fisheries and None Divided between
irrigation for agriculture and
commercial and food hydroelectricity for
agriculture industry
Cambodia Fisheries (Mekong None Divided between
River and Tonle Sap agriculture and
fish are its main hydroelectricity to
source of protein) finance economic
development
Vietnam Irrigation for food None Agriculture
agriculture (Mekong
River Delta is its
main source of rice)

Consequences of Vietnam’s Se San River Dams on Life in Cambodia and Their Meaning in
International Law,” NGO Forum on Cambodia, Dec. 2005, pp. 19-41; Mekong River Commission,
Water Quality Impacts of the Yali Falls Dam in Se San River Basin Ratanakiri Province Northeast Cambodia
(Vientiane: Mekong River Commission, 2002), pp. 4-17.
11 Mekong River Commission, Transboundary River Basin Management: Addressing Water, Energy and Food

Security (Vientiane: Mekong River Commission, 2012), pp. 12-13.

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Indeed, among and within the countries of the lower Mekong River region
there is frequent disagreement over the best way to balance the human demands on
the Mekong River’s water flow. That has made priority setting on several critical
issues—how the river’s hydroelectric potential should be developed, when it should
be developed, and how to compensate the fishing and agricultural communities that
such development might disrupt—a major challenge for any integrated water
management scheme, like the one the LMI seeks to devise. (See Table 2.) That
challenge is further exacerbated by the fact that the Mekong River draws its water
from across the entire region, reducing the potential for direct accountability. So
while there have been documented changes to the river’s ecology, tracing those to
culprits is often difficult. Despite reports that linked the filling of China’s
mainstream dams with lower river levels in the 1990s, the MRC could only point to
lower rainfall as a clear cause. 12
After China completed its initial dams on the Mekong River, Southeast
Asian countries hoped that Beijing would come to embrace a multilateral approach
to hydroelectric development on the river, if only as part of Beijing’s wider
diplomatic “charm offensive” in Southeast Asia that started in the late 1990s.
Certainly there were indications that China could be brought into Southeast Asia’s
multilateral frameworks. During the Asian Financial Crisis in 1997–1998, China
refrained from engaging in the competitive currency devaluations that swept the
region, avoiding an even graver spiral. And after the crisis, Southeast Asian
governments found renewed appreciation for China’s professed respect for the
internal affairs of other countries, given the intrusive conditions that accompanied
western financial aid. Meanwhile, China became a member of several regional
initiatives with the Association of Southeast Asian Nations (ASEAN), the region’s
leading multilateral organization.13
But Chinese pursuit of hydroelectric development on the Lancang Jiang has
been steadfast. China’s continued economic growth remains Beijing’s top priority
and that growth requires more electricity. Consequently, China has pressed on with
the construction of new hydroelectric dams, including those on its own rivers like
the gigantic Three Gorges Dam. 14 And when asked to consider the consequences
of their rapid hydroelectric development on the Mekong River, Chinese

12 Nargiza Salidjanova, “Chinese Damming of Mekong and Negative Repercussion for Tonle Sap,”

ICE Case Studies 218, May 2007, http://www1.american.edu/ted/ice/mekong-china.htm; Fred

Pearce, “Chinese dams blamed for Mekong’s bizarre flow,” New Scientist, Mar. 25, 2004,
http://www.newscientist.com/article.ns?id=dn4819.
13 Joshua Kurlantzick, “China’s Charm Offensive in Southeast Asia,” Current History, Sept. 2006, pp.

270-276; “Will China be next?” Economist, Oct. 24, 1998.

14 Shai Oster, “Why Chinese Dam Is Forcing Yet Another Mass Exodus,” Wall Street Journal, Nov. 16,
2007; Patrick E. Tyler, “China Moves Ahead on Huge but Disputed Dam,” New York Times, Dec. 27,
1994.

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representatives are quick to respond that only 16 percent of the river’s total water
flow comes from China. Even further, many Chinese have come to view Southeast
Asian attempts to slow their country’s hydroelectric development on environmental
grounds alone as insincere, given Cambodian and Lao government plans to build
their own dams—sometimes with Chinese financing—on the Mekong River and its
tributaries.
As a result, Southeast Asian hopes that China would eventually warm to an
integrated water management scheme have dimmed. Instead, Southeast Asia’s
riparian countries have come to see China’s increasingly assertive behavior in the
East and South China Seas mirrored in its actions over the Mekong River. In the
meantime, the conflicting interests and priorities within Southeast Asia have
prevented it from reconciling their own differences over how to best use the river.
Such inherent divisions and the region’s devotion to the notion of noninterference
in other countries’ internal affairs likely contributed to the MRC’s failure to even
consider the Mekong River’s most prominent issue—the construction of the
Xayaburi dam—at its annual council meeting in January 2013. As a result, some
Southeast Asian countries have begun to question whether ASEAN’s multilateral
engagement with China will ever succeed and embarked on hedging strategies that
seek to draw other powers deeper into the region. 15
American attempts to help facilitate the Mekong River’s hydroelectric
development began in the 1950s, when American policymakers sought ways to grow
the region’s economies as bulwarks to communist insurgencies in the countries
along the Mekong River’s banks. Among the first efforts was the Committee for
Coordination of Investigations of the Lower Mekong Basin (Mekong Committee) in
1957. Under its auspices, the U.S. Bureau of Land Reclamation studied how the
countries of Southeast Asia could best use the Mekong River’s hydroelectric
potential to provide the foundation for economic development, in a manner
mirroring the American experience with the Tennessee Valley Authority.
However, by the late 1970s, the Vietnam Conflict, the rise of the Khmer
Rouge, and finally the Vietnamese invasion of Cambodia led the United States to
withdraw its sponsorship from the Mekong Committee. Laos, Thailand, and
Vietnam then established a caretaker intergovernmental body called the Interim
Mekong Committee (IMC) to continue the work toward a regional approach to
economic development on the Mekong River. But in the end it was able to do little
more than collect data and undertake a few small projects in Thailand.
After the hot conflicts of the Cold War wound down, Cambodia sought
readmission into the IMC. But Cambodia’s entry was delayed by Thai concerns

15 “Xayaburi Dam fails to make agenda for Mekong River meeting,” Cleanbiz.asia, Jan. 16, 2013,

http://www.cleanbiz.asia/news/xayaburi-dam-fails-make-agenda-mekong-river-meeting; “Divided we
stagger,” Economist, Aug. 18, 2012; “Chinese checkers,” Economist, July 21, 2012; Olivia Rondonuwu,
“ASEAN to claim ‘common ground’ on South China Sea, but no communique,” Reuters, July 20,
2012; Prak Chan Thul and Stuart Grudgings, “SE Asia meeting in disarray over sea dispute with
China,” Reuters, July 13, 2012.

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over how a larger body might restrict its national sovereignty. Eventually the four
countries of the lower Mekong River agreed to form the Mekong River Commission
in April 1995. While its purview expanded from hydroelectric and agricultural
development to include broader initiatives to improve the socio-economic
conditions of its member countries, the MRC has no greater authority than its
predecessor. The MRC’s member countries have no veto powers; its decisions are
based on consensus; and its members are not bound by its decisions. In the years
that followed, the MRC has focused on technical water and environmental issues,
ranging from river navigation and monitoring to flood, drought, and watershed
management.16
But the MRC has made little progress toward reaching an integrated water
management solution for the Mekong River. Among the biggest obstacles to that
goal has been China’s unwillingness to consult with the MRC over its dam building
program on the Lancang Jiang. Hence, the MRC’s only tangible collaboration with
China occurred in 2002 when Beijing offered to provide the commission with some
hydrological data. So although China has held dialogue status in the MRC since
1996, the commission still lacks a real way to address its concerns over the Mekong
River’s upstream water flows.17
The MRC’s consensus-driven and non-binding decision-making process has
been another significant obstacle. That was clearly evident in the MRC’s vacillating
decision to delay the Xayaburi dam’s construction and then in Laos’s decision to
proceed in spite of it. Since then Cambodian and Vietnamese fears for their
farmlands and fisheries have grown. Hanoi has even voiced support for a ten-year
moratorium on mainstream dam construction on the Mekong River. Meanwhile,
sentiment in Thailand has been split. On the one hand, Thai business interests
clearly favor the dam’s completion—not only because Thai companies and banks
are directly involved in the project, but also because Thai industry needs the dam’s
hydroelectricity to grow. On the other hand, many Thai farming and fishing
communities along the Mekong River oppose the dam; and they have sued to
prevent their national utility from buying the dam’s hydroelectricity in a bid to halt
its construction, given that the dam is slated to sell 95 percent of its power output to
Thailand’s central electric utility. 18

16 Mekong River Commission, MRC Work Programme 2012 (Vientiane: Mekong River Commission,
2012), pp. 2-16; “MRC Hua Hin Declaration: Meeting the Needs, Keeping the Balance: Towards
Sustainable Development of the Mekong River Basin,” Mekong River Commission press release, Apr.
5, 2010; Jeffrey W. Jacobs, “The Mekong River Commission: Transboundary Water Resources
Planning and Regional Security,” Geography Journal 168:4 (2002), pp. 354-364.
17 “China to Offer Hydrological Data to Mekong River Commission,” People’s Daily Online, June 12,
2002, http://english.peopledaily.com.cn/200206/12/eng20020612_97703.shtml.
18 “Neighbors Not Against Xayaburi,” Radio Free Asia, Sept. 13, 2012; Supalak Ganjanakhundee,
“Fight against Xayaburi Dam goes to court,” The Nation, Aug. 8, 2012; “Construction forges ahead at
Xayaburi Dam project,” Bangkok Post, Aug. 7, 2012; Mekong River Commission, MRC Flood
Management and Mitigation Programme, Flood Situation Report 2011 (Vientiane: Mekong River

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Such crosscutting currents among and within the countries of the lower
Mekong River clearly diminish the prospects for regional unity. Even as agricultural
and fishery concerns have gained greater currency in downstream countries,
upstream countries remain highly focused on realizing the benefits they can derive
from the river’s hydroelectric potential. Meanwhile, governments and industries
that have come to regard hydroelectricity as synonymous with economic
development are now set against communities whose traditional livelihoods depend
on the river’s water flow.
Those sorts of conflict are unlikely to fade soon. The MRC has not yet
even resolved the problems associated with hydroelectric dams erected on the
Mekong River’s tributaries. In the past, poorly communicated water releases from
such dams in Vietnam have inundated downstream communities in Cambodia. And
as the capital to develop hydroelectric power has become more readily available
from Chinese, Thai, and Vietnamese construction and investment companies—
rather than slower-moving international development banks—new proposals for
hydroelectric dams on the Mekong River and its tributaries have proliferated.

Regional Security Outlook

Conflict is not new to Southeast Asia. The region experienced a half

century of international and internal armed conflict. By the last decades of the
twentieth century, many Southeast Asians came to believe that the best way to avoid
future strife was to make economic development the foundation for regional and
regime stability. Hence, on the Indochina peninsula—where economic
development and hydroelectricity share a close association—hydroelectric
development is sometimes seen as a contributor not only to economic prosperity,
but also to regional security.
Another way Southeast Asian countries have come to view security is a
belief that multilateral agreements and dialogues can set the conditions for a more
stable region. They regard multilateral bodies and initiatives, like ASEAN and the
MRC, as vehicles that can promote greater stability both within the region and with
external partners. (See Table 3.) Throughout the 1990s and early 2000s, Southeast
Asian countries were reasonably optimistic that they could persuade China to see
the benefit of such multilateral frameworks. And for a time, it seemed as if they
might succeed. Certainly Southeast Asian countries were relieved by China’s
restraint during the Asian Financial Crisis and cheered when it signed ASEAN’s
Treaty of Amity and Cooperation. They were further heartened when China agreed
to their non-binding code of conduct governing behavior in the South China Sea a
few years later. 19

Commission, 2011); David Brown, “Mekong dams test a ‘special relationship’,” Asia Times Online,
May, 18, 2011, http://www.atimes.com/atimes/Southeast_Asia/ME18Ae01.html.
19 John Lee, “The end of Smile Diplomacy?” National Interest, Sept. 23, 2010,

http://nationalinterest.org/commentary/the-end-smile-diplomacy-4122; “Whale and Spratlys,”

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Table 3. Regional Cooperative Initiatives

Initiative Purpose Member countries Year
Asian Development Technical assistance program to CN KH LA 1992
Bank’s Greater Mekong promote economic cooperation MM TH VN
Subregion Economic
Cooperation Program
Mekong Basin Initiative to improve economic BN CN ID 1996
Development partnerships between ASEAN KH LA MM
Cooperation and riparian countries of the MY PH SG
Mekong River TH VN
Mekong-Ganga Initiative to improve IN KH LA 2000
Cooperation cooperation in cultural affairs, MM TH VN
tourism, transportation, and
human-resource development
Development Triangle Initiative to improve economic KH LA VN 2000
Initiative cooperation and reduce poverty
in border areas
Lancang-Upper Agreement to improve CN LA MM 2001
Mekong River transportation on the Mekong TH
Commercial Navigation River
Agreement
Ayeyawady-Chao Initiative to improve KH LA MM 2003
Phraya-Mekong cooperation in agriculture, TH VN
Economic Cooperation industry, investment, tourism,
Strategy transportation, and human-
resource development
Emerald Triangle Initiative to improve tourism KH LA TH 2003
Cooperation
Framework
Key:
BN = Brunei IN = India MM = Myanmar SG = Singapore
CN = China KH = Cambodia MY = Malaysia TH = Thailand
ID = Indonesia LA = Laos PH = Philippines VN = Vietnam

Economist, Dec. 13, 2007; John Wesley Jackson, “China in the South China Sea: Genuine Multilateralism
or a Wolf in Sheep’s Clothing?” thesis, Naval Postgraduate School, Dec. 2005, pp. 39-55; Leszek
Buszynski, “ASEAN, the Declaration on Conduct, and the South China Sea,” Contemporary Southeast
Asia 25.3 (2003), pp. 343-62.

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 U.S. Foreign Policy in Southeast Asia

But as China’s economic and military rise proceeded, Beijing began to more
openly assert the primacy of its interests in disputes with Southeast Asia. Rather
than embrace ASEAN’s multilateral norms, China sought to pursue its goals alone
or insisted on bilateral negotiations, where its power overshadows that of its
Southeast Asian counterpart. It eschewed proposals for multilateral talks to settle
competing maritime claims in the South China Sea and pushed for bilateral
agreements with the Philippines and Vietnam. In late 2007, China’s legislature
accorded the authority that governs the disputed Paracel and Spratly Islands a higher
legal status, and then, in early 2010, Beijing listed the islands among its “core
interests”—a term previously reserved for territories over which it would fight—for
the first time. Two years later, China confronted Japan and the Philippines over
their island disputes with it in the East and South China Seas—keeping tensions
there elevated well into 2013.20
Meanwhile, China has paid little attention to Southeast Asian appeals to
slow its hydroelectric development on the Lancang Jiang—unsurprising given the
heavy pressure on Chinese national and provincial leaders to meet economic growth
targets and the powerful influence of Chinese energy and construction firms. And
so China pressed ahead to complete the 4,200-MW Xiaowan dam in 2010 and began
phased construction of the even bigger 5,500-MW Nuozhadu dam.
For a time, some ASEAN countries felt that putting off their differences
with China was the best approach, considering China’s growing power and the
potential economic benefits it could bring as an investor or trading partner. Besides,
as many in the region believed, American power was on the wane or focused
elsewhere. Others simply doubted the long-term commitment of the United States
to the region. But as the last decade drew to close, Southeast Asian frustration with
Chinese assertiveness finally came to a head and the region began to actively seek
sturdier ties with external powers to balance Chinese strength.
By then Washington had also begun to take greater notice of China’s
evolving behavior in Asia as well as its state-backed commercial acquisitions of
natural resource assets around the globe. Gradually, the United States came to
pursue a policy that favored engagement with Southeast Asia to increase its
cohesion so that it could act as a break on China’s expanding influence, just as the
region’s countries began their search for external hedges against China. Those

20 Jane Perlez, “As Dispute Over Islands Escalates, Japan and China Send Fighter Jets to the Scene,”
New York Times, Jan. 19, 2013; James Hookway, “Sea Tensions Deepen With China’s Rise,” Wall Street
Journal, Jun. 7, 2012; Zhong Jijun, “Chen Bingde stresses promotion of military training
transformation,” PLA Daily, Jul. 29. 2010; Ministry of Foreign Affairs of the People’s Republic of
China, “Foreign Minister Yang Jiechi Refutes Fallacies On the South China Sea Issue,” Jul. 26, 2010,
http://www.mfa.gov.cn/eng/zxxx/t719460.htm; Jay Solomon, “China Rejects U.S. Efforts in
Maritime Spat,” Wall Street Journal, July 25, 2010; Mark Landler, “Offering to Aid Talks, U.S. Challenges
China on Disputed Islands,” New York Times, July 23, 2010.

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converging interests provided the United States with an opportunity to raise its
stature in Southeast Asia through the LMI.21

Lower Mekong Initiative and U.S. Foreign Policy

Less than two weeks after his 2012 reelection, President Barack Obama
flew to Southeast Asia to attend the Seventh East Asian Summit in Phnom Penh.
Many considered his visit as a clear signal of his administration’s “pivot” or
“rebalancing” toward Asia. At the summit, he reiterated American support for a
multilateral approach to resolve the maritime disputes in the South China Sea—a
nod to Southeast Asia’s position on the issue and a slight to China’s bilateral
preference. And, while in Southeast Asia, Obama made a special visit to Myanmar,
a country of growing regional importance, particularly because it will assume
ASEAN’s chairmanship in 2014 and play a leading role in setting that organization’s
agenda.22
But Obama’s visit to Southeast Asia was only the latest in a line of efforts
designed to bolster American relationships with Southeast Asian countries and the
region’s cohesion. In 2009, Washington entered into ASEAN’s Treaty of Amity and
Cooperation and since then has participated in a number of the association’s
forums. The United States also boosted its naval presence in the Philippines and
Singapore as well as restored its military ties with Indonesia and Vietnam. Such
examples have demonstrated an American readiness to remain engaged in the region
and work with its premier multilateral institutions.23
The creation of the LMI at a July 2009 foreign minsters’ meeting in Phuket
has been another example. With the exception of China, the initiative now involves
all the Mekong River’s riparian countries: Cambodia, Laos, Thailand, Vietnam, and
most recently Myanmar, after that country’s democratic elections in 2010. From the
beginning, the LMI’s intent was to engage the United States more deeply into the
issues of the lower Mekong River region. Three years on, Secretary of State Hillary

21 “ASEAN Hedging Strategy” from China-Southeast Asia Relations in Singapore conference, U.S.

Department of State, Aug. 22-24, 2005.

22 Felix K. Chang, “The Geopolitics of Obama’s Visit to Myanmar,” FPRI E-Notes, Nov. 2012;

Natasha Brereton-Fukui, Chun Han Wong, and Enda Curran, “Sea Tensions Erupt at Asian Summit,”
Wall Street Journal, Nov. 20, 2012; David Pilling and Gwen Robinson, “Myanmar can ‘taste freedom,’
says Obama,” Financial Times, Nov. 19, 2012; Kavi Chongkittavorn, “Myanmar set to be game
changer,” Straits Times, July 4, 2012; Jane Perlez, “U.S. and China Press for Influence in Myanmar,”
New York Times, Mar. 30, 2012.
23 “US seeks expanded military ties with Indonesia,” Associated Press, Nov. 27, 2012; Michael Cohen
and James Hardy, “Philippines, US confirm US Navy’s return to Subic Bay,” Jane’s Defense Weekly, Oct.
11, 2012; Marcus Weisgerber, “Singapore will now host 4 littoral combat ships,” Navy Times, June 2,
2012, http://www.navytimes.com/news/2012/06/navy-singapore-host-4-littoral-combat-ships-
060212d; “US signs Treaty of Amity and Cooperation (TAC),” Association of Southeast Asian Nations
press release, July 22, 2009.

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 U.S. Foreign Policy in Southeast Asia

Clinton expanded the initiative’s scope under the banner of LMI 2020 to include
direct American assistance to its member countries on several long-term issues that
range from government capacity building to general equality.24
Nevertheless, the most concrete benefit the LMI could offer the Mekong
River’s riparian countries would be to facilitate an integrated water management
scheme for the river. To achieve that aim, the United States has pledged to support
the MRC and its decisions, which it did during the Xayaburi dam controversy in
2012. But thus far, the LMI’s most tangible contribution to such a scheme has been
Forecast Mekong—a program that provides a forum for the region’s technical
experts to gather and share data while leveraging U.S. Geological Survey’s
hydrological planning tools to help those experts visualize that data.25
But unless the LMI can draw China into serious talks with the MRC about
its dam operations or building program, it will never be able to create an integrated
water management scheme that encompasses the entire river. And just to create a
scheme that all the MRC’s member countries can agree on will require the United
States to successfully navigate the tangled web of economic and environmental
interests across the region. With the expansion of the LMI’s aims under the LMI
2020 agenda, the initiative’s potential to overcome these hurdles may actually have
narrowed, since those new aims may diffuse—rather than concentrate—the region’s
energies.
Certainly, Southeast Asia’s multilateral predisposition provided a head start
for an American policy designed to enhance regional cohesion, but that bent alone
is not enough for the LMI to facilitate a water management solution. To improve
the initiative’s chances, Washington must be careful not to be seen as a hindrance to
hydroelectric power generation, given the close association that many Southeast
Asians see between it and economic development. That may require the United
States to set aside its own notions about the tradeoffs between hydroelectric dams
and their environmental consequences, since those notions could be perceived to
favor the interests of one side of those or another. And, rather than play the role of
enforcer for the MRC’s decisions—as it did to little effect after the MRC’s decision
on the Xayaburi dam—the United States might have better served the MRC and
encouraged Lao compliance had it sought to reassure both sides instead. The
United States could have offered to help accelerate the MRC’s desired

24 Hillary Rodham Clinton, Secretary of State, remarks, Lower Mekong Initiative Women’s Gender
Equality and Empowerment Dialogue, Siem Reap, Cambodia, July 13, 2012.
25 D. Phil Turnipseed, “Forecast Mekong,” U.S. Geological Service, National Wetlands Research

Center, June 2011; “Bangkok Proposal: 2009 Ag-Biotechnology Outreach Funds,” U.S. Department of
State cable, Jan. 15, 2010, Wikileaks,
http://www.wikileaks.org/cable/2010/01/10BANGKOK125.html; “Lower Mekong Initiative:
Forecast Mekong in the Delta,” U.S. Department of State cable, Dec. 16, 2009, Wikileaks,
http://www.wikileaks.org/cable/2009/12/09HOCHIMINHCITY674.html.

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environmental impact studies and facilitated a compromise timeline for the dam’s
construction that would have assuaged Lao concerns.26
Even so, American engagement through the LMI has prompted China to
pay more attention to the Indochina peninsula. And though Beijing stated that it
does not oppose Washington’s initiative, it has privately expressed its reservations
over the American involvement in the region. China may eventually seek to counter
American influence with greater economic incentives. In that event, the United
States should not be surprised by Southeast Asian acceptance of generous Chinese
investment terms or even trade pact proposals, given the prominent part that
economic development plays in the region’s conception of security. Nor should the
United States expect that the interest that Southeast Asian countries have shown in
stronger ties with it will mature into relationships like those it had with its Cold War
allies.27
The United States is unlikely to ever foster enough regional cohesiveness in
Southeast Asia to entirely ward off Chinese influence. In any case, the region’s
multilateral predisposition has its limits, as is evident in the function of both
ASEAN and the MRC. And there are too few prominent countries in the region
around which others are willing rally. Practically, only ASEAN might have
sufficient political weight to face China. Thus, the LMI’s focus on shoring up the
MRC—rather than working through an ASEAN-wide group—might have missed
an opportunity for the United States to edge closer to its larger goal of strengthening
regional cohesion. For even absent a solution, it could have brought together
Southeast Asia’s maritime countries with its continental ones into closer common
cause.

Conclusion

Over the last decade, a number of factors have coalesced to give life to the
Lower Mekong Initiative. First, there was a convergence of interests between
Southeast Asian countries keen to engage external powers to offset China’s might
and the United States trying to strengthen regional cohesion to slow the ascent of
Chinese influence. Second, many in Southeast Asia had begun to question whether
they could resolve the Mekong River water management issue on their own, given
China’s behavior on the Lancang Jiang and its seeming indifference to Southeast

26 Hillary Rodham Clinton, Secretary of State, remarks, Fifth Lower Mekong Initiative Ministerial,

Phnom Penh, Cambodia, July 13, 2012.

27 James Hookway, “China Brings Spending Plan to Bangkok,” Wall Street Journal, Nov. 21, 2012; Jane

Perlez, “Asian Nations Plan Trade Bloc That, Unlike U.S.’s, Invites China,” New York Times, Nov. 20,
2012; “A new Great Game?” Economist, Dec. 3, 2011; “China Sparks Hydro Debate at Mekong River
Commission,” U.S. Department of State cable, Oct. 20, 2009, Wikileaks,
http://www.wikileaks.org/cable/2009/10/09BANGKOK2682.html.

298 | Orbis
 U.S. Foreign Policy in Southeast Asia

Asian concerns. And third, recent American engagement with Southeast Asia has
seemed to have greater durability and embraced the region’s multilateral affinities.
Nonetheless, the LMI’s ultimate success is far from certain. The initiative’s
most concrete aim—helping the MRC create an integrated water management
scheme—is particularly difficult to achieve, given the region’s long litany of
disagreements, the consensus-driven way the MRC was designed to operate, and
ultimately China’s reluctance to discuss the issue with the MRC. And now,
Clinton’s LMI 2020 agenda may inadvertently divert the initiative’s energies away
from that aim.
How the LMI will help the MRC realize its integrated water management
aim remains unclear. The riparian countries along the Mekong River have very
different economic and social conditions, leading them to hold interests and
priorities that are hard to reconcile. Of course, they are not the first countries to be
caught between the desire for economic development and the demands of
traditional riparian societies. Certainly the United States can help in some ways. But
for its own policy goal to succeed, the United States may find that the Lower
Mekong Initiative as it is now conceived to be an imperfect agent. So far,
Washington has made good use of a convergence of favorable factors to strengthen
its ties with Southeast Asia, but it is hardly closer to its larger goal of enhancing
regional cohesion. In the meantime, the United States should make best use of the
greatest benefactor of Southeast Asian unity and its own strategy: China’s new-
found assertiveness.

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