Trouble on the Mekong
Image Credit: International Rivers

Trouble on the Mekong

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Its turbulent currents snake their way through the tropical heart of Southeast Asia. The 4,880-kilometer Mekong river hosts the iconic giant catfish, the endangered Irrawaddy dolphin and the largest inland fisheries in the world. Its vast biodiversity – second only to the Amazon – offers myriad opportunities for ecotourism development

But are the wonders of the mighty Mekong doomed by a very different kind of development, fuelled by a rapacious demand for hydro-power in an energy-hungry region?

Construction of a $3.8 billion mega-dam project in Xayaburi, in the north of Laos, is already underway, with ten more dams slated for the mainstream of the river.

A group of Finnish nongovernment organizations have invoked European rules of corporate social responsibility, to challenge what they regard as reckless and irresponsible recommendations by Pöyry Energy AG, the Swiss engineering subsidiary of Finish consulting company Pöyry PLC, which has been hired by the government of Laos.

The Xayaburi dam project has been the subject of an international consultation process under the auspices of the Mekong River Commission (MRC), which comprises four member states: Cambodia, Laos, Thailand and Vietnam

But the MRC has split between Laos and Thailand, which support the dam (Thailand is providing all the funding and will purchase 95% of the power generated), and Cambodia and Vietnam, which view dams on the Mekong as a cumulative threat to agriculture, fisheries and livelihoods.

Scientists warn that a cascade of dams threaten food security along the Mekong for around 65 million people. The prime minsters of both Cambodia and Vietnam have demanded further scientific studies on downriver impacts to be carried out prior to any construction, but supported by Pöyry’s recommendations, Laos has ignored its Indochina neighbors.

It was the deadlock inside the MRC that prompted the government of Laos to hire Zurich-based Pöyry Energy, allegedly with a view to circumventing the consultation procedures laid down by the 1995 Mekong Treaty

In response, fourteen Finnish NGOs filed a landmark case against Pöyry, alleging that it had violated OECD rules. Finland was obliged to set up a Corporate Social Responsibility Committee in 2012, to hear the complaint against parent firm Pöyry PLC, the parent company in Helsinki.

As the largest donor to the MRC, Finland has a special interest in the Xayaburi controversy. All development partners of the MRC have expressed deep concerns about the environmental impacts of Xayaburi,   the first dam to be built on the Lower Mekong.

The Finnish NGOs have accused the international consultant Pöyry of promoting a reckless and irresponsible mode of development, and undermining international cooperation among the riparian countries through the Mekong River Commission.

Pöyry has since announced that it has won a new eight-year contract to supervise construction of the Xayaburi dam.

Otto Bruun, Friends of the Earth campaign coordinator noted: “The Company reaps a lucrative eight-year reward for its deceptive behavior as a consultant. This conflict of interest is an outrage.”

A spokesman for Pöyry Energy in Bangkok denied to The Diplomat that there was any conflict of interest.

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