Cablegate: Lower Mekong Nations Engage China, Tackle Hydropower

VZCZCXYZ0002
RR RUEHWEB

DE RUEHBK #3117/01 3451002
ZNR UUUUU ZZH
R 111002Z DEC 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 9241
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHKT/AMEMBASSY KATHMANDU 7541
RUEHSV/AMEMBASSY SUVA 0519
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RHHMUNA/CDR USPACOM HONOLULU HI
RHMFIUU/HQ EPA WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS BANGKOK 003117

SIPDIS
SENSITIVE

DEPT FOR OES, EAP
USAID FOR LJOHNSTON,
INTERIOR FOR USGS/NAT WETLANDS CENTER/JPOWELL

E.O. 12958: N/A
TAGS: PREL ECON ENRG EAGR TBIO EAID PGOV TH
SUBJECT: LOWER MEKONG NATIONS ENGAGE CHINA, TACKLE HYDROPOWER

REF: A) Beijing 2941 (B) Bangkok 2682 (D) Vientiane 0540

1. (U) Summary: The Mekong River Commission (MRC) continues to
mature as engagement with China expands. Member states Thailand,
Cambodia, Laos and Vietnam met at the MRC's 16th Council that
included a meeting with the MRC Donor Consultative Group in Thailand
November 26-28. Donors announced $66 million in funding while the
MRC made a long-awaited decision to split permanently the MRC
secretariat between Vientiane and Phnom Penh. After years of
avoiding the contentious transboundary effects of hydropower
development, the MRC's new regional hydropower assessment is now
progressing with China's participation. Still uncertain is whether
the MRC should recommend against building a particular dam, and if
member states would heed such a recommendation. MRC members continue
to show great interest in the Secretary's Lower Mekong Initiative
and the prospect of U.S. scientific collaboration. Recommendation: A
MRC summit planned for April 2010 in Thailand could be an
opportunity for the EAP or OES Assistant Secretary to engage with
Lower Mekong leaders as they tout transboundary water coordination.
END SUMMARY and RECOMMENDATION.

2. (U) In 1995 Cambodia, Laos, Thailand and Vietnam signed the
Mekong Agreement, establishing the Mekong River Commission (MRC) and
agreeing to joint management of their shared water resources for
sustainable development.
The MRC held its 16th meeting of the MRC Council, which included a
session with the MRC Donor Consultative Group, on November 26-28 in
Hua Hin, Thailand. Member states were represented at the
ministerial level. Of the two MRC "dialogue partners," Burma sent
an observer but China did not. Donor or consultant participants
included Australia, Belgium, Denmark, Finland, France, Germany,
Japan, Netherland, Sweden and the U.S., as well as ASEAN, Asian
Development Bank, ESCAP, European Commission, International Union
for the Conservation of Nature, World Bank, and Worldwide Fund for
Nature.

INCREASED ACTIVITY WITH DIALOG PARTNERS CHINA AND BURMA
------------------
3. (U) As a "dialog partner," China has about half the Mekong River
in length but contributes around 16% of the flow downstream (with
rain contributing the rest). China had played a minimal role in the
transboundary water issues that the MRC was created to address, but
the new MRC Secretariat leadership has helped to change this. MRC
representatives visited the Yangtze River Resources Commission flood
control offices and the Ecosystem Study Commission for International
Rivers (ESCIR); China pledged an ESCIR focal point to support the
MRC's hydropower assessment. China sent representatives to the MRC
Flood Forum in May and the October stakeholder forum (Ref B). China
now provides real-time hydrological data to the MRC during the rainy
(flood) season, has recently agreed to provide historical data, and
is now discussing an agreement to provide real-time data during the
dry season as well. China is cooperating, with scientific data,
for the MRC's strategic environmental assessment of Mekong
hydropower dams, which will include the impact of Chinese dams. The
MRC and China agreed to jointly organize seminars on navigation,
following a first seminar in Jinghong in October 2008. Although
China did not attend this MRC meeting, it indicated that it would
attend the MRC's July meeting. Burma did participate and is
reportedly close to allowing the MRC to upgrade and operate a
Burmese hydrological station to aid in regional flood forecasting.
Burma also participated in the MRC flood forum in May.

REGIONAL COOPERATION: ASEAN, ADB AND DONOR FUNDING
---------------------
4. (SBU) The MRC Secretariat announced that the ASEAN secretariat
had approved a memorandum of understanding (MOU) to be signed in the
coming weeks. The MRC participated as an organization in the August
ASEAN summit, and it plans to align its strategic planning with
ASEAN's integration agenda. The Asian Development Bank has
finalized a joint statement of cooperation that will be issued soon.
MRC announcements of regional achievements included the signing of
a letter of intent for cooperation with the Mississippi River
Commission, but MRC secretariat officials told regional hub officer
that progress towards a MOU with the Mississippi River Commission
has been slow. The MRC announced donor multi-year funding to total
$66 million. While Australia and Denmark have expressed confidence
in the MRC's new monitoring, reporting and evaluation procedures
(many learned from working with USAID) by announcing direct funding
of MRC programs, most donors such as Japan noted that assistance
would continue to be managed by donor programming at the project
level. (Note: In a meeting with Huboff prior to the MRC meeting, the
Japanese embassy action officer for lower Mekong engagement noted
that Japan's long list of assistance programs recently delivered at
its Mekong summit (Ref D) was largely notional and that the MRC
meeting was a venue for Japan to see which of the many types of
assistance resonated with the lower Mekong countries. In the MRC
meeting, the same Japanese representative announced only $300,000 in
firm funding to support the MRC. END NOTE.)

HYDROPOWER STRATEGIC ENVIRONMENTAL ASSESSMENT
--------------------
5. (U) After virtually ignoring hydropower since the Mekong
Agreement was signed in 1995, the MRC is now facing regional
hydropower development head on with a Strategic Environmental
Assessment (SEA) for the hydropower sector that will include the
impact of China's eight existing or planned mainstream dams. With
60 million people dependent on the Mekong for food security and
livelihood, MRC CEO Jeremy Bird noted that hydropower effects on the
river posed the greatest strategic challenge to the Mekong Agreement
since it was signed. (NOTE: There is around 3235MW currently
generated on Mekong tributaries; dams totaling about 3209MW are in
construction. On the Mekong mainstream, 11 dams are proposed by
Cambodia, Laos and Thailand. END NOTE.) The SEA will include
climate change, fisheries, energy and social systems. The twin
goals are to integrate energy into the MRC's river basin development
plan and to assess the impact of hydropower on the MRC members'
sustainable development objectives. Completion is scheduled for
July. MRC secretariat officials noted that USGS scientific support
through its DRAGON program would hopefully contribute in a
significant way to the data foundation of the assessment. In 2010,
USAID RDMA will cooperate with MRC, WWF and ADB to supplement the
ongoing SEA work by preparing a basin-wide sustainability assessment
protocol specifically for use by the MRC (and possibly other river
basins in Asia) to assess hydropower projects in a holistic,
basin-wide context that takes into account cumulative impacts.
USAID will also launch a new cooperative initiative with the ADB
Greater Mekong Subregion (GMS) program to develop new SEAs targeting
hydropower and other sectors by sharing practical experience between
Mekong countries through "twinning" partnerships. Despite the new
analysis the MRC should have at its disposal come July, it is not
clear whether the MRC will seek to stop any dam construction, or
whether any countries would heed MRC instructions in that regard.

MRC SECRETARIAT SPLIT BETWEEN VIENTIANE AND PHNOM PENH
---------------------
6. (SBU) The MRC Secretariat was relocated from Phnom Penh to
Vientiane in June 2004, though the Regional Flood Management and
Mitigation Centre remained in Phnom Penn. Following several years
of debate, the MRC Council agreed to split the Secretariat between
Phnom Penh and Vientiane, where the chief executive and half of the
program offices will remain. Concerns that Thailand would block the
move to Phnom Penh, due to its current tension with Cambodia, did
not materialize. The four countries also debated whether to
alternate the Secretariat between the two cities; the donor
community was fairly unanimous in the view that the Secretariat
should stay in Vientane, as any move would be costly, considering
donor funding makes up a large percentage of the MRC's budget.
Still, almost all donor representatives expressed to Emboffs
satisfaction, on balance, that the permanent location had finally
been decided; recruitment for Secretariat positions had been
difficult since potential employees did not know how long the office
would remain in Vientiane. Moving half the Secretariat to Cambodia
was also seen as having a capacity-building effect for Cambodia.
Note: In the closed-door development partner meeting representatives
generally agreed that they were not entirely satisfied with the
outcome of the decision to split the MRC Secretariat. Development
partners (DPs) would have preferred a single location. After much
discussion it was decided that donor partners would make a
supportive comment in the MRC plenary session. The group understood
that the Council's decision was s a difficult matter that required
compromise. DPs expressed that they stand ready to work with the
MRC to make co-hosting effective to ensure a focus on the
substantive issues within the MRC's mandate. End Note.
MRC FUTURE: Budget, Summit and Hydropower consultations
-------------------
7. (SBU) Member and donor representatives alike spoke of the need
for members to fund more of the MRC Secretariat budget. Member
contributions, which vary by member, were about $1.5 million in 2008
and have been slowly, if steadily increasing since 2000. Donor
contributions put the technical assistance budget at around $30
million. The Secretariat floated other avenues for member funding,
such as the carbon development mechanism or some sort of levies on
development projects such as hydropower dams. The Council agreed to
a heads of state summit for April 5, 2010, as part of the 15th
anniversary of the Mekong Agreement. The MRC reported that China had
signaled that it would likely send a high level delegate to the
summit. Thai Environment Minister Suwit, as 2009-10 chair of the MRC
Council, told ESTHoff that since the summit would be in Thailand, he
was sure that Prime Minister Abhisit would participate and that
donor/collaborating countries such as the U.S. would be invited.

COMMENT
-------
8. (SBU) This meeting showed that the members take the MRC
seriously; the Mekong River Commission is maturing but still faces a
test of relevancy. Under the 1995 Mekong Agreement, members
committed to prior notification, followed by a consultation process
for any member's actions that affected other members' use of the
river, such as for hydropower projects. So far there have been no
formal notifications despite MOUs signed in member countries for
mainstream Mekong Dams. One test of the Mekong Agreement and MRC
will be if the notification procedures are followed, but the true
test would be if Laos altered plans for any planned mainstream dam
on the basis of MRC consultation. In the past, when there were
transboundary issues of any consequence, the (usually) two countries
involved would negotiate bilaterally rather than use the legal
mechanisms of the Joint Committee or Council the Secretariat would
not get involved beyond providing information so as to maintain its
independence. One of the main criticisms by donors is MRC timidity
to address the difficult transboundary issues such as hydropower,
and the lack of member attention paid to the Secretariat on the
issues that were addressed.

9. Large-scale donors like Australia and Denmark are showing
confidence in MRC by funding programs directly, and with keen
interest in U.S. expertise and experience, perhaps the USG should
look for more ways to support the MRC. Japan and China have pledged
billions in assistance to the lower Mekong countries but not to the
MRC specifically. Donors were unanimous that the MRC has made
progress in monitoring and evaluation tools (derived in part from
observing USAID practices). Much donor criticism in the past has
stemmed from inadequate program controls. An independent review of
MRC practices in 2007 made 33 recommendations; donors at this
meeting noted with satisfaction that 27 of those recommendations had
been implemented. The low member contributions compared to the MRC
overall budget remains a cause for concern; true ownership by the
members will require higher contributions.

10. Seconding USG scientists to assist the MRC in its hydropower
assessment or other initiatives, or organizing study tours to the
U.S. would be welcome. France and Germany have each sent a technical
advisor to work at the MRC Secretariat. As the MRC CEO Jeremy Bird
said, hydropower represents the MRC's most important strategic
challenge since the Mekong Agreement was signed in 1995. (NOTE:
although not an activity with the MRC, USGS will hold a DRAGON
Forecast Mekong workshop in Can Tho, Vietnam from December 9 to 11,
which will involve MRC member representatives. END NOTE) Some USG
facilitation of the Mississippi and Mekong Commissions partnership
appears to be needed.

11. (U) This is a joint cable from Embassies Bangkok and Vientiane.

JOHN

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