By Martin Petty
BANGKOK (Reuters) - Plans for the first dam across the lower Mekong River are putting Laos on a collision course with its neighbors and environmentalists who fear livelihoods, fish species and farmland could be destroyed, potentially sparking a food crisis.
The impoverished, Communist nation seems determined to defy international pressure and forge ahead with construction of the $3.5 billion Xayaburi Dam, a mostly Thai-led project that experts say could cause untold environmental damage.
The four countries that share the lower stretches of the 4,900 km (3,044 mile) Mekong -- Laos, Thailand, Vietnam and Cambodia -- failed at a meeting Tuesday to reach an agreement on construction of the 1.285-megawatt (MW) dam, the first of 11 planned in the lower Mekong that are expected to generate 8 percent of Southeast Asia's power by 2025.
In a joint statement, they said there was "still a difference in views" and the issue should be handled at ministerial level.
Mekong basin countries are bound by a treaty to hold inter-governmental consultations before building dams, but none has veto powers and Laos will have the final say, although not without considerable diplomatic pressure.
Ecologists and rivers experts say an environmental impact assessment conducted last year by the Lao government was patchy at best. They warn that the livelihoods of 60 million people in the lower Mekong region are at risk if the Xayaburi dam goes ahead without proper risk assessment.
Activists say scores of fish species face extinction, fish stocks will dwindle as migratory routes will be blocked, and swathes of rice-rich land could be deprived of fertile silt carried downstream by Southeast Asia's longest waterway.
Entire villages would be forced to relocate.
According to a study by the Mekong River Commission, an inter-government agency, the proposed 11 dams would turn 55 percent of the river into reservoirs, resulting in estimated agriculture losses of more than $500 million a year and cutting the average protein intake of Thai and Lao people by 30 percent.
China has built four dams on the upper river, closer to its source, but they are equally controversial. Activists say they were responsible for a drought last year that sent lower Mekong water levels to their lowest in half a century.
Laos has not responded to the warnings or to scientists' recommendations. Viraphonh Viravong, head of the Lao delegation, said after Tuesday's meeting that it would "consider" accommodating its neighbors concerns, but an extension of the consultation process was no longer practical.
The Lao government has hailed Xayaburi as a model for clean, green energy that will stimulate its tiny $6 billion economy and improve the lives of its 5.9 million people, over a quarter of whom live below the poverty line, many without electricity.
Its energy-hungry neighbor, Thailand, will buy about 95 percent of the power generated by the dam and three Thai firms have a stake in the project, according to an announcement on Thailand's stock exchange last month.
Thailand's No. 2 building contractor, CH Karnchang Pcl, has 57 percent share in the project, state-owned energy giant PTT has a 25 percent share and Electricity Generating PCL a 12.5 percent stake in the dam, which Thailand's government has said very little about.
Dubbed the "battery of Southeast Asia" because of its hydropower ambitions, Laos is already committed to supplying 7,000 MW to Thailand, 5,000 MW to Vietnam, and 1,500 MW to Cambodia by 2015. Its energy ministry says it has the potential to generate 28,000 MW of power from the Mekong.
But opposition is fierce. Protests over the dam have been held in Thailand and in some villages in Laos where dissent is rare. Some 263 non-governmental organizations have petitioned Lao Prime Minister Thongsing Thammavong and his Thai counterpart, Abhisit Vejjajiva, to scrap it.
U.S. Senator Jim Webb, a Democrat and chairman of the U.S. senate subcommittee on East Asia and the Pacific, said the dam was "very troubling" and would "have devastating environmental, economic and social consequences for the entire Mekong subregion."
"It would be prudent to delay construction ... until adequate planning and multilateral coordination can be guaranteed. Absent this collaborative approach, the stability of Southeast Asia is at risk," he said in a statement last week.
Vietnam and Cambodia have made public calls for the project to be postponed pending further studies, while state-controlled media in Vietnam has been uncharacteristically critical, which suggests behind-the-scenes diplomacy had failed.
Vietnamese Foreign Ministry spokeswoman Nguyen Phuong said Mekong countries "must cooperate closely in exploiting and using natural resources in a fair and proper manner," while Watt Botkosal, deputy secretary general of Cambodia's National Mekong Committee, called for a thorough study on the "impact on the social economy that millions of people rely on."
What has raised eyebrows is Laos's refusal to back down in the face of clear opposition from Vietnam, which has long exerted major influence on its much smaller socialist neighbor. Analysts say Laos has a lot to lose if it upsets Hanoi, its biggest investor.
"What's happening is unprecedented. It's hard to see who is really in favor of this dam," said Ian Baird, an expert on Laos and specialist on hydropower dams and fisheries at the University of Wisconsin-Madison.
"Laos isn't going to make any friends here. Politically, these are uncharted waters and it's difficult to see quite where this is going."
Baird said the environmental assessment carried out by Laos lacked credibility, while five international experts interviewed by the U.S.-based environmental group, International Rivers, delivered scathing criticism of a report they said was "contradictory," "incomplete" and "irresponsible."
But what has outraged most activists and could embarrass Laos within the 10-member ASEAN regional bloc are reports that appear to show the Lao government and its Thai partners have already started construction on the dam.
Sunday's Bangkok Post newspaper carried pictures of construction of what it said was a 30 km (19 mile) stretch of road leading up to the dam site, with 20 trucks lined up each bearing the logos of CH Karnchang.
International Rivers said the decision to refer the case to ministers was a reprieve that presented a window of opportunity to strengthen international opposition to the project.
"Given the project's inevitable trans-boundary impacts we urge the region's governments to acknowledge the widespread concern of the public and civil society groups and indefinitely cancel the Xayaburi Dam project," it said in a statement.
(Additional reporting by Prak Chan Thul in Phnom Penh and John Ruwitch in Hanoi; Editing by Robert Birsel)