Analysis: Cambodia signing up for Chinese billions – at a price

Prime Minister Hun Sen and Chinese Premier Li Keqiang sign a host of development agreements at the Peace Palace in Phnom Penh yesterday. Hong Menea

Andrew Nachemson | The Phnom Penh Post
Publication date 12 January 2018 | 05:51 ICT

Arriving in Phnom Penh in the midst of a political crackdown on dissent, Chinese Premier Li Keqiang showed no qualms about signing 19 major development deals yesterday with Cambodian Prime Minister Hun Sen, making it clear that Chinese aid to the Kingdom remains unaffected by human rights concerns.

Indeed, as Cambodia’s relations with Western democracies deteriorated over the last year thanks to the Kingdom’s abrupt democratic backslide, Hun Sen has gloated that China would fill any funding void left behind – and so far it has, beefing up support for the upcoming national elections and for the Cambodian Mine Action Center after the US and others withdrew support.

But while that aid – and the deals signed on the sidelines of the China-backed Mekong-Lancang Cooperation (MLC) summit yesterday – may not come with any human rights strings attached, analysts and past experience alike suggest that the Chinese infusion of aid and investment does have a cost, one paid by marginalised communities and the environment even as government officials and Chinese businessmen line their pockets.

“I’ve never seen a nation have such an overwhelming impact on the earth as China does now,” wrote Dr Bill Laurance, an ecologist and Australian Laureate at James Cook University, in his article The Dark Legacy of China’s Drive for Global Resources, published by the Yale School of Forestry and Environmental studies in March 2017.

His research team is active in 20 nations in Asia, Latin America and Africa, where he said Chinese business and investors are causing devastating damage to the environment.

“What I have witnessed frightens me very much,” he told The Post via email this week.

Laurance acknowledges that developing countries need infrastructure improvements and that Chinese investments do offer some benefits, but he has found that Chinese investment rarely furthers equitable development or environmental sustainability. He told The Post that far from bringing opportunities and wealth to locals, Chinese development projects tend to maintain wealth within the Chinese community.

“Chinese businessmen tend to be very cliquish, living and working together and strongly preferring to hire their own countrymen . . . before they will hire locals,” he said.

“In my experience many Chinese businessmen are extremely aggressive in bribing public officials . . . so that they acquire broad access to land, minerals, timber, oil and gas, and other resources, often at the expense of local residents and nationals.”

Laurance acknowledges that China is not unique in its environmental exploitation, but says it has gone far beyond that of other nations.

“No nation has ever changed the planet so rapidly, on such a large scale, and with such single-minded determination,” he wrote in the article.

A worker stands in front of the Lower Sesan II Dam as it was put online in September. The dam, which displaced thousands and may destroy the fisheries which feed millions, is partly owned by Chinese state firm Hydrolancang. Hong Menea

Regional leaders convened in Phnom Penh this week to endorse a five-year plan to guide development along the Mekong through China’s MLC mechanism, however details of the plan were not disclosed. A brief “Phnom Penh Declaration” issued by delegates pledged stability, development and, notably, noninterference, but the idea of China as a steward of the Mekong was at odds with its reputation as a developer whose projects threaten its very ecosystem and the millions of livelihoods that depend on it.

Observers fear the relatively new MLC will give China unfettered access to dam development along the river, something that the far more established intergovernmental body the Mekong River Commission has long been wary of.

A significant portion of Chinese foreign investment in Cambodia has already gone towards building hydropower dams.

Between 2006 and 2008, the Kamchay Dam in Kampot province was Cambodia’s largest foreign investment project, with half of then-Chinese Premier Wen Jiabao’s pledged $600 million in aid going towards the dam’s development, according to a report by a group of international NGOs. The project is headed by Sinohydro, a state-owned Chinese company.

“Civil society groups have warned that Cambodia’s hydropower developments could displace thousands of people and seriously damage the environment,” the NGOs’ paper notes.

Those concerns played out with the Lower Sesan II Dam in Stung Treng, which was inaugurated by Hun Sen in September. The dam, built by the Chinese state-owned company HydroLancang, displaced thousands of indigenous community members and uprooted a way of life intrinsically linked to their traditional lands. It has also raised major concerns about irrevocable damage to the Tonle Sap fisheries, which feed millions.

Cambodia is hardly alone: China’s years-long exploitation of natural resources in Africa has long garnered international attention.

David Shinn, a professor at George Washington University’s Elliot School of International Affairs, writes that China took advantage of lax environmental standards across the continent that, like Cambodia’s, “are much lower than accepted international norms”.

In his paper The Environmental Impact of China’s Investment in Africa, published in International Policy Digest, Shinn noted that in Sudan and South Sudan, development from the China National Petroleum Corporation caused widespread devastation.

“Seismic surveying created hundreds of kilometers of bulldozed tracks, destroying farmland and increasing deforestation. Road construction disrupted water flows, which damaged irrigation systems and forced the evacuation of several communities,” Shinn wrote, noting that “Sudanese government officials were more interested in advancing the oil industry than enforcing environmental laws”.

Shinn also noted that China is the largest importer of Mozambique’s hardwood timber, 80 percent of which is illegal.

Cambodian Prime Minister Hun Sen (left) walks with Chinese Premier Li Keqiang (right) for a signing ceremony at the Peace Palace in Phnom Penh yesterday morning. Hong Menea

Alejandro Gonzalez-Davidson, an environmental activist who was deported from Cambodia in 2015 on orders of Hun Sen, accused the Cambodian government of being “openly in bed” with large Chinese companies.

“It makes total sense for it to give priority to this so-called ‘aid’ from China. These are large amounts of money we are talking about here, most of which of course goes towards huge projects such as hydro-electric dams, economic land concessions, [and] mines,” he said in a message last week.

Gonzalez-Davidson explained that these “non-transparent and non-accountable” Chinese companies are able to wield the Cambodian judiciary, police and even armed forces to quash protests and legal complications.

This played out in Koh Kong province at a project by Union Development Group (UDG) that Gonzalez-Davidson points to as another example of exploitative Chinese development couched as investment. The Chinese-owned firm was given a 99-year lease on 45,000 hectares of land, an apparent violation of regulations limiting economic land concessions to 10,000 hectares.

UDG laid out grand plans to a build a sprawling seaside resort and accompanying international airport – plunked down within the bounds of the Botum Sakor National Park – spending $3.8 billion, but displacing thousands of people in two districts in the process.

UDG has been accused of illegally logging the area and reneging on promised compensation packages to displaced villagers. At one point, the UN Office of the High Commissioner for Human Rights even stepped in to urge the firm to put an immediate end to the practice of using Cambodian military officials to deal with villagers disputing the compensation packages offered.

The dispute remains unresolved.

But as Gonzalez-Davidson explained, many Cambodian companies that are contracted to assist with Chinese projects are owned or associated with government officials. For example, the Pheapimex group, which is owned by ruling party Senator Lao Meng Khin, has a monopoly on electricity distribution from hydropower dams.

Brian Eyler, an expert on China’s economic relationship with Southeast Asia, and the director of the Stimson Institute’s Southeast Asia program, said Chinese aid causes both short- and long-term damage.

“The short term price paid by countries in the Mekong and elsewhere is an under-utilization of domestic labor and resources,” he explained in an email, noting that China has committed 50,000 of its own labourers to building a high-speed railway in Laos, rather than using domestic workers.

Eyler added that China’s “myopic vision” when it comes to the environment “often comes with a great cost, especially abroad where Chinese stakeholders fail to understand the local culture, social norms, and importantly the ecological system”.

Eyler also pointed to the Lower Sesan II dam as an example, explaining that the structure’s so-called fish ladders meant to allow fish to migrate upstream will be ineffective.

“Even if these fish ladders successfully send a portion of fish over the dam’s wall, their eggs laid upstream will not be forced back downstream and into the Tonle Sap for maturation – a process that has played out over many millennia and created the world’s largest inland fishery – because the eggs will fall into the dam’s reservoir and perish,” Eyler said.

“This lack of understanding of how the Mekong works will deliver huge environmental and social costs from the reduction in Cambodia’s fish catch,” he added.

Cambodia-based conservationist Marcus Hardtke says Chinese developers are interested in “mega projects – the bigger, the better”, because they yield the most profits for developers and Cambodian officials alike.

“Plenty of officials from different ministries are also profiting in the process. The money is in signing these lucrative construction contracts; logic and sustainability of the proposed project is usually not the priority when these deals are approved,” he said, adding that Chinese and Vietnamese investors are not averse to “corrupt or criminal sectors like land dealings and the timber trade”.

Hardtke points to dam construction in the Cardamom Mountains as an example of unsustainable development. “Massive environmental impact, large-scale illegal logging, oversized roads mindlessly bulldozed into protected areas, pollution, absence of government oversight. At times it looked like 1,000 bombs exploded in the area,” he said.

Hardtke added that a lack of legal standards or strong state institutions prevents any improvements or enforcement of regulations, and allows China to freely exploit Cambodia’s resources.

Multiple attempts to reach representatives of the Chinese Embassy over the course of this week were unsuccessful.

But Sao Sopheap, spokesman for the Ministry of Environment, dismissed the idea that Chinese aid was particularly dangerous, and claimed environmental regulations in Cambodia are “strong”.

“I don’t discriminate against Chinese investment,” Sopheap said yesterday. “All investment and development must comply with the regulations of the country.”

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