Commentary

New Competition for the Resources of the Mekong Basin

in Program

Rapid economic globalization has turned “Asia’s Last Frontier” from a military battleground to an economic one.  The natural resources of the MekongRiver Basin are strategic assets for the countries through which its waters flow.  The rapid surge of trade and foreign investment in China and Southeast Asia has become the driving force of a new competition for control of these resources.  Foreign and regional powers alike have been attracted to the territories of Cambodia and Laos due to their rich supplies of natural wealth.  Today, palm oil, rubber, minerals and commercially viable timber define the rush for resources, in addition to intense interest in hydroelectric power development.

The globalized economy has created a new rush for involvement in the least developed countries of the region, Burma, Cambodia, Laos and Vietnam.  Burma, Cambodia and Laos in particular are the object of attention from China, while Vietnam is more developed and generally better able to resist excessive pressure from its wealthier and more powerful neighbors.

Mineral extraction in Laos is thriving, while the Cambodian mining industry is still in its infancy.  As of 2006 there were a total of three foreign companies mining for copper, gold, lead and zinc.  Six joint-ventures are extracting gemstones, gypsum, limestone, tin, zinc and manufacturing cement.  The majority of domestically operated mines are small scale quarries producing sand, gravel and other construction materials.[i]  By far the biggest players in the Laotian mining industry are Australian and Chinese companies.  There is significant concern regarding harmful runoff and waste produced by many of these mining operations as well as the deforestation of areas selected for mineral extraction.

Commercial logging efforts in Laos received significant Asian Development Bank (ADB) financing.  Initially focused on developing the timber and logging industries, recent efforts have concentrated on industrial pulp and paper production.  Myanmar is the most heavily forested country in the Greater Mekong Subregion (GMS), but suffers from widespread illegal logging, especially of expensive and slow-growing teak.  Cambodia’s forests also suffer the effects of corruption and weak governance, though efforts are underway to better manage this valuable resource.  Increasing global demand for biofuels has led to the creation of vast palm oil plantations throughout Southeast Asia, further contributing to deforestation in fragile ecosystems.

The current attitude toward Burma, Cambodia and Laos amongst China, Thailand, Vietnam and others reflects the evolution of foreign policy over the past two centuries.  Initially colonial prizes, they quickly became enmeshed in the dichotomy of Cold War politics.  In today’s globalized setting, economic growth is more important than ideology, as evident in the “market communist” regimes of China, Laos and Vietnam.  There is little doubt that the potential for riches exists in “Asia’s Last Frontier.”

Trade within the region is expanding.  The ADB is promoting cooperative development and economic integration.  The expansion of trade in the region also received a boost from the China-ASEAN agreement to achieve free trade by 2010.  Many projects within Cambodia and Laos have been financed with backing from Multilateral Development Banks (MDB’s), most notably the ADB and the World Bank, and also by major aid donor countries such as France, Japan, Norway, and neighboring Thailand.  China has seized this opportunity and is an increasingly important source of financial support to countries in the GMS.  Its strongest impact however, has been commercial investment in projects deemed too controversial for Multilateral Development Bank backing.

But investments in the region could be creating conditions for future instability.  Depletion of forest habitat for agriculture, logging or mining has a massive impact on those engaged in subsistence livelihoods.  Not only are food supplies impinged upon, but these populations are often relocated from traditional lands to areas deemed less commercially valuable.  Social upheaval is a real possibility so long as decision makers remain largely unaccountable to their citizenry and outside actors continue to exploit natural resources for external gain.

 

[i] John C. Wu, “The Mineral Industry of Laos,” USGS 2006 Minerals Yearbook: Laos, http://minerals.usgs.gov/minerals/pubs/country/2006/myb3-2006-la.pdf (Accessed February 5, 2008).

photo credit: Chris Lang, http://www.flickr.com/photos/chrislang/70834966/

 

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