Asymmetric bargaining between Myanmar and China in the Myitsone Dam controversy: social opposition akin to David's stone against Goliath

ABSTRACT

The Myitsone Dam suspension is an asymmetric negotiation between Naypyitaw and Beijing. The bilateral agreement of the hydropower project was concluded in 2009. However, Myanmar's civil society started to oppose the dam when political opportunities expanded in 2011. The quasi-civilian government in Myanmar was caught in an ‘audience cost dilemma': either to disappoint domestic constituents by fulfilling international obligations, or to compensate the Chinese dam developer for breaching the contract. In September 2011, Myanmar President Thein Sein declared the suspension of the dam throughout his tenure. Unexpectedly, China's state-owned dam company did not sue Naypyidaw. Moreover, Beijing even engaged with societal actors in Myanmar to seek their support for the project. How could Naypyitaw defy Beijing in this Myitsone Dam case? Drawing from 35 interviews with anti-dam campaigners and other stakeholders, as well as secondary data, this article argues that the rise of civil society successfully conditioned Naypyitaw's diplomatic options in the controversy. The change of Beijing's diplomatic strategy confirms that domestic constraint in Myanmar is not rhetorical. The Myitsone Dam case is an example that shows bilateral agreement without domestic endorsement can become China's business risk. Presumably, the dispute has wider implications for other Chinese overseas projects outside Myanmar.

KEYWORDS:

• Myanmar
• China
• social movement
• asymmetric bargaining
• diplomacy

Acknowledgments

Thanks go to Prof. Ian Holliday, Dr Courtney Fung, Dr Roger Lee Huang, Dr Marc Lanteigne, Dr Norma Wong, Ms Annie Song and an anonymous reviewer for commenting on earlier drafts of this article.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. This article refers to the country as Myanmar after 1989, and to the country as Burma before the military government changed the country's name.

2. The intrusion of the defeated Kuomintang troops after the Chinese Communist Party took power (Callahan, 2003, p. 146), the infiltration of China's Cultural Revolution and the subsequent anti-Chinese riots (Fan, 2012), and the Chinese Communist Party's material support of the Burma Communist Party (Maung Aung Myoe, 2011, Ch. 3) have all posed tremendous threats to Burma's sovereignty and governance.

3. Over 75 percent of China's oil imports have to pass through the Malacca Straits which is within the US navy's sphere of influence. China desires to reduce the reliance on the sea-lane transportation to avoid possible supply disruptions (Lai, 2010, p. 125).

4. It is important to note that the ratification process is not confined to the voting inside the legislature. Support or opposition from other ruling elites and societal actors also represent the acceptance or disapproval of an international agreement (Putnam, 1988, pp. 435–437).

5. Putnam (1988) lays out the sequence of the two-level game negotiation. First, the chief negotiators arrive at a tentative agreement. Then, they will seek endorsement from their respective constituents before signing it. Domestic opposition to a signed international agreement not only incurs legal ramifications for the state, but also political consequences for the incumbent (see also Haftel & Thompson, 2013). Therefore, it is highly improbable for a negotiator to sign an international agreement without securing domestic support.

6. Apart from the Myitsone hydropower station, Chipwi, Wutsok, Hpizaw, Kanglanhpu, Renam, and Laza hydropower dams will be constructed on Mali Hka and N'Mai Hka rivers.

7. In the Memorandum of Agreement (MoA) of the Myitsone Dam acquired by this author, force majeure is included in article 6 of the MoA. It is assumed that the contract also contains the same clause.

8. In June 2015, a source close to the State Power Investment Corporation stated that the company would claim US$5 billion in compensation (Ye Mon & Hammond, 2015). Another report revealed that the amount of compensation requested by the company was US$800 million (Sithu Aung Myint, 2016).

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Debby Sze Wan Chan

Debby Sze Wan Chan is a PhD candidate in politics in the Department of Politics and Public Administration at the University of Hong Kong. Her research interests include social opposition towards Chinese overseas investment and asymmetric international bargaining in economic disputes.