US embassy cable - 04RANGOON125

S E C R E T RANGOON 000125 
 
SIPDIS 
 
E.O. 12958: DECL: 01/29/2014 
TAGS: PREL, ENRG, KNNP, BM, CH 
SUBJECT: CHINESE DAMS, CHINESE INFLUENCE IN BURMA 
 
REF: RANGOON 88 
 
Classified By: COM CARMEN M. MARTINEZ FOR REASON 1.5(D). 
 
1.  (SBU) SURGING CHINESE SOCIO-ECONOMIC INFLUENCE:  Emboffs 
traveling on GOB-organized "Study Visit" to border regions 
and central Burma January 23 - 26 witnessed a high degree of 
Chinese socio-economic influence across a 325-mile stretch of 
Burma's Shan State border with China, especially in the 
self-administered autonomous regions of ethnic minority 
cease-fire groups.  Even in the interior northern towns of 
Lashio, Kengtung, and Maymyo (Pwin U Lwin) we saw and heard 
clear indications of major Chinese economic inroads.  Another 
emboff who traveled to the Chinese border regions with UNODC 
will report septel on some striking indications of Chinese 
dominance of the economy and social fabric in some parts of 
Burma's frontier regions. 
 
2.  (SBU) THE HIGH DAM:  Emboffs visited the Ye Ywa Dam site, 
located 39 miles SW of Mandalay.  Scheduled for completion in 
2007, the 433 foot high dam will create a reservoir filling a 
canyon some 45 miles long.  When completed the dam's hydro 
plant will generate 790 MW of electricity, adding 
significantly to the current countrywide total of perhaps 
1,500 MW.  A Swiss firm, Colenco Power Engineering Co., has 
provided the engineering consulting expertise, and the 
Export-Import Bank of China provided a $200 million soft loan 
to cover two-thirds of the hard-currency costs of the 
project.  This loan was agreed to during Senior General Than 
Shwe's January 2003 visit to the PRC, and is to be used to 
purchase Chinese equipment and material for the dam project. 
The GOB sees this project providing the energy for industrial 
expansion of a large swath of central Burma in coming years. 
 
3.  (SBU) CHINESE CONSULTANTS, TIED LOANS:  After visiting a 
major irrigation scheme near Salin on the Irrawaddy River in 
Magway Division (equipped with massive Chinese pumping 
equipment) emboffs then toured a nearly complete, 
multi-purpose dam 48 miles WNW of Minbu.  The Mone Dam is 
financed by a soft Chinese loan of $32 million from the China 
International Investment & Trust, specifically for the 
purchase of Chinese equipment and material.  In addition, the 
Mone Dam utilizes Chinese engineering consultants.  Schedule 
to be finished in March 2004, the 200 foot high dam will 
provide irrigation water and 75 MW of hydro-electricity. 
 
4.  (C) COMMENT:  With no guiding political ideology, Burma's 
military regime seems to be pursuing the aim of "legitimacy 
through infrastructure."  Chinese soft loans for Burmese 
infrastructure projects provide the capital-poor SPDC with a 
lifeline to resources badly needed to meet the regime's 
developmental goals. 
 
5.  (S) COMMENT CONTINUED:  Emboffs were flown on a Burmese 
Air Force MI-17 helicopter the 48 miles across the dry, flat 
plains of Magway Division from Mone Dam to Minbu on a clear 
day with good visibility.  If the GOB were attempting to hide 
a sensitive weapons or other facility NW of Minbu, it seems 
odd that they chose to fly us over that route.  At Mone we 
witnessed around-the-clock work being done to complete the 
dam within the next 60 days, including the installation of 
heavy-gauge (inch and a half) iron re-rod in the 210-foot 
deep concrete-lined surge tank.  Reports (ref) of 
suspiciously heavy rebar being off-loaded at Minbu could 
conceivably have been based on sightings of materials being 
rushed to complete the Mone Dam.  End Comment. 
Martinez