Xayaburi Dam: How Laos Violated the 1995 Mekong Agreement

Kirk Herbertson

On November 7, 2012, Laos officially began construction on the controversial Xayaburi Hydropower Project, the first mainstream dam proposed for the Lower Mekong River. The process has not gone smoothly. Construction activities began almost two years before the official announcement. Vietnam and Cambodia called for a delay in construction because concerns over the dam’s transboundary impacts remained unresolved. Laos never conducted a comprehensive analysis of the transboundary impacts, instead insisting that the dam was engineered to be environmentally sustainable. The Mekong River Commission’s (MRC) Secretariat disagreed with many of Laos’ claims, but its advice went unheeded. Although the dam is going forward, its risks remain unknown.

The Xayaburi Dam was the first significant test for the Mekong Agreement, a treaty signed in 1995 by Cambodia, Laos, Thailand, and Vietnam. The treaty is intended to promote shared use and management of the river basin. Instead of cooperating with neighboring governments, however, Laos began implementing the Xayaburi Dam while Cambodia and Vietnam voiced concerns about the project’s transboundary impacts. Thailand remained silent through much of the dispute, but quietly financed the project and agreed to purchase its electricity. By November 2012, Laos’ and Thailand’s implementation of the project had advanced so far that Cambodia and Vietnam had little leverage left to raise concerns.

Laos insists that the Xayaburi Dam complies with the 1995 Mekong Agreement. Few others have questioned this claim.

In a new report, we examine the requirements of the Mekong Agreement in closer detail. On its surface, the text of the Agreement is often ambiguous. In an effort to seek greater clarity, we examine the requirements of the Mekong Agreement in its entirety. We also examine: (i) the historical record of the negotiations that describes what the parties intended when they drafted the Agreement; and (ii) international law that describes the meaning of the words that were carefully placed in the Agreement. In doing so, a clearer picture of the Mekong Agreement emerges. We find that Laos has misinterpreted the Mekong Agreement and failed to comply with several of its key requirements.

The full report is available below, but key findings are summarized here.

Laos is required to seek agreement with its neighbors before beginning the project.

To balance the rights of upstream and downstream countries, the Mekong Agreement requires all four governments to make a “good faith” effort to reach agreement on whether a project goes forward. Instead of trying to reach agreement on the Xayaburi Dam, Laos claimed that it only must consider comments of the other governments. Laos made no efforts to compromise on its position or to reach a mutually agreeable solution.

Laos must provide other governments with opportunity to evaluate the project’s impacts.

The MRC’s “prior consultation” is the process where the four governments try to reach an agreement. The primary purpose of the prior consultation is to provide the governments with an opportunity to evaluate the project’s transboundary impacts. Yet for the Xayaburi Dam, Laos did not provide neighboring governments with an opportunity to evaluate the project’s transboundary impacts. In particular, Laos did not assess the transboundary impacts before starting the prior consultation in September 2010.

Laos is not permitted to implement the project while consultations are still underway.

International law and the Mekong Agreement prohibit the governments from implementing a project while the governments are still discussing it—this is part of the obligation to negotiate “in good faith.” Laos and developer Ch. Karnchang began implementing the Xayaburi Dam in late 2010 before the Mekong governments even met to discuss the project. Later, Laos incorrectly claimed that “preparatory work” was allowed under the Mekong Agreement while the consultations are underway.

Laos is required to study the project’s transboundary impacts before consultation can take place.

Under international law, governments are required to prevent significant harm to other countries, which includes setting aside enough time to assess the project’s transboundary impacts. After failing to assess the Xayaburi Dam's transboundary impacts in 2010, Laos refused to delay project implementation after Cambodia and Vietnam requested these studies during the prior consultation. Instead, Laos claimed that untested technologies proposed by consulting company Pöyry were sufficient to mitigate any harm.

Cambodia, Vietnam, and Thailand have a right to extend the prior consultation’s timeframe.

The default timeframe for the prior consultation is six months, but under international law the downstream governments have a right to extend it. Laos claims that the Xayaburi Dam's prior consultation ended automatically after six months. During this initial six month period, Laos failed to provide the information that other governments needed to evaluate the project’s impacts. This undermined the primary purpose of the prior consultation. Laos also began project implementation during this initial period.

Cambodia, Thailand, and Vietnam have a right to seek compensation for any harm caused.

Laos has an obligation under international law to stop the project immediately if it causes harm to neighboring countries. Downstream governments Cambodia, Thailand, and Vietnam can seek compensation for any harm that the dam causes. Cambodia, Thailand, and Vietnam will have difficulty seeking compensation, however, because there is insufficient baseline data at this time to measure how the Xayaburi Dam will change the Mekong River. All three countries now face the difficult task of closely monitoring the impacts caused by the dam.

The Xayaburi Dam has set a dangerous precedent that could undermine future cooperation. In 2013, work might advance on two other Mekong mainstream dams—the Don Sahong and the Pak Beng Dams. Unless reforms are made quickly, disagreements over the Mekong dams could escalate into a conflict with serious economic and political implications.

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