Indigenous Peoples, Investment

Treaties and Myanmar:

An examination of relevance to the Myitsone dam

Vicky Bowman, Director, Myanmar Centre for Responsible Business

Consultation by the UN Special Rapporteur on Indigenous Peoples

Bangkok 2-3 May 2016

www.mcrb.org.mm

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MCRB Objective

To provide an effective and legitimate platform for

the creation of knowledge, capacity and dialogue

concerning responsible business in Myanmar,

based on local needs and international

standards, that results in more responsible

business and thereby contributes to sustained,

inclusive and sustainable economic growth.

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‘business activities that work for the long-

term interests of Myanmar and all its

people’.

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The Myanmar legal framework has begun to recognise specific rights of indigenous peoples…….

The Protection of the Rights of National Races Law (2015), Article 5, states that the indigenous peoples ‘should receive complete and precise information about extractive industry projects and other business activities in their areas before project implementation so that negotiations between the groups and the government/companies can take place’ [unofficial translation]

◦ However a definition of ‘indigenous peoples’ was omitted from the law, and IPs are only mentioned in this article.

EIA Procedures (29 December 2015, which implemented 2012

Environmental Conservation Law) includes a definition of:

◦ indigenous peoples (‘Indigenous People means people with a social or

cultural identity distinct from the dominant or mainstream society,

which makes them vulnerable to being disadvantaged in the processes

of development’.)

Article 7: ‘Projects that involve Involuntary Resettlement or which may

potentially have an Adverse Impact on Indigenous People shall comply

with specific procedures separately issued by the responsible ministries.

Prior to the issuance of such specific procedures, all such Projects shall

adhere to international good practice (as accepted by international

financial institutions including the World Bank Group and Asian

Development Bank) on Involuntary Resettlement and Indigenous Peoples’.

Bilateral agreements: Agreement between the government of the Republic of the Union of Myanmar and the government of:- The State of Israel for the Reciprocal Promotion and Protection of Investments

(2014) - The Republic of Korea for the Promotion and Protection of Investments (2014)- The United States (Investment incentive agreement) (2013)- The Republic of Indonesia (Framework Agreement on Trade and Investment)

(2013)- Japan for the Liberalization, Promotion and Protection of Investment (2013)- The Republic of India for the Promotion and Protection of Investments (2008)- The Kingdom of Thailand the Promotion and Protection of Investments (2008)- The State of Kuwait for the Encouragement and Reciprocal Protection of

Investments (2008)- The Lao People’s Democratic Republic for the Promotion and Reciprocal

Protection of Investments (2003)- The People’s Republic of China on the Promotions and Protections of

Investments (2001)- The Socialist Republic of Vietnam for the Promotion and Reciprocal Protection

of Investments (2000)- The Republic of Philippines for the Promotion and Reciprocal Protection of

Investments (1998)

2012 ASEAN Comprehensive Investment Agreement (ACIA) An EU/Myanmar IPA is under negotiation – (2016)

• 6,000 MW Myitsone dam, part of a 20,000 MW complex of 7 dams (US$ 3. 6 billion project)

• Myitsone to flood 64,835 acres• MoU signed 2006• According to China Power Investment

Corporation (CPI) (www.uachc.com):• Myanmar will receive 11 billion kwH free• Only what the Myanmar Ministry of Electric

Power decides is surplus to the country’s requirements will be exported.

• China will pay for electricity it buys• 50 year concession during which direct

benefits to Myanmar estimated at USD 54 billion from the taxes levied on the forecast power exported to China together with the free shares and free power to Myanmar.

Case study on indigenous peoples and Myanmar-China Investment Treaty: The Myitsone Dam

As our government is elected by the people, it is to respect the people’s will. We have the responsibility to address public concerns in all seriousness. So construction of Myitsone Dam will be suspended in the time of our government. Other hydropower projects that pose no threat will be implemented through thorough survey for availability of electricity needed for the nation. I would like to inform the Hluttaws that coordination will be made with the neighbouring friendly nation, the People’s Republic of China, to accept the agreements regarding the project without undermining cordial relations.

Statement by President U Thein Sein to Parliament, September 2011

Planned structure, and current state of construction (Google Maps sourced 1 May 2016)

A small dam, ‘Little Chipwi’, was finished in 2013 and is supplying power to the project site, relocation site and surrounding areas

December 2006 Ministry of Electric Power (1) (MOEP) and China Power Investment (CPI) signed “MoU on Hydropower Project in Nmaihka River, Malikha River and Myitsone of Ayeyarwady River”

Shareholding is 80% CPI, 15% MoEP(1) and 5% Asia World MoU is not public. ◦ “We didn’t discuss the Myitsone Dam project with the Chinese

foreign minister because I haven’t become familiar enough with the contract details” (Aung San Suu Kyi’s quote following her meeting with Chinese Foreign Minister Wang Yi, April 2016)

Provisions on environmental and social safeguards, expropriation, compensation, arbitration, stabilisation etc are not known.

No other hydro MoUs are available for comparison (and there is no equivalent project to Myitsone).◦ The Myanmar 2013 model Oil and Gas Production Sharing Contract

(Section 22) contains provisions for arbitration in Singapore under UNCITRAL Arbitration Rules, and ‘In rendering an award, the arbitrators shall take account of the laws of the Republic of the Union of Myanmar’ - however this may not be a good guide to the content of the Myitsone MoU.

“The Myanmar Government finally expressed their intention to China. The Myanmar Government began to contact the Chinese Government through various channels since 2001, and invited Kunming Hydroelectric Investigation and Design Institute in 2003 to make a survey of “Myitsone Dam on the Ayeyawady River, a Multi-purpose Water Conservancy Project”.

Compared with the urgency of Myanmar Government, the Chinese enterprises were very cautious during the early contact due to the complex political and social situations in this region. To promote the project progress, the higher-ups of Myanmar Government, the high-ranking military officers and the local leaders expressed their goodwill many times to the Chinese Government. Particularly, Thein Sein, who became the President of Myanmar later, went to the relevant departments and enterprises in China many times for mobilization and also made the commitments.

Under the enthusiastic promotion by Myanmar Government, in the 3rd China-ASEAN Business & Investment Summit held in October 2006, the Myanmar Government and China Power Investment Corporation finally reached the investment agreement. In the same year, they signed the memorandum of understanding (MOU)”.

“The ordinary people with a smattering of knowledge of Myitsone Hydropower Project, have an impression that it is a project actively promoted by China via the higher-ups in Myanmar, and Myanmar is passive and unwilling. However, the practical situation is widely divergent from this opinion. In fact, the Myitsone Hydropower Project is a project strongly promoted by the Myanmar Government”.

“The Development of Myitsone Hydropower Project was once the common aspiration of the people in Myanmar. What's more, the Myanmar Government had put forward the plan of Myitsone Dam construction in 1952. Later, the Myanmar Government had looked for many investors in Europe, Japan, China and other countries and regions. However, due to various problems such as fund, electricity market and western sanctions, the project was not successfully approved”.

This was not addressed in the EIA, despite quoting WB OP4.10, no baseline assessment of the presence of indigenous peoples was undertaken

However, Kachin Development Network Group (kdng.org ) reports that “over 60 villages, approximately 15,000 people, will be forcibly relocated without informed consent for the Myitsone Dam alone. Families from six [Kachin] villages have already been forced to move (2010) and are currently suffering in a relocation camp. This dislocation will continue to fuel social problems including conflicts over jobs and land, and an increase in migration and trafficking to neighboring countries. Women will be particularly impacted”

Kachin pastor: ‘In Burma our natural heritage includes the famous Pukpwa and Zwekabinmountains and the Mali-N’Mai confluence. If one of these treasures is destroyed, it is just as if all could be destroyed’ Kachin pastor, interview in ‘Damming the Irrawaddy’ report by KDNG)

The company denies KDNG’s claim that local Kachin groups were never consulted, claiming that Upstream Ayeyawady Confluence Basin Hydropower Co (UACHC), has “attached great importance to the stakeholders‘ rights to know and to participate”. It added that before the investment, CPI “consulted the elders from six Kachin tribes, learning that these elders all were in favor of the Ayeyawady River project”.

http://www.myanmar.com/Myanmar_Weekly_News/Myanmar_Weekly_News_Vol01_No.05.pdf

A Chinese perspective of the cultural heritage aspectsInternational Herald Leader, January 15, 2016) www.uachc.com/Liems/esite/content/showDetail.jsp?nid=11203&newtype_no=2282

The people’s opposition of Myitsone Hydropower Project is

originated from two lies. The first is that the site of Myitsone

Hydropower Project is the holy land of religion for Kachin

People, or even the holy land of national culture of Myanmar.

Strictly speaking, the term “holy land of national culture” is

put forward by a non-governmental organization (NGO)

supported by Kachin People in 2007 according to some local

legends, before which this view had never been universally

accepted in Myanmar, or even in Kachin State. The

monument at the intersection of three rivers (i.e. the Jinsha

River, the Lancang River and the Nujiang River) were

constructed in a rush in 2014. However, through the

continuous publicity of media controlled by some countries

such as Japan, this lie has been accepted as a truth by most

people in Myanmar who are not familiar with local conditions.

Prior to 2012, there was no Myanmar legal framework/requirement for EIA.

EIA was introduced by both the the 2012 Environmental Conservation Law, and the 2012 Foreign Investment Law

However, an EIA undertaken by Changjiang Survey planning Design and Research Limited on request of MoEP in 2009 (and it is understood China EXIM Bank)

EIA was published September 2011 (i.e. following widespread protest movement). Available at http://www.uachc.com/Liems/esiten/detail/detail.jsp?newsNo=6897

Although World Bank OP/BP4.10 is cited as ‘technical specification document’ there is no mention of indigenous peoples in the EIA

An Independent Expert Review of the EIA concluded that the social impact assessment was ‘unsubstantiated and overly optimistic ‘

https://www.internationalrivers.org/files/attached-files/independent_expert_review_of_the_myitsone_dam_eia_0.pdf

“..Influences on minority national culture in hydropower project by the implementation of cascade hydropower stations mainly embodies that during removing migrants, original geographic environment and social environment of national culture will change to form new folk cultural pattern” (p. 211)

‘..with the promotion of hydropower development and unceasing development , alien cultures will impose certain influences on minority culture . Project related Keqin nationality (‘Keqin’ is a Chinese spelling for ‘Kachin’); Miannationality and Dan nationality are bigger nationalities with long culture, deep history, so the alien influences are limited’ (p. 210)

• Survey was over 5 months in 2009.

• Climate change impacts on water

flow not considered and given recent

climate change must be revisited

(2016)

• Limited downstream assessment of

Ayeyarwaddy River and no

catchment wide assessment.

• No health impact assessment.

• Mitigation measures unclear.

• No public consultation.

• No cumulative impact had been

carried out.

• No examination of alternatives or

“no-build” option was undertaken

“..the Environmental Impact Assessment (EIA)

contains some serious deficiencies and flawed

conclusions. Based on the reviews from 12

experts in fields including ecology, fisheries,

environmental and social impact assessment,

public health, flood management and

hydrology, the survey found that the analysis of

the dams’ impacts on terrestrial fauna was

“relatively robust,” but that there were serious

flaws in the methodology and structure of the

EIA, total neglect of the temporal and spatial

scale of the social and environmental impacts

of the dams, superficial analysis of the dams’

impacts on freshwater biodiversity, and that

public participation failed to meet best

practice”.

‘Polluter Pays’ introduced in the Environmental Conservation Law (Article 7)

and EIA Procedures Article 102

Responsibility for all Adverse Impacts

102 The Project Proponent shall bear full legal and financial responsibility for:

a) all of the Project Proponent's actions and omissions and those of its

contractors, subcontractors, officers, employees, agents, representatives, and

consultants employed, hired, or authorized by the Project acting for or on behalf

of the Project, in carrying out work on the Project; and

b) PAPs until they have achieved socio-economic stability at a level not

lower than that in effect prior to the commencement of the Project, and shall

support programs for livelihood restoration and resettlement in consultation with

the PAPs, related government agencies, and organizations and other

concerned persons for all Adverse Impacts

103 The Project Proponent shall fully implement the EMP, all Project

commitments, and conditions, and is liable to ensure that all contractors and

subcontractors of the Project comply fully with all applicable Laws, the Rules, this

Procedure, the EMP, Project commitments and conditions when providing services

to the Project.

104 The Project Proponent shall be responsible for, and shall fully and

effectively implement, all requirements set forth in the ECC, applicable Laws, the

Rules, this Procedure and standards.

Legacy projects

EIA Procedures, Article 8 states: “Any Project already in

existence prior to the issuance of the Rules, or the

construction of which has already commenced prior to the

issuance of the Rules, and which, in either case, shall be

required to undertake, within the timeframe prescribed by

the Department, an environmental compliance audit,

including on-site assessment, to identify past and/or

present concerns related to that Project's Environmental

Impacts, and to:

develop an EIA or IEE or EMP;

obtain an ECC; and

take appropriate actions to mitigate Adverse Impacts in

accordance with the Law, the Rules, and other applicable

laws.

vhttp://www.aseanbriefing.com/userfiles/resources

-pdfs/Myanmar/BIT/Myanmar_China_BTI.pdf

Article 4 EXPROPRIATION

1. Neither Contracting Party shall expropriate, nationalize or take other

similar measures (hereinafter referred to as "expropriation") against the

investments of the investors of the other Contracting Party in its territory,

unless the following conditions are met:

(a) for the public interests;

(b) under domestic legal procedure;

(c) without discrimination;

(d) against compensation

2. The compensation mentioned in Paragraph 1 of this Article shall be

equivalent to the value of the expropriated investments immediately

before the expropriation is taken or the impending expropriation

becomes public knowledge, which is earlier. The value shall be

determined in accordance with generally recognized principles of

valuation. The compensation shall include interest at a normal

commercial rate from the date of expropriation until the date of

payment. The compensation shall also be made without delay, be effectively

realizable and freely transferable.

Article 5 COMPENSATION FOR DAMAGES AND LOSSES

……..

Investors have already spent US$1.2 billion and money is being spent every day on maintaining the sites and providing free 24-hour power to the surrounding villages. In total the Myitsone dam alone is likely to cost $8 billion to complete.China has stated that if Myanmar wants to cancel the project completely, it will need to solve the situation legally and provide compensation for the contract. “CPI will require at least $5 billion in compensation for the time and money spent,” said a source close to the project. “If the project is cancelled altogether, they will almost certainly sue the government.”Myanmar Times, 5 June 2015

“About $800 million has been spent on the

project” [a company official] said, Myanmar times 8 October 2015

The (unpublished) MoU is likely to contain provisions on disputes and arbitration, but the China-Myanmar Investment Protection Agreement will be another source of legal protection for the company.

However the project itself needs to become legally compliant with current Myanmar Law. Myanmar legal framework on EIA and Indigenous Peoples (IPs) has developed since pre-2011 (when it was non-existent). The Myitsone project is not compliant with Myanmar’s current legal framework, or the international standards which are its current reference point e.g. IFC.

Myitsone’s impact on Indigenous Peoples’ rights is one of a number of concerns about major environmental and social impacts

These impacts, including downstream and cumulative impacts, have not been properly assessed in the EIA. Nor have effective mitigation plans put in place (see Independent Expert Review)

With the ‘Polluter Pays’ principle being introduced (see Article 7 of Environmental Conservation Law and Article 102 of EIA Procedures) the liability for unassessed/poorly mitigate downstream economic damage could run to $$billions (see recent estimates of damage by Xayaburi dam, Laos). This will further changing the project economics and should be taken into consideration by the company and the Myanmar Government.

Although Article 7 of the EIA Procedures now provides protection for Indigenous Peoples rights concerning major projects, Myanmar needs to develop its own safeguards for Indigenous Peoples rights, ideally compliant with international standards such as UNDRIP.

These safeguards should protect IP rights against projects by domestic as well as foreign investors.

To further underline this, reference to the rights indigenous peoples could be included in Myanmar’s investment treaties

In line with Article 7 and Article 8, the Myanmar government must ensure that EIAs and EMPs, including for legacy projects, comply with Myanmar’s new requirements for IP protection i.e. that they ◦ ‘adhere to international good practice (as accepted by international financial

institutions including the World Bank Group and Asian Development Bank) on Involuntary Resettlement and Indigenous Peoples’.

Requirement should be implemented in a systematic non-discriminatory manner on all relevant projects (and not only for matters concerning IPs), and be based on solid independent expert advice.

Undertake an independent environmental compliance audit (under Art 8 EIA Procedures of all seven dams in the Upper Ayeyarwady Confluence hydropower complex); this should also be undertaken for other similar projects.

Promote a national debate and public consultation (neither of which were never able to be held previously) with input invited from all interested parties, including the company and other Chinese stakeholders, to consider whether the project is in line with Myanmar’s development priorities and energy policy, or should be amended or cancelled.

National debate should be supported by:◦ Publication of the 2006 MoU ◦ This is in addition to inclusion of the UACHC in the wider IFC Strategic Environmental

Assessment of Hydropower in Myanmar.◦ Independent study of the full economic costs/benefits of the project as currently

designed, including potential downstream economic costs, as well as alternatives

If project - as originally planned, or amended - is still considered desirable by both Myanmar and the investor - a new EIA process should be undertaken for all its elements

This should be fully compliant with Myanmar’s EIA Procedures which address gaps in the previous EIA, and include proper consideration of social impacts, human rights, indigenous peoples, conflict impacts, upstream/downstream and cumulative impacts.