China’s influence can be seen everywhere in this remote desert. As we travel through the area, we begin to understand the extent of this development project, based on a Chinese model and Chinese funding.7 As we cross an empty, perfectly asphalted road built by Chinese companies which stretches as far as the border at Wadi Halfa, we pass an irrigation canal which has allowed wheat to be grown in the area for the last four years. Next we cross the Nile over the imposing Friendship Bridge, courtesy of the Chinese state-owned company China National Petroleum Corporation (CNPC), before entering the Merowe Medical City, a hospital complex in its final phase of construction. Furthermore, the monotonous ocher-colored landscape is interrupted by an infinite column of high-voltage towers, also installed by the Chinese consortium. These towers are used to carry the electricity generated by the dam as far as Khartoum and Port Sudan—the end of the 1,500-kilometer Chinese oil pipeline used to transport Sudanese crude oil bought by China. Some sources argue that this crude oil acts as a guarantee for the loan granted by the Chinese Exim Bank to finance the Merowe Dam.
A little further on we reach the new airport, a fabulous 18-square-kilometer structure with a VIP terminal, a mosque and a 4-kilometer-long runway with landing space for planes as big as the Airbus 380. More modern than the airport at Khartoum, its facilities oversaw the arrival of eighteen planes the day when the dam first opened. However, it is now completely empty apart from the guards patrolling the lodge at the entrance to the precinct. The fact that there is little demand to fly to this forgotten corner of the earth does not really come as much of a surprise. Standing inside this enormous airport without any movement of planes or bustle of employees, passengers or vehicles definitely gives an eerie sensation, almost a sense of nuclear panic. However, from the runway which we have driven out to in our Toyotas, Awad calmly assures us that the future is just around the corner. “This airport will grow enormously over the next few years. Airplanes will come here from all over the world and it will be used to export wheat and other agricultural products. Thanks to the dam, agriculture will develop, immigrants will arrive from the south and we will have access to hospitals, public services and tourism,” he predicts. Awad’s words sound like a means of justification, a way of making sense of this enormous waste of infrastructure in the middle of nowhere with no current sign of any benefits.
There is no doubt that the Merowe Dam is the centerpiece of this network of future infrastructure that fuels the country’s elite’s dreams of wealth for this remote region which few people could even pinpoint on a map. As we drive closer to the dam, we are reminded of the words of President al-Bashir: “Merowe is the project that will eliminate poverty in Sudan.” The full grandeur of the project becomes clear as soon as we cross the military-controlled entrance, where a sign welcomes us in Mandarin: “Congratulations to the Merowe Dam!” After a brief technical description of the project, Mahjub Ali, the chief engineer who has come to meet us, explains that “the Chinese consortium which led the construction of the dam required 25 million cubic meters of rocks and another million and half cubic meters of concrete,” as well as the titanic efforts of between 3,000 and 5,000 Chinese workers over the course of six years. Although the structure officially opened in 2009, a contingent of Chinese workers are still finishing off minor building works during our visit to the dam, living in a simple camp presided over by the Chinese flag. As we go by, they stop working for a moment to exchange a few polite words of greeting and even let us take their photographs before industriously turning back to their work under the blazing sun.8
The view from the top of the 67-meter-high structure clearly demonstrates the magnitude of the second biggest hydraulic project on the waters of the Nile after the Aswan Dam: upriver, an enormous 176-kilometer reservoir has irreversibly flooded fertile land, entire villages and a unique archaeological legacy dating back to the prehistoric era; downriver, the dam is spitting out a spectacular stream of pressurized water, creating violent waves and splashing everything in its path until the river eventually returns to its natural course and rhythm. Mahjub Ali uses highly technical rhetoric to describe the benefits of the new installation: “In 2008, Sudan’s entire energy consumption was just 750 megawatts, the same amount required by New York City, and only 15 percent of the population had access to electricity. Thanks to Merowe, that figure has now risen to 30 percent. That is why more dams are either being built or already being upgraded in Sudan,” the engineer concludes.
In fact, Merowe is the first—and most important—of a series of ten dams which are already in operation, or under construction, or have been approved by the Sudanese government. In many cases, China is playing a decisive role either in the building or financing of the projects—if not both.9 As our vehicles set off at full speed back along the road to Khartoum, we can see China’s unmistakable hallmark on Merowe’s superstructure and the entire development project. The image of another no less controversial project cannot help but spring to mind—the gigantic Three Gorges Dam in the middle reach of the Yangtze river. Despite being separated by thousands of kilometers, Merowe and the Three Gorges Dam share some surprising similarities in terms of both their conception and their form.
THE CHINESE FRIEND NEVER SAYS “NO”
In 1999, a delegation sent by the Sudanese government set off across the world in search of capital to finance the Merowe Dam, which back then was only in the planning stage. However, the project had a weakness that frightened off potential investors: it did not comply with international standards on environmental and social issues. Therefore, after knocking on the doors of various financial bodies in various countries, the delegation returned to Khartoum empty-handed. At that time, China had already been working for five years on the Three Gorges Dam, the biggest of its kind in the world, which it had had to finance entirely with its own funds for the same reason that led to the failure of the Sudanese delegation: the refusal of the World Bank and other institutions to get involved in projects with such clearly bad environmental and social consequences. As if that were not enough, the United States had accused Sudan of promoting terrorism, further marginalizing the country on an international level. Under these circumstances, while the rest of the world refused to finance the Merowe Dam because of their legitimate suspicions about the project, China came to the rescue.
Coinciding with Sudan’s oil boom at the start of the century, the Chinese Exim Bank granted Khartoum a loan of $608 million to finance its star project, which had an initial budget of $1.8 billion but which eventually ran to costs of around $3.5 billion, although the opaqueness typical of contracts with China makes it difficult to be precise about this figure.10 The loan was not, however, merely a financial operation. It was contingent on awarding the dam construction contract to Sinohydro, the company that had been selected for the Three Gorges project and which is currently building 107 dams across the world, according to the NGO International Rivers.11 Another Chinese consortium was chosen to install the high-voltage towers. “The Chinese are fast and cheap, and to top it all they give you loans. How were we supposed to say no?” argues Asim al-Moghrabi, the Nile expert. The complete offer was, of course, irresistibly tempting: a “turnkey” project that involved not only granting loans that were supposedly guaranteed with oil, but also the construction of the dam at the most competitive price on the market. The timeframe for carrying out the project was also quick and reliable thanks—mainly—to the Chinese companies’ outstanding experience and their enormous supply of cheap labor. And all this could take place without any awkward questions about the impact on the environment or the local population.
As is shown by China’s success across the planet, where it is building dams, roads, railways and football stadiums, this formula is so attractive that the two Chinese policy banks—China Development Bank and the Exim Bank—have managed to overtake the World Bank as the biggest lenders to the developing world.12 In this sense, China’s contribution to the progress of the receiving countries is undeniable—as is d
emonstrated by the energy capacity provided by the Merowe Dam and the whole parallel development project—even when there is some debate over the cost-benefit analysis of the project. However, it is not China’s investments which are causing distrust, but rather its lack of attention to their side effects. Or, to put it more directly, China’s utter contempt for any environmental consequences, the destruction of a unique archaeological legacy or the violation of the rights of thousands of people who have been forcibly relocated and pushed into extreme poverty. This is a carbon copy of the situation at the Three Gorges Dam.13
For all the reasons above, China should be held accountable, according to Ali Askouri, an activist who championed the cause of Merowe’s victims and played a decisive role in gathering international opposition to the dam. “The World Bank chose not to finance the dam as a result of pressure from various international organizations. There is no Western money behind the project and therefore it could never have gone ahead without Chinese funding or the technical expertise of companies such as [the German] Lahmeyer,” Askouri told us in Khartoum. He also describes the sense of immunity enjoyed by Chinese companies, particularly in comparison with the potential consequences faced by their Western competitors, as is shown in the case of Merowe itself.14 “Western companies can be brought to justice, but it is impossible to submit the Chinese to any real scrutiny. It is difficult to put pressure on Chinese corporations.”15
China takes refuge in one of the stalwart principles behind its foreign policy—that of “no interference”—in order to give the green light to projects which, like Merowe, have such harmful consequences that the World Bank and other organizations flatly refuse to get involved. Furthermore, China’s influence is not inconsiderable given that it is the world’s leading lender in projects of this kind.
According to International Rivers, up to May 2012 China had been involved in 300 dam projects in 66 countries worldwide. Many of these were backed by unconditional loans from Chinese financial bodies, with the Exim Bank leading the way, despite controversy and criticism due to their potential damage to local societies and the environment. Would Chinese construction companies have won tenders for these projects if they had not come bearing unconditional funds backed by Chinese banks? Would they have been able to send their Western competitors packing if they had adopted international standards? Would many of these structures even exist without China’s help? In the context of the current economic crisis, China’s financial capacity plays a key role in getting these infrastructure projects off the ground. This is why Peter Bosshard, one of the directors of International Rivers, believes that it is essential to be able to influence the lenders in order to curb the excesses. “Dam construction companies don’t generally show a lot of respect for their social and environmental responsibilities. Financial bodies tend to be more sensitive to the risks; the people who provide the financing are the ones who can decide whether to pull out of certain projects, particularly if they are using public money.”
However, a project’s social and ecological costs do not as yet carry much weight in the decisions made by Chinese financial bodies about whether or not to invest in a project. Out of all the Chinese lenders, the Exim Bank is the only one which has published its best practice guidelines on environmental and social issues (first published in 2004 and updated in 2007). However, these guidelines are demonstrably vague and, even worse, are difficult to use to screen projects in practice. The Exim Bank has only once agreed to suspend its funding for a project as a result of ethical reasons: this took place in 2010, after an NGO proved that the construction of a dam in a national park in Gabon violated the bank’s own best practice guidelines. Despite the undeniable merit of such a decision, the general rule is still unfortunately the opposite outcome: in 2012 the Exim Bank and other Chinese financial bodies continued financing projects throughout the world when other international institutions wisely kept their distance.16
Furthermore, given the nature of China’s political system, there is not much hope that the people with the power to change things—generally those in charge of the country’s political system, banks or state-owned companies—will begin to feel pressure from civil society. In China, academics, journalists and NGOs do not have the same degree of influence as in democratic systems. “There are over 3,000 NGOs in China, but certain matters are effectively off-limits. For example, there is practically no public debate on China’s involvement in international affairs. That, of course, makes all the difference [in terms of the influence of the civil society in other countries],” Peter Bosshard argues. As always in China, change needs to come from within the power structure itself.
Under these circumstances, the opinion piece published in the official newspaper Global Times in January 2011 by Li Fusheng, deputy director of assessment studies at the Exim Bank, came as both a surprise and a relief. In reference to his recent visit to Laos and Cambodia (organized by an American institution) to evaluate the environmental and social impact of Chinese investments, Li did not hold back:
We take it for granted that we go [to these countries] to help the local population with our investments, but that is not all the people living in those countries see. They probably think that the investments are being carried out for economic and diplomatic gain, or they believe that the companies need to do better than they are currently doing. The dominant voices in the receiving countries (which normally come from within the local government) express their gratitude, but there are some marginal voices (which come from the inhabitants, the NGOs and some media sectors) who express their dissatisfaction and criticism for our work.
Li Fusheng recognized the damaging effects that Chinese investments may have on the local people, and thereby went much further than the usual “win-win” rhetoric and mentions of the close political ties between the countries:
In order to do something well, it has to be done carefully. Everybody in the receiving countries recognizes that China’s aid and investments have contributed to the rapid development of their infrastructure, to their energy generation and their agricultural capacity. However, at the same time they are concerned about their forests and vegetation, their migratory fish, the safety of the environment and the relocation of the local people … Therefore, whenever a study is carried out into the viability of a particular project, it is very important to also carry out an evaluation into the environmental and social impact of that project.17
It could be said a little louder but it couldn’t be said any clearer. In a country that obsessively controls the flow of information, this opinion could not be more direct or to the point. Perhaps, at last, we are seeing the first step in encouraging the Chinese corporations which are rebuilding Africa and Asia to take greater responsibility for their actions.
BEIJING: PRECOCIOUS STUDENT OF THE IMF?
“Why do you ask whether a study has been carried out into the environmental impact? That information is not relevant to you,” Liu Yang replies drily, when we interview the director of Sinohydro in Ecuador in his Quito-based office. Months earlier, the Chinese company had begun preparatory work on the construction of a new dam on the Coca River, the most important infrastructure project currently taking place in the Latin American country. The government in Quito had therefore intervened to ask Liu to meet us. However, after spending just two minutes with this grave, monosyllabic, middle-aged man, we realize that Liu is not interested in helping us and that this is going to be a short meeting. He speaks perfect English and can just about get by in Spanish after spending two years in Ecuador, but he clings to the strategy of speaking only in Mandarin in order to put an intermediary—the translator—between us and him.
As the Exim Bank granted nearly $1.7 billion to finance 85 percent of the hydroelectric project—its biggest investment in Latin America to date—we are interested in finding out the technical details of the project in order to understand why a dam which requires such a small dike (as we would later see) costs such a lot of money. “I think it is be
tter not to answer on financial matters,” Liu continues along the same lines, as the tension in the room begins to build. Next we decide to try to make friends by using a very straightforward question, and so we ask him about the strategic reasons behind Sinohydro’s recent arrival in Latin America. Again, we come up against a brick wall: “That information is not relevant for your book,” he concludes, refusing to budge. And, with that, the interview is over.
Early the next morning we decide to head off to El Chaco in the Napo province, around 160 kilometers northeast of Quito, to see for ourselves how Sinohydro is leading the project. The route into the heart of the Ecuadorian Amazon along a lonely road skimming the edge of bottomless ravines, with stunning views of turbulent rivers and no less spectacular waterfalls, does not disappoint us. After four hours of traveling along winding roads through lashing rain and thick fog on the route of the Trans-Ecuadorian oil pipelines which cut through the Amazon jungle, we arrive at the natural paradise where the future dam belonging to the state-owned Coca Codo Sinclair will provide the national power supply with 1,500 megawatts of electricity, or a third of the country’s total energy requirements. Standing on a suspension bridge over the Coca River, just above where the dam will be built, a group of the company’s employees explain that, rather than just a dam, what they are building is a 25-kilometer channel that will take advantage of the uneven water levels to carry water to a particular point downriver, where it will speed up to create a waterfall.
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