Originally Published 2011-09-07 00:00:00 Published on Sep 07, 2011
The US is in a dilemma over the funding of the Diamer-Bhasha dam in Pakistan-occupied Kashmir. While China and Saudi Arabia have made big inroads in public perception by taking up developmental projects, the US, despite lots of assistance, is perceived not to be doing enough in this area.
US and the Diamer-Bhasha dam in PoK
The United States had announced in mid-August that it was studying the prospects of funding the construction of the Diamer-Bhasha dam in northern Pakistan. The proposed dam is expected to take 8 years to be completed at an estimated cost of $12 Billion. The 890 feet dam will be the world's highest roller compact concrete dam, with 50 km long storage facility. It is expected to generate 4500 megawatts of electricity which is the current electricity shortfall in the country. The dam is also expected to play an integral part in flood control -- an essential benefit when a fifth of the country was inundated by last year's floods.

The US does not intend to fund the whole project but to initiate the process by which others could become a part of this project, boosting the confidence of potential investors. According to media reports, the US will provide only $200 million with other agencies like the Asian Developmental Bank (ADB) expected to pitch in for the rest. Incidentally, the dam's name is derived from its proposed location Bhasha in Gilgit-Baltistan's Diamer district.

For the US, this dam is an image building exercise as relationship between the two countries has been steadily deteriorating since the Abbottabad incident, followed by the suspension of promised financial aid to Islamabad. The dam may help the US on two fronts. The first is that the financial assistance US has been providing to Pakistan for the past decade has been within the purview of the military. At least 90% of all the money provided by the US has been meant for the Pakistani military with very little for any real development work. Of the $20.7 billion that Islamabad received from Washington since 2001, only $6.5 billion was meant for non-military purposes, including budgetary support. Diamer-Bhasha dam would become the first significant civilian programme to be funded by the US. Incidentally, this would also be the first initiative by the US that would be tangible and visible to the Pakistani public after the Tarbela and Mangla dams during the cold war era.

In the last few decades, there has been no visible American developmental assistance in the public perception. This project will be first significant long term development oriented assistance by the US since the 'war on terror' campaign in 2001. This does not mean that the US had not undertaken any civilian developmental projects in Pakistan. The US had assisted Pakistan in developing, upgrading and modernising infrastructure and installations besides initiatives in fields like education and agriculture. The US has also provided assistance for the completion of two hydroelectric dams in Satpar in Gilgit-Baltistan and Gomal Zam in South Waziristan. But then, all these projects generated limited public goodwill irrespective of Washington's participation.

On the other hand, Pakistan's other key backers, Saudi Arabia and China, have made deep inroads. Saudi Arabia funds a number of madrassas and other religious institutions apart from providing Pakistan with oil at favourable prices. The Chinese are involved in high visibility projects like Gwadar port and expansion of the Chashma nuclear power plant. They have not only undertaken projects that can be termed 'national assets' but also strategically vital for Pakistan. The Chinese have also shown their interest in the Diamer-Bhasha dam and had offered financial assistance on terms that are more attractive than what Washington had indicated.

Despite the American intentions to participate or promote this project, there are a few roadblocks. Firstly, the American government would have difficulties in selling this project to both the domestic public and the Congress for the financial approval, given the fact that the US itself is currently facing economic difficulties, and the negative image of Pakistan acting as an impediment. In addition to this, the US's financial contribution to the project, in real terms, at best can be labelled as a pittance, thereby forcing Pakistan to seek other sources of funding also.

The second obstacle is that the proposed site is situated in an active seismic zone with the last major earthquake in 2005 recording 7.6 in the Richter scale. This apart, the region is also ecologically sensitive. The dam will submerge a large stretch of fertile agricultural land besides a number of historic, Buddhist and other cultural sites. Thousands of people will be displaced. The dam is also expected to submerge a part of the Karakoram Highway, thereby limiting overland connectivity to the northern reaches of Pakistan, Afghanistan and to eastern China.

The resulting displacement of people could result in demographic changes in the region. This aspect would be more important, given the history of sectarian violence (Shia-Sunni) in the region. The resulting displacement and demographic change could lead to a situation that can pose obstacle to both the construction and operation of the dam as being experienced in the case of Gwadar port in Baluchistan. This project has already received the displeasure of the residents of the region.

Last but not the least is the regional political and security climate pertaining to the Diamer-Bhasha dam. Gilgit-Baltistan being a part of the disputed Jammu and Kashmir issue has already received the displeasure of the Indian foreign ministry in 2006. The involvement of foreign funders will depend on their relationship with Delhi. The fear of terrorism also looms around the dam, since its neighbouring districts are plagued by this menace.

The Diamer-Bhasha dam is not a stand-alone project but only the first piece of six dams in the regions. Barring the technicalities, the challenges and opportunities faced by the other dams in the region would be similar to that of the Diamer-Bhasha dam. Thus the Diamer-Bhasha dam project will not only help Pakistan to meet its power shortages and help in flood control but also set the ball rolling for the other five projects.

(Sripathi Narayanan is a research intern at Observer Research Foundation, New Delhi)
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