Pork Pile-Up Continues: Bacon Levels In US Cold Storage Surge To 48-Year High
Cold storage facilities across the U.S. have just hit record-high levels of pork bellies, the cut of the pig used to make bacon, reported Bloomberg. Much of the oversupply problem stems from farmers’ increasing herd sizes ahead of a possible trade deal that was expected to occur earlier this year.
Farmers in 1H20 across Central and Midwest regions were desperately trying to increase herd sizes and or fields planted of corn and soybean because President Trump kept touting imminent trade deal in the press. What the farmers didn’t realize is that there was no trade deal at the time, and the impending trade deal comments were only to boost the stock market. What this created was massive misguidance by the government that has led to shocking oversupplied conditions.
According to new U.S. government data published last week, there are more than 40 million pounds of pork bellies in cold storage facilities across the U.S. The levels are so high that some cold storage facilities could run out of space. The last time storage facilities saw this much pork belly was 1971.
Hog producers, listening to every trade headlines from the Trump administration, quickly expanded herds through spring and summer with the anticipation of an imminent trade deal with China. U.S. herd levels rose to 7.7 million heads as of Sept. 1, a level not seen since 1943.
While the massive overhang of pork bellies could be short-lived due to the anticipation of a “Phase 1” trade deal could be signed imminently between the U.S. and China, the lesson to be seen is that fake trade news has consequences, such as disrupting free markets and creating imbalances.
What is Trump really up to? It’s almost unknowable. At the same time that the president was pulling (some) troops out of Northeast Syria, giving an antiwar speech, and then sending other troops back into Syria to “secure the oil,” he also quietly sent another 1800 service members into Saudi Arabia. What little Trump did say about it consisted of a peculiar defense of his actions. Faced with the obvious question from a reporter:
“Mr. President, why are you sending more troops to Saudi Arabia when you just said it’s a mistake to be in the Middle East?”
Trump argued that there was no contradiction in his policy because, well, the Saudis “buy hundreds of billions of dollars’ worth of merchandise from us,” and have “agreed to pay us for everything we’re doing to help them.”
It seems the U.S. military is going full mercenary in the Gulf.
While I’ve noted that Trump’s recent antiwar remarks were profound – though largely unfulfilled – these words will amount to nothing if followed by a military buildup in Saudi Arabia that leads to a new, far more bloody and destabilizing, war with Iran.
Nothing would please the “three Bs” – Israeli Prime Minister Bibi Netanyahu, Saudi Crown Prince Mohammed Bin Salman, and former National Security Adviser John Bolton – more than a US military strike on the Islamic Republic, cost and consequences be damned.
It’s just that an Iran war isn’t the only risk associated with basing majority-Christian, foreign American troops in the land of Islam’s two holiest cities. And a brief historical review of US presence in Saudi Arabia demonstrates quite clearly the potential transnational terrorist “blowback” of Washington’s basing decisions.
In fact, Trump’s latest deployment constitutes at least the third time the US military has been stationed on the Arabian peninsula.
It’s rarely ended well, and, in a paradox stranger than fiction, often linked Washington and Riyadh’s dollars with the Bin Laden family. It’s almost enough to make one understand the propensity of some Americans to buy into some degree of 9/11 “truth.”
The strange saga began in the 1930s when a US oil conglomerate, Aramco, built a settlement at Dhahran in the desert near the little town of Khobar. Local workers did the construction, including a rather talented Yemeni bricklayer named Mohamed Bin Laden. Though illiterate and with only one eye, he and his brother then started their own construction company: Mohamed and Abdullah, Sons of Awadh bin Laden.” When, in 1945, the US military decided to lease a sizable air base at Dhahran, the Bin Laden brothers got the contract. The firm made a fortune on the American taxpayers’ dime. After that, the Bin Laden’s became the builders of choice for the spendthrift Saudi royal family, by then flush with oil profits.
Nonetheless, the devoutly Muslim Saudi people were horrified by the Western presence and the king ended the first US military lease in 1962. Still, the Bin Laden company continued to do business with the American government and corporate entities, so much so, in fact, that it retained an agent in New York City. After the elder Bin Laden died in 1967, his sons took over the family business. One, Osama, had a particular knack for construction.
He was also devoutly religious, and, despite his family business’ close connections with the Americans, virulently opposed to foreign intervention in the Greater Middle East. So, with tons of his firm’s heavy construction equipment in tow, he headed off to Afghanistan to fight with the mujahideen against the Soviet Army occupation of that country. Though he and his fellow Arab volunteers played only a small role in the Soviet’s eventual defeat, Osama Bin Laden dug tunnels, built roads, and crafted a genuine mountain base for his fighters in Afghanistan. He even named his new organization to direct the jihad Al Qaeda, or “the base,” and learned a life-altering lesson from the Soviet war. As he reflected, “The myth of the superpower was destroyed not only in my mind but also in the minds of all Muslims.”
Thus, when Saddam Hussein’s massive Iraqi Army swallowed up Kuwait and threatened the Saudi Kingdom in 1990, Bin Laden thought he could recruit a new mujahideen army and single-handedly defeat the invaders. He offered his services to the king, but was rebuked, in favor of an invitation to the US military to instead defend Saudi Arabia. Bin Laden never forgave the king or the American “occupiers” of his holy homeland. The American troopers flooded into a reopened base at Dhahran, the Iraqis were swiftly defeated by the US military coalition, Bin Laden later declared war on the United States, and the rest, as they say, is history.
Terror attacks on the Khobar Towers Air Force barracks, two US African embassies, and the Navy’s USS Cole followed, and then New York and Washington were struck in the worst terrorist incident in American History. Bin Laden got the war he sought, lured the US military into countless quagmires in the Mideast and, despite his eventual death at the hands of American Navy SEALs, succeeded beyond probably even his wildest imagination.
All that brief history ought to remind American policymakers and people alike of the inherent dangers of military basing in Saudi Arabia in this, the third, such instance. Washington, as has been proven time and again since the end of the Second World War, reaps what it sows across the world. So, when Trump’s latest addition to the tragic US history of building bases and stationing troops on the Arabian Peninsula backfires, when a new Bin Laden of sorts takes the war to a major American city, I’ll be one of the few voices saying I told you so…
This is exactly what it shows. The CIA previously introduced BGM-71 TOW anti-tank missiles to the Syrian battlefield, handing the advanced weaponry off to the so-called ‘moderate rebels’ of the Free Syrian Army (FSA) in order to accomplish regime change against Assad as part of operation ‘Timber Sycamore’ (which failed).
Critics of CIA efforts in Syria were quick to point out that such American hardware would inevitably go straight to the jihadists of ISIS and al-Qaeda. As even the mainstream media and pundits were forced to document, this is precisely what happened, given Washington ultimately sought to use Sunni jihadists to overthrow the Syrian government.
Photo of ISIS deploying CIA-supplied TOW missiles near Palmyra in 2015, documented by Foundation for Defense of Democracies’ (FDD) Long War Journal.
And now the Turkish-backed Free Syrian Army (TFSA), more commonly known as the Syrian National Army, is deploying the very same CIA-supplied TOW missiles against America’s current proxy in Syria, the Kurdish-led Syrian Democratic Forces (SDF), as part of Erdogan’s ‘Operation Peace Spring’.
It’s been well-documented that the Turkey invasion forces of Syrian National Army are stacked with former ISIS, Nusrah, and FSA jihadists… who clearly brought their CIA toys with them.
“US Military May Be Targeted by Its Own Missiles in Middle East,” warned Newsweek earlier this year. Well, yes…
This means American Green Berets and other special forces advisers still embedded with Kurdish SDF units around the oil fields in Deir Ezzor and Hasakah province could find themselves on the receiving end of US-supplied missiles, ironically enough.
Just another day in Washington’s long-term covert war in Syria, and yet another example of what many of us years ago warned would happened, once again coming to exact fruition. And yet Washington is still addicted to its regime change wars in the Middle East.
‘Do Your Job!’: Rand Paul Slams MSM And GOP Over Whistleblower Horsepucky
Sen. Rand Paul (R-KY) slammed the media for refusing to publish the name of the Trump-Ukraine whistleblower, despite it being one of the biggest open secrets in the Beltway. The Kentucky Republican also shot barbs at his GOP colleagues in Congress for not taking enough action to defend the president against the Democratic-led impeachment, according to the Washington Examiner.
“President Trump has great courage,” Paul said during a Monday evening Trump rally. “He faces down the fake media every day. But Congress needs to step up and have equal courage to defend the president.”
“We also now know the name of the whistleblower,” he added. “The whistleblower needs to come before Congress as a material witness because he worked with Joe Biden at the same time Hunter Biden was getting money from corrupt oligarchs. I say tonight to the media, ‘Do your job and print his name!‘ And I say this to my fellow colleagues in Congress, to every Republican in Washington, ‘Step up and subpoena Hunter Biden and subpoena the whistleblower!“
The whistleblower was outed by RealClearPolitics‘ Paul Sperry last week as 33-year-old CIA employee Eric Ciaramella, whose attorneys would “neither confirm nor deny” that it was him.
Watch:
Last month House Democrats launched impeachment proceedings against Trump based on Ciaramella’s second-hand whistleblower complaint alleging that the president abused his office by asking Ukriane to investigate former VP Joe Biden and his son Hunter, along with other matters.
SoftBank’s ‘Conglomerate Discount’ Balloons To $130 Billion As Investors Bet Worst Is Yet To Come
After a suite of marquee investments blew up in the company’s face over the summer, SoftBank, the Japanese telecoms giant with a massive VC arm attached, is preparing to face its first real ‘day of reckoning’ this week when it reports Q2 earnings, according to the FT and Nikkei Asian Review. The results will be released after the close of Japanese markets on Wednesday.
Masayoshi Son
Most analysts expect a grim showing: In the span of a few months, SoftBank Chairman Masayoshi Son’s reputation as one of the world’s most successful momentum investors has been totally eviscerated. The company’s stake in ride-share darling Uber has generated an on-paper loss of 30%. What’s worse, Son has insisted on throwing even more money at WeWork parent ‘The We Company’ in a desperate attempt to stave off an imminent bankruptcy, which would have stuck SB with losses in the billions of dollars.
In the latest indication of just how little faith investors’ have in the company, Nikkei points out that SoftBank’s ‘valuation discount’, the gap between its valuation in public markets and its net asset value, has swollen to $130 billion.
Take the group’s net debt figure of $45 billion (which excludes 10 trillion yen of debt held in subsidiaries and is the figure that Son prefers to use), add that to SoftBank’s market capitalization of $81 billion, and its enterprise value is $126 billion. This is essentially the all-in cost of buying the company.
Against that, however, SoftBank has around $191 billion of quoted assets on its balance sheet, the largest of which is a 26% stake in Alibaba Group Holding, the Chinese e-commerce giant. It also owns U.K. chip designer Arm, which SoftBank has on its books at $25 billion, and another $8 billion of assorted assets it classifies as “others.” Add it all up, and SoftBank owns around $224 billion of assets.
In addition, however, there are over 80 tech companies in the Vision Fund – such as ride-hailing giants Didi Chuxing and Grab, Indian hotel startup Oyo, and Chinese social media company ByteDance. SoftBank estimates its one-third share of these are worth $32 billion.
Add all these assets together and the total comes to $256 billion – or $130 billion more than the company is worth on the market. This is the “conglomerate discount,” and it appears to have widened since Son railed about it in the past.
SoftBank and Son are still desperately trying to court Saudi Arabia and convince Crown Prince MbS to commit to backing a planned second iteration of its Vision Fund (which Saudi Arabia backed to the tune of $45 billion from its sovereign wealth fund). However, even before WeWork’s valuation imploded, leading to the scrapping of its planned IPO and an embarrassingly public rescue that involved the ouster of co-founder and CEO Adam Neumann, there was talk that the Saudi’s would sit this one out.
As SoftBank sees it, the Saudis owe it another chance: In the aftermath of Jamal Khashoggi’s murder inside a Saudi consulate in Istanbul, SoftBank stood by the kingdom, even as Wall Street executives and other business leaders in the West cancelled plans to attend last year’s Future Investment Initiative (better known as MbS’s “Davos in the Desert”) while publicly contemplating whether to sever all business ties to the kingdom, according to the FT.
One year later, those grievances appear to have been forgotten. But sparse attendance at Son’s speech at this year’s FII was seen as emblematic of the reputational hit that Son had taken in the aftermath of the WeWork blowup.
Analysts quoted by Nikkei said that unless SoftBank can pull off the turnaround at WeWork, reviving its valuation will be difficult.
“It cannot be helped that SoftBank’s [WeWork] investment is seen as a failure,” said Mitsunobu Tsuruo, analyst at Citigroup Global Markets Japan. “Investors are worried whether [it] will be the last negative material to affect SoftBank and its shares.”
“We believe that unless the WeWork episode is resolved, SoftBank improves disclosure and clarifies its strategy, there is no solid anchor” to its net asset value, said Atul Goyal, analyst at Jefferies Securities.
On the other hand, another analyst argued that the double-digit slump in SoftBank’s share price this year has completely priced in the WeWork fiasco, and that the SoftBank shares have nowhere to go but up from here.
“We think the impact of this [WeWork] event is now priced in and expect the shares to rebound,” SMBC Nikko Securities wrote in an Oct. 25 report.
A successful IPO from one of the Vision Fund’s 80 other portfolio companies could provide exactly the catalyst that the company needs. A listing for TikTok owner ByteDance in Hong Kong could accomplish this. Whatever happens, a successful offering will almost certainly need to happen outside of the US, since American markets have repeatedly shown this year that they have little appetite left for richly valued unicorns following a nearly uninterrupted string of IPO flops, from Uber & Lyft, to Slack, Peloton and others.
A successful IPO would certainly help, after WeWork’s failed share float. ByteDance, the owner of social media app TikTok, which was valued at $75 billion in an October 2018 fundraising led by SoftBank, is reportedly considering a listing in Hong Kong.
Then again, one IPO might not be enough; many professional asset managers now see Vision Fund backing as an obvious counter-indicator, as one hedge fund manager told the FT. After all, when it comes to valuing its portfolio companies, SoftBank has been so wrong, so many times, that rebuilding trust and faith in its abilities could prove to be an impossible task.
“If SoftBank says this is the value, how much of that should you believe?” says Kirk Boodry, a tech analyst at Redex Holdings who publishes on research platform Smartkarma. One hedge fund investor says backing from the Vision Fund is “an immediate cue to sell.”
And though SoftBank has scored several huge wins in recent years (it still owns a massive stake in Alibaba), investors in the Vision Fund largely missed out on those wins.
According to the FT, Vision Fund executives are counting on a $30 billion investment from Saudi Arabia for V2. But MbS has reportedly told advisors and other insiders that, while he would like to reward Son’s loyalty, his advisors are vehemently against it.
Former White House Chief Strategist Steve Bannon is set to testify against Roger Stone by claiming Stone was in contact with Julian Assange and WikiLeaks, according to sources close to the trial.
The information was uncovered by reporters on the scene of Stone’s pre-trial.
Bannon testifying against Stone is an act of revenge for Stone’s role in having him ousted from the Trump administration.
Stone wrote an article that was published by the Daily Caller headlined ‘Bannon’s Time Is Up’ the day before Bannon left the White House, although Bannon asserts his departure was by mutual consent.
In the article, Stone accused Bannon of paving the way for ‘Never Trumpers’ and neo-cons like Rex Tillerson, Dina Powell and Fiona Hill.
Soon after Bannon left, he was swept under the wing of Robert Mueller’s investigation. Since that time Bannon has been working behind the scenes to undermine Stone, as well as Infowars host Alex Jones and Donald Trump Jr.
Bannon also reportedly sought dirt and information on Jones at the peak of Mueller’s investigation into Infowars. Jones also asserts that he was subsequently the victim of a dirty tricks campaign that attempted to frame him for Russian collusion, which Jones reported to the FBI.
Stone is charged with lying to Congress, trying to obstruct a congressional inquiry and intimidating a witness. He faces 20 years in prison.
Prosecutors claim Stone attempted numerous times to contact WikiLeaks via intermediaries and leaked information about upcoming WikiLeaks disclosures to the Trump campaign and then lied about this to Congress.
Stone claims that he only had tentative knowledge of WikiLeaks via radio host Randy Credico and did not meet with Assange.
Russiagate, which failed to claim any significant scalps and turned out to be exactly as President Trump asserted all along – a witch hunt – now appears to rest on Bannon’s betrayal of Stone.
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Abenomics Update: New Car Sales In October Plunge 24.9% In Japan
It appears that Abenomics continues to fail in Japan, as a worldwide global recession in automobile sales combined with Typhoon Hagibis, which pummeled the Kantō region of Japan during October, both contributed to a huge drop off in new car sales for the month. Japan’s recent increase in its consumption tax was also cited as a potential drag on sales.
Sales of new cars in Japan (including minicars) fell 24.9% year over year, according to the Japan Automobile Sales Association, Nikkei writes.
Sales of registered vehicles fell 26.4% during the month, to 192,504 units. Honda saw its numbers plunge by 40.5%, Toyota fell by 21.7% and Nissan fell 36.9%.
Vendors attributed the drop off to the typhoon and “other weather factors and disasters” during the month.
Minicar sales fell by 22.3% to 122,280 units, the first decrease in 3 months. Sales from Suzuki fell 6.2% and the numbers from Daihatsu plunged 26.3%.
“It cannot be said that there was no impact from the consumption tax hike, but it is necessary to check the trend of several months,” a spokesperson from the Japan Automobile Manufacturers Association said.
Recall, the country raised its sales tax from 8% to 10% at the beginning of October. The new rate applies to nearly all goods and services, including vehicles, and excludes most food.
China Services PMI Drops To 12-Month Low, Hong Kong Business Activity Crashes Most On Record
Despite China’s surprise surge in Caixin Manufacturing PMI (to its highest since Dec 2016), Services were expected to show a modest decline which it did (down from 51.3 to 51.1).
Note that the only one of the four PMIs to rise was the Caixin manufacturing index – massively bucking the trend of the rest…
“The Caixin China General Services Business Activity Index dipped to 51.1 in October from 51.3 in the previous month, marking the slowest expansion in eight months amid subdued market conditions.
1) Demand across the services sector grew at a reduced pace, with the gauge for new business falling to the lowest level since February. The measure for new export business picked up slightly.
2) While the job market expanded at a weaker clip, with the employment gauge falling from the previous month’s recent high, the measure for outstanding business rose further into expansionary territory. This implied a mismatch between labor supply and demand.
3) Both gauges for input costs and prices charged by service providers edged down, but they remained in positive territory, reflecting relatively high pressure on costs, including those of workers, raw materials and fuel.
4) The measure for business expectations dropped to the lowest point in 15 months, indicating depressed business confidence.
Additionally, the Caixin China Composite Output Index inched up to 52 in October from 51.9 in the month before, amid an improvement in manufacturing, but a softer service sector performance.
Source: Bloomberg
“The employment gauge dipped into contractionary territory, indicating renewed pressure on the labor market, which was likely due mainly to structural unemployment. The measure for backlogs of work climbed to the highest level since early 2011, highlighting bottlenecks in production capacity and inventories due to weak business confidence.
“China’s economy continued to recover in general in October, thanks chiefly to the performance of the manufacturing sector. Domestic and foreign demand both improved. However, business confidence remained weak, constraining the release of production capacity. Structural unemployment and rising raw material costs remained issues. The foundation for economic growth to stabilize still needs to be consolidated.”
But then again, it could be worse – it could be Hong Kong, which saw its PMI crash to 39.3 in October – the lowest since November 2008 with business activity crashing at the fastest pace in the survey’s 21-year history. So much for the bounce in August that everyone declared as the bottom…
“Hong Kong’s private sector remained mired in one of its worst downturns for the past two decades during October, with the latest PMI survey signalling a deepening economic malaise.
“The ongoing political unrest and impact of trade tensions saw business activity fall at the sharpest pace since the survey started over 21 years ago. Anecdotal evidence revealed that the retail and tourism sectors remained particularly affected.
“As new orders continued to fall sharply, led by a record decline in demand from mainland China, firms were becoming increasingly pessimistic about the outlook.”
Which doesn’t sound like a picture of ‘recovery’ or bottoming for the Chinese economy as a whole.
And finally, both attempts to juice stocks today on US-China trade deal talk have failed…
US Issues $20M Reward For Return Of US Agent, “Longest Held” Hostage In Iran
A flurry of US-Iran related activity on the 40th anniversary of the American hostage crisis and the Islamic revolution that sparked it: after Iran earlier on Monday announced it took steps to double its uranium enrichment capacity via new advanced centrifuges, Washington has answered by slapping new sanctions on Mojtaba Khamenei, the second son of Iran’s Supreme Leader Ali Khamenei, as well as eight advisers of Iran’s top cleric, including the head of judiciary Ebrahim Raisi, and Iran’s Armed Forces General Staff and its chief, General Mohammad Bagheri.
Crucially, the United States Treasury also announced a $20 million reward for info on the return of Bob Levinson, who is believed to have been held hostage by the Iranian government since his disappearance from Iran’s Kish Island in 2007.
Levinson is the longest held American hostage inside the Islamic Republic, and multiple efforts to free him or gain knowledge of his whereabouts have come up empty over the years. It’s believed he came under suspicion of Iran’s intelligence agencies due to his being a former Drug Enforcement Administration and FBI agent.
For over 12 years Bob’s family and loved ones have waited; for over 12 years, the Iranian regime has failed to cooperate.
Up to $20 million possible for information leading to his safe location, recovery, and return.
Indeed years ago it was revealed that he was likely working as a contractor for the CIA. According to a recent Newsweek profile of Levinson:
Levinson, an ex–FBI agent well into a second career as a private detective, had disappeared over a decade earlier from a hotel on Iran’s Kish Island. He had been seen only twice since then, first in a hostage video his family received from unknown intermediaries in 2010, then in photos three years later, showing the then-63-year-old increasingly haggard and begging for help.
At first, the U.S. government claimed it had no knowledge of why Levinson, an expert on Russian organized crime, had gone to Iran. The Iranian regime denied it was holding him. But in 2013, the Associated Press and other news outlets revealed that the ex-agent had gone to Kish on an off-the-books CIA mission to probe high-level Iranian money laundering.
The United States has reportedly long been engaged in secretive efforts to secure his release, but little is as yet known of his status.
Concerning the new sanctions announced Monday, the US Treasury stated in its press release that it is targeting “Iran’s inner circle responsible for advancing regime’s domestic and foreign oppression,” or what it also describes as “Khamenei’s network”.
This follows broader economic sanctions on Iran’s energy, auto, banking, and other major sectors after the May 2018 Trump administration pullout of the 2015 nuclear deal.
Office of the Iranian Supreme Leader via AP.
US Secretary of State Mike Pompeo said of the new sanctions: “The designation seeks to block funds from flowing to a shadow network of Khamenei’s military and foreign affairs advisers who have for decades oppressed the Iranian people, supported terrorism, and advanced destabilizing policies around the world.”
“While the Iranian regime’s decision to jail our diplomats has cast a 40-year shadow over our relations, the United States knows that the longest-suffering victims of the Iranian regime are the Iranian people,” he added, referencing the 40th anniversary of the 1979 crisis, which went for 444 days.
Asia, the world’s driest continent in per capita terms, remains the center of dam construction, with more than half of the 50,000 large dams across the globe. The hyperactivity on dams has only sharpened local and international disputes over the resources of shared rivers and aquifers.
The focus on dams reflects a continuing preference for supply-side approaches, which entail increased exploitation of water resources, as opposed to pursuing demand-side solutions, such as smart water management and greater water-use efficiency. As a result, nowhere is the geopolitics over dams murkier than in Asia, the world’s most dam-dotted continent.
Improving the hydropolitics demands institutionalized cooperation, transparency on projects, water-sharing arrangements and dispute-resolution mechanisms. Asia can build a harmonious, rules-based water management regime only if China gets on board. At least for now, that does not seem likely.
Last summer, water levels in continental Southeast Asia’s lifeline, the 4,880-kilometer Mekong River, fell to their lowest in more than 100 years, even though the annual monsoon season stretches from late May to late September. Yet, after completing 11 mega-dams, China is building more upstream dams on the Mekong, which originates on the Tibetan Plateau. Indeed, Beijing is also damming other transnational rivers.
China is central to Asia’s water map. Thanks to its annexation of the water-rich Tibetan Plateau and the sprawling Xinjiang province, China is the starting point of rivers that flow to 18 downstream countries. No other country in the world serves as the riverhead for so many countries.
By erecting dams, barrages and other water diversion structures in its borderlands, China is creating an extensive upstream infrastructure that arms it with the capacity to weaponize water.
To be sure, dam-building is also roiling relations elsewhere in Asia. The festering territorial disputes over Kashmir and Central Asia’s Ferghana Valley are as much about water as they are about land. Across Asia, states are jockeying to control shared water resources by building dams, even as they demand transparency and information on their neighbors’ projects.
A serious drought presently parching parts of the vast region extending from Australia to the Indian peninsula has underscored the mounting risks from the pursuit of dam-centered engineering solutions to growing freshwater shortages.
Asia’s densely populated regions already face a high risk that their water stress could worsen to water scarcity. The dam-driven water competition is threatening to also provoke greater tensions and conflict.
In the West, the building of large dams has largely petered out. The construction of large dams is also slowing in Asia’s major democracies, such as Japan, South Korea and India, because of increasing grassroots opposition.
It is the construction in non-democracies that has made Asia the global nucleus of dam-building. China remains the world’s top dam-builder at home and abroad. In keeping with its obsession to build the tallest, largest, deepest, longest and highest projects, China completed ahead of schedule the world’s biggest dam, Three Gorges, touting it as the greatest architectural feat in history since the building of the Great Wall.
It is currently implementing the most ambitious interbasin and inter-river water transfer program ever conceived in human history.
Among its planned new dams is a massive project at Metog, or Motuo in Chinese, on the world’s highest-altitude major river, the Brahmaputra. The proposed dam, close to the disputed, heavily militarized border with India, will have a power-generating capacity nearly twice that of the Three Gorges Dam, whose reservoir is longer than the largest of North America’s Great Lakes.
Several of the Southeast Asian dam projects financed and undertaken by Chinese companies, like in Laos and Myanmar, are intended to generate electricity for export to China’s own market.
Indeed, China has demonstrated that it has no qualms about building dams in disputed territories, such as Pakistan-administered Kashmir, or in areas torn by ethnic separatism, like northern Myanmar.
Ever since China erected a cascade of giant dams on the Mekong, droughts have become more frequent and intense in the downriver countries. This has created a serious public-relations headache for Beijing, which denies that its upriver dams are to blame.
Indeed, seeking to play savior, it has promised to release more dam water for the drought-stricken countries. But this offer only highlights the newfound reliance of downriver countries on Chinese goodwill — a dependence that is set to deepen as China builds more giant dams on the Mekong.
With water woes worsening across Asia, the continent faces a stark choice — stay on the present path, which can lead only to more environmental degradation and even water wars, or fundamentally change course by embarking on the path of rules-based cooperation.
The latter path demands not only water-sharing accords and the free flow of hydrological data but also greater efficiency in water consumption, increased use of recycled and desalinated water, and innovative conservation and adaptation efforts.
None of this will be possible without the cooperation of China, which thus far has refused to enter into water-sharing arrangements with any downstream neighbor. If China does not abandon its current approach, the prospects for a rules-based order in Asia could perish forever. Getting China on board has thus become critical to shape water for peace in Asia.
