This is where the Washington-based World Bank must decide whether or not to provide the iron-clad risk insurance and subsidies Nam Theun 2 developers insist they need to finance the US$1.2-billion dam. The trouble is, after years of touting Nam Theun 2 as the best option for Laos, the World Bank is getting cold feet.

At a donors conference in Vientiane last year, the Bank’s Nam Theun 2 project director, Jayashankar Shivakumar, said: “Unless the negative impacts [of the dam] are carefully mitigated, the net benefits flowing from the project may not be attractive enough to justify it.”

Not only that, but “the policy and governance framework in Lao PDR is flawed and capacity in the public sector is woefully weak,” according to Shivakumar, suggesting that the Bank has grown wary of backing another development failure in a country where most people survive on less than two dollars a day.

In the past, the World Bank has assured critics that Nam Theun 2 would be different. Now, Bank staff freely admit the dam will cause extensive losses and damage to fisheries and agriculture, and that “mitigation plans” might not work. As critics point out, the Bank’s assurances of “enhanced lifestyles” for the five thousand people who would be displaced by Nam Theun 2 are little more than a promise to divert more aid money to dubious rural development programs, without any guaranteed results.

Then there’s the devastation to forests and wildlife to contend with. If Nam Theun 2 is built, one-third of the Nakai Plateau would be drowned by its reservoir; that’s about 500 square kilometres of lost economic opportunity for Nakai residents and it would mean the destruction of critical habitat for some of the region’s last populations of tiger, elephant, large-antlered muntjac, gaur, and saola. Previously, the Bank has insisted the losses are an “acceptable tradeoff” because Nam Theun 2 revenues would be put to policing an area of forest eight times that size, but environmentalists in the region aren’t buying it.

Virawat Dheeraprasart, the former chief of Thailand’s Thung Yai Naresuan wildlife sanctuary, said drowning part of the Nakai Plateau in the name of conservation is like “cutting off both your legs so somebody can lend you a bottle of medicine.” A well-armed cadre of park rangers, as proposed by the developers, would have little sway over the military-backed company that has already logged out the proposed reservoir and controls a booming timber trade in central Laos, he said.

In May, the World Wildlife Fund issued a statement from its Bangkok office saying it doesn’t believe Thailand needs the power that would be produced by Nam Theun 2 and sees no justification for flooding the Nakai Plateau and disrupting people’s livelihoods along two major river systems.

The World Bank’s public relations manoeuvres cannot disguise the fact that Nam Theun 2 is a preferential deal between the Lao government and its French and Thai dam-building partners: one that requires massive subsidies to appear workable and is hinged precariously on Thailand buying electricity it doesn’t need.