Mitigation can be a means to peace, not just conflict, said Stacy VanDeveer in the lead up to Backdraft: The Conflict Potential of Climate Mitigation and Adaptation at the Woodrow Wilson Center on June 10. VanDeveer believes that mitigation techniques, particularly alternative energy sources like hydroelectric dams, could stimulate cooperation rather than exacerbate threats.

As shown by Aaron Wolf’s Transboundary Freshwater Dispute Database, cooperation over water is much more commonplace than conflict – over the last 50 years, only 37 disputes resulted in violence, and 30 of those occurred between Israel and one of its neighbors.

It thus stands to reason that water could continue to serve as a unifier when it comes to hydroelectric development. Neighboring countries sharing a major water basin undoubtedly share a common interest in managing this nebulous resource jointly for economic and environmental gain.

However, various examples from around the world complicate this assumption – the Rogan hydroelectric dam in Tajikistan worries downstream neighbor Uzbekistan; India’s recently built hydroelectric dam in Kashmir stymies water flow and dries up irrigation canals in Pakistan; and Kenya worries about Lake Turkana’s ecosystem as Ethiopia moves to construct a new hydroelectric dam. The list goes on.

One prominent South American example is a particularly apt case in point.

Low-Level Tensions: The Case of Itaipu

In 1973, Paraguay and Brazil signed a bilateral agreement to build the Itaipu hydroelectric dam, which at that time was the world’s largest. After 20 years of construction that carried a hefty price tag of US$15 billion, Itaipu now provides some 26,000 megawatts of energy to Brazil and Paraguay.

From the outset, however, tension between the two countries has outweighed any tangible benefits. Paraguay complains that although it relies on the dam for 90 percent of the country’s electricity, it uses only a fraction of the dam’s output – 10 percent to be exact. Meanwhile, Itaipu accounts for 20 percent of Brazil’s total energy needs. Fueling tensions further, the terms of the original 1973 treaty dictate that if one country has surplus energy, it must sell that energy to the other for below-market value; meaning Paraguay regularly sells Brazil leftover energy at cutthroat prices.

Paraguay argues that if they were allowed to sell to third-party customers at market value, the country would be making upwards of US$2.28 billion a year – or, in other words, double the sum paid by Brazil for 18 years of power imports, according to the Asunción press.

Cooperation and Compensation Win the Day?

After more than 30 years of increasing hostility, Brazil agreed to triple its compensation to Paraguay in July 2009, increasing its annual payments for dam energy from US$120 million to US$360 million. Paraguay also won the possibility of selling excess energy produced from the dam to the private Brazilian market, although Paraguay will not be allowed to sell to other countries until 2023.

The compromise also set aside another US$450 million of no-strings-attached investment for a transmission line from Itaipu to Asuncion, enabling more widespread energy distribution throughout Paraguay at lower costs. (So far, only US$10 million has been paid out.)

Less-than-Friendly Overtures

However, the cooperative atmosphere did not last long. Despite the deal and warming relations, Brazil chose to flex its military might in a November 15, 2009, training exercise dubbed “Operation Lasso,” which took place on the border of Argentina and Paraguay. The mission: quell violence in a hypothetical enemy country and recover a bi-national hydroelectric dam that had fallen into their hands.

In obvious reference to Itaipu, the simulation was based around a strategic hydroelectric dam, Itá,” which had been occupied by hostile forces. The two combatants were “Green,” allegedly representing Brazil, and “Yellow,” presumably playing the part of Paraguay. Defesa@Net called the exercise “the greatest simulation of a major conventional conflict in Latin America.”

Brazilian General Carlos de Nardi, commander of the 8,000 joint-service members taking part in the simulation, told Defensa@Net, “We are training our people for dissuasion, so that nobody trespasses our frontiers.”

On the Horizon

The complicated nature of Brazilian-Paraguayan cooperation over the Itaipu dam will continue to be tested, as energy demand is set to significantly increase in the near future. The 2014 World Cup and 2016 Olympic Games will both take place in Brazil, and the expected influx of tourists and athletes, as well as the construction of major Games-related infrastructure projects, will surely put added strain on its already fragile energy infrastructure. With Paraguay already so dependent on Itaipu – a brief blackout in 2009 caused the entire country to lose power for 15 minutes – tensions over energy sharing will undoubtedly reoccur.