* Dam to displace up to 30,000 people
* Drying rivers could isolate Indians, reduce biodiversity
* Doubling of local population will pressure resources
By Raymond Colitt
XINGU RIVER, Brazil, May 24 Beptum Xikrin contemplates the Bacaja River from his village of thatched-roof huts, wondering how he will catch fish or take Brazil nuts to market if a planned dam on the Amazon's mighty Xingu River will, as ecologists expect, all but dry up this tributary.
After nearly three decades of sometimes violent protests, Beptum and 1,000 other indigenous people in this remote region of the Brazilian Amazon have resigned themselves to the fact that the world's third-largest dam will be built in their backyard.
"They decided to build it against our will; what can we do?" said Beptum at a meeting of tribesmen, many with body tattoos and large earlobe piercings.
A start date for construction of the Belo Monte dam has not been set yet, but it is expected to come online in 2015.
Near the meeting tribesmen, a naked girl with a partially shaven scalp plays with a broken doll in the dirt, while a woman roasts manioc flour -- a staple of the Brazilian diet -- over an open fire.
The apparent calm is likely to change when, further downstream, trucks and bulldozers move more earth than was shifted during the construction of the Panama Canal.
The building of the massive Belo Monte hydroelectric plant, estimated to cost between $11 billion and $17 billion, illustrates the dilemmas Brazil faces as it strives to make the leap to developed-nation status.
Supporters say the dam, which will be built by a domestic consortium led by state-owned power company Eletrobras ELET4.SA, will create jobs in a downtrodden region and help power Latin America's largest economy.
But critics say the race for economic prosperity also brings social and environmental costs. The 6 kilometer-long (3.75 miles) dam will displace 30,000 river dwellers, partially dry up a 100-kilometer (62.5 mile) stretch of the Xingu, and flood a 190-square-mile (500-sq-km) area three times the size of Washington D.C.
Despite the warnings and intense international pressure from the likes of Hollywood director James Cameron, President Luiz Inacio Lula da Silva has vowed to push ahead.
Some analysts say he wants to showcase the project ahead of October's presidential election to benefit his chosen candidate, Dilma Rousseff, who until recently headed the government's public works projects.
Lula's defense of the dam also reflects Brazil's newfound confidence and determination to exert control in the often lawless Amazon region by developing the local economy.
"We want there to be an industry here, not only an extraction of wood, iron ore, bauxite and aluminum," Lula, who grew up in poverty, said on a visit to the region last month.
In the late 1980s Brazil's debt-ridden, young democracy was forced to cancel the project under intense international pressure, including a campaign by rock star Sting.
Today, Belo Monte is one of nine hydroelectric dams being planned in the Amazon and part of the largest development strategy for the region since the 1964-85 military dictatorship plowed muddy roads through the world's largest rain forest.
The hugely popular Lula has cracked down on illegal logging and cattle ranching in the Amazon but more often has chosen to create jobs than protect trees. Many locals fear they won't benefit from Belo Monte.
"It's a terrible idea. The energy won't stay here. It'll curtail our leisure and the jobs of many people," said Antonio Jose de Nascimento, 51, pointing to the Xingu from his fish stand in Altamira, the region's largest town.
Across the street a "for sale" sign on a rickety, wood shack on stilts reflects the despair of many residents in one of Altamira's several neighborhoods that will be flooded. Promises of replacement housing are consolation to only a few.
With the local population expected to double to 200,000 in Altamira, already stretched public services could collapse altogether and provoke social strife, the government environment agency Ibama warned. After its report, which also said changing river levels would reduce biodiversity and cut off outlying communities, two Ibama officials resigned in December under government pressure.
While many now accept the dam as inevitable, others say they will continue to fight it.
"The legal battle is just beginning. The project is unconstitutional, it's rotten to the core," said Erwin Krautler, the Roman Catholic Bishop of Altamira.
He says Lula, who pulled millions out of poverty with a mix of market-friendly policies and social welfare, has become hostage to the interests of big business.
Public prosecutors and others claim environmental impact studies are flawed and that the dam is unconstitutional because the indigenous people were not formally consulted.
"It's unacceptable and illegal to build a dam this size without knowing the full environmental impact or consulting the indigenous people," says Clarice Cohn, an anthropologist at the University of Sao Carlos in Sao Paulo state.
Authorities say the dam won't sit on indigenous lands.
Not everyone in Altamira disagrees with the dam. Waldir de Souza, a 42-year-old electrician, says it would create jobs and prod authorities to pave the road to Altamira, helping to reduce the cost of goods.
"We are very forgotten here. Everything is expensive."
BLESSING OR CURSE?
To compensate for the impact on nearby communities, the consortium is required to invest in housing, health and education.
"This region won the lottery with the construction of the dam, it will leap from poverty to development," said Mauricio Tolmasquim, head of the government's Energy Research Company.
But locals warn corruption may undermine such gains.
"Oligarchies rule here, corruption goes unpunished. The shower of money will go down the drain," said Bishop Krautler.
Back in their village, the Xikrin debate the pros and cons of development. They have a public phone, whose satellite dish sticks out like a sore thumb among palm trees, scrawny dogs and discarded soda bottles. But few have the phone cards needed to use it.
Unlike their self-sufficient forefathers, most native Indians need to sell farm and forest produce in town to buy tools, medicine and also consumer products.
"I want a refrigerator to store my fish; a TV would be nice too," says 34-year-old Princore Xikrin, with his six children crammed into a windowless, dirt-floor hut.
Most of the Xikrin also want a road to get to town more cheaply but are unaware of the prostitution, alcoholism and land conflicts that roads have brought Indians elsewhere.
"We want only the good things from the white man. We don't want drugs or other problems," said an elder Xikrin, recalling that life was easier in the jungle when he was a kid.
(Editing by Todd Benson and Cynthia Osterman)