SAO PAULO, Brazil — Brazil’s Belo Monte dam could flood more than 500 square kilometers of Amazon rainforest, displacing tens of thousands people and disrupting the lives of thousands of indigenous tribes.

But the Brazilian government, with its booming economy and growing electricity needs, is determined to go ahead and build it.

The giant hydroelectric project — which would be the world’s third biggest — has become an international symbol of the battle between environmental protection and economic development. Opposition from actress Sigourney Weaver and Avatar director James Cameron has raised its profile yet further. “What’s happening in Avatar is happening in Brazil,” said Cameron, when he visited the area in April.

But to stop the dam, said President Luiz Inacio Lula da Silva on his weekly radio program in April, would be “an insane move” in the fight against climate change. “Hydroelectricity is the cheapest,” he said, “and because of this I’m happy that after 30 years, finally, Belo Monte is going to happen.”

First planned by Brazil’s military government in 1979, Belo Monte has been attracting celebrity opposition since the 1980s. In 1989, the project was shelved after a campaign by the rock star Sting and Indian chief Raoni, who famously wore a plate through his lip, succeeded in scaring off foreign backers. Twenty years later, both are back opposing the dam.

“It is not to better the quality of life of people,” said Antonia Mello, coordinator from the Xingu Indian tribe’s Xingu Movement Forever. “It is to benefit political groups and groups of businessmen.” The tribe’s Xingu Basin home will be flooded. “There will be huge damage to the biodiversity. More than 50,000 people who will be expelled from their homes and their lands,” Mello said. Protests and international legal actions are pending.

But with Brazil's economy set to grow at 5 percent this year, the country needs electricity. “Electricity consumption has grown higher than GDP,” said Ronaldo Seroa from the Government’s Economic Research Institute. In October 2009, a blackout affected tens of millions of Brazilians when power line failures shut down the giant Itaipu dam — another giant hydroelectric project on the Paraguay border that supplies almost 20 percent of Brazil’s electricity.

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Belo Monte has been beset by problems. Construction giants Camargo Correa and Odebrecht walked out of the first consortium put together to build the dam. After a judicial battle a second consortium finally won a government auction. The government has had to guarantee 80 percent of the costs through the Brazilian Development Bank. Critics say the dam will not generate the energy the government says it will.

“The government says it will produce 11,000 megawatts,” Mello said. “But the government knows well that it will be just 4,700 megawatts when the river is full. In the dry season when the river diminishes its water, it will be just 1,000 megawatts — and it could be completely paralyzed if the river is too dry.” The government says it will cost $19 billion reais ($10 billion). Specialists say it could cost up to $30 billion reais.

Greenpeace Brazil’s Marcelo Fortado said Brazil needs a more imaginative energy policy and could easily find the extra power needed using alternative sources: wind turbines, smaller hydroelectric projects, sugar cane waste, greater energy saving. “Big projects like this are not the way forward,” he said.

In December 2009, a report by the Brazilian government’s own Energy Research Company said that energy consumption could be cut dramatically by a more efficient environment code, and more efficient electronic goods and energy consumption. Greenpeace says 30 percent of energy produced is wasted.

But Brazil is an ambitious country and the world’s 10th biggest economy wants to become its fifth. Thirty million Brazilians have come out of poverty in the last decade, 50 percent of the population is now considered part of a new lower middle class. And if continuing social problems are to be avoided, the country’s economy needs to keep growing at the 5 percent projected for this year. Belo Monte is part of the Lula government’s Accelerated Growth Program.

“If Brazil is going to grow, more electricity is needed," said David Fleischer, professor of political science at Brasilia University. "We do need some big infrastructure projects if Brazil is going to become the fifth biggest economy in the world.”

Ever since Brazil’s military dictatorship, with its slogan of "Big Brazil" first mooted the Belo Monte project, big showpiece projects like this have been written into the DNA of successive Brazilian governments. “Politically, it’s flashy and it gives you a lot of propaganda,” said Fleischer. And Brazil is proud of its clean energy record: about 80 percent of its electricity comes from hydroelectricity. Seventy more dams are planned.

In October, Brazil will elect a new president. A radical new energy policy is unlikely to be adopted in the meantime. For now, Belo Monte is going ahead. Cacique Akiaboro, leader of the Caiapo, another tribe affected, said last week after a meeting with Lula “there will be a war between Indians and whites” if the government insists on building the dam.

But in the wider context of an overheating economy and an ambitious government, indigenous tribes like his are political collateral in a game being played for much bigger stakes.