URUGUAY-ARGENTINA: Pulp Mill Conflict Hits Tourism

By Dario Montero Reprint | | Print |

Darío Montero*

MONTEVIDEO, Jan 3 2006 (IPS) - Thousands of tourists saw their year-end holiday plans interrupted over the weekend by a roadblock that formed part of the escalating conflict between Uruguay and Argentina over the construction of two pulp mills on the Uruguayan side of a river that runs between the two South American countries.

Thousands of tourists saw their year-end holiday plans interrupted over the weekend by a roadblock that formed part of the escalating conflict between Uruguay and Argentina over the construction of two pulp mills on the Uruguayan side of a river that runs between the two South American countries.

Some 200 environmentalists and local residents from the eastern Argentine province of Entre Ríos blocked the main bridge spanning the Uruguay River from early Friday to early Saturday, prompting angry reactions from Argentine tourists driving to Uruguay, as well as Uruguayan residents of Argentina heading home for the holidays.

The roadblocks organised periodically by the Gualeguaychú Citizens Environmental Assembly – with the tacit support of the Entre Ríos provincial government – to protest the construction of two cellulose factories on the Uruguayan side of the Uruguay River have begun to intensify.

The citizens’ group has now decided to block traffic across the river twice a week over the next month. In addition, it is considering the possibility of eventually staging a roadblock that would last for up to 10 days.

As the conflict between the two nations, which are separated by the Uruguay River and by the murky waters of the Río de la Plata, the world’s largest estuary, has heated up, construction of the two pulp plants has been steadily moving ahead.

Tourists from Argentina represent around 80 percent of foreign visitors to Uruguay during the southern hemisphere summer high season, which just started, and most Argentine visitors arrive by land.

Thousands of Argentine tourists were inconvenienced Friday and early Saturday as they attempted to enter Uruguay by the bridge connecting Puerto Unzué, located 22 km from the Argentine city of Gualeguaychú, and Fray Bentos, the capital of the western Uruguayan department (province) of Río Negro.

But hundreds of Uruguayans who live in Argentina and were driving back to their home country to visit their families were also affected by the roadblock, as traffic was backed up for kilometres.

Two bridges located further north on the Uruguay River also suffered short, surprise roadblocks.

Traffic over the San Martín bridge, between Puerto Unzué and Fray Bentos, was unusually light on Saturday and Sunday, indicating that drivers had sought alternative routes of travel.

Uruguayan Minister of Tourism Héctor Lezcano told IPS last Friday that he had failed in his attempt to get the Argentine government of Néstor Kirchner to adopt some measure to get traffic moving again.

The leftist Uruguayan government of socialist President Tabaré Vázquez warned that the protests violated agreements on the free circulation of goods and persons signed by the members of the Mercosur (Southern Common Market) free trade bloc: Argentina, Brazil, Paraguay and Uruguay.

The smokestacks of the cellulose factories being built by the Empresa Nacional de Celulosa de España (ENCE), a Spanish firm, and Botnia from Finland can already be seen from the other side of the river. The two plants are located 10 km apart from each other, near the town of Fray Bentos.

Local residents across the river in Argentina, environmentalists and provincial and national authorities in Argentina are worried about the risk of pollution posed by the plants and the potential impact on tourism and fishing.

They were recently angered by an environmental and social impact study by the International Finance Corporation, which coordinates the World Bank’s private sector investment programme, that is largely favourable to Uruguay’s position.

“We are worried that they are not feeding us all of the available information” on the environmental impact of the two plants on the Uruguay River and nearby towns in Argentina, complained the representative of environmental affairs in the Argentine Foreign Ministry, Raúl Estrada Oyuela.

But Uruguay’s Undersecretary of Industry, Martín Ponce de León, stated that “We have provided the Argentine government with all of the available information. Our attitude has been one of absolute transparency and total attention to all of the reports that have been coming in.”

Uruguay plans to promote the pulp industry, a new undertaking for this country, as one of the main engines of development, which means it would make no sense “to be so arrogant or careless as to say ‘I’m not listening’,” Ponce de León told IPS.

Most of the world’s paper is made from wood pulp. The species of trees most commonly used to produce pulp, or cellulose, in Latin America are fast-growing eucalyptus and pine, which are often planted in areas that once held native forests.

Eucalyptus and pine plantations in Argentina, Brazil, Chile and Uruguay represent 40 percent of the 10 million hectares of rapid-growth tree plantations worldwide.

The Uruguayan government and the two foreign corporations building the plants in Uruguay have repeatedly stressed that the factories will be equipped with modern technology aimed at minimising the environmental risks.

Both Botnia and ENCE are planning to use the “elemental chlorine free” (ECF) bleaching process in their plants.

Environmentalists and others opposed to the pulp mills point out that while not as harmful as older technologies, ECF bleaching still involves the use of chlorine dioxide, leading to the emission of dioxins and furans, which are not only harmful to human health, but can also spread over long distances and persist for years or even decades.

There is also a newer, cleaner bleaching process, known as totally chlorine free (TCF), which produces no dioxins whatsoever. But industry spokespersons say it is incapable of producing high-quality paper.

The factories under construction by ENCE and Botnia, which will invest a combined total of 1.8 billion dollars, will together produce 1.5 million tons a year of cellulose for the paper industry, starting in 2007.

But Argentina, which administers the Uruguay River jointly with Uruguay, is upset over the location of the plants, and the Kirchner administration is demanding independent environmental impact studies, complaining that it has not been supplied with the necessary information.

“We do not doubt Montevideo, but we believe the companies are concealing vital information,” Estrada Oyuela emphatically told IPS.

Although the conflict between Argentina and Uruguay, which are extremely close in historical and cultural terms, is the worst they have experienced in decades, sources with the centre-left Kirchner administration interviewed by IPS underlined that the presidents of the two countries are friends, and that the two governments have shared socioeconomic objectives.

A binational Argentine-Uruguayan technical committee was named by the two presidents in mid-2005 to study and negotiate the issue of the pulp mills. But the route towards a negotiated solution seems to be narrowing due to the intransigence of both sides.

Estrada Oyuela told IPS that Argentina may take its complaints to the International Court of Justice at The Hague.

Buenos Aires is demanding that construction work on the plants immediately be brought to a halt, and that the factories be relocated so that they are not only farther apart but also more removed from urban areas and from the Uruguay River, said the Argentine official, who added that Argentina could provide financial assistance for these measures.

But Ponce de León flatly denied that this was possible. “We have not even considered it,” he said.

The binational committee will end its work without reaching an agreement, and with two separate reports, said a Uruguayan diplomatic source who preferred not to be named. The committee will meet next on Jan. 18 in Buenos Aires, and is scheduled to complete its work 12 days later in Montevideo.

According to the source, Argentina sees the committee as a step in the negotiations, whose failure would logically lead the government to turn to the International Court at The Hague, while Uruguay considers it a mechanism for the sharing of information aimed at easing the Argentine government’s concerns.

A decision by Argentina to turn to the International Court of Justice would be the worst possible scenario, because Montevideo would be in a bad position if Buenos Aires complains that Uruguay undertook a major industrial project on a jointly administered river without first informing the Uruguay River administrative commission.

But Argentina, for its part, would have to demonstrate that the factories would cause it damages, in a costly, complex legal process. Because of the complexities, turning to The Hague means that a decision has already been made to battle it out legally rather than negotiate, said the source.

Meanwhile, the roadblocks along the border could prompt Uruguay to file a complaint in Mercosur, in what would be a second dispute that would overlap with and further complicate possible solutions for the original complaint brought by Argentina over the pulp mills.

For Argentina, the suspension of the construction of the plants would be a necessary first step towards a negotiated solution. But Uruguay cannot take that step because it is bound by the investment protection treaty signed with Finland and ratified in 2004, which means Montevideo would have to shell out large indemnification payments if it called off construction.

Alternatives are needed to defuse the conflict. One suggestion proposed by the Uruguayan diplomatic source would be to bring in international mediators, such as neighbouring Brazil.

If the conflict continues to escalate, it could not only hurt bilateral relations but also test the very foundations of regional integration and significantly affect the functioning of Mercosur. Because of that risk, Brazil may be interested in taking a hand in the matter and attempting to get the two sides to continue working towards a negotiated solution.

Unlike court action, which can adopt precautionary measures like calling off work on the plants, mediation is much more flexible, with looser timeframes, and perhaps more suited to the problem at hand, said the source.

But it does not form part of the Uruguayan government’s plans, and the role of technical experts and advisers, who may be interested in seeking out alternatives, is very limited, he added.

Nevertheless, even though both sides have used tough-sounding rhetoric that has been amplified by the media, both governments will think twice before turning to international litigation due to the complexities, delays and costs that such a step would involve.

*With additional reporting by Diana Cariboni in Montevideo.