Friday, February 02, 2007

Regarding COHA's January 30 Press Release: "A Beneficial Uruguayan Paper Mill: Pulp Fiction?"

  • As Mercosur was about to meet, Uruguay’s President Vázquez signs papers with the U.S. that could lead to a free trade pact with Washington. Vázquez flirts with the idea of being forced to leave Mercosur if he goes ahead and binds himself to Washington.
  • In the fatal battle between the two normally friendly nations, Uruguay may be making the mistake of the generation by not seeking some kind of settlement of its ugly spat with Argentina.
  • International lending agencies deserve blame for not engaging in a vigorous environmental study before agreeing to allocate the substantial asset to the “Orion” project.

Through their use of roadblocks and varied inflammatory statements to the press, Argentine activists and Uruguayan public officials have sought international attention to their respective sides in the nearly 2-year-old conflict over the construction of a paper mill on the Uruguayan side of the river. Usually amassed on the San Martín Bridge and largely hailing from the Argentine town of Gualeguaychú, these demonstrators vehemently oppose Botnia’s (a privately-owned Finnish firm) vision of a cellulose plant on the banks of the river separating the two countries. The project has evoked strong antagonism due to the detrimental environmental effects that appear unavoidable should the mill be completed and become operational. Botnia’s endeavor has drawn enthusiastic support from the Vázquez government, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the World Bank. Unsurprisingly, their backing has added to the political tension now plaguing the two sides, which includes Buenos Aires’ pleas before the International Court of Justice to halt construction of the mill and Uruguay’s plea to the same court that the border closures were causing ‘irreparable’ damages to the country’s economy. On January 25, Uruguay boldly signed a Trade and Investment Framework Agreement (TIFA) with the U.S. in hopes that the affiliation with the northern super power might influence the paper mill dispute in its favor. A TIFA is often a first step to a Free Trade Agreement, which would directly violate Uruguay’s membership agreement with the other Mercosur countries. In spite of the perspective economic bonanza to Uruguay, resulting from the pulp mill, Montevideo would be wise to reexamine the likely political and economic costs of risking its continued membership in Mercosur. Then there is the need for Uruguay to preserve its own environment, as well as the need for it not to imprudently go too far out of its way to antagonize Mercosur partner Argentina and, quite possibly, its long term ties to Brazil.

Full article...

~There is a lot of relevant information in this article, but no mention of the various effects, good and bad of the several Argentine paper mills on the other side of the Uruguay River, in Corrientes Province, I believe, which employ older and much more polluting technologies. Why? Nor is there any mention of the fact that the Argentine Province of Entre Rios attempted to attract the Botnia project and lost out--and that, at the outset of the controversy, the Governor of the Argentine Province of Corrientes stated that Corrientes would be happy to receive the project. (He appears to have been silenced since.) These seeem like most unfortunate omisions. Whether or not there are ecological arguments against the plant, in the interest of a balanced presentation, the efforts of two Argentine provinces to attract the investment, and the experience of more polluting Argentine cellulose plants on the other side of the river should be noted. As it is, the article seems like it was prepared primarily with information supplied by the Province of Entre Rios and the Government of Argentina.
Hugh Schwartz

COHA answers:

My dear Hugh,

We will look into this. Any article, that you ar aware of that shed light on the subject would be very much appreciated here.

My best,

Larry Birns
Director of COHA

~ Dear COHA

While I always read and enjoy your reports on South America I am once again moved to write to you because of your continuing bias for Nestor Kirchner's Argentina, which I feel is rooted in a mistaken belief that the man is some kind of progressive reformer as opposed to the latest Peronist populist (Hartford Campbell's article last year and my response to it).

As an Argentine I too am worried about the impact of the Botnia plant on the environment but I am even more worried about how the Argentine government's absolute failure to manage this diplomatic problem is threatening to wreck Mercosur and bring relations between what should be two brother republics to a new and very sorry low.

Completely absent from Ms Donovan's report was any broader history of the dispute. No mention of the fact that the Uruguayans consulted the Duhalde government about the plant only for Kirchner to decide AFTER the roadblocks went up that that consultation did not count because the government at the time gave the answer he now could not or would not implement without facing down roadblocks - something he has shown himself to be unwilling or unable to do since coming into office.

In effect Argentina has contracted out one of its most important bilateral relations to unelected protesters who are breaking the law of the land which guarantees free movement on the republic's roads.
One can feel for these people - no-one wants a large industrial project to set up in their neighbourhood, especially when it is across a national frontier and leaving them to benefit less in terms of jobs and income while having to share any environmental impact. But to contract out your country's bilateral relations with a close neighbour to these people is the height of stupidity.

What nation would end a massive foreign investment project in the face of demands that it do so by foreign protesters who blocked the international frontier in an attempt to strangle your economy? This is even less likely in Uruguay where there are long memories of Argentine meddling in its internal affairs that go back to the time of independence and have by fuelled by Argentine insensitivity in every generation since.

This is why I believe why Tabaré is so strongly backed by the VAST majority of the Uruguayan population. Sending troops to guard the plant was a stupid stunt but no worse that Kirchner's repeated stupid rantings on the subject both domestically and at international forums.

Of course as a pluralistic society opposition to the plant is to be found in Uruguay, but Ms Donovan's report I believe over-emphasises this opposition while failing to stress the huge support for the plant in Uruguay, increasingly out of defiance at the Argentine roadblocks.
This was very clear to me on my last trip to Uruguay.

What I feel is also missing in the report is the growing sense in Buenos Aires political and business circles that this whole dispute is another example of the Kirchner government's almost total disregard for diplomacy, playing fast and loose with an important neighbour based on typically Peronist chauvinistic tendencies dressed up as progressive environmental concerns.

Do you really think that Kirchner's government gives a damn about the environment? Just look at the number of new mining projects it has authorised within its own borders in recent years. Botnia's plant passed international studies of its environmental impact and Botnia says the plant meets EU standards, a claim that can be verified by end of 2007. Nothing like this is underway in Argentina. Gold mines using high levels of mercury are being approved all over Argentina with very little oversight. The idea that the Argentine government has an environmental stance on the paper plant is not just wrong - it is absurd to even think so. Nearly all the heavy pollution already flowing into the Rio de la Plata comes from Argentina, plants the government is doing little or nothing to clean up or shut down. One only has to get a taxi to La Boca in Buenos Aires to realise that the major environmental threat to the Rio de la Plata is Argentina, not Botnia or Uruguay.

The problem is that Kirchner's diplomatic maladroitness has backed him into a corner.
It is hard outside of Kirchner's supporters to find anyone in Buenos Aires who thinks our case will win at the Hague. Why did he back the protesters? Because he thought it would be another cheap populist move to further boost his popularity? Possibly. Maybe it was because he fears his own police's ability to remove roadblocks without violence, which would be understandable. But by letting whoever block whatever road they wish since coming to power he now finds it almost impossible to articulate a situation in which this should stop. The result is that this particular saga has gone on until now we have our diplomatic relations with Uruguay being conducted by the inhabitants of Gualeguaychú. Leaving bilateral relations in the hands of people living on the border is never really a good idea.

I believe the root of this dispute is to be found in the actions or lack of them of the Kirchner government. Ms Donovan's report I think shamelessly implies that Uruguay should back down in the face of Argentina's demands. No government could do this and survive and I believe that the Uruguayan government should not be asked to do so.
What is lacking in the report is an analysis of how the Kirchner government has blithely walked into this mess, dragging Uruguay along with it. Just because it is the bigger, more important power and has wrapped itself in a spurious environmental cloak is no reason not to call its bluff and force it to conform with the norms of international law and decency.

Jean Fournier

This opinion essay is bias and too much influenced by Argentinean position. You should include a Uruguayan version of this conflict and uncovered the real selfish interest from Argentina in this conflict. It is too easy to write on something you are scarcely or not well informed. As an Uruguayan citizen I resent this kind of essays, but this is not the first time I have problems with essays published by the Council on Hemispheric Affairs.


Hugo Achuga MLL Dept.

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