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ARGENTINA / URUGUAY
Paper pulp mills at the point of no return
Alejo Álvez
6/15/2006
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Dispute mars historically fraternal relations between neighboring countries.

The construction of two paper pulp mills in Uruguay along its border with Argentina has created a rift between two countries that have historically enjoyed a close relationship.

The dispute’s impact may even extend as far as the Southern Common Market (MERCOSUR), possibly stunting the integration processes of other member nations Brazil and Paraguay.

Argentina has complained that the construction of the two paper pulp plants along the Uruguay River, which divides the two countries, would cause severe environmental damage.

After the governments of presidents Néstor Kirchner in Argentina and Tabaré Vázquez in Uruguay were unable to reach an agreement on the plants’ construction, Argentina brought the case to the International Court of Justice at the Hague.

Uruguay has still not convinced Kirchner, MERCOSUR’s president pro tempore, to bring the debate to the regional community.

Tensions began in 2003 when Uruguay, under the government of then-President Jorge Batlle (2000-2005), authorized the Spanish company ENCE and the Finnish company Botnia to construct the two pulping plants near the Uruguayan border town Fray Bentos, 309 kilometers (193 miles) northeast of Montevideo.

The two international giants offered an investment of US$1.8 billion in the project. Such an investment, if projected to the Argentine economy, would amount to $22 billion — hence its importance for the Uruguayan economy.

Protests began in early 2005 over the two plants, located on the outskirts of Fray Bentos, which is separated from the Argentine city Gualeguaychu by the Uruguay.

Cellulose contamination

"The cellulose production is a contaminant and will destroy the ecosystem, with grave impacts on the population, flora, fauna and fish," said the Citizen’s Environmental Assembly of Gualeguaychu.

While the Uruguayan government opted to continue with construction, and Kirchner avoided the issue, assembly members began to demonstrate. The group blocked two of the three bridges that link the Uruguayan and Argentine sides of the Uruguay River, a key MERCOSUR trade zone.

The blockades impeded the entry of tens of thousands of Argentine tourists who were traveling to Uruguay’s famed beaches between December and February. Communications between the two countries broke off for 71 days, 45 of them during high tourist season.

Fray Bentos alone is said to have lost an estimated $50 million. Uruguay’s economy and tourism ministries said that the blockades cost the country at least $500 million.

Omar Lafluf, governor of the Rio Negro province (Fray Bentos is its capital) says that an entire generation will pass before these two "historically fraternal" countries will repair their relationship.

Almost any Fray Bentos resident is likely to agree.

Nationalist language and insults were hurled at the other nation across the Uruguay River. This was even common as far as Buenos Aires and Montevideo.

Interdependent neighbors

Fray Bentos and Gualeguaychu, like their countries, have historically been interdependent. Argentine-Uruguayan families are very common here. Purchases of food or gasoline can be made simple by crossing the river. They listen to similar music and serve similar dishes. The same music and sports icons are worshipped.

Both sides of the river have served as a magnet for better job opportunities during times of financial crisis, or as a haven for refugees during the various coups during the 20th century.

Some Argentines question why Kirchner’s government has expressed so much concern about the contamination without taking decisive action regarding the seven cellulose plants on the Parana River. These aging plants use highly contaminating out-of-date technology.

"Kirchner does not even want to promote concrete terms to avoid the cellulose contamination," Martín Prieto, executive director of the environmental organization Greenpeace, said in May.

Some analysts in Uruguay associate the row with hidden interests aimed at creating a larger rift between the two countries in order to break down MERCOSUR and lead Uruguay to sign a free trade agreement with the United States.

What is guaranteed is that the crisis has extended to the rest of the Southern Cone and has brought MERCOSUR to the brink of dissolution.


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