Southern pulp friction

Some six miles from the Uruguay River, which divides Uruguay from Argentina, Nelly Pivas sits beneath a makeshift tent in the middle of a two-lane highway. Flies are circling her freshly cut Argentine potatoes.

"We are out here because if the Uruguayans go ahead with this, it will contaminate everything," says the 65-year-old Argentine, condemning two massive pulp mills being built on Uruguay's side of the river in nearby Fray Bentos, a port town of 23,000.

Convinced by environmentalists and some Argentine politicians that the two plants will spew deadly toxins into the shared ecosystem here, Ms. Pivas and hundreds of other Argentines in recent weeks have used trucks, tractors, and their own bodies to block two of three international bridges connecting their Uruguayan neighbors to the regional economy.

In recent days, as Argentines continue to turn away traffic, meeting nightly over barbeque, drums, and bitter Argentine yerba mate tea, a straightforward environmental protest has devolved into an unusually tense diplomatic row that threatens to spawn a regional crisis with potentially significant economic impact.

The plants, together worth $1.8 billion, represent Uruguay's largest investment ever. One, belonging to Spain's Grupo Empresarial ENCE SA, plans to churn out 600,000 tons of paper pulp annually. The other belongs to Finland's Oy Metsa-Botnia AB and Kymmene Corp., and plans to produce 1 million tons per year.

A spokesman for Botnia says the plants employ the latest technology and will meet the stringent environmental standards of the European Union. But such claims do little to appease environmental activists, business groups, and Argentine politicians.

With the plants moving steadily toward production, both governments are posturing.

On Friday, Uruguay sent a ranking official to discuss the roadblock issue with Jose Miguel Insulza, the Secretary General of the Organization of American States (OAS), even though the international body can do nothing unless both sides request intervention.

Uruguayan President Tabare Vasquez, who says the facilities will put $400 million annually into the Uruguayan economy, has appealed to his Argentine counterpart, Nestor Kirchner, to intervene to stop the costly blockades. So far, President Kirchner has refused to step in.

Mr. Vasquez has also called on Argentina to pay Uruguay for economic losses, and recently suggested Montevideo may even pull out of Mercosur, the regional trade bloc dominated by Brazil and Argentina.

Argentina, which co-administers the river according to a bilateral agreement, has threatened to take Uruguay before the International Court of Justice (ICJ) at The Hague for failing to consult it before the plants were approved.

"Both governments are buying time," says Gerardo Caetano, director of the Political Science Institute at Uruguay's public University of the Republic, "all this is about political tactics." He says the ICJ will not accept a hypothetical case, and even releasing an opinion on the matter could take years.

Page: 1 | 2