Metsä-Botnia continues construction of Uruguay pulp mill despite appeal by two presidents

Leaders of Uruguay and Argentina urge 90-day moratorium on construction

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The Finnish pulp and paper manufacturer Metsä-Botnia is proceeding with the construction of a pulp mill in Uruguay, in Fray Bentos on the Uruguay river, which forms the border with Argentina. The construction is going ahead in spite of an appeal by the presidents of both countries for a temporary halt.
     The suspected environmental impact of the planned mills has sparked a political crisis between the countries.
     
Finnish forest industry companies are investing more than EUR one billion in the Metsä-Botnia project in Uruguay, making it the largest single foreign investment by Finnish companies.
     On Saturday, Argentina's President Néstor Kirchner and Uruguay's President Tabaré Vásquez agreed that the construction work by Metsä-Botnia and the Spanish company Ence should be suspended until an independent environmental impact study has taken place.
     The two leaders met in Chile at the inauguration of that country's new President Michelle Bachelet.
     Kirchner said that the suspension of the construction would be a "necessary gesture" for the achievement of a settlement between the people of Uruguay and Argentina.
     
Opponents of the construction of the plant have held numerous demonstrations in which they have blocked a number of bridges linking the two countries. The road between Gualeguaychú and Fray Bentos has been cut off for more than a month, and the road between Colón and Paysandú has been closed for three weeks by the protesters.
     Uruguay calculates that the roadblocks have inflicted 200 million dollars in lost revenue. President Vásquez says that compared to that, the costs of suspending construction would be "insignificant".
     
Although the agreement between the two presidents was greeted with joy among the demonstrators in Gualeguaychú, Metsä-Botnia has continued its work on the mill. Timo Piilonen, the head of Uruguay operations for Metsä-Botnia, says that the company is waiting for an official statement by Uruguay on the matter at hand. "Now everything is based on information in the Argentine media."
      Piilonen does not expect Uruguay to order a complete halt to the construction. He expects the company to suspend some work. "Then it is up to the companies to decide, in the final instance, whether or not to agree to the request of the President."
     "We will not suspend anything before we get a request from the state. Then we will consider the matter."
     Piilonen admitted that the discussions between the Argentine and Uruguayan leaders involve a political culture that is different from that which prevails in the Nordic Countries.
      "But some way out has to be found between the countries. The dispute must be resolved one way or another", Piilonen ponders.
     
The Metsä-Botnia construction site currently employs 1,500 people. In addition,about 1,000 people work at the company's forest plantations nearby.
     Metsä-Botnia has held talks with the World Bank, aimed at getting the bank to shoulder the so-called "political risk" of stopping the construction.
     Piilonen says that discussions with the World Bank are still underway.
     Stopping the construction would cost tens of millions of dollars. Piilonen notes that local trade unions are sharply opposed to any suspension.
     "This is no disaster", Piilonen says. "We need to assess what we might do. There is always room to manoeuvre in these kinds of projects.
     
The Finnish Embassy in Buenos Aires has made great efforts to promote the Botnia project. According to Ambassador Ritva Jolkkonen, the embassy is trying to rectify what it sees as misconceptions about Finnish environmental policy.
     "Trust in officials and institutions here is traditionally weak, and suspicions run deep. The belief that foreign companies can come here and use old technology which has been banned in Europe, lives strong", Jolkkonen says.
     Many of the demonstrators opposed to the construction of the Fray Bentos plant are convinced that Botnia is building its plant in Uruguay because "it has been thrown out of Finland because of its pollution".
     The dispute has made Finland suddenly famous in Argentina. One example of this is the form that students at the University of Buenos Aires fill out to evaluate courses that they have attended. A course considered poor is called "bird flu", and a very poor course is called a "Finnish pulp mill".


Previously in HS International Edition:
  Greenpeace action at construction site of Uruguay pulp mill (18.1.2006)
  Botnia pulp factory centre of dispute between Argentina and Uruguay (10.1.2006)
  Argentines stage protest against Botnia pulp mill in Uruguay (8.12.2005)
  Argentina demands Botnia abandon their pulp mill undertaking in Uruguay (11.8.2005)
  Metsä-Botnia to build massive pulp factory in Uruguay (8.3.2005)

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