Solution to paper factory dispute between Argentina and Uruguay more remote than ever

Spain's King tries to help ease tension

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By Kari Huhta in Buenos Aires
     
     Not even the prestige of Spain's King Juan Carlos is enough in the mediation effort in the increasingly bitter dispute over the massive investment by the Finnish paper manufacturer Botnia in Uruguay, say several sources in the Argentine capital Buenos Aires.
      The work of a mediator appointed by the King is not the only attempt to resolve the dispute that has put the neighbours Argentina and Uruguay on collision course, and turned Botnia into a reluctant party in an international political struggle.
     
The dispute began in early 2005 when Botnia began building a factory with an annual capacity of a million tonnes of pulp in Fray Bentos, Uruguay. On the opposite bank of the Uruguay River, residents of the Argentine town of Gualeguaychú rose up against the project, citing environmental concerns as their primary objection.
      Environmental studies and Botnia's assurances have had no effect on the resistance of the Argentines. For this reason, much hope was placed on the Spanish mediation effort.
     
During the mediation one partial solution emerged, when another pulp company, the Spanish Ence, decided in December to move its own pulp mill project away from Fray Bentos to the river's delta.
      The Spanish effort did not end there, because the purpose was not to promote Spanish interests, but rather to resolve the dispute between Argentina and Uruguay.
      There was a slight surge of hope when the mediation focused on the Botnia project, but last week, sharply-worded comments from Argentina in particular shot it down.
      In capitals of the countries involved, including Helsinki, comments on the details of the mediation are hard to come by.
      However, according to some sources, Juan Antonio Yáñez Barnuevo, who was the "facilitator" appointed by King Juan Carlos, is compiling a package of measures aimed at dismantling the dispute and allowing the pulp mill to start in peace.
     
The Finnish Ministry for Foreign Affairs and Botnia confirm that the package includes measures that the Finns would be expected to take. Botnia has previously said that it is not a party to the dispute between Uruguay and Argentina. The starting point of the Finnish government has been that as a state, it cannot interfere with the actions of a company.
      The goal of Yáñez is to arrange a summit sometime in the spring; at the meeting, the presidents of Argentina and Uruguay, Nestor Kirchner and Tabaré Vázquez, could resolve their disputes in the presence of the King of Spain and some representative of Finland of slightly smaller stature.
      The meeting should be timed so that it would take place between the regional elections in Argentina, which are being held at different times of the year, and the Presidential elections that are scheduled for October.
      Preparations for the summit are being made by the chiefs of staff of the presidents of Argentina and Uruguay, who are to engage in a dialogue which is scheduled to begin this month.
      Markus Lyra, political undersecretary of state of the Finnish Ministry for Foreign Affairs, confirms that "the possibility to take part in the meeting has been probed on some level, but there is no agreement.
      There are no plans for Finland to participate at the highest level, but Yáñez has been in contact with President Tarja Halonen on the matter. The President's office confirms that Halonen got a letter from Yáñez before Christmas, which she answered by emphasising the importance of the mediation project.
     
Yáñez visited Finland during the week between Christmas and New Year's and got a clear answer from Botnia as to whether or not it would be possible to consider moving a nearly complete factory to a different location.
      That would not be possible, but at the same time, Botnia is promising to embark on various projects involving landscaping, the treatment of the city's waste water, and international monitoring, which do not question Botnia's right to operate as a company.
      The purpose is to create a situation in which Argentine President Kirchner could call on his compatriots who are blocking bridges between Argentina and Uruguay to call off their protest.
      The permanent roadblock on the bridge leading to the plant, and the occasional blockades of two other bridges must be stopped if negotiations are to start, says Vázquez.
     
In his opening speech of the autumn season of the Southern Hemisphere last week, Kirchner declared that the neighbour's demand to open the bridges is an impediment to negotiations, which Kirchner feels should be about moving the Botnia mill.
      The speech sparked angry reactions, also from the restrained circles of the Spanish mediation effort, and the situation did not improve, even though Vázquez clearly desisted from responding in kind in his own autumn speech the following day.
      Kirchner's tough speech raised the alternative that the Botnia pulp mill will begin operations according to plan during the third quarter of this year, accompanied by an escalating international dispute.
      Optimists set their hopes on the fact that a solution to the dispute which hurts political and economic cooperative projects in South America is ultimately necessary in Kirchner's view as well.
     
Helsingin Sanomat / First published in print 7.3.2007


Previously in HS International Edition:
  Pulp mill dispute between Argentina and Uruguay intensifies (12.4.2006)
  King of Spain to mediate in Metsä-Botnia pulp mill dispute (6.11.2006)

KARI HUHTA / Helsingin Sanomat
kari.huhta@hs.fi