Argentina, Uruguay Agree to Halt Pulp Mill Project

Story by Juana Ines Casas REUTERS NEWS SERVICE

CHILE: March 13, 2006
SANTIAGO - The presidents of Argentina and Uruguay agreed on Saturday to temporarily halt construction of two controversial pulp mills that have caused a diplomatic crisis between the neighboring nations over environmental safety.
The $1.7 billion project to build two mills along the Uruguay River, which borders both countries, is Uruguay's biggest industrial investment.
Under the agreement, reached in Santiago before Chile's presidential inauguration, Uruguayan President Tabare Vazquez agreed to stop construction of the mills for up to 90 days in response to Argentina's environmental concerns.
At the same time, Argentine President Nestor Kirchner agreed to suspend months-long roadblocks across the river from one proposed mill site that Uruguay has said are badly hurting the economy.
"The (project) suspension is done so that at the same time, they clear the blockades and we can begin negotiations between the two governments to reach an understanding, which we will surely achieve," Vazquez told reporters.
Further progress will depend on cooperation from Argentine protesters and the companies, Finland's Metsa-Botnia and Spain's Ence.
The presidents plan to meet twice during the 90-day period, once in Colonia, Uruguay, and once in Mar del Plata, Argentina, an official source with the Kirchner delegation said on condition of anonymity.
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The leaders have not decided yet whether to carry out an independent environmental impact study, as Argentina has repeatedly demanded.
"Uruguay is certain that the mills' functioning will cause a truly minor or very small impact on the environment," Vazquez said, adding that the companies will be using new, improved technologies.
The agreement came a little over a week after Uruguay rejected a plea by Kirchner to suspend construction of the eucalyptus pulp mills, which has led to demonstrations by Argentines and environmentalists worried about contamination and the impact on the region's tourism and fishing industries.
"This gesture that we are asking for jointly is fundamental to finding a solution that the people of Uruguay and Argentina want to strengthen their ties," Kirchner told reporters.
The two leaders met before the historic inauguration of Michelle Bachelet as Chile's first woman president.
The companies insist any pollutants from the plants would be below internationally tolerated levels. Metsa-Botnia officials in Uruguay did not answer their telephones on Saturday when sought for comment, and Ence representatives were not immediately available for comment either.
The mills are expected to produce 1.5 million metric tonnes of wood pulp for export after production scheduled to begin in the third quarter of 2007.
A protest leader in Argentina, Juan Veronesi, told Reuters the road blockades will not be cleared until construction on the mills has stopped.
"That is an indispensable condition. I have no assurances that Botnia will respond to Tabare's request, or that Tabare will actually request this," said Veronesi, a leader of the Citizens' Environmental Assembly of Gualeguaychu, the Argentine city at the center of the protests.
"We are tired of lies and tired of promises. We want to see concrete actions," he said.
(Additional reporting by Hilary Burke in Buenos Aires, Antonio de la Jara in Valparaiso and Patricia Avila in Montevideo)