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- Paper Pulp Mills - Uruguay
- Corporate Accountability and Human Rights
- Climate Change and Human Rights
IFC Papermill Project Drives Argentina and Uruguay to the International Court of Justice: The Crisis Deepens
The Hague. May 4th, 2006 – Argentina filed a complaint today to the International Court of Justice at the Hague, claiming Uruguay’s violations to the Uruguay River Treaty, in the handling of a near 2 billion dollar investment in a World Bank driven mega pulp paper mill investment in Uruguay on the Argentine border. The pulp mills, which have not yet received World Bank funding, are under IFC and MIGA consideration to receive over US$400 million. The filing adds yet another formal international legal dispute to the deepening crisis and long list of complaints that have already been filed by numerous stakeholder groups, including the government of Argentina, environmental and human rights organizations, as well as 40,000 community stakeholders which filed a complaint to the IFC’s Compliance Advisory Ombudsman back in September of last year over IFC mishandling of these projects.
The filing is the first time that a Latin American country takes a neighboring state to international court over an environmental dispute. It is also the first time that a World Bank project will be the focus of a case at the ICJ. The projects had already made legal history back in September, when stakeholders filed a complaint to the Inter-American Commission on Human Rights, the first time that the World Bank has a project sent to an international human rights tribunal.
The World Bank’s Ombudsman Office came down stongly against the IFC papermill projects for clear violations to the World Bank’s Environmental and Social Safeguard policies particularly on transparency, consultation, and access to information, yet the IFC’s Global Manufacturing and Services and its Environmental and Social divisions adamently plowed forth with their intention to support the investments, ignoring the CAO’s and stakeholder groups’ concerns, and despite clear problems with the projects’ environmental impact studies as well as blatent violations of transprency and stakeholder consultations procedures, which were confirmed by the CAO’s Compliance Audit.[1] The IFC however, has been unable to set a board date for considering Bank support, laregly due to its inability to manage the international dispute caused by its proposed investments.
One of the principle private investors, ING Group, has already withdrawn US$480 billion which had been under consideration for the Finnish Botnia. Following public scrutiny and an Equator Principles Compliance Complaint presented by CEDHA in December, ING decided to cancel its invovement casting serious international doubt on the viability of this multi-billion dollar investment.
Botnia, the Finnish pulp mill was to blame for the recent collapse of negotiations between Argentina and Uruguay to resolve the dispute, when fearing a drop in stock values in New York, decided to ignore the presidents’ request to halt construction while the two nations could sort out differences and provide further information regarding eventual impacts to the environment, to the impacted region’s critical tourist industry and to the health and livelihoods of local communities, threatened by the pulp mills’ expected pollution.[2] Botnia’s stance and unwillingness to collaborate with Argentina and Uruguay, was one of the root causes of today’s ICJ presentation.
A recent independent consultant’s report commissioned by the IFC has shown considerable gaps and weaknesses of the companies’ and the IFC’s environmental impact studies, while Botnia has apparently refused to provide more clear information about the technology it will be using in the production of what will be one of the world’s largest pulp mills, producing nearly 1.5 million tons a year.
Tabaré Vasquez, Uruguay’s president met yesterday with World Bank President Paul Wolfovitz in an effort to get explicite Bank approval for the projects, since both companies depend on Bank financing to facilitate private sector investment of other groups, who like ING are re-examining their financial commitments to the mills. BBVA of Spain, Nordea of Sweden, and many other smaller banks, as well as two oficial State credit agencies of Finland and Spain, are also closely following the evolution of the growing international tensions resulting from these projects.
Vasquez walked away from his meeting with Wolfovitz, yesterday, however, with yet another doubtful card, as the Bank president indicated that the World Bank would not provide financing to the mills if they did not comply with the Bank’s established social and environmental safeguards. The CAO has already said, they are not in compliance.
Finally, and to make diplomatic matters even worse, Uruguay’s frustration with the growingly unmanageable international crisis caused by these IFC-to-be sponsored projects, is now evaluating pulling out of Mercosur, the regional free trade agreement established in 1991 by Argentina, Brazil, Paraguay and Uruguay. It would also be a first if this World Bank driven project also causes the collapse of a regional trade agreement.
The Uruguay River Treaty, signed between Uruguay and Argentina in 1975, establishes joint-management and natural resources protection of the Uruguay River. Argentina claims that the IFC driven investment, violates proceedures and articles established in the binational treaty.
[2] See: http://www.cedha.org.ar/en/more_information/botnia-continues-construction.php
More Information
For more information contact:
Jorge Daniel Taillant
Center for Human Rights and Environment (CEDHA)
Tel. 54 3541 494 162
Cel. 54 9 351 625 3290
jdtaillant@cedha.org.ar
