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Botnia Pulp Mill Conflict

Sustained International Roadblocks Against Pulp Mill in Uruguay Hits Record 4 Months!

Easter Holiday - Communities cut all terrestrial traffic into Uruguay and vow not to leave.
Botnia, Finland, and Financial Banks refuses to budge

April 3, 2007 –The Argentine-Uruguayan Border. It is not an April fools joke. The sustained road block that separates Argentina and Uruguay at the San Martin International Bridge, at the site of a controversial mega sized pulp mill in construction by the Finnish pulp mill company Metsa Botnia, has beyond all predictions, already surpassed its 4 month mark. The blockade went up last November 20th, the eve of the World Bank decision to finance what has become its most controversial project ever. The community roadblock is now a full blockade of all terrestrial passages into Uruguay. Only ferries and planes remain open into the country.

This is the image drivers see (see picture above) when they approach the principal international bridges once linking (now dividing) Uruguay and Argentina, in what has long been an irrational conflict between local communities who don't want Latin America's biggest paper pulp mill (which generally stink and pollute) going up in front of their pristine beaches, and a stubborn multinational and its financiers, who refuse to stop and consider the irrationality of the conflict they have spurred, between what have always been friendly communities and neighboring countries.

All terrestrial traffic between Argentina and Uruguay will be cut for the 9 th time since the blockade began in November. Stakeholders generally block only one bridge (there are only three), which already makes for serious problems for anyone considering coming from or going to Uruguay over land, since the other two are much further north and away from Argentina's and Uruguay's populations centers, Buenos Aires and Montevideo. This weekend Easter holidays kicked off, one the most important travel weeks for the tourism season. This time, and for the duration of the Easter holiday, all three bridges will be blocked.

Local community representatives say that they will never leave and reject offers by Uruguay and the mill operator to collaborate in control and monitoring tasks to avoid potential harm. The local beaches of Gualeguaychú, the name of the Argentine city facing the mill across the river, fear that they will lose much cherished income revenues from hundreds of thousands of tourists and fisherman who each year come to the riverside community to soak in its natural beauty and quiet riverside natural environment. “Had they asked us before deciding to locate here (which the World Bank obliged them to do but failed to enforce), they could have set up a bit further south and avoided this whole problem”, … “We want the mill to relocate away from our area”, said Jorge Frixler, a local resident and active member of the Citizen's Environmental Assembly of Gualeguaychú, what has become now, one of the world's largest, if not the largest democratic environmental social movement ever.

Not only will Botnia's pulp mill ruin the pristine non-industrial natural scenery in the area, generally caused by chlorine chemical agents used in the pulp production process, but hundreds of thousands of trucks arriving and departing from the mill each year, as well as the appearance of other large industry, will begin to transform this environmental haven, into an industrial focal point. Already one large petrochemical industry is interested in siting near Botnia. Even the CEO of another pulp mill, ENCE of Spain, which was equally large and planned in the area but decided to leave because of the growing conflict caused by the mill location choice, said before leaving that it made no sense to build the pulp mill at the location, and that the number of trucks that will come to the regional cannot be assimilated by the existing transport infrastructure. The World Bank has overlooked this point.

Making reference to a facilitation and bilateral reconciliation effort under way under the auspices of the King of Spain, residents said that relocation, “must be on the agenda as we will never give Botnia the social license it needs to operate here”, said Pedro Ruiz Díaz, a resident of Concordia, a community up-river from the mill site, and at one of the other only bridges crossing into Uruguay, which will also be blocked in solidarity with the Gualeguaychú community. Botnia has systematically rejected discussing relocation.

Communities opposing the mill have vowed to stay on the bridge until Botnia decides to pack its bags and leave, perhaps to relocate in some other area on the border or inland in Uruguay. The Argentine government at one point, before the problem had become a full fledged international and bilateral dispute, even offered to pay for Botnia's relocation. Botnia has always skirted the offer and kept on to its construction schedule even accelerating it, provoking the rage and frustration of local citizens even further. Many local residents say that Botnia's arrogant attitude and indifference to the local conflict they have caused between to brotherly nations, is the source of everyone's problems and simply want them to leave. Botnia's management says that “Botnians”, not Uruguayans or Argentine's imbued with a Finnish way of doing things will run the mill and that stakeholders have nothing to worry about. Local communities don't buy it.

Communities have protested before the Finnish Embassy, and before financial banks, and even before other Finnish companies like Nokia, trying to exert pressure on Botnia, but to no avail. Finland refuses to get involved in the dispute, which they claim is a private affair, despite the fact that the Finnish government ironically owns 49% of the chemical company Kemira that will supply Botnia and be built at the Botnia site in Uruguay. “Technically”, argue the Finns, it's a different project. Stakeholders point to Finnvera, Finland's Export Credit Agency, which is also financing Bontia, a as clear indication that Finland is indeed involved and has serious stakes. Argentine-Finnish relations have been tense ever since the conflict got out of hand. Paula Lehtomaki, Finland's Trade and Industry Minister canceled a trip to Argentina in her regional visit last year, when Argentina insisted that she Finland help resolve the conflict. They refused, and Lehtomaki avoided Argentina in her pass through.

The mill project has also been a headache for the World Bank, particularly the International Finance Corporation (IFC) – the World Bank's private sector lending arm, which botched its review of the project before sending it to a Board Vote in April of 2005. The IFC's technical team in charge of the reviewing project social and evaluation impact documents indicated at the time that it had “broad public support”. Ten days later, the largest march ever against a World Bank project occurred, spontaneously drawing 50,000 local residents (see picture). This was further magnified by a scathing audit conducted by its own ombudsman, which said that the communities were right and that the IFC was violating its own social and environmental norms. This sent the IFC's technical team back to the drawing board for nearly 18 months to cover large gaps in environmental studies. The IFC avoided consulting the community which as growing more and more skeptical, and came back with a clean bill of health for Botnia, signed by a standard pulp industry consulting firm. Opposing sides of the conflict had by then entrenched. Each of the World Bank Directors that voted to give Botnia financing have, in an unprecedented move, been named in a criminal complaint filed in local courts and could potentially be called to trial should they visit Argentina.

CEDHA, the civil society group that represents stakeholders in a world-wind international campaign to freeze international financing to the investment, and that has led already 12 international complaint filings against the World Bank, Botnia and a handful of international financial banks, was in Norway and Sweden this week, to explain to the banks, that despite their blind belief in the IFC's clean bill of health for the mill, that the problem isn't going away.

Many rightfully ask how this investment could be such a problem for Argentina and Uruguay, especially considering that it is a foreign investment, no local company is involved, that it has been shown to violate the World Bank's social and environmental safeguard policy, that it is creating relatively few local permanent jobs, that it is the cause of an open dispute in the International Court of Justice filed by Argentina against Uruguay which could render the project illegal. Botnia will have a 25 years tax free agreement and it was designed so that Europeans could continue to consume 300 kilos of paper per capita per year, while Uruguay barely consume 30. Not much sense it seems in a world growingly concerned with the depletion of natural resources and irrational patterns of industrialized country consumption and persistent wealth and income inequities.

The conflict has had its moments of almost-resolution, however. In April of last year, the Presidents of Uruguay and Argentina, realizing the dispute could not go on, had reached a tentative agreement to take three months to complete their own independent studies, and enter into a resolution to the conflict. The agreement hinged on the pulp mill company Botnia and ENCE (the other mill then in construction nearby), ceasing construction for 90 days. Botnia refused to stop construction following a collapse of 9% of its stock when word of the construction cease got out. The presidential accord subsequently collapsed, and with it any hopes to resolve the dispute.

Eventually, ENCE the Spanish pulp mill programmed to produce only 5 kilometers from the Botnia site, bowed to local opposition and heeded to an Argentine presidential request to relocate its plant, and is now planning to build downstream from the conflict zone, in an area where no controversy is expected. Argentina had offered to pay for Botnia's relocation, when it was probably more viable that it move, but Botnia refuses to even acknowledge that this might be the only solution to the growing conflict.

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Jorge Daniel Taillant

Cel: 54 116 182 3172