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- Paper Pulp Mills - Uruguay
- Corporate Accountability and Human Rights
- Climate Change and Human Rights
Uruguay Turning Away from MERCOSUR?
Regional Crisis over Papermills Deepens as Mercosur Trade Agreement Hangs from Thread
Washington DC, May 2, 2006– Last night, Argentine and Uruguayan television and internet press, announced from Washington DC (where Uruguayan president Vasquez is purportedly negotiating a free trade agreement with the United States) Uruguay’s decision to pull out from the MERCOSUR trade block, signed in 1985 by Argentina, Brazil, Uruguay and Paraguay to promote regional trade, and downgrade its status to “observer”, a status held today by Bolivia, Chile and more recently, Venezuela. Several Uruguayan officials had alluded to a possible withdrawal of Uruguay from the MERCOSUR trade block over the last several weeks as tensions continue to mount over the border papermill conflict lived by the two nations. The Uruguayan Economic Minister, Danilo Astori, this morning, negated the news, suggesting that Uruguay is not considering a pull-out or even a trade agreement with the USA (a Uruguay-USA free trade agreement is fervently opposed by the other MERCOSUR trade block members). However, many feel Uruguay may be leaking this news purposefully to put pressure on Argentina to abstain from filing a complaint against Uruguay to the International Court of Justice (ICJ), for violations to the Uruguay River Treaty, due to the installation of two controversial papermills on the Argentine and Uruguayan border. The Argentine filing at the ICJ is expected later this week or early next.
The escalating conflict over the mills (one by the Finnish Botnia and the other by ENCE of Spain) on the Uruguay River, forming the natural border between Uruguay and Argentina, has magnified recent comments by Uruguayan officials, that MERCOSUR is not providing Uruguay with the much anticipated benefits it once believed it would reap from regional integration, largely due to the dominance in the trade block of economic and political colossal giants, Brazil and Argentina, whose economies represent 50 and 12 times the Uruguayan economy, respectively. In recent discussions with neighboring states, Brazil and Venezuela, Uruguay indicated that it did not want a future transregional gas pipeline to go through Argentina, for fear that Argentina, in retaliation against the unwanted papermills, might sever gas connections to its neighbor Uruguay. Uruguay is desperately seeking a resolution to the rising conflict over what would be the largest foreign direct investment in Uruguay’s history. The papermills amount to nearly US$2 billion in foreign direct investment.
Botnia, the Finnish megamill currently under construction, collapsed ongoing negotiations between the two countries when with their refusal to cease construction for 90 days, as requested by the two presidents so they could sort out matters and plan for further environmental impact studies. Due to complaints filed by stakeholders at the World Bank, and to one of the principle private banks, ING Group, already 500 million of this investment have disappeared, and nearly 1.2 billion is on hold pending a resolution to an ever escalating binational conflict.
Two days ago, over 100,000 persons marched in a peaceful demonstration against the mills to the bridge uniting Argentina and Uruguay adjacent to the Botnia mill site which remains blocked in protest causing hundred’s of millions of dollars to the Uruguayan economy. Argentina’s filing to the Hague, threatens to blow a coup de grace to the investment and would further complicate regional relations for the MERCOSUR.
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
