MercoPress. South Atlantic News Agency

Dispute between Argentina and Uruguay

Uruguay rejected a plea by Argentine President Nestor Kirchner on Wednesday to temporarily halt construction of two pulp mills that have sparked environmental concerns, protests and a deep diplomatic crisis between the neighbors.

The $1.7 billion project along the Uruguay River shared by the two countries is Uruguay's biggest industrial investment.

It has unleashed demonstrations led by ordinary Argentines and environmentalists worried about contamination and its effect on the region's tourism and fishing.

"The request made by the president of Argentina, which we have respectfully taken into account, is an impertinent request," said Uruguay's vice president, Rodolfo Nin.

Hours earlier, Kirchner called for a 90-day halt to the mills and urged Uruguay President Tabare Vazquez to allow time for further studies on environmental risks.

"I'm asking for only 90 days to help two brotherly countries resolve this very important issue," Kirchner said in a speech to open the legislative year in Congress.

Nin promised Uruguay would help monitor the plants' impact on the river but made clear that stopping work was not an option. "The government of Uruguay is never going to take such an action, telling a company that has trusted in the country to halt its investment," he said.

The mills, to be built by Finland's Metsa-Botnia and Spain's Ence are expected to produce 1.5 million metric tonnes of wood pulp for export after they begin production in 2007.

The companies insist any pollutants from the plants would come within internationally tolerated levels.

But for months, residents in Argentina's Entre Rios Province, across the river from the proposed mill site, have blockaded roads and shut down travel between the two countries. Uruguayan officials have said the action is badly hurting Uruguay's economy.

Kirchner and Argentine officials have threatened to take their concerns to the International Court of Justice in The Hague if the two countries fail to resolve their differences over the plants.

Vazquez has said he is considering seeking mediation by the Organization of American States.