MercoPress. South Atlantic News Agency

President's Summit sinks on move by Botnia

Uruguay announced that a widely expected summit between its President and that of Argentina to seek a solution to a dispute over two Uruguayan factories under construction has been suspended once again after a company building one of the plants yesterday refused to halt works for a period demanded by Argentina to assess the environmental consequences,

"Regrettably I have to announce that the summit between the presidents (Tabaré Vázquez, of Uruguay, and Néstor Kirchner, of Argentina) that was expected for this week has been postponed," Uruguayan Presidential Chief-of-Staff Gonzalo Fernandez told reporters in Montevideo.

No new date was set for the meeting that had already been postponed last month "to discuss some details."

The Finnish company Botnia, that is building one of the two pulp mills at Fray Bentos, yesterday said that it was ready to suspend works for only 10 days, not for the 90 days that both presidents had requested when they met in Santiago de Chile in mid March.

"We share with Argentina the disappointment over the company's lack of sensitivity," Fernandez said.

Meanwhile, residents of the Argentine province of Entre Rios who this summer blocked two of the three binational crossings for over a month, yesterday threatened with resuming the blockades that they lifted after the truce agreed by the two presidents in Chile. Fernandez said that the blockades have cost Uruguay 300 million dollars in lost revenue.

Botnia's decision was made at its headquarters in Finland and was based on fears about a possible fall of the company's shares in stock markets, Fernandez said.

Fernandez add that Botnia's decision had nothing to do with alleged fears as to who would pay the workers' wages during a possible suspension of the works. He also said that Argentina had already agreed that the construction of the two plants will go ahead and that they will continue to be built at their current location.

Argentina argues that the two plants on the Uruguay River shared by both nations will harm its environment. Uruguay says that the environmental consequences will be monitored according to demanding international standards.

Both countries requested the suspension so that a binational team would assess the environmental consequences. Fernández said that 30-40 days would have been enough to draw a report.

On Monday an Argentine government source said that Argentina was "happy" with Uruguay's response to a proposal Argentina had put forward last Thursday. Argentina has threatened to take the case to the World Court.

Botnia on March 26 had announced a decision to partially suspend works for up to 90 days to facilitate an understanding between the two countries but on March 31 Uruguayan unions said that the company had ordered them to go ahead with the works.

After that, Jorge Busti, the governor of Entre Rios, said that Botnia was seeking "a provocation" to cause the talks between the two nations to collapse.

Spanish company ENCE, which is building the other plant, had already announced a 90-day suspension to facilitate an understanding.

Botnia issued a statement saying that it was ready to suspend some works for 10 days as from April 7, a period mostly coinciding with the Easter holidays. It said that it was seeking to favour "a definite solution of the controversy between the two countries."

The Finnish company also said that "at a cost of one billion dollars, Botnia's cellulose plant is the largest (industrial) investment in Uruguayan history, which will increase (the country's) Gross Domestic Product by 1.6 percent and will create a total of about 8,000 direct and indirect jobs." The total cost of the two plants is 1.8 billion dollars.

Meanwhile José Cardozo, a Uruguayan deputy for the National Party and a former member of the CARU binational agency managing the Uruguay River, said yesterday that the real issue at stake between Argentina and Uruguay was "a dispute to lure investments."

He said that both Uruguayan and Argentine members of the CARU went to Finland in October 2004 and that during a meeting, Botnia's president "was very clear in explaining to us why the investment was being made in Uruguay: first, because Botnia does not invest in countries in default and secondly, because nor do they invest where high levels of corruption are reported. He was very clear and nobody rebuked him."

The project was approved in 2000. In late 2001 Argentina plunged into its worst economic crisis in history and declared the world's largest-ever debt default. Corruption scandals have mushroomed for decades.

"All this mess has nothing to do with the quality of the technology (to be used by the plants), or the water, this is a dispute over investments," Cardozo said. Buenos Aires Herald