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Pulp friction: the Argentina-Uruguay conflict

Celia Szusterman
30 January 2008

Cristina Fernández de Kirchner's honeymoon as Argentina's new president ended almost as soon as she received the sash from her husband and predecessor Néstor Kirchner at her inauguration on 10 December 2007. Her first seven weeks in office have been marked by criticism of the government's economic management, particularly the country's double-digit (but often-denied in official circles) inflation rate; by charges that the new president was the intended beneficiary of efforts to covertly fund her election campaign; and by questions over her decision to put the clocks forward by an hour for a limited period (30 December 2007 - 16 March 2008) in an effort to alleviate the interruptions in energy supply that have caused electricity blackouts in Buenos Aires, when the problem has been one of underinvestment as a result of seven years of frozen tariffs.

Celia Szusterman is principal lecturer in Spanish and Latin American studies at the University of Westminster and an associate fellow at the Institute for the Study of the Americas, University of London

Also by Celia Szusterman in openDemocracy:

"Argentina: the state we're in" (26 October 2005)

"Latin America's eroding democracy: the view from Argentina" (1 June 2006 )

"The Kirchner model: king and queen penguin" (17 July 2007)

"Argentina's new president: Kirchner after Kirchner" (29 October 2007)But the most damaging indicator of her troubles has come in the very area where there were expectations of a different, more open and better mannered, style: foreign policy. In particular, Cristina Kirchner's early mishandling of the long-running dispute with Argentina's neighbour Uruguay over the operation of pulp-mills across the river dividing the two countries highlights the doubts already gathering around her. Moreover, this national, cross-border, regional and indeed global controversy reflects far wider issues about Argentina's modern governance. The fate of Argentina's new president is in this respect only part of a larger argument about the country's political inheritance and direction.

A chilly welcome

Cristina Kirchner's difficulties began as early as her inaugural speech, with an impromptu remark: after referring to the fraternal relations between Argentina and Uruguay, she immediately added that the latter had "violated" the Treaty of the River Uruguay (1975) and that the International Court of Justice (ICJ) in The Hague would have the last word in the conflict over the Uruguayan pulp-mills affair.

At best, the comment revealed a lack of diplomatic skills; not least as Tabaré Vázquez, the Uruguayan president, was standing among the invited dignitaries in a chaotic ceremony.

At worst, it meant pre-empting the decision of the ICJ. But there was more to come: three days later, Mrs Kirchner accused the United States (albeit without naming it) of staging a "garbage operation" against Argentina, and treating countries like "employees" rather than equals.

This was an elliptical reference to a scandal that had featured in Argentina's election campaign without quite gaining the critical mass to derail Cristina's rise to office: in particular, to news that federal prosecutors in Miami were holding Venezuelan citizens accused of illegally acting in the US as "agents of a foreign government". The allegation concerned pressure on a man called Guido Antonini Wilson, a holder of joint US-Venezuelan citizenship, not to reveal the background of his effort illegally to smuggle into Argentina a sum of $800,000 via a private flight from Caracas to Buenos Aires hired by an Argentine state firm (Enarsa) - money, it is alleged, meant as a contribution from the Venezuelan president, Hugo Chávez, for Mrs Kirchner's presidential campaign. One of those alleged to havesought to prevent Antonini Wilson revealing information on the affair, Moses Maionica, pleaded guilty in a Florida court on 25 January 2008 and will be sentenced on 4 April.

The new president continued to lash out at these two adversaries - the United States and Uruguay. Days later, she mobilised both chambers of Argentina's congress to "repudiate the offence" of the US government to the Argentine nation and her president; and announced that she would not attend a dinner organised in Montevideo by Tabaré Vázquez to welcome all heads of state of the Mercosur countries (the last such event before Uruguay ceded the pro tempore presidency of the regional trade bloc to Argentina).

In the event, the Uruguayan president announced the cancellation of the dinner. The Uruguayans' frustration with Argentina and the emasculated Mercosur now goes deeper than a diplomatic spat: it is expected that they will request their status in the organisation be downgraded to that of "associate" (rather than "full") member, in order to be able to negotiate a free-trade deal directly with the US. This would be a double-whammy: a slap in the face of Mercosur, and a poke in the eye of Argentina and Venezuela, which helped ensure the failure of such a deal at the Summit of the Americas in Mar del Plata in November 2005.

For the second President Kirchner, alienating both Montevideo and Washington so early in her term of office is some achievement. But it hasn't even started yet.

The river overflows

The conflict over Uruguay's decision to allow the construction of two pulp-mills on its territory, by the side of the Río Uruguay that acts as a frontier with Argentina, has been a source of apparently inexorable - and certainly unnecessarily - confrontation between the two countries.

So what is all the fuss about? How has a foreign-investment decision by two pulp-mill companies - one Finnish and one Spanish - been allowed to escalate for two years to the extent that it has led to the closure of frontiers and hearings in the International Court of Justice?

Towards the end of the 1980s, Uruguay established a national forestation plan that set aside 700,000 hectares for the planting of eucalyptus and pine trees with the long-term aim of producing cellulose paste. In 2002, then president Jorge Batlle made known his government's decision to allow the construction of pulp-mills by the Río Uruguay. The result, it was hoped, would be a qualitative leap in Uruguayan exports, adding value to its traditional export of wood chips. Uruguayan environmental groups, worried about the contaminating consequences of the mills, sought allies on the Argentinean side of the river. They then submitted a claim to the Comision Administradora del Rio Uruguay (Administrative Commission of the River Uruguay / Caru); this had been set up in 1975 as part of the bilateral Treaty of the River Uruguay signed by both countries to ensure joint responsibility for their common frontier.

In July 2003, the Asamblea Ciudadana Ambiental de Gualeguaychú (Acag) in the Argentine province of Entre Ríos was established to promote environmental awareness and try to prevent the construction of the pulp-mills. In October of that year the Spanish group Ence was authorised to start construction; and negotiations were started with the Finnish company Oy Metsä-Botnia Ab (Botnia) over permission to build a second mill, a few kilometres from the first in the Uruguayan town of Fray Bentos. In March 2004, foreign ministers of both countries met to discuss a plan that would require Uruguay to inform Caru of the development of the construction process; they agreed to share responsibility for monitoring any contamination impact.

The official "annual memory of the Argentine national state" for 2004 notes these developments without mentioning any disagreements; it states, moreover, "the agreement respects the national character of the Uruguayan project, which was never in dispute". In fact, if the Uruguayan government had informed Caru rather than seeking a joint assessment according to the requirements of the 1975 treaty, this was not questioned at the time by the Argentine government. Thus both governments apparently accepted the strict adherence to the procedures recommended in the treaty.

But an issue that at the outset was clearly framed within the scope of bilateral technical and diplomatic channels suddenly acquired an unmanageable political dimension. A multiplicity of actors became involved: neighbours on both sides of the river; local, provincial and national governments; business sectors in both countries; regional and international organisations.

The swift development of polarisation between Argentina and Uruguay over the paper-mill issue as quickly began to reveal the huge chasm between the real interests at stake and the perceptions of the actors. In fact, this suggests precisely one of the difficulties of explaining an already multi-faceted issue in straightforward terms: for the methods of collective action adopted on the Argentinean side must be read (or so I would argue) in the context of the country's ongoing crisis of political representation which reached its lowest point in the effective collapse of the government in 2001-02. Only in a context of weak institutionalisation is it possible to comprehend how direct action - mostly illegal according to the Argentinean constitution and international treaties - became the accepted method of protest in a dispute over the anticipated environmental impact of pulp-mills not yet even constructed.

A bridge to nowhere

The turning-point occurred in February 2005, when the outgoing Batlle government authorised the construction of Botnia's proposed second (and much larger) "Orion" pulp-mill, which aimed to produce one million tons of air-dried pulp per year. The $1.2 billion investment was going to be the largest in Uruguay's history; it was also consistent with the aims of the national forestation plan of two decades earlier, as well as offering the prospect of an estimated 8,000 jobs in a poor area with high levels of unemployment.

Botnia's website listed its considerations in choosing the Uruguayan side of the river rather than the Argentinean. These included the political stability of the country, the low level of corruption, the certainty of land-based property rights, a free-port area, the high level of education of the Uruguayan workforce, and (the only factor not exclusive to Uruguay) the abundance of raw materials and climatic conditions that allow the quick growth of eucalyptus trees. All this, needless to say, is a coded if unmistakeable criticism of Argentina's governance.

In April 2005, the opposition party Frente Amplio, led by Tabaré Vázquez, entered government in Uruguay and immediately announced its support for the pulp mills. At that point the Acag organised a demonstration behind the slogan: "Yes to life. No to the pulp mills". It gathered 40,000 participants, almost all of them Argentineans, to occupy one of the three bridges over the Río Uruguay that connect the two countries. The huge and passionate march, with its cries of "ecocide" and accusations of "eco-terrorism" by the governments of Spain and Finland against the 73,000 citizens of Gualeguaychú, shifted the position first of Argentina's provincial government and then of the national authorities.

The governor of Entre Ríos immediately backed the asambleístas, as the demonstrators became known in the national media. Then, in July, Argentina's foreign minister Rafael Bielsa and finally President Néstor Kirchner himself came out on their side. At that point the conflict intensified and the possibility of an amicable solution all but vanished.

The Argentine government for the first time declared its intention to seek the judgment of international tribunals. Meanwhile the conflict was fought out in the media, reaching an almost farcical point when the Argentinean embassy in Montevideo denied that troops had been ordered to deploy in the province of Entre Ríos. Rafael Bielsa, who was a candidate for deputy in the neighbouring province of Santa Fe in the forthcoming legislative elections, visited Entre Ríos to state his and his president's support for the asambleístas.

The latter were increasingly emboldened, and announced a plan of disruption of the international trade between both countries by closing down the international bridges (a clear violation of Argentinean and Mercosur legislation; the Treaty of Asunción guarantees the free movement of goods and people among the member-states of the bloc). This did not prevent Néstor Kirchner receiving representatives of the asambleístas in the Casa Rosada.

The great divide

As the ground-level atmosphere was becoming sharper, so there were attempts to resolve matters at a diplomatic level. In May 2005, sections of the Argentine national press emphasised the links of friendship between the two countries since the early 19th century, and were optimistic that the conflict could easily be solved.

It was not to be. When the two presidents, Néstor Kirchner and Tabaré Vázquez, announced the formation of a "high level technical group" to assess the likely environmental effects of the pulp-mills, the asambleístas denounced a "sell-out" by the Argentine government. The picketing of the bridges continued; the movement of goods and people between the two countries was seriously affected.

The World Bank joined the fray with an environmental-impact assessment, which had been demanded by the provincial governor of Entre Ríos. The Hatfield report was in two parts, an environmental and a social assessment; it outlined the expected impacts that "two bleached kraft pulp mills" would have, and the "mitigation and enhancement measures" to manage them. The report concluded that "these mills will probably perform to a standard of the top five in the world if operated to design specifications, discharging lower quantities of pollutants than most of the older, smaller mills in Latin America, the US and Canada".

Among openDemocracy's articles on Argentina's politics:

Ivan Briscoe, "Argentina: how politicians survive while people starve" (16 April 2003)

Ivan Briscoe, "Néstor Kirchner's Argentina: a journey from hell" (24 May 2005)

Horacio Verbitsky, "Breaking the silence: the Catholic Church in Argentina and the 'dirty war'" (27 July 2005)

Carlos Forment, "The democratic dribble: Buenos Aires's politics of football" (15 June 2006)

Ana Caistor-Arendar, "Cristina Kirchner's moment" (14 December 2007)The prospect of Argentina's legislative elections in October 2005 - in which Bielsa was a candidate - did nothing to allay political mobilisation over the environmental (and by now national) cause. When Argentine customs prevented the export of crucial parts for the construction of the Botnia (Orion) pulp-mill, it was clear that the Buenos Aires government shared the position of the asambleístas. From that moment the conflict became a zero-sum game, with each side adopting an immovable stance and with little prospect of a bilateral negotiated solution.

It became indeed a national cause on both sides of the river. Yet this was truer in Uruguay than in Argentina, where the opposition was critical of the government's unnecessary politicisation of a controversy that should have had a technical, negotiated, solution; and in which both countries would have monitored the impact of the pulp-mills once they started to operate (for a detailed analysis of the nationalist capture of the dispute, see Vicente Palermo & Carlos Reboratti, eds., Del otro lado del río: ambientalismo y política entre uruguayos y argentinos [Buenos Aires, Editorial Edhasa, 2007]).

From the beginning, the Asamblea Ciudadana Ambiental de Gualeguaychú had adopted a catastrophist position; this helped to push a government which itself utterly lacked an environmental policy - of the 225 bills submitted by the Argentinean executive to the legislature in 2003-07, only two referred to environmental matters - into accepting uncritically an extreme view of the situation. The aim was to stop the construction of the mills, instead of focusing on the possible contaminating consequences. Thus, the approach of the Acag became a dogma: inflexible and unquestionable.

To a genuine Uruguayan national interest, Argentina opposed a mean political opportunism: this was a government that did not even have a policy towards the (at least) five pulp-mills located in Argentina which use old, highly polluting technologies. The now retired Canadian expert Wayne Dwernychuk - a co-author of the Hatfield report - sent a letter published to the Argentinean daily La Nación (published on 9 June 2007) in which he denounced President Kirchner's "monumental hypocrisy" in opposing the Uruguayan mills, given the appalling conditions in the Río Matanza-Riachuelo and the Río Paraná. Other environmental concerns that Argentina continues to evade could be cited - for example, massive deforestation, soil erosion and over-fishing. Until 2006, these issues had no impact on politics or public opinion.

The regional stream

From January 2006, the sporadic picketing of the international bridges - during which all traffic between the two countries was halted - became a permanent blockade. This began at the peak of Uruguay's tourist season, one of the country's main economic activities; the Uruguayan government estimated that damage to the country's economy amounted to $400 million. Its appeals to the Argentine government to guarantee the rule of law by allowing the free circulation of people and goods between both countries were ignored.

In its stance, the Argentine government was failing both to distinguish between the right to freedom of expression and the law of the land, and to recognise that national interests must have precedence over sectoral ones when the two conflict. The government was now backing the asambleístas in two ways: politically (and in doing so, endorsing methods that were in clear violation of the Argentine constitution and international treaties) and financially. In 2005 the people of Gualeguaychú had formed a citizens' environmental assembly; this had a monthly income of approximately $12,000 to pay for picketing Route 136, travel to meet officials and organise demonstrations, and fuel for transportation and leasing vehicles. The local NGO also received help in kind from the culture department of the municipality: the use of free offices and telephones, plus expenses for travel to Buenos Aires. In addition, the provincial government has since July 2006 paid $30,000 to the Acag; and professional organisations, assemblies from other parts of the country and several trade unions have also made financial contributions.

But international judgments continued to reveal the weakness of Argentina's case. In November 2006, the boards of directors of two of the World Bank Group's component bodies - the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (Miga) - approved a $170 million investment (by the IFC) and a guarantee of up to $350 million (from Miga) for the Botnia pulp-mill project. The organisations stated that after a thorough review (including consideration of the Hatfield report) their conviction was "that the mill will generate significant economic benefits for Uruguay and cause no environmental harm". These conclusions coincided with Botnia's own assessment.

At the regional level too, the dispute continued to exert a capacity to highlight Argentina's vulnerability. In September 2006, Mercosur's ad hoc arbitration tribunal concluded in Uruguay's favour, saying that the Argentine government had allowed the closure of international bridges in violation of the Treaty of Asunción. This body had no power of enforcement; but in any case Argentina decided to raise the stakes by presenting its case to the International Court of Justice - on the grounds that the pulp-mills would cause "irreversible damage" and that in allowing them to be built Uruguay had violated the Treaty of the River Uruguay.

It may take the ICJ at least until 2010 to reach a decision. As this further legal process has unfolded, Ence decided to relocate its mill further up the river; but in November 2007 - coinciding with the Iberoamerican summit meeting in Santiago de Chile - Botnia became fully operational. Uruguay's position is that it has consistently respected the 1975 treaty, that it acted according to international law, that the pulp mills pose no environmental risk to the region, and that it is the Uruguayan government's sovereign decision to allow this investment and permit the plant to function.

In 2006, Néstor Kirchner had suggested that the king of Spain might act as "facilitator" between the two countries. The announcement in Santiago of the start of Botnia's operation effectively put an end to this possibility. The failure to reach an agreement between Uruguay and Argentina may have contributed to the irritiation King Juan Carlos displayed in the face of the persistent interruption of Kirchner's ally, Venezuela's Hugo Chávez.

A triple lesson

This kaleidoscopic - and unfinished - dispute has three especially notable aspects. First, it reveals troubling aspects of Argentine political culture: since there are no effective political parties to act as intermediaries between citizens and the state, "direct action" - almost invariably illegal and frequently violent - has become "normal". The remarkable feature of the asambleístas action is its ambiguous political character: it champions a form of egalitarian, participatory and leaderless "direct democracy", yet embraces methods that walk or cross the borderline of legality.

Second, domestic political considerations persistently compromise foreign-policy decisions that are not founded on a clear overall political agenda. In the case of the pulp-mills, the then president Néstor Kirchner - who had no environmental agenda, and whose candidate had lost the 2003 gubernatorial elections in Entre Ríos province to then presidential candidate Carlos Menem - saw the chance of embracing a popular campaign in the town of Gualeguaychú and turning it into a "national cause". The lack of a state policy on environmental issues also favoured the over-politicisation of the conflict.

Third, the evolution of international jurisdiction and governance is having an increasing and profound impact at local and regional as well as inter-state levels of political authority. But this not does not absolve actors at these "lower" tiers of authority from responsibility for managing and settling disputes in a reasoned, principled and democratic way. In this light, the pulp-mills affair reveals how a lack of political will and leadership can compound rather than resolve a conflict. Will Cristina Kirchner learn from the follies of her predecessor and his government in this and other fields? These first seven weeks make it hard to be optimistic.

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