ARI 33/2006 (Translated from Spanish) -- Análisis
Theme: The conflict between Argentina and Uruguay over the construction of two pulp mills in the Uruguayan city of Fray Bentos is becoming more serious, although certain moves suggest the possibility of a negotiated settlement.
Summary: The governments of Argentina and Uruguay are at loggerheads. The conflict involves the construction of two plants designed to produce paper pulp, one backed by Spanish capital and the other Finnish, in the Uruguayan city of Fray Bentos. The Argentines see the venture as environmental aggression, making it a bilateral issue. Uruguay considers it a strictly internal, domestic matter in which the country's sovereignty is at stake. The conflict arose from local political battles and electoral issues in the Argentine province of Entre Ríos. From there, with President Kirchner's support (or unwillingness to stop it), it became a national issue. Uruguay's response has been uncompromising and the constant criticism of Mercosur expressed by different political and economic actors has amplified a large number of complaints against Argentina. The two governments could lose control of the dispute since strong nationalist feelings have been stirred up among the general public. In fact, the conflict mounted steadily through February, as the Argentine Congress authorised the government to approach the International Court in The Hague, the Uruguayan government requested mediation before the Organisation of American States (OAS) and Argentina proposed that work on the projects be stopped for three months. This demonstrates how the conflict has gone beyond the bounds of Mercosur, given the apparent inability of Brazilian diplomacy to deal with a dispute which, if it continues to worsen, threatens to ruin what little remains of Mercosur. However, in early March there were a few, though insufficient, signs that tensions may be easing.
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