Experimental feature

Listen to this article

Experimental feature

Argentine environmental activists are planning to block roads into Uruguay on Friday to protest against a pulp mill project on the far side of the river that divides the two countries.

The resumption of roadblocks, which have already cost the Uruguayan economy an estimated $400m (€320m, £216m) this year, comes ahead of a report by the International Finance Corporation on the environmental impact of the plants.

A draft of the report’s conclusions, which plays down the environmental impact of the factories on residents in Gualeguaychú, Argentina, was inadvertently published over the weekend on the website of the IFC, the private sector arm of the World Bank.

“Local residents in Gualeguaychú feel insulted by the IFC-sponsored report and discredit its conclusions,” said Jorge Daniel Taillant, the director of Argentina’s CEDHA environmental pressure group.

He said the study – expected to be published this week – failed to take into account the impact on tourism.

A positive assessment of the $1.7bn project, representing about 10 per cent of Uruguay’s gross domestic product, will pave the way for bank financing in accordance with the “equator principles” promoting socially and environmentally responsible investment.

The report will also in part determine whether or not the IFC goes ahead with contributing loans of almost $400m to the pulp mills, which are being built by Botnia of Finland and Ence of Spain.

But last month Ence made a surprise decision to relocate from its original site, less than five miles away from the Botnia plant, purportedly to increase its production capacity.

Argentine activists argue that Ence’s move was prompted by concerns that banks might shy away from providing financing with the two plants so close together.

The resumption of roadblocks is likely to worsen already strained relations between the two countries. Argentina took the matter to the International Court of Justice in The Hague, resulting in a preliminary ruling in July in Uruguay’s favour.

Uruguay’s environment minister has asked Argentina’s President Néstor Kirchner to prevent the blockades. Uruguay won a favourable ruling in a tribunal of Mercosur, the regional trade bloc that guarantees the free movement of people and goods between countries, when it complained that the Buenos Aires government failed to prevent roadblocks earlier in the year that damaged its tourism and transport industries.

However, in a letter sent to Paul Wolfowitz, the head of the World Bank, Argentina’s environment secretary said the bank would be held accountable for any repercussions caused by the IFC’s error.

Get alerts on Emerging markets when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article