Development vs. the Environment: A River Runs Through It

By Marcela Sanchez
Special to
Friday, November 24, 2006; 12:00 AM

WASHINGTON -- When an 88-year-old woman offers to blow herself up to shut down a factory, you can be pretty sure you have let a controversy get out of control.

The senior citizen and her fellow residents of Gualeguaychu, Argentina, are outraged that a Finnish paper mill is being built just across the Uruguay River in the town of Fray Bentos. They see the new plant as a blight on the landscape and an environmental hazard that will cause irreparable damage to the river, which serves as the natural border between the two countries.

For more than a year and a half, the protesters from Gualeguaychu have demonstrated in the streets, barricading roads and bridges, and slowing traffic to Uruguayan destinations. Some of the town's local business owners have even posted signs refusing to serve Uruguayans.

Political ineptitude and irresponsibility have fueled what Daniel Taillant, executive director of the Argentine Center for Human Rights and Environment, calls Gualeguaychu's "social psychosis." Argentine officials have done nothing to discourage the disruptive protests, using them instead for political gain. The result is that the dispute has grown into an international crisis.

After the World Bank decided Tuesday to help finance the project with a $170 million loan and up to $350 million in credit guarantees, the roadblocks began again. Argentine President Nestor Kirchner had asked World Bank President Paul Wolfowitz suspend deliberations over the loan in order to maintain the bank's "neutrality" in the controversy.

Argentina's environment minister, Romina Picolotti, last week cautioned World Bank officials that the loan would be tantamount to abetting Uruguay's "unlawful international act" -- unlawful, that is, if the International Court of Justice in The Hague ultimately rules that Uruguay violated a bilateral treaty on the use of the river.

Over the weekend a senior Argentine diplomat ominously warned that the bank's decision could create "a point of friction (between Argentina and Uruguay) that could last 50 or 80 years."

Taillant and other Argentine observers agree that the dispute could have been averted had Argentine politicians done more than look the other way as Uruguay undertook an aggressive tree-planting program on its side of the river for two decades. That Uruguay was going to establish a paper mill at some point should have been obvious, says Gustavo Lazzari, director of the Atlas 1853 Foundation, a conservative group based in Buenos Aires. But Argentine politicians "do not see things until they explode on their faces."

The paper mill controversy is rooted in the oldest sources of conflicts -- water. According to a U.N. Human Development report released earlier this month, two of every five people in the world live along rivers or lakes that cross international borders, and at least half the water resources of Argentina and Uruguay -- and some 37 other countries -- originate beyond their frontiers.

The U.N. report emphasizes that "water has the potential to fuel wider conflicts but also to act as a bridge for cooperation." As water becomes more scarce while countries strive for more development, the political and bureaucratic management of shared waters will determine whether there will be confrontation or not. When it comes to sensitive issues over water governance, "national interest can be pursued in more -- or less -- enlightened terms," says the report.

The paper mill attracted the largest foreign investment in Uruguayan history and is expected to add two percentage points to the country's gross domestic product, increase exports by 8 percent and generate between 3,000 and 8,000 jobs, according to the Uruguayan government. Thousands have also demonstrated in Fray Bentos in support of the mill.

The environmental concerns of Gualeguaychu's residents are justified -- paper mills are considered a high-polluting industry. Yet the new plant will operate using chlorine-free pulp production and, as the World Bank stated in announcing its decision this week, will produce "sufficient sodium chlorate to allow local mills in Argentina and Uruguay to move to" that production method.

Carlos Gianelli Derois, Uruguay's ambassador to Washington, said in an interview that he hopes a positive precedent could emerge from this conflict if a balance is struck between "environmental protection and a country's right to develop." To solve the conflict, Uruguayans are proposing that both countries monitor the mill's environmental impact.

The best that can be hoped for now is that the Argentine protests about the environmental impact of the paper mill will lead to broader monitoring of the transnational water basin of that region. If that comes about, it would probably amount to much more than either Uruguay or Argentina is currently doing to monitor water quality inside their own territories.

© 2006 The Washington Post Company