VZCZCXYZ0002
OO RUEHWEB

DE RUEHMN #0640 1941603
ZNR UUUUU ZZH
O 131603Z JUL 06
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6018
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0430
RUEHHE/AMEMBASSY HELSINKI 0061
RUEHLP/AMEMBASSY LA PAZ JUL MADRID 0854
RUEHSG/AMEMBASSY SANTIAGO 2881
RUEHTC/AMEMBASSY THE HAGUE 0167
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUMIAAA/CDR USSOUTHCOM MIAMI FL

UNCLAS MONTEVIDEO 000640 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/BSC AND EB 
DEPT ALSO FOR EUR/ERA, EUR/WE (MHILL), EUR/NB (MEVANS) 
TREASURY FOR OASIA FOR DOUGLASS 
USDOC FOR ITA/MAC/WBASTIAN 
SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PREL PGOV SENV SOCI KLIG EINV AR UY
SUBJECT: HAGUE RULING ON PULP MILLS FAVORABLE TO URUGUAY 
 
REF: MONTEVIDEO 00529 AND PREVIOUS 
 
1.(SBU) Summary: The International Court of Justice (ICJ) 
issued a ruling today rejecting Argentina's petition for an 
injunction to halt construction of two pulp mills on the 
Uruguayan side of a shared river. The Court's decision was 
broadcast live on Uruguayan television in the early morning 
hours amid high local interest. A few days earlier, 
Mercosur's Review Tribunal rejected Argentina's claim that 
the Tribunal was not competent to rule in a Uruguayan lawsuit 
demanding compensation for economic losses incurred by 
Argentine protesters' blocking of international bridges. 
Uruguay is obviously pleased with the two rulings, but GOU 
officials remain concerned that environmental activists 
and/or the GOA will continue to harass the plants' 
construction. The local media reported that Argentine First 
Lady Cristina Kirchner and Presidential Chief of Staff 
Alberto Fernandez canceled their planned attendance at a July 
13 Mercosur seminar in Montevideo.  We understand that their 
participation was aimed at seeking a political solution to 
the long-running pulp mill dispute (reftels).  End Summary. 
 
¶2. (SBU) On July 13, the ICJ turned down Argentina's petition 
for an injunction to halt construction of two large cellulose 
plants in Uruguay's city of Fray Bentos, citing in its Order 
that, "the circumstances, as they now present themselves to 
the Court, are not such as to require the exercise of its 
power under Article 14 of the Statute to indicate provisional 
measures."  The Court also indicated that it will continue to 
review Argentina's claim filed on May 4, 2006.  The Court's 
decision was made by 15 magistrates in a vote of 14 to 1. The 
sole dissenting vote was cast by the Argentine-appointed 
judge, casting some doubt on his impartiality by observers 
here. 
 
¶3. (SBU) GOU officials have told us that they remain 
concerned that despite the positive ICJ decision, the pulp 
mills controversy is far from over.  They fear that Argentine 
environmental activists might once again resume blockades of 
international bridges and have already promised protests at 
the July 20-21 Mercosur Summit in Cordoba. The officials 
worried that the GOA might somehow impede needed dredging of 
the Uruguay river, with adverse consequences for ships 
servicing the plants in Fray Bentos. They also fretted that 
the GOA will try to influence the projects' financing either 
in Europe or through the International Finance Corporation 
(IFC).  MFA officials lamented that the pulp mill dispute has 
already had a negative impact on Argentine/Uruguayan 
bilateral relations and to foreign investment in the region. 
 
¶4. (SBU) Meanwhile, the construction of the Finnish-owned 
Botnia plant continued at a rapid pace with about fifty 
percent of the work completed.  Construction on the 
Spanish-owned ENCE cellulose plant has not yet begun. (Note: 
Some GOU interlocutors expressed worry that ENCE investors 
could be vulnerable to pressure from Argentina and might be 
having second thoughts about the project.  Meanwhile, news 
reports indicated that President Vazquez has authorized 
construction of another Stora Enso pulp mill plant on the Rio 
Negro. End Note.) 
 
Comment: 
-------- 
¶5. (SBU)  As Senator (and former Foreign Minister) Sergio 
Abreu indicated in a press interview today, international law 
is Uruguay's only "shield" and that it must carefully manage 
its "win" in order to avoid inflaming Argentine nationalist 
passions.  This will probably entail resumption of bilateral 
talks, appeals for calm, offers of joint monitoring of 
pollution, proposing regional environmental standards and 
pressuring Brazil to adopt a more constructive role once it 
assumes Mercosur's pro-tempore Presidency.  End Comment. 
 
Gonzalez