Global Policy Forum

UN Court Says

Associated Press
July 13, 2006

The World Court ruled Thursday that Uruguay can continue building two paper mills on the river that forms its border with Argentina, rejecting an Argentine request for an immediate construction halt.

The $1.9 billion project, which will create 600 jobs and boost Uruguay's exports by 15 percent, is the biggest foreign investment in the country's history. The court said it found the circumstances did not require "the indication of a provisional measure" ordering suspension of construction work, said the court's president, British judge Rosalyn Higgins.

The ruling said the construction itself posed no immediate and irreversible threat to the environment, and that work could continue while the judges weighed the potential risks of the mills once they begin operation. But it cautioned Uruguay that it "bears all risks" if the court eventually rules that the mills are illegal. Higgins told reporters that the interim ruling did not hint at the case's ultimate outcome.

"I want to emphasize that the fact that Argentina has not been granted any of the provisional measures requested does not imply that Argentina's arguments as to the legal rights or wrongs of the pulp mill construction ... in their present location have been rejected," she said. Uruguay's ambassador to The Hague, Carlos Mora, said he was pleased with the outcome, which his country had anticipated. "But we were not sure it will come out," he said.

Susana Ruiz Cerutti, legal counsel for Argentina's Foreign Ministry, said she was disappointed with the result but vowed to fight on when the court considers the full case. "Of course we would have liked to see a suspension of work today," she told reporters at the court. "But we will come back to argue the case later." Argentina had urged the court to order an immediate construction halt to prevent environmental damage to the Uruguay River pending the U.N. court's final ruling on the legality of the mills' construction -- which could take many months to deliver. It also argued that Uruguay failed to abide by a treaty calling for prior consultation and mutual agreement between the two countries on any action that could affect the river.

The court said it "encourages both parties to refrain from any actions which might render more difficult the resolution" of the dispute. The tribunal of international judges voted 14-1 in Uruguay's favor, with only an Argentine justice dissenting. Rulings by the highest U.N. court, formally known as the International Court of Justice, are final and binding, but are not always obeyed.

The dispute over the mills has for months strained relations between the neighbors, sparking blockades by angry Argentine protesters of bridges over the Uruguay River and a demonstration by a bikini-clad Argentine woman at a summit in Vienna, Austria, between European Union and Latin American leaders. Meanwhile, thousands of Uruguayans have rallied in support of the mills, which are due to begin work in 2007 and 2008. Uruguay says the mills are being built to the highest international standards and will not contaminate the Uruguay River. Argentina claims Uruguay violated a 1975 treaty covering the 1,000-mile (1,600-kilometer) river's management when it approved the pulp mills. The area is home to 150 species of fish and 400 bird species.

The mills -- a joint venture by Spain's Grupo Empresarial ENCE, S.A., and Finland's Oy Metsa-Botnia AB and Kymmene Corp. -- would make 1.4 million tons of pulp a year and help Uruguay's recovery from a 2002 economic crisis. Uruguay told the court that delaying the project would deal the country's economy a catastrophic blow. Uruguay is building the mills in Fray Bentos, a town of some 23,000 people about 15 miles (25 kilometers) from Gualeguaychu, an Argentine tourist resort with 80,000 residents. The area is about 125 miles (200 kilometers) northeast of Buenos Aires.

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