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Cablegate: Argentine-Uruguayan Pulp Mill Dispute: Finnish

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DE RUEHBU #1776/01 2491928
ZNY CCCCC ZZH
R 061928Z SEP 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 9160
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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL

C O N F I D E N T I A L BUENOS AIRES 001776

SIPDIS

SIPDIS

PASS NSC FOR MICHAEL SMART

PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE

PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN

TREASURY FOR ROSELLEN ALBANO

USDOC FOR 4322/ITA/MAC/OLAC/PEACHER

US SOUTHCOM FOR POLAD

OES FOR LAWRENCE SPERLING

EX-IM BANK FOR MICHEE WILKINS

OPIC FOR GEORGE SCHULTZ AND RUTH ANN NICASTRI

USDOC FOR ALEXANDER PEACHER AND JOHN ANDERSEN

USCINCSO FOR POLAD


E.O. 12958: DECL: 09/05/2017

TAGS: ECON EINV SENV PREL SOCI FI UY AR

SUBJECT: ARGENTINE-URUGUAYAN PULP MILL DISPUTE: FINNISH

EMBASSY OFFICIAL DISCOUNTS POSSIBILITY OF SERIOUS VIOLENCE


REF: BUENOS AIRES 01707


Classified By: DCM Tom Kelly, Reasons 1.5 (b,d)


1. (C) SUMMARY: The Finnish Embassy believes that despite the

bilateral frictions that the Argentina-Uruguay pulp mill

dispute has created, the mill project will open as scheduled

in October with a minimal possibility of violence. The

Embassy discounts as spurious Argentine environmental

activists' complaints, saying that both federal and

provincial governments have politicized the protest movement

and resisted any attempts at dialogue with Botnia. President

Kirchner has failed to see how ""damaging"" his actions have

been to Argentina's own international investment image. The

Embassy praised the King of Spain's mediation effort, but

said this effort, as well as the GOA-GOU International Court

of Justice case, are ""going nowhere."" The Embassy said that

the Government of Uruguay (GOU) has been ""terribly

disappointed"" with Brazil and Mercosur for its lack of

support in the dispute, which has in turn forced the GOU to

consider building ties outside the trade bloc. The Embassy

said this dispute is ""vastly more important"" for Uruguay than

it is for Argentina. The Embassy said Botnia chose Uruguay

over Argentina for this pulp mill due to the former's more

salutary environment with respect to anti-corruption laws,

rule of law, and forestry management. END SUMMARY.


--------------------------

Pulp mill ""perfectly safe""

--------------------------


2. (C) EconOff met Ms. Petra Theman, Charge of the Finnish

Embassy, on August 23 to discuss the Finnish-based Botnia's

pulp mill project in Uruguay (reftel). The Finnish Embassy

in Buenos Aires is

also accredited to Uruguay. Ms. Theman has been in Argentina

for over a year, and appears to be very

knowledgeable about the pulp mill issue. She described the

long and conflict-ridden history of this project. While

neither her Government nor Embassy has any direct role in

this Finnish private sector project, it has at times been

drawn into the debate, and provided general advocacy for the

project.


3. (C) Theman said that the GOA, media and analysts have long

known ""perfectly well"" that the GOA and Gualeguaychu

activists have ""no case"" on the environmental merits. She

said that it is well known that the Botnia technology is

safe, and uses the most advanced technology. Theman said her

Embassy had been in contact with Greenpeace and other

environmental NGOs throughout this conflict, and they had all

long ago dissociated themselves from the Gualeguaychu

protests, recognizing early on the mostly political nature of

their cause. She said that this particular pulp mill

technology has not been an issue for Greenpeace for a long

time. She said that Finland itself has a dozen or so mills

exactly the same as this one in Uruguay.



-------------------------------

Mediation ""still going nowhere""

-------------------------------


4. (C) Theman said that the International Court of Justice

case between the GOA and GOU might last several more months

or longer, as it decides on the central issue of whether the

GOU violated the 1975 Treaty of the Rio Uruguay (joint

oversight of the river). She said the GOU and GOA were

submitting reports and counter-reports to the ICJ, and this

could take time. She said that, unfortunately, neither side

ever did exchange any actual physical note agreeing to allow

the pulp mill. The leaders did verbally agree to allow it to

move forward, but other than ""some speeches"" to this effect,

there were nothing more concrete, which was ""a slight problem

for the (GOU)."" She said that the King of

Spain's mediation effort has also seen ""little progress,""

although she praised the Spaniards for their ""great job.""

She understood that the King of Spain has high hopes to be

able to announce something concrete during the November

Ibero-American summit in Chile.


--------------------------------------------- --------

""Fifteen minutes of fame"" for ""uneducated"" protesters

--------------------------------------------- --------


5. (C) Ms. Theman said she had visited Gualeguaychu,

Argentina, and Fray Bentos, Uruguay many times, and appeared

to know these communities well. Theman said that many

Gualaguaychu activists liked to portray their town as kind of

""environmental haven, but in fact it is a big polluter."" She

said that like many small Argentine towns in the interior, it

in fact has big pollution problems: factory air and water

pollution, solid waste, and the community's wastewater goes

untreated directly into the Rio Uruguay itself. She said

that Botnia has for years attempted to inform and include the

Gualaguaychu community in the project: invitations to visit

Finland and its (identical) pulp mills there, invitations to

attend community information sessions, and many press and

information notices to local newspapers to counter the

""totally false propaganda."" However, all such advances have

been rejected. She said that Entre Rios Governor Jorge Busti

threatened to cut off all official advertising to newspapers

carrying any ""pro-Botnia"" advertisements. She said that, in

fact, the very few Argentines who do attempt to learn more

about the Botnia issue, or even express neutrality, are ""cut

off"" from the community, and have even been threatened. She

said that one journalist who did take up the Botnia offer to

visit Finland returned with a more ""open mind,"" but was also

shunned. She said that another frustration for Botnia is

that, and contrary to what most Argentines think,

Gualaguaychu is actually around 18 miles away from the River

Uruguay, and even the small tourist beach area with which it

is associated is six miles away from a site across the river

from the Botnia plant. Theman said that the ""educational

level"" of many of the most vocal protesters did not seem too

high, and that for some, the protest was an ""interesting

wagon to ride on,"" and an opportunity for their ""15 minutes



of fame.""


--------------------------------------------- --

Entre Rios Province and GOA's ""unhelpful"" roles

--------------------------------------------- --


6. (C) Theman explained that, as Gualaguaychu has

traditionally been Radical Party territory, the decision by

Peronist Governor Busti to joining the cause was an

""opportunity to co-opt this group"". Now, he ""is more or less

stuck with the role."" Theman also said that Busti has had

good relations with the Kirchners, was an early supporter of

then-Governor Nestor Kirchner's 2003 presidential bid, and

has also helped Mrs. Kirchner financially in her own

presidential campaign. This close relationship has

contributed to the GOA's own support of this cause.


7. (C) Theman said that her Embassy and its contacts are

certain that the GOA, among other groups, has financed the

protesters, and she indicated that these otherwise ""marginal""

protesters had no other means of support. She said that the

GOA has not been at all helpful during this near two-year

ordeal. The Finnish Embassy and Botnia's main interlocutor

at the MFA was initially the ""very difficult"" MFA

Environmental Affairs official, Raul Estrada Oyuela. (Post

has also found Estrada Oyuela to be recalcitrant and

officious.) Theman said that Estrada Oyuela was ""totally on

the side"" of the protesters, and always resisted Finnish

attempts to talk or exchange views. Theman said that there

is wide agreement in the Argentine scientific community, and

even in the GOA scientific community, that there is no

environmental danger from the pulp mill, but the GOA forced

its own experts to keep quiet. Theman actually marveled at

the level of expertise among the Argentine environmental

community, in and outside government, but said it was ""a

pity"" that they could not speak out. She also noted how, for

the GOA, this dispute was a great natural fit in the GOA

populist ""blame game"" campaign against outside interests: to

blame ""multinationals"" for treating Argentina as a ""waste

dump.""


8. (C) Speaking more generally about Argentina citizens'

propensity for conflict, Theman cited the ""remarkably low

trust"" that residents of Gualaguaychu, and Argentines in

general, have towards their own government, businesses, and

institutions. She said that a big contributor to this

conflict has been citizens' own lack of confidence and trust

in their own institutions, politics, politicians,

international organizations, and multinational corporations.

Thus, ""it was only natural to have little faith in Botnia.""

She said that perhaps the only institutions that enjoy a

modicum of trust or respect in Argentina are the Catholic

Church and universities.


--------------------------------------------- ---------

Uruguay ""terribly disappointed"" with GOA, Brazil, Mercosur

--------------------------------------------- ---------



9. (C) As non-resident diplomats, Theman and her ambassador

visit Uruguay fairly often, and her ambassador has met with

President Vazquez and senior GOU officials. She said that

the GOU has been ""terribly disappointed"" by the GOA,

Lula/Brazil and Mercosur, for its lack of action or support.

She said, partly as a result of this ""betrayal,"" the GOU,

including Vazquez, has mentioned its interest in reducing its

Mercosur ties, opening up more to the world in the ""Chile

fashion"" (i.e., opening much more to the rest of the world,

albeit with a foot still in Mercosur). She said that

Brazilian President Lula will have a state visit in Finland

in the coming weeks, and Botnia will surely be on the agenda.

Theman said that, although it is widely assumed that

Kirchner has his hands tied in opposition to the mill, it was

actually GOU President Vazquez who really had his hands tied,

given the ""extremely fragile"" leftist Frente government, and

that Vazquez ""cannot go too far left or right to maneuver.""

She also said that there is ""universal"" support all over

Uruguay for this project, and that the issue is ""vastly"" more

important in Uruguay than it is here. She agreed with our

assessment that, media coverage notwithstanding, this is

virtually a non-issue for 98% of Argentines.


--------------------------------------------- --------

Beefed up security for Finnish Embassy and staff residences

--------------------------------------------- --------


10. (C) In response to a question if the Embassy or staff

felt threatened, Theman expressed a general sense of

satisfaction with security and that her Embassy staff thought

there was ""nothing to worry about."" But as a ""precaution,""

the Finnish Embassy had increased security at the Embassy (a

fifth floor office in a downtown high-rise) and at the

residences of the Ambassador and the Mission's three-member

staff.


----------------------------------------

Damage to Argentina's investment climate

----------------------------------------


11. (C) Theman said that Kirchner, perhaps due to his

""provincial background,"" did not seem to grasp, in this

""globalized world of instant communications,"" just how

damaging the GOA's stance has been for Argentina's own global

investment perception. She said that GOU officials from

President Vazquez on down know all too well that they could

never have undone this project (which they inherited from

the previous GOU administration). If they had canceled the

project, she said, it would have been a ""monumental disaster""

for their future investment prospects. Theman said that many

potential Argentine sub-contractors and suppliers had lost

out on opportunities, many out of fear of reprisal from

Argentines. Many other Argentine sub-contractors had already

lined up work, but had to cancel in the face of this

pressure.


------------

Why Uruguay?




------------


12. (C) Theman discussed some of the reasons that Botnia

chose Uruguay for its site in the first place. She noted

that Argentina, and in particular, Governor Busti's own Entre

Rios Province, had itself courted pulp mills for its

territory. Theman mentioned the widely-cited high levels of

corruption in Entre Rios province and Argentina as a whole,

compared to the much lower levels in Uruguay. Theman also

cited several other important reasons that Uruguay was chosen

for the pulp mill project: a better

tree-growing climate and soil, rule of law, and relatively

skilled workers. She particularly highlighted what she said

were the GOU's ""model, advanced"" forestry legislation,

management and long term planning.


------------------------------------

Recent industrial accident at Botnia

------------------------------------


13. (C) As mentioned in reftel, on August 14, there was a

highly publicized leak of a mixture of sodium sulphide at the

Botnia plant. A small amount of this chemical, a material

with which Botnia employees routinely work, was accidentally

released in the air during a period of high wind. According

to a Botnia press release, two workers downwind showed skin,

eye and upper respiratory symptoms, but according to medical

professionals, there were no major clinical symptoms.

Nonetheless, this incident prompted more GOA and activists'

complaints. Theman said that a group of Brazilian

subcontractors, in violation of procedures, transported a bag

of sodium sulphide during high winds, and it spread about 12

meters around.


------------------------------------------

Next steps: face-saving deal in the works?

------------------------------------------


14. (C) Speaking of the likely October mill opening - ""right

at the same time as the presidential elections!"" - Theman

largely downplayed any possibility of major violence. She

said that everyone to whom she speaks on this matter also

dismisses the chance of violence. However, she would not

rule out the possibility of ""a lone person or small group

doing something,"" like disrupting a shipment to or from the

plant, along the River Uruguay. She hoped that during the

late October-through-early December 10 GOA presidential

transition, there might be a face-saving solution, but did

not hold out a lot of hope for this. Theman said that one

possible deal that she had heard about was that, in exchange

for the GOU and Botnia delaying the mill's opening, the GOA

would withdraw its ICJ complaint. But Theman herself did not

give this theory too much weight. She said that that what

might likely occur is just more blockades and protests, which

would gradually taper off as the project goes on line and

""people slowly start to see that there really is no major

environmental problem to the mill."" Theman was not sure if

there were even any GOA-GOU talks going on at all. She noted



that GOA Chief of Staff Alberto Fernandez and GOU Secretary

of the Presidency (Chief of Staff) Gonzalo Fernandez were

three-decade-old friends from the University of Buenos Aires,

and assumed that they're in touch on this pulp mill issue as

well. (These two reportedly met in person last week in

Uruguay, but no reports have surfaced on the content of their

discussion.)


--------

Comment

--------


15. (C) Most, if not all, of Theman's comments track closely

with Embassy's own reading of events. The conflict has

always been mostly about politics rather than the

environment. The coming weeks will be a sensitive time, with

the opening of the mill roughly coinciding with the GOA's

October 25 presidential election. Post will continue to

monitor this case, especially for any indication of violence.

WAYNE


=======================CABLE ENDS============================

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