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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
INFO RUEHAC/AMEMBASSY ASUNCION 6533
RUEHBO/AMEMBASSY BOGOTA 1627
RUEHCV/AMEMBASSY CARACAS 1469
RUEHPE/AMEMBASSY LIMA 2147
RUEHME/AMEMBASSY MEXICO 1435
RUEHOT/AMEMBASSY OTTAWA 0545
RUEHFR/AMEMBASSY PARIS 1318
RUEHQT/AMEMBASSY QUITO 0993
RUEHSG/AMEMBASSY SANTIAGO 0753
RUEHHE/AMEMBASSY HELSINKI 0050
RUEHBR/AMEMBASSY BRASILIA 6392
RUEHMN/AMEMBASSY MONTEVIDEO 6725
RUEHEG/AMEMBASSY CAIRO 0027
RUEHMD/AMEMBASSY MADRID 1894
RUEHLP/AMEMBASSY LA PAZ SEP WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
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============================