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Planet Ark World Environment News UN Court Allows Uruguay Pulp Mill Project

Date: 14-Jul-06
Country: NETHERLANDS
Author: Nicola Leske

"There is not enough ground for a provisional measure to suspend construction," said International Court of Justice President Rosalyn Higgins.

Uruguay now may continue construction of the US$1.7 billion project on the Uruguay River but bears all the risks relating to any later decision by the court, Higgins said.

Argentina had wanted the World Court to temporarily halt construction of the mills on the shared river, while it weighed its claim that the mills violated a bilateral treaty.

A judgement on whether Uruguay breached the 1975 treaty, under which all issues regarding the water of the river must be consulted on and agreed by both countries, is expected within two years, a court spokesman said.

Uruguay may be ordered to tear down the mills, that are due to start operating in 2007 and 2008, if the court finds it in violation of the 1975 treaty.

But, Higgins said, the decision did not prejudge questions relating to the merits of the case.

The court also said it did not find any evidence that the construction of the mills would cause irrevocable damage to the environment at the time.

STRAINED RELATIONS

Relations between Uruguay and Argentina, historically on friendly terms, have been strained by the project.

Argentina fears that the mills will damage the environment and also hurt tourism and property values.

"This is neither a victory or a defeat," Uruguayan Foreign Minister Reinaldo Gargano told local radio in Montevideo. "But we were confident about this ruling."

Argentine Environment Secretary Romina Picolotti insisted the ruling wasn't definitive, saying the mills "could be ordered suspended or dismantled in the future."

But Lucio Andres Terraza, an Argentine lawyer observing the hearing, expressed doubts the project would be stopped should it be considered environmentally harmful once operational.

"My opinion is that when you build something you are going to use it and when you start using it that's when the environment is going to get damaged," he told Reuters TV.

"When the decision will be needed over that issue, an expensive construction will be finished and it will be hard to decide not to use something that's already been built."

Uruguay contends there is no danger of pollution from its largest industrial investment and said halting the project would cause considerable economic damage to the small country.

It argues the mills will be under strict environmental control according to European standards and generate jobs.

The plants are being built by Finland's Metsa-Botnia and Spain's Ence.

The Finnish firm said construction work on Botnia's pulp mill in the town of Fray Bentos was continuing as normal.

"Botnia's mill will employ the best available technology and according to the studies made by independent bodies the mill will not cause any damage to the environment," the company said.

The dispute came to a head after months of protests by thousands of Argentines and roadblocks by environmentalists and residents that have cost Uruguay's economy US$400 million.

In April, the World Bank's private sector arm decided to withhold approval of about US$400 million in funding for the mills until it completed studies on the project's social and environmental impact.

(Additional reporting by Patricia Avila in Montevideo and Cesar Illiano in Buenos Aires)

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