Papering over Uruguay

Uruguay is one of my favorite destinations, a country through which I've traveled three times and which I fantasize about visiting again and again.  Many tourists, and Argentines especially, complain about Uruguay and its capital, Montevideo:  it is "boring," with "nothing to do," and to some, even "sad."  I personally love the bohemian feel of its capital, its streets adorned with mighty buildings that surely impressed the many immigrants who arrived 80 years ago.  Many of these buildings, unfortunately, have not been indulged with a coat of paint for decades.  Once buoyed by beef and produce exports, Uruguay has suffered economically and psychologically.  Uruguayans suffered from a brutal dictatorship that from the late 1960s to mid-1980s that turned this once progressive nation into a cruel joke:  at one point, Uruguay had the highest per capital rate of political prisoners in the world.  Democracy eventually returned in the 1990s, with a return to progressive values:  Montevideo has a park celebrating sexual diversity, grants civil unions to gays and lesbians, and its Broad Front keeps reactionary impulses within the country in check.  By the way, Uruguay was the first nation in the world to recognize the Armenian Genocide.  And in sports, Uruguay has won two World Cup championships.

Economic recovery for Uruguay, however, has been fitful.  Squeezed between Argentina and Brazil, and with only a population of 3.4 million (one-fourth of greater Buenos Aires), this tiny country is susceptible to the economies of its huge neighbors; if either neighbor sneezes, Uruguay catches a nasty cold.  Agriculture exports are still the backbone of its economy, and while the banking sector has given it the name "Switzerland of South America," well, we know where banking has taken us lately.  Its education achievements are impressive, with the highest literacy rate in South America.  University degrees and training, however, have not led to significant job creation, although outsourcing and off-shoring are increasing rapidly.  Seeking a reliable source of exports, Uruguay's government gave the green light to opening paper mills along the Uruguay River, a hop and skip from Argentina:  and that's where all hell broke loose.

Two companies, one Spanish and one Finnish, announced their intentions to build pulp and paper mills near the Uruguay River, fomenting protests throughout Argentina.  Argentines fumed that a treaty between these two countries, close culturally and historically, required one party to request permission of the other when undertaking any development; the Uruguayans counter that they only needed to "inform" their neighbor.  Despite both companies' promises to not dump waste into the river, protests escalated throughout 2005 and 2006, and even effected Chilean firms: trucks based there were blocked by Argentines from delivering goods to the construction sites in Uruguay.

Both sides have valid concerns:  Uruguayans have suffered since Argentina's currency collapsed in 2001.  Jobs are difficult to come by, and besides the thousands of jobs the paper mills will supposedly create, these paper exports will build up the cash reserves Uruguay desperately seeks.  Argentines have their fears:  despite mill owners' assurances that they would only incorporate the cleanest processes, locals feared that dioxin and other carcinogens would leech into the water, disrupting agriculture and tourism while creating numerous health hazards.  The dispute reverberated beyond South America, as Argentine advocacy groups entangled a French bank that financed one of the mills into litigation at The Hague's International World Court Justice.

Eventually, Botnia, the Finnish firm, opened its plant.  Its site claims they are doing much on the social responsibility front, from building soccer fields to farms ensuring the region's ecological diversity.  Botnia is committed to using black liquor, the waste that results from paper and pulp processing, as feedstock for the mill's electricity, with excess power returned to the local grid.

But even if Botnia is doing everything it can to guarantee minimal environmental impact from its mill, the pulp mills already built in Uruguay have arguably had detrimental effects.  Most of the pulp processing in Uruguay relies on eucalyptus trees, which grow quickly to provide the pulp needed for making paper.  Eucalyptus, however, is a water hog that consumes water at the expense of other plant species.  Farmers and villagers have had to abandon their land, as the wells upon which they had relied ran dry.  Farms once devoted to grains, vegetables, and legumes now host eucalyptus trees instead, which spread recklessly and trample other plants in their path.  The mills have burdened communities with air pollution and water contamination without providing the copious amount of jobs the companies had promised to the citizens living nearby.

Perhaps all of this could have been avoided if Botnia showed a genuine plan guaranteeing that black liquor from pulp processing be used for renewable energy purposes.  Besides electricity, black liquor could be reprocessed as dimethyl ether (DME), which could fuel fleets of cars or trucks.  Maybe Botnia could have done a better job proving that its project would do nothing to harm the river and farms around it.  Why must jobs and the environment clash?  Scandinavians have shown that they can sustainably engineer their home economies; it's a shame that their companies could not demonstrate the same outside of their home countries' borders.