Identifier
Created
Classification
Origin
06BUENOSAIRES626
2006-03-17 22:08:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

ARGENTINE MFA RAISES CONCERNS ON POSSIBLE IFC

Tags:  PREL EINV EFIN SENV AR UY 
pdf how-to read a cable
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TO RUEHC/SECSTATE WASHDC PRIORITY 3863
INFO RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 5418
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,C O N F I D E N T I A L BUENOS AIRES 000626

SIPDIS

SIPDIS

TREASURY FOR OIA NANCY LEE, DORA DOUGLASS, CHRIS KUSHLIS
DEPT FOR WHA/BSC IAN SHERIDAN WHA/EPSC FOR KRIS URS
EB/IFD/OMA FOR KENDALL MOSS EB/IFD/ODF FOR KERI DIZOGLIO

E.O. 12958: DECL: 03/17/2016
TAGS: PREL EINV EFIN SENV AR UY
SUBJECT: ARGENTINE MFA RAISES CONCERNS ON POSSIBLE IFC
FUNDING OF PAPER MILLS

Classified By: DCM Hugo Llorens for Reasons 1.4 (b) and (d).

PP RUEHWEB

DE RUEHBU #0626/01 0762208
ZNY CCCCC ZZH
P 172208Z MAR 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 3863
INFO RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 5418
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
,C O N F I D E N T I A L BUENOS AIRES 000626

SIPDIS

SIPDIS

TREASURY FOR OIA NANCY LEE, DORA DOUGLASS, CHRIS KUSHLIS
DEPT FOR WHA/BSC IAN SHERIDAN WHA/EPSC FOR KRIS URS
EB/IFD/OMA FOR KENDALL MOSS EB/IFD/ODF FOR KERI DIZOGLIO

E.O. 12958: DECL: 03/17/2016
TAGS: PREL EINV EFIN SENV AR UY
SUBJECT: ARGENTINE MFA RAISES CONCERNS ON POSSIBLE IFC
FUNDING OF PAPER MILLS

Classified By: DCM Hugo Llorens for Reasons 1.4 (b) and (d).


1. (C) Argentine Foreign Minister Jorge Taiana requested a
meeting with the Ambassador on March 15 to discuss GoA
concerns regarding a proposal before the International
Finance Corporation to provide funding for the controversial
paper cellulose plants in Uruguay. In the absence of the
Ambassador, who was on official travel in Argentina, the DCM,
accompanied by the PolCouns, met with Taiana on March 16.


2. (C) During the meeting, Taiana expressed his concern that
the IFC Board should not take any action on pending loan
applications for the plants until a final Cumulative Impact
Study (CIS) could be completed. He suggested that the
concern might be consistent with U.S. regulations (Pelosi
Amendment) that require that all relevant studies, including
environmental impact studies, be completed and made public
120 days before the IFC Board votes on the loans. He noted a
December 2005 environmental impact study on the plants was an
interim report that did not meet the conditions of the Pelosi
Amendment. Taiana gave the DCM a non paper on the GoA
concerns, an informal translation of which is in paragraph
four.


3. (C) Comment: It is our understanding that no date has
been set for an IFC Board review of the loan proposals and,
indeed, that the final CIS report is probably still sometime
off. The GoA is cognizant of our neutral position on the
paper mill dispute and that any decisions we make on the
proposed loans will be made on a technical basis. It was our
impression that Taiana was more interested in sounding out
possible ways of delaying Board consideration of the loans
rather than obtaining a U.S. abstention or negative vote on
the loans. Taiana's demarche reflects the GoA's desire to
buy additional time to seek a mutually acceptable solution to
what has become a serious impediment to Argentine-Uruguayan
relations. End Comment.


4. (C) Begin Text: Aide Memoire. The International Finance
Corporation has been considering two loans for some months in
order to contribute to the financing of two paper mills
located on the left margin of the Uruguay River. These
projects have given rise to a controversy between the
Government of the Argentine Republic and the Government of
the Oriental Republic of Uruguay based on the non-compliance
of legal statutes in force and the lack of a reliable
environmental impact study.

The Government of the Argentine Republic has cautioned the
IFC and those international banks contributing to the
financing about the potential environmental and social
liability they might be subject to in the case these projects
are realized without complying with all the necessary
requirements and, thus, cause any clear damages. This
liability would be most burdensome to the main member of the
World Bank and the IFC.

The Pelosi Amendment (22 U.S. Code Chapter 7, Section 262m-7)
states that the U.S. Secretary of the Treasury shall instruct
the Executive Director in each multilateral development bank
to vote not to approve any actions taken by the respective
bank that may have a significant impact on the environment
unless an environmental assessment of the proposed action and
alternatives for such an action is made available to the
board of the bank.

In compliance with said instructions, the U.S. Executive
Director at the World Bank and the IFC frequently abstains
from voting when such a situation appears, although it does
not prevent the action from being approved. Abstention would
mean, in this case, putting forward the taking of actions
that could bring social and environmental liability, as was
mentioned before, with its corresponding impact.

Thus, it is requested that you consider, in the form in which
you consider best, that the U.S. Executive Director at the
World Bank and the IFC avoid taking a decision while the
controversy is ongoing.

It is worth remembering that Argentine delegations have
supported the U.S. position in international meetings with
respect to restrictions on the use of methyl bromide, which
affects agricultural producers and sectors of the U.S.
population in a manner similar to the damages that the
projected paper mills may cause to agricultural producers and
sectors of the Argentine population. End Text.