URUGUAY CANNOT BACK DOWN ON PAPERMILL CONSTRUCTION

C O N F I D E N T I A L MONTEVIDEO 000207

SIPDIS

SIPDIS

DEPT ALSO FOR WHA/BSC

E.O. 12958: DECL: 03/01/2016
TAGS: PREL PGOV KSUM UY
SUBJECT: URUGUAY CANNOT BACK DOWN ON PAPERMILL CONSTRUCTION

REF: A. BUENOS AIRES 00486 AND PREVIOUS


B. MONTEVIDEO 00155 AND PREVIOUS (NOTAL)

Classified By: Charge D'Affaires James D. Nealon
for reasons 1.4 (b) and (d)


1. (C) The GOU has roundly rejected President Kirchner's
March 1 public offer (ref A) to seek a solution to the
papermill dispute by halting construction for 90 days while
environmentalists conduct a study. Vice President Nin Novoa
did not help matters by characterizing Kirchner's ""plea"" as
impertinent."" The GOU says it cannot interfere in private
construction contracts or negotiate under pressure while the
bridges are being blocked. The MFA said, ""To suspend
construction of the plants before they begin to operate is to
give in to an irrational position."" The prevailing view here
is that the papermill dispute will probably get worse before
it gets better, but that the majority of Uruguayans are
united in favor of the plants' construction.


2. (C) The Uruguayan press has made much of the fact that the
Argentine President (and pro-tempore President of Mercosur)
never formally answered President Vazquez' letter requesting
a meeting to discuss the papermill controversy. In a recent
poll, 42% of Uruguayans sampled responded in favor of the GOU
adopting a more ""aggressive"" approach on the dispute.
Vice-Foreign Minister Belela Herrera traveled to Washington
last week to deliver a letter from Vazquez to OAS Secretary
General Miguel Insuzla requesting OAS intervention in the
matter. (Comment: Either by design or by mistake, Herrera
claimed that the OAS SYG had promised to ""mediate"" in the
dispute, which is clearly not the case. End Comment.)


3. (C) The MFA's Director General for Political Affairs,
Bruno Faraone recently told PolCouns, that ""if construction
were halted for even one day, the projects would be dead in
the water and unlikely to restart."" Faraone's view was that
the GOA ""picks on the little guy to satisfy the piqueteros.""
He also indicated that Vazquez would be seeking regional
support for Uruguay's position when he travels to Chile and
other countries in mid-March. Faraone said that the GOU would
take its case to ""whatever international organization is
willing to listen.""


4. (U) Meanwhile, according to news reports, the bridges at
Fray Bentos/Gualeguaychu and Paysandu/Colon remain blocked by
Argentine protesters who claim to be settling in for the long
haul. The remaining land crossing at Salto/Concordia is open
with increased traffic from vacationers returning from the
holidays.


5. (C) COMMENT: We remain concerned at the soured bilateral
relationship between Uruguay and Argentina over this thorny
issue and don't see an easy way for either side to back down.
We have noted that the Argentine press has taken to
criticizing Uruguay for servicing British ships based in the
Falkland Islands (a thorny issue for Argentina). Vazquez has
said his next cabinet meeting will take place near where the
papermills are being built. Uruguayans continue to tally up
economic losses from the blockades and assert that the
papermill dispute has already done long term damage to
bilateral relations and to Mercosur. END COMMENT.