HAGUE RULING DISAPPOINTS URUGUAY

UNCLAS MONTEVIDEO 000090

SIPDIS

SENSITIVE
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DEPT ALSO FOR WHA/BSC AND EB
DEPT ALSO FOR EUR/ERA, EUR/WE (MHILL),EUR/NB (MEVANS)
DEPT PASS USTR FOR EEISSENSTAT AND SCRONIN
TREASURY FOR OASIA FOR JASPER HOEK
COMMERCE FOR ITA/MAC/WBASTIAN
NSC FOR JCARDENAS
SOUTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: PREL PGOV SENV SOCI KLIG EINV AR UY
SUBJECT: HAGUE RULING DISAPPOINTS URUGUAY

REF: 06 MONTEVIDEO 00907 AND PREVIOUS


1. (U) On January 23, the International Court of Justice
(ICJ) rejected Uruguay's petitions for provisional measures
which would have obliged Argentina to remove roadblocks
obstructing international bridges linking the two counties.
The early morning newscasts here implied that the Court had
decided it did not have jurisdiction in the matter. However,
subsequent reading of the decision indicates the Court has
competence but ruled that the blockades did not present an
imminent risk of irreparable prejudice to the rights of
Uruguay at this time.


2. (U) Initially, GOU officials publicly expressed dismay and
disappointment at the outcome but did not spell out what next
steps the Government might take. Uruguay's representative in
The Hague, Hector Gross Espiel, was quoted as saying that he
"was neither happy nor sad" over the ICJ's decision because
the Court had failed to legitimize the roadblocks erected by
Argentine protesters. Foreign Minister Reinaldo Gargano's
reaction was vague and muted, though he stated that "we will
have to wait for the Argentine Government's reaction." He
also reiterated that Uruguay would not negotiate with
Argentina while the bridges were blocked.


3. (U) Meanwhile, the Argentine environmental protesters who
block the bridges reportedly were elated by the ICJ's
decision not to exercise its power under Article 41 of the
ICJ Statute to indicate provisional measures. Some protesters
reportedly promised to "increase" their pressure against the
construction of a $1.2 billion Finnish-owned pulp mill
project on the shared Uruguay river.


4. (U) In somewhat related developments, a Spanish mediator
in the dispute is scheduled to visit the region next week to
try and help move things along. Also, the Spanish firm ENCE,
which had moved the location of its own proposed pulp mill in
Fray Bentos to a less controversial site in Colonia, for an
investment of $1.2 billion. The ENCE plant will produce its
own energy through biomass.


5. (U) Local press speculated several possible next steps to
resolve the conflict. While all these options existed before
the Court's ruling, the publication of possible options seems
to indicate a public eagerness to move forward. Possible
options listed are: the facilitator offered by the King of
Spain could mediate, Argentina could begin the dialogue, or
Uruguay could make the first move. The press also raise the
question as to whether Uruguay would drop its demand to begin
negotiations only upon lifting of the bridge blockades. The
press also speculated that Uruguay could return to the ICJ or
complain at the OAS as well.


6. (SBU) Comment: The ICJ decision is seen here as a defeat
for Uruguay. Observers are clearly disappointed that the
Court did not limit Argentina's "coercive action," while the
parties await a final Court decision. The loss is bound to
renew criticism of Formin Gargano's handling of the
long-festering pulp mill dispute. On the other hand, some
observers believe that a mild victory for Argentina "saves
face" for the GOA and may allow Kirchner greater leeway on
making concessions. The earlier GOA "defeats" at the Hague,
the Mercosur tribunal and on the IFC loan vote inflamed
Argentine nationalist passions according to this view.


7. (SBU) Comment (cont): Our contacts at the MFA were coy
about what Uruguay might do next. Embassy notes that Uruguay
has never seriously taken up its case with the OAS, other
than a weak appeal last year by Vice-Formin Maria "Belela"
Herrera to SYGN Insulza for OAS mediation. Possibly the GOU
has not resorted to the OAS because of Mercosur's perceived
rivalry with the OAS and Gargano's preference for Mercosur.
Still, in previous discussions with mid-level Uruguayan
diplomats, some of them expressed a desire for a stronger
appeal to that forum. Article 20 of the OAS Charter states,
"No State may use the coercive measures of an economic or
political character in order to force the sovereign will of
another State and obtain from it advantages of any kind."
However, in its recent pleadings, Argentina argued that since
the commercial aspects of the case had already been heard and
decided by the Mercosur Tribunal, under the principle of "res
judicata" the issue cannot be raised again in another forum.
We do not know to what degree this principle applies in the
jurisdiction of the OAS. End Comment.
Baxter