Uruguay: Pulp Factions: Uruguay's Environmentalists v. Big Paper

Christmas Eve 2002, Alfredo Bazzini went to draw water from the family well in Las Flores, a small farming town in western Uruguay. What he found was that the water his family depended on for drinking, cooking, washing, and farming had dried up.

"It wasn't only my well that didn't have any water, all of the wells in town, even the deepest, were empty, and nobody knew what to do," Bazzini recalls.

For the residents of Las Flores in the department (province) of Paysandú, this was the climax to a desperate story that began some two years earlier, when the water level in local wells dropped by up to 60 percent. And kept dropping.

"When it rained the wells filled up almost to the top, but then the water level would drop to even lower than it had been before," said Bazzini.

With no way to bring water in from outside, townspeople watched helplessly as their watermelons and peanuts -- the mainstay crops of the local economy -- began to dry up, too.

Eucalyptus as Far as the Eye Can See

The culprit, it turns out, is the Eucalyptus tree, or rather the large-scale plantations run by international corporations that are spreading across Uruguay. The tree farms are heavily fertilized by tax subsidies from the federal government and aid from such international financial institutions as the World Bank and Inter-American Development Bank. Las Flores lies just three kilometers east of Piedras Coloradas, the main town in a region that has been afflicted by a growing water shortage since becoming a favored location for this lucrative new crop.

Other settlements in the region are also suffering the impact of eucalyptus plantations. The forestry companies are buying up more and more land and the eucalyptus forests are now spreading up to the very doors of the small towns and villages," commented fruit grower David Kertesz. That is what happened at Las Flores. "At first the plantations were far away, but little by little they kept moving closer," Bazzini reported. "When they reached to just a few meters out of town, the water ran out and the land died."

"That Christmas Eve we hit rock bottom," Bazzini recounted. "The little water left was gone, and it never came back." The 40 local families who lived off the land were forced to leave everything behind and move away. Only five houses remained occupied. Today, Las Flores is known as Pueblo Seco, "Dry Town."

The phenomenon is being repeated throughout the plantation region. Downstream from the San Francisco creek near Piedras Coloradas, local residents no longer have enough water to raise cattle. Nearby, in the village of Colonia 19 de Abril, 25 to 30 meter wells have dried up, and so has most of the surrounding marshland, said Augusto Sande, a farm produce transporter. Now, "to find water you have to dig a well at least 60 meters deep, which costs $4,000, and almost none of the farmers have that kind of money," remarked Sande.

Native to Australia, the eucalyptus is ideal for pulpwood production: It grows quickly and is accomplished at scavenging large amounts of water at the expense of other plants. Foreign-owned large-scale plantations of the fragrant trees now occupy more than 700,000 hectares (2,700 square miles) in Uruguay, estimates María Selva Ortiz of the REDES- member of the Friends of the Earth non-governmental environmental network.

Botnia of Finland has planted trees on 60,000 hectares (232 square miles) of prime land, while ENCE of Spain already owns 50,000 hectares (183 square miles) and plans to purchase even more, according to Ricardo Carrere, spokesperson for local environmental group Guayabira.

But some in the halls of government, the ivory tower, and on the ground question the development. Uruguayan Agriculture Minister José Mujica has publicly called for limiting monoculture tree plantations, to prevent further degradation of the soil and exhaustion of the country's water supply. Máximo D'Atri, an independent researcher notes that "In all of the locations where there is eucalyptus monoculture forestry, the water supply is running out, and in the areas near these forests, the arable land has suffered irreversible deterioration." And two farm workers who have watched the deterioration first-hand agree. "The more eucalyptus trees they plant, the less water we have. Things are going from bad to worse," said Aníbal Sosa and Mario Díaz Suarez.

"Trees for pulp production have taken over land formerly used to grow wheat, barley, sunflowers and linseed," said Carrere, who is also the coordinator of the World Rainforest Movement (WRM). A large percentage of that land used to belong to small and medium-sized farmers who were driven under by the economic crisis that hit the country between 2000 and 2003. "These farmers, left without capital or any kind of government support, sold their fields to the corporations, and at very low prices," reported Mercedes Borrás, who served as the legal representative of one of the many families strangled by the debts they incurred during the crisis.

Vertical Pulp

Uruguay's monoculture forestry program was supposed to generate employment and boost exports, but the results have been quite the opposite, said Carrere. Tree farms planted with fast-growing pulpwood species have created only 2,962 new permanent jobs, he notes, while traditional agricultural activities such as cattle, pig and poultry farming and the cultivation of grains and other food crops are a good source of employment. "And given that the monoculture forestry industry has displaced these other activities," Carrere said, "this forestry model has entailed a net loss of jobs in the farming sector."

Nor are all the new jobs, good jobs. After government inspectors discovered that workers on some of these plantations live in conditions of near slavery, Labor Minister Eduardo Bonomi announced that the forestry companies involved in this sector will be more closely monitored and regulated. The local nonprofits, Guayubira and REDES-Friends of the Earth have called on the government not only to promote the sustainable use of the large industrial tree farms already established, but also to compensate the affected farmers. They are advocating the creation of an integrated forestry industry, which would include, for example, the building of homes and the manufacture of furniture.

The foreign companies are way ahead in the process of integration, although to different ends than those of the non-profits. Botnia and ENCE, which own some of the largest plantations are building mills in Uruguay to process the wood they grow into pulp for paper products. Another major transnational corporation, the U.S.-based forestry giant Weyerhaeuser, has bought up roughly 135,000 hectares (521 square miles) and recently announced plans to invest $1.2 billion to expand its Uruguayan pulp operations.

That the companies owning the plantations had ambitions in that direction "was established when it was discovered that the main companies involved in this forestry activity were controlled by pulp and paper producers or had been operated with the pre-agreed intent of selling the forested areas to corporations in the industry, which has in fact happened in many cases," said D'Atri.

Clear-Cutting Jobs

Much of the Uruguayan economic and governmental leadership supports the project and is actively encouraging this agro-industrial project, activist Ortiz told CorpWatch. They argue that the mills will provide jobs. According to the companies' estimates, the two mills together will provide some 600 direct and permanent jobs. Botnia adds that over the next 11 years, its mill will generate another 6,500 indirect jobs such as planting and harvesting on the tree plantations and transporting the trees to the mills. ENCE, which will produce 500,000 tons of pulp annually, talks about similar job creation.

Currently, some 460 people-- mostly from Fray Bentos and mostly working for subcontractors-- have jobs building of the mills for about $12 a day. But Delia Villalba of the Movement for Life, Work and Sustainable Development, a local group formed in Fray Bentos, predicts that in the small port city of 24,000 inhabitants, pollution caused by the mills will decrease the number of jobs by destroying tourism, beekeeping, farming, artisanal fishing, and the dairy industries, which, after the civil service sector, are the town's main sources of employment.

And increasingly as construction speeds up, locals are also facing competition for jobs from hundreds of unemployed workers attracted to the region. "They come from other departments and also from Argentina, Brazil and Paraguay with the hope of getting hired to work on the construction of the plants," said Villalba, "but there are very few jobs available, and most end up leaving empty-handed."

Don't Drink the Water

Meanwhile Stolkin charges that pulp plants run by Botnia and ENCE, will spew contaminants. The use of chlorine dioxide to bleach the pulp creates dioxins and furans. These organochlorines are two of the 12 chemical compounds specifically targeted for elimination under the Stockholm Convention on Persistent Organic Pollutants (POPs), as the WRM has stressed. They have been shown to weaken the immune system and have been implicated in birth defects, hormonal imbalances, neurological disorders, infertility, and diabetes. The U.S. Environmental Protection Agency (EPA) classifies dioxin as a potential human carcinogen.

Since the manufacture of pulp requires large amounts of water that is used and then disposed of, pulp mills around the world are typically cited on waterways. The Botnia and ENCE plants in the western Uruguayan city of Fray Bentos sit on the Uruguay River, which forms part of the border between Uruguay and Argentina.

The Botnia mill alone, which will produce a million tons of pulp annually, will dump the same amount of wastewater into the river as that generated by a city of 100,000, according to the estimates of local environmentalists.

Botnia spokesperson Faroppa, however, insists that the water taken from the Uruguay River will be so thoroughly treated before being dumped back that it will be even cleaner than it was to begin with.

But if as critics claim, the mills are releasing dioxins and furans, the consequences will be both long-lasting and far-reaching: Dioxins and furans travel long distances through the air and water, take a decade or more to break down, and can have toxic effects even in tiny quantities. They also accumulate in the fatty tissue of living organisms and have been shown to biomagnify, meaning that they increase in concentration the higher up the food chain they move, according to medical reports cited by the Argentine branch of Greenpeace.

Pregnant women can pass these toxins directly to the fetus through the placenta, particularly during the first nine weeks of pregnancy, says Argentine oncologist Ada Rossi Guffanti.

Nor are dioxin and furans the only contaminants associated with pulp production. Carlos Pérez Arrarte, an ecological economics professor and researcher at the University of the Republic predicts that the mills will also release into the river some 600 kilograms of nitrogen and 60 kilograms of phosphorus on a daily basis. Argentine oncologist Ada Rossi Guffanti warns that the chlorate also released by pulp processing kills fish and plants. According to Arrarte, the Botnia mill's effluents -- including 43 tons of organic matter daily -- will seriously affect biodiversity and the sustainability of the river's flora and fauna.

The mills claim that these warnings are based on out-dated technology and data. The most widely used pulp bleaching technique in the world today-and the one used by Botnia and ENCE is Elemental Chlorine-free, or ECF. While cleaner than older technologies, it still releases dioxins, furans and other toxic substances. Safer yet is Totally Chlorine-Free (TCF) process which uses oxygen-based compounds instead of chlorine-based compounds.

Botnia has chosen not to go with this cleaner technology in its Uruguayan mills, says agricultural engineer Carlos Faroppa. The Botnia spokesperson says that the decision was based not on cost, but on quality and effectiveness. The oxygen-based "TCF is hardly used around the world because the technology has not continued to advance," he said. "The fibers it produces cannot be used to manufacture quality paper."

But Botnia does, in fact, use TCF technology at its pulp mill in Rauma, Finland, according to Arrarte. The company has not denied or confirmed this version. Botnia and ENCE's choice of the less safe process means that "Every day, millions of liters of wastewater will be dumped into the river, which will degrade it," Fray Bento activist Delia Villalba told CorpWatch.

And Don't Breathe the Air

It is not just the water, but the air, too, that is affected by pulp mills. The large quantities of reduced sulfur compounds such as hydrogen sulfide produce a potent "rotten egg smell" for kilometers around, commented biologist Oscar Galli, one of 60 scientists who sent the Uruguayan government an open letter opposing the pulp mills.

Epidemiological studies show that prolonged exposure to these foul-smelling sulfur compounds increases the risk of acute respiratory infections.

While placing little importance on the health impact of this stench, Botnia itself admits that many people "will stop engaging in outdoor activities in the area around the plant" and avoid nearby public spaces.

But Botnia spokesperson Faroppa stressed that the mill's emissions will contain the lowest possible levels of pollutants, thanks to strict controls that comply with the standards imposed in the European Union, "which are more demanding than those of the United States," and monitored by experts from the company itself, the municipal and federal governments, and the University of the Republic.

Indeed, Uruguayan President Tabaré Vázquez has pledged that the mills will be rigorously monitored to ensure that they meet with national environmental protection standards. "We are going to be very strict. Uruguay is one of the countries that puts the most effort into fighting pollution and it will not allow any violations of the rules established for this purpose," he declared.

Nevertheless, environmentalists doubt that the Uruguayan government will be able to exercise sufficiently strict control over the 24-hour-a-day industrial operations of two pulp sector giants like Botnia and ENCE.

This degree of monitoring would require not only training enough qualified staff, but also making a significant investment in infrastructure for equipment to measure pollutants.

The National Environment Office (DINAMA), the federal government agency responsible for monitoring the companies, is still not equipped to exercise the complex and thorough controls needed. "The DINAMA technicians obviously don't have the experience," chemical engineer Ignacio Stolkin told CorpWatch. "They are very capable, but this is something new for them, and it will take them time to learn."

For now, they don't even have the required equipment. "It is inconceivable that [effective monitoring] could be achieved in the medium term in our country, given that, for example, a single dioxin-measuring device costs around $300,000," says Guayubira.

Foreign Fertilizer

The plantations and mills, meanwhile, enjoy powerful and richly funded backers. Large-scale eucalyptus plantations were introduced in Uruguay in 1988, promoted mainly by the World Bank and the Inter-American Development Bank (IDB), with the active participation of forestry companies.

At the time, the price of pulpwood on the world market was $60 a ton, and demand was high, says Raúl Zibechi, a professor and researcher at the Franciscan Multiversity of Latin America. International financial agencies were facing increasing criticism over the destruction of the planet's tropical rainforests as indiscriminate logging of trees for pulp production around the world, was consuming 15 million hectares (58,000 square miles) annually.

New sources were needed and Uruguay, chosen from the climate-controlled offices in distant world capitals, seemed an ideal candidate for monoculture pulpwood production. Montevideo pledged full compliance and provided forestry companies with generous subsidies, soft credits, and tax exemptions. Over 12 years, the Uruguayan government's support for this sector exceeded $500 million in tax exemptions and direct disbursements, an amount representing almost 4 percent of the country's annual GDP. To facilitate the transportation and export of the wood, the governments of the day made further investments in new ports, bridges, roads, and railway lines.

So far, owing to low world market prices for pulpwood, the promised economic gains from export have failed to materialize.

By citing the pulp mills near the plantations the corporations hoped ti increase profitability. The pulp project will be partially financed by the World Bank, which will grant each of the foreign companies involved a $200 million loan. Botnia and ENCE will invest a combined $1.8 billion in the two mills, making this the largest direct private investment ever in the country's history, according to figures released by Minister of the Economy Danilo Astori and Minister of Industry Jorge Lepra.

Much of the Uruguayan economic and governmental leadership, supports the project and is actively encouraging this agro-industrial project, activist Ortiz told CorpWatch.

Big Paper Protest

How much of that increased profit will go to Uruguay is in dispute. With 80 percent of the money going abroad the purchase of equipment and machinery abroad, Botnia and ENCE will actually spend only 20 percent in Uruguay, according representatives of the companies.

Also in doubt is how much will flow to those at the lower end of Uruguay's economy. Local groups fear that while benefits of the projects concentrate in the foreign and local elites, most Uruguayans will reap only lost jobs, farm land, housing, and health. Charging that pulp mills cause "serious environmental damage that poses great danger to people's health and lives." Guayubira, REDES-Friends of the Earth and other groups have launched a major campaign specifically targeted against the mills currently under construction.

The campaign has spread to Gualeguaychú, Argentina, which sits across the Uruguay River from Fray Bentos. Residents of Gualeguaychú are also concerned about the health and environmental effects of the effluents that the mills will dumped into the shared river.

As in Uruguay, Gualeguaychú's opposition to the mills has been spearheaded by a growing environmental movement, with strong support from trade unions and other social organizations. The Citizens Environmental Assembly of Gualeguaychú has joined with their Uruguayan counterparts to organize public protests.

They are getting support from officials in Argentina. In October 2005, the governor of Entre Ríos, Jorge Busti, sparked a diplomatic incident when he told the Argentine press that Botnia and ENCE had distributed "incentives" among unnamed members of the current Uruguayan government to gain their approval for the construction of the plants.

In response, the companies stated that they had given a $10,000 donation to every Uruguayan political party during the 2004 election campaign, but roundly denied the allegations of bribery implicit in the governor's statements. In any case, when the new leftist Uruguayan government took office in March, it immediately ratified the authorization for the new mills originally granted by the previous conservative administration.

Some critics also charge that Botnia and ENCE negotiated a sweetheart deal with Montevideo which conceded duty-free zones that will allow the companies to import and export without paying taxes. "If everything comes in and goes out without them having to pay, what does Uruguay get out of it?" asks chemical engineer Stolkin.

On April 30, some 35,000 protestors from Argentina and Uruguay occupied the international bridge that links Fray Bentos to Gualeguaychú for a massive demonstration against Botnia and ENCE. Numerous other joint protests have been held since then, including one involving thousands of schoolchildren from the Argentine city of Entre Ríos, and more are planned for the coming weeks.

Tensions between Argentina and Uruguay are also heating up at the diplomatic level. On September 16, provincial governor Busti - in coordination with Argentine President Néstor Kirchner -- filed a complaint against the mill construction projects with the World Bank. Their request that the bank cancel its line of credit to Botnia and ENCE fueled friction between the two nations.

Financing for the projects had been frozen until the International Finance Corporation, which manages the World Bank's private sector investment program, completed an environmental and social impact study. Released in January, it found that the plants don't cause substantial environmental damage to the river.

The campaign being waged by local environmentalists took on greater urgency after President Tabaré Vázquez took office in March and Swedish-Finnish forestry giant Stora Enso expressed interest in installing yet another pulp mill in Uruguay.

"Stora Enso is already buying up land for forestry," warned Carrere. "It wants to acquire a total of 100,000 hectares to plant trees that it will convert to pulp for paper production. This will further reinforce the monoculture-pulp mills model, which drives out productive activities, causes serious environmental problems, and forces rural populations off their lands."

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