Type to search

Uruguay's President Vazquez made a shameful decision to postpone Botnia's permit.


Uruguayan president Tabare Vazquez was in California last week to promote investment in his country. Vazquez told a meeting of the World Affairs Council in San Francisco how foreign investment was key to Uruguay's economic growth and job creation.

The day after, however, Vazquez made a decision negatively affecting Uruguay's largest foreign investor, Finland-based pulp producer Botnia. The company was scheduled to receive the final go-ahead to start production at its facility in Uruguay. At a cost of $1.2 billion, it represents the largest foreign investment ever in Uruguay and the largest Finnish investment abroad.


Yet, at the very last minute, the approval ceremony was delayed after urging from the Spanish government of Jose Luis Rodriguez Zapatero, which in turn was obviously acting on behalf of Argentina's President Nestor Kirchner. Spain agreed to act as a "mediator" in a long-running dispute between Uruguay and Argentina over the Botnia mill.  The conflict can be summed up simply like this: Uruguay granted Botnia a concession to build a pulp mill. Kirchner claimed it would pollute neighboring Argentina as well. The Botnia mill passed several independent and international environmental tests by the World Bank and others proving him wrong. Yet, Kirchner continued to argue his case - among other places at the International Court of Justice in Hague. So far, that has cost Uruguayan taxpayers $3.5 million in legal expenses, according to Uruguayan newspaper El Pais.

The same paper reveals that the country's environment minister Mariano Arana had scheduled a formal signing ceremony for Thursday and invited officials from Botnia as well as local media. It was supposed to be moment of triumph for both Botnia and Uruguay. Yet, only moments before, Arana received a call from President Vazquez in California. Vazquez asked Arana to delay the signing. Vazquez, in turn, had been woken up at 6AM California time with a call from the Spanish government asking that the signing be delayed until the Ibero-American Summit in Chile this week.

The delay naturally surprised Botnia officials, who with reason could only sigh at yet another hurdle they had to face. (Others include constant demonstrations by Argentine NGO's and the international smear campaign by Kirchner). The delay also caused significant criticism from opposition politicians.


We agree with the criticism. President Vazquez made a shameful decision to postpone the much-awaited signing. It is worth noting that the Vazquez administration has all along maintained that technical, not political, issues would decide its course on Botnia.  In the end Vazquez gave in to political pressure from a source - Argentina's Kirchner - who doesn't care about Uruguay's progress.

Although Botnia will likely receive its final OK during the November 8-10 summit in Chile, the last-minute delay has put a dent in Uruguay's image as one of Latin America's most investment-friendly countries. It certainly weakened Vazquez' credibility to make any foreign trips promoting investment.           

  © Copyright Latin Business Chronicle

To read this post, you must purchase a Latin Trade Business Intelligence Subscription.
Previous Article
Scroll to top of page
Begin Zoho Tracking Code for Analytics