Argentine President Nestor Kirchner asked the World Bank on Monday to halt loans for a pulp mill in neighboring Uruguay that critics say will harm the environment, the state news agency reported. The news agency, Telam, said Kirchner had written to World Bank President Paul Wolfowitz to formally ask that funds be put on hold until the countries resolve their conflict over the project in international courts. Kirchner said it was "not appropriate" for the bank to disburse financing "while an international legal case remains open", the agency reported.

Finland s Metsa-Botnia is building a pulp mill alongside a river dividing Uruguay and Argentina that has sparked protests by Argentine environmentalists and a diplomatic feud that reached the International Court of Justice in The Hague. The World Bank s private-sector lender and guarantee agency said last month they would recommend that their boards approve financing for the project, after determining it met their environmental and social standards.

Argentina says its neighbor violated a bilateral treaty on the Uruguay River by not providing sufficient information on the project. The court in The Hague refused to order a halt to the construction, but a broader decision is not expected until late next year, sources at Argentinas foreign ministry said late last month.

Argentina fears the mill, which is due to begin operating in the third quarter of 2007, will damage the environment and also hurt tourism and fishing. The World Bank s International Finance Corp. has proposed providing US$170 million in loans for Botnia s mill, while the Multilateral Investment Guarantee Agency is considering political risk insurance of about US$300 million.

Spain s Ence had planned to build a pulp plant next to Botnia s mill, but the company has said it would relocate it. The two mills were estimated to cost about US$1.7 billion -- the largest private investment in Uruguay s history.
(Planet Ark, 08/11/2006)