Port fight fuels South American rivalry

Brazil agreed to fund the majority of a new deep-water port in tiny neighboring Uruguay last week in a move to help both countries flout new Argentinian regulations designed to control shipping in the South Atlantic.

Since October, Argentina’s Economy Ministry has barred cargo ships that make stops in Uruguayan ports, aiming to bring more business directly to and from Argentinian ports. It also hopes the move will pressure Uruguay to make concessions in a new shipping agreement for South America’s Mercosur trade bloc, to which all three countries belong.

The new port would relieveMontevideo, Uruguay’s capital city port, which currently handles record numbers of container ships and is only 80 miles from Buenos Aires across the mouth of the La Plata River. Uruguay’s vice president, Danilo Astori, said it will transform his country’s economy by freeing its shipping industry from Argentina’s protectionist policies. It would serve an expected boom in iron ore production and steel exports from Northern Uruguay and Southern Brazil and could handle land-locked Paraguay and Bolivia’s increased grain and mineral exports to the Far East.

Uruguayan President José Mujica first discussed the port project in 2010 with his Brazilian counterpart, Luiz Inácio Lula da Silva. Priority went to the Rocha region’s naturally deep water coastline. With the offer to finance 80 percent of the costs, Mujica said, “Brazil has given us and will give us a really big hand with this job.”

The $500 million port embodies more than just economic ambitions: The project evokes the long-time rivalry between Brazil and Argentina. Uruguay stands to gain from one regional giant’s help against the other. Brazil’s largesse aside, its O Globonewspaper humorously disparaged Uruguay as “a country of three million people, lost in the south of the world, which only surges into the headlines once in a blue moon for something related to football.”

Yet the new port has its critics. To prepare for construction, the Rocha government authority seized 458 properties in August 2012, some owned by Argentinians guilty of decades of tax evasion, according to Uruguay’sEl País newspaper. Another 4,000 delinquent land-holders—Argentinians among them—face the same fate.

The Uruguayan Ministry of Transport and Public Works itself questions whether enough tonnage volume exists to require a new port. And environmentalists decry the Rocha project, saying it will spoil an undeveloped, sparsely inhabited area and pollute the home of a sea lion colony and beautiful sand dunes. Local tourism proponents argue the port would destroy business in the El Palenque coastal resorts. But Mujica has held his ground, saying the port would be built “here or nowhere.”

Astori insisted construction will comply with environmental law and highlighted new infrastructure, including rail connections to mining and industrial regions, ushering in a “revolutionary transformation” for Uruguay.

The Rocha facility is expected to be operational within 12 years and could become the premier of Southern South America’s ports. “It won't neutralize Argentina’s influence over Uruguay, but in terms of shipping it will change it completely,” Astori said.

The Associated Press contributed to this report.