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Brazil to fund deep-water port, help Uruguay avoid Argentina's controls

MONTEVIDEO, Uruguay -- Uruguayan President Jose Mujica says Brazil will fund 80 percent of a new deep-water port that will get around Argentine efforts to control shipping in the South Atlantic.

Mujica told the Republica newspaper in an interview published Tuesday that construction will begin in about a year on the US$500 million project in Rocha, Uruguay, and that Brazil will pay for most of it through trade bloc Mercosur's Fund for Structural Convergence.

“Brazil has given us and will give us a really big hand with this job,” Mujica said. “Uruguay doesn't have the capacity to finance this by itself, and depends for now on outside help.”

Vice President Danilo Astori provided more details about the port in an Associated Press interview, predicting that it will transform Uruguay's economy by freeing the country's shipping industry from Argentina's protectionist policies.

In October, Argentina's Economy Ministry began turning away any cargo vessels that stop in Uruguayan ports while traveling between most South American nations, aiming to promote Argentine ports and pressure Uruguay into making concessions in negotiations over a new Mercosur shipping agreement.

The ports of Buenos Aires and Montevideo have competed for centuries to dominate the region's shipping, but this latest decree is driving up trade costs in both countries.

A leading container company in Montevideo, Katoen Natie, announced 500 layoffs in December, and Argentina's chamber of commerce pleaded with the ministry to withdraw the ban, saying it raises costs and operational difficulties by leaving Argentine import and export companies with no other legal ports to stop in but Brazil's.

Uruguay needs another deep-water port because its current ports have already been handling record loads, Astori said.

2014 will see substantially more shipments from paper pulp plants on the shallow waterways it shares with Argentina, where both neighbors have failed to agree on basic elements such as dredging the rivers to let ships pass through, Astori said. A huge iron mining project in northern Uruguay also will need a deep-water ocean port so that ships can affordably carry away heavier loads.

The Rocha project, which will have rail connections to the mine and to Brazil's southern industrial heartland, implies “a revolutionary transformation for Uruguay, if we can finally get it done,” Astori said. “It won't neutralize Argentina's influence over Uruguay, but in terms of shipping it will change it completely.”

He added, “This port will change routes, itineraries, cargo weights, and all of this will certainly have positive effects for Uruguay.”

The planned port also is key to Brazil's future, Brazilian ambassador Antonio Jose Ferreira Simoes said in 2011, when he described a shared development project stretching from southern Brazil into northern Uruguay that would make the entire region's commerce more dynamic.

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